Santa Monica City Council
April 11, 2023

City of Santa Monica
California
Annual Comprehensive Financial Report
for the Year Ended June 30, 2022
Audit Subcommittee of the Santa Monica City Council Meeting Date: March 22, 2023
Agenda Item: 2
City of Santa Monica
California
Annual Comprehensive Financial Report
Year ended June 30, 2022
Prepared by the Finance Department
Gigi Decavalles-Hughes Director of Finance/City Treasurer Stephanie Manglaras Financial Operations Manager
Robert Garcia Supervising Accountant
Randy Chow Financial Reporting Administrator
Amelia Dawson Senior Grants Analyst
Nick Felldin Accountant II
Jane Lim Accountant II
Lisa Nakamine Accountant II
Thomas Hoang Accountant I
Swen Yang Accountant I
Laura Perez Executive Administrative Assistant

CITY OF SANTA MONICA, CALIFORNIA
Annual Comprehensive Financial Report
For the fiscal year ended June 30, 2022
Table of Contents
Page

INTRODUCTORY SECTION
Letter of Transmittal .......................................................................................................................... i Officials of the City of Santa Monica ................................................................................................ xiii Organizational Chart – City of Santa Monica ................................................................................... xiv GFOA Certificate of Achievement for Excellence in Financial Reporting ....................................... xv

FINANCIAL SECTION
Independent Auditors’ Report ........................................................................................................... xvi Management’s Discussion and Analysis (Required Supplementary Information) ............................ xix BASIC FINANCIAL STATEMENTS:

Government-Wide Financial Statements:

Statement of Net Position ............................................................................................................ 1 Statement of Activities ................................................................................................................ 2 Fund Financial Statements:

Balance Sheet – Governmental Funds ........................................................................................ 4 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position ........................................................................................................ 5 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ................................................................................................................ 6 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities ......................... 7 Statement of Net Position – Proprietary Funds ........................................................................... 9 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds ....... 10 Statement of Cash Flows – Proprietary Funds ............................................................................ 11 Statement of Fiduciary Net Position – Fiduciary Funds ............................................................. 14 Statement of Changes in Fiduciary Net Position – Fiduciary Funds .......................................... 15 Notes to Basic Financial Statements:

Note 1 – Summary of Significant Accounting Policies ............................................................ 16 Note 2 – Cash and Investments ................................................................................................. 29 Note 3 – Leases ......................................................................................................................... 37 Note 4 – Notes Receivable ........................................................................................................ 40 Note 5 – Capital Assets ............................................................................................................. 48 Note 6 – Unearned Revenue and Deferred Inflows of Resources ............................................. 50 Note 7 – Compensated Absences .............................................................................................. 52 Note 8 – Self-Insurance ............................................................................................................. 53 Note 9 – Long-Term Debt ......................................................................................................... 55 Note 10 – Pollution Remediation ................................................................................................ 59 Note 11 – Employee Benefit Programs ....................................................................................... 61 Note 12 – Fund Balances ............................................................................................................ 78 Note 13 – Fund Deficits .............................................................................................................. 82 Note 14 – Restricted Net Position ............................................................................................... 83 Note 15 – Commitments and Contingencies ............................................................................... 85

CITY OF SANTA MONICA, CALIFORNIA
Annual Comprehensive Financial Report
For the fiscal year ended June 30, 2022
Table of Contents, Continued
Page
Note 16 – Reconciliation of Fund Balance Sheet/Statement of Net Position to GovernmentWide Financial Statements ......................................................................................... 89 Note 17 – Interfund Transactions ................................................................................................ 92 Note 18 – Successor Agency Trust Fund for Assets of Former Redevelopment Agency ............ 95 Note 19 – Pandemic ..................................................................................................................... 99 Note 20 – Prior Period Adjustments ............................................................................................ 101 Note 21 – Special and Extraordinary Items ................................................................................. 102

REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund ............................................................................................................................... 103 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Special Revenue Source Fund ..................................................................................................... 105 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Low and Moderate Income Housing Asset Fund ........................................................................ 106 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Miscellaneous Grants Fund ......................................................................................................... 107 Note to Required Supplementary Information ................................................................................... 108 Schedules of Changes in the Net Pension Liability and Related Ratios ........................................... 109 Schedules of Contributions – Pension Plans ...................................................................................... 112 Schedule of Changes in the Net OPEB Liability and Related Ratios ................................................ 115 Schedules of Contributions – OPEB .................................................................................................. 116

SUPPLEMENTARY INFORMATION

NON-MAJOR FUNDS / OTHER FINANCIAL INFORMATION
Combining and Individual Fund Statements and Schedules:

Combining Balance Sheet – Nonmajor Governmental Funds ........................................................ 119 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds .................................................................................................. 122 Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) – Budget and Actual – Major and Nonmajor Governmental Funds –
Special Revenue Funds:

Beach Recreation ..................................................................................................................... 125 Housing Authority ................................................................................................................... 126 Tenant Ownership Rights Charter Amendment (TORCA) ...................................................... 127 Citizens Option for Public Safety ............................................................................................ 128 Gas Tax ..................................................................................................................................... 129 Local Return ........................................................................................................................... 130 Community Development Block Grant (CDBG) ..................................................................... 131 South Coast Air Quality Management District (SCAQMD) ................................................... 132 Parks and Recreation .............................................................................................................. 133 Capital Projects Funds:

Clean Beaches and Ocean Parcel Tax ...................................................................................... 134 Combining Statement of Net Position – Nonmajor Enterprise Funds ............................................ 136

CITY OF SANTA MONICA, CALIFORNIA
Annual Comprehensive Financial Report
For the fiscal year ended June 30, 2022
Table of Contents, Continued
Page
Combining Statement of Revenues, Expenses and Changes in Fund Net Position – Nonmajor Enterprise Funds ........................................................................................................ 137 Combining Statement of Cash Flows – Nonmajor Enterprise Funds ............................................. 138 Combining Statement of Net Position – Internal Service Funds .................................................... 141 Combining Statement of Revenues, Expenses and Changes in Fund Net Position – Internal Service Funds ................................................................................................................ 142 Combining Statement of Cash Flows – Internal Service Funds ..................................................... 143 STATISTICAL SECTION (Unaudited)
Financial Trends Information
Net Position by Component – Last Ten Fiscal Years ........................................................... 1 144 Changes in Net Position – Last Ten Fiscal Years ................................................................. 2 145 Fund Balance of Governmental Funds – Last Ten Fiscal Years .......................................... 3 148 Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years ........................ 4 149 General Fund Tax Revenues by Source – Last Ten Fiscal Years ......................................... 5 151 Revenue Capacity Information
Assessed Value and Actual Value of Taxable Property – Last Ten Fiscal Years ................ 6 152 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years .................................. 7 153 Principal Property Tax Payers – Current Fiscal Year and Nine Years Ago ......................... 8 154 Property Tax Levies and Collections – Last Ten Fiscal Years ............................................. 9 155 Taxable Transactions by Type of Business – Last Ten Calendar Years ............................... 10 156 Debt Capacity Information
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ............................................. 11 157 Ratios of General Bonded Debt – Last Ten Fiscal Years ..................................................... 12 158 Direct and Overlapping Governmental Activities Debt........................................................ 13 159 Computation of Legal Debt Margin – Last Ten Fiscal Years ............................................... 14 160 Water Enterprise Revenue Bonds Coverage – Last Year ..................................................... 15 161 Demographic and Economic Information
Demographic and Economic Statistics – Last Ten Calendar Years ..................................... 16 162 Principal Employers – Current Year and Nine Years Ago ................................................... 17 163 Operating Information
Full-time Equivalent City Government Employees by Function/Program – Last Ten Fiscal Years ........................................................................................................ 18 164 Operating Indicators by Function/Program – Last Ten Fiscal Years ................................... 19 165 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ................................ 20 166 City of Santa Monica, California
Year Ended June 30, 2022

INTRODUCTORY SECTION
Department of Finance | 1685 Main Street, Mail Stop 09 | Santa Monica, CA 90401 [email protected] | finance.smgov.net/
Tel: 310 458-8281 Fax: 310 394-0647
February 9, 2023
Dear Honorable Mayor and Members of the City Council, City Manager, and Citizens of Santa Monica:

Attached is the Annual Comprehensive Financial Report (ACFR) for the City of Santa Monica (City) for the fiscal year ended June 30, 2022 (FY 2021-22).

The ACFR has been prepared by Finance Department staff in conformance with the principles and standards for financial reporting set forth by the Governmental Accounting Standards Board (GASB), the authoritative body establishing U.S. generally accepted accounting principles for local governments.

Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls established for that purpose.

Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

The ACFR has been compiled in a manner designed to fairly set forth the financial positions and results of operations of the City. The ACFR includes disclosures designed to enable the reader to gain an understanding of the City’s financial affairs.

In accordance with generally accepted accounting principles, a narrative overview and analysis of the basic financial statements in the form of Management’s Discussion and Analysis (MD&A) is provided and can be found immediately following the independent auditor’s report. This letter of transmittal complements the MD&A and should be read in conjunction with it.

Lance, Soll & Lunghard LLP has issued an unmodified opinion on the City of Santa Monica’s basic financial statements for FY 2021-22. Their report is located at the front of the financial section of this report.

PROFILE OF THE CITY OF SANTA MONICA
The City of Santa Monica, bordered by the City of Los Angeles on three sides and by the Pacific Ocean on the west, encompasses an area slightly greater than eight square miles and serves a residential population of 92,408 making it the 18th largest of the 88 cities in Los Angeles County.

The City of Santa Monica, incorporated in 1886, adopted its City Charter in 1945, and established a council-manager form of government in 1947. Elections are held every two years for either three or four Council members elected to serve four-year terms on the seven-member City Council. In the past, elected Council members selected a Mayor and a Mayor Pro-Tempore to preside over Council meetings.

However beginning in December 2022, the Council shall select the longest continuously serving Councilmember, whether initially elected or appointed, to serve as Mayor for a 1 year term. Each subsequent December the next longest continuously serving Councilmember shall be selected as Mayor for a 1 year term, then rotating each December to select the Mayor in order of the next longest serving i
Councilmember.

The City Council (Council) appoints a City Manager, a City Attorney and a City Clerk. The City Manager, responsible for supervising day-to-day operations of the City and for carrying out policies set by the Council, appoints Department directors.

Santa Monica’s level and breadth of services surpass those of other cities of comparable size. The City provides a full range of services, including police and fire protection, water and wastewater, street maintenance, public landscaping, a regional transit system that serves 6.5 million riders each year, parking, parks and recreation including 245 acres of beaches, five public libraries, planning, building and safety, the iconic Santa Monica Pier, an airport, a cemetery, and a high level of support for social services, cultural programs and public education. Elementary and secondary education is provided by the Santa Monica Malibu Unified School District, and community college education is provided by the Santa Monica Community College District. Court, health, and social services are provided by the County of Los Angeles. Gas and telephone services are provided by private utility companies, while power is purchased through the Clean Power Alliance, a joint powers authority made up of public agencies across Los Angeles and Ventura counties working together to bring clean, renewable power to Southern California, and delivered by a private utility company.

Financial data for all funds through which services are provided by the City have been included in this report based on the criteria adopted by GASB.

FINANCIAL CONDITION AND OUTLOOK
As a AAA rated city, Santa Monica has long relied on prudent fiscal planning to prepare for the future with two-year operating budgets, five-year fiscal forecasts and capital plans, and continuous review and refinement of fiscal policies and processes. This careful planning allowed the City to quickly reposition itself in response to the COVID-19 pandemic that devastated economies at all levels around the world.

Cities like Santa Monica, with strong tourism, retail and entertainment amenities, were hit the hardest.

For the period from March 2020 to June 2022, the City is projected to have lost approximately $170 million in General Fund revenue as a result of the economic disruption. The federal stimulus funds Santa Monica received to help close the gap totaled approximately 16% of this amount, provided minimal relief.

To respond, the City restructured and reduced its operations, resulting in a 20% decrease in General Fund operating expenditures and a 50% decrease in the annual General Fund capital program. Included in the restructuring was an 18% cut in staffing Citywide. At the same time, one-time funds were diverted from liability paydowns, discretionary affordable housing contributions and economic uncertainty and contingency reserves, and the Rainy Day reserve level was lowered from 15% of ongoing operating expenditures to 12.5%, in order to meet the immediate and longer-lasting effects of the COVID-19 pandemic. Despite these measures, and owing to the City’s careful realignment, all three major rating agencies affirmed Santa Monica’s AAA status during 2021 and 2022.

Fiscal Year 2021-22 saw sustained economic recovery that continues, but challenges persist. While General Fund revenues are growing, they are below the levels they would have been had the economy not been disrupted by the pandemic. The City is also experiencing significant cost increases coming from the highest levels of inflation in forty years, supply chain issues, other market disruptions occurring as a result of the war in Ukraine, and staff compensation increases after two years marked by paycuts or no cost-ofliving increases. Furthermore, coronavirus variants continue to emerge and threaten to slow down economic activity, international and business travel is still lagging, and office-based businesses are still not operating in person at their pre-pandemic levels, which impacts supporting businesses and parking ii
activity. These challenges have a direct impact on the City’s ability to restore services and programs to meet community needs and address critical gaps in services. While key investments have enabled staff to bring back some services and invest in new areas addressing priorities, the City is still operating at 86% of previous staffing levels, which translates to most City programs and services continuing to operate at reduced levels. Reductions to facility maintenance and capital improvements in the General fund also continue.

The City’s General Fund reserves have been impacted by both COVID losses and by a series of agreements to settle legal claims since March 2020. In the face of ongoing contingent liabilities, continued economic volatility, and the appreciation that strong reserves allow us to continue to provide essential services even in the most difficult times, the City diligently balances program restoration and addressing urgent needs with rebuilding its Rainy Day fund. In FY 2022-23, the Rainy Day fund level has been increased to 13%, with the commitment to increase the reserve level by 0.5 percentage point a year until it once again reaches 15% in FY 2026-27.

Looking to the future and further recovery, City General Fund revenues are projected to increase by over

4.5% in FY 2022-23 over prior year actuals and continue to grow. The City will no longer receive Federal ARPA funds, which helped supplement revenues and slightly mitigate losses during the past two years.

With limited resources, any new funds are allocated to address three City Council-adopted priorities:

Clean and Safe Neighborhoods and Open Spaces, Addressing Homelessness, and Inclusive and Equitable Economic Recovery for All.

The national economy, after rebounding strongly and quickly in 2021 from the COVID-19 recession that severely hampered economic activity through much of 2020, has begun to show some signs of weakness.

Economic growth, as measured by GDP, is expected to be 1.9% in 2022 and only 0.3% in 2023 after a sharp rise of 5.9% in 2021. A recent survey of top economists now puts the probability of a recession at 65% at some time during the next twelve months. The major hindrance to the economy has been surging inflation which has hit a 40 year high of nearly 10% year-over-year led by sharp increases in food, energy, and shelter costs. While inflation is expected to begin to moderate late in 2023, it is expected that it will be at least late 2024 or early 2025 before inflation returns to the Federal Reserve’s target level of 2%. To attempt to rein in inflation, the Federal Reserve has sharply increased interest rates, which will further contribute to an economic slowdown. Additionally, there are still concerns over potential surges of new COVID strains, supply chain disruption, the impact of the continuing war in the Ukraine, and the recent labor shortage.

California’s economic recovery in 2021 and early 2022 was the strongest since 1960 as the State unemployment rate fell to a record low, and the number of pandemic-related job losses were recovered by late 2022. However, some of the same uncertainties affecting the national economy are expected to slow State growth. The Governor’s proposed budget for Fiscal Year 2023-24 projects a deficit of $22.5 billion. However, the budget avoids spending cuts by using the prior year’s record surplus to fund certain one-time costs.

Santa Monica is heavily dependent on visitors and the hospitality industry, which took a significant plunge during the pandemic. However, both transient occupancy taxes and sales taxes have recovered to essentially pre-pandemic levels and should continue to improve as international tourism and group travel related to business or special events gradually catch up to domestic travel over the next 1 to 2 years before reaching pre-COVID 2019 volume levels.

Parking revenues, the other significant revenue source affected by visitors, are improving, but at a slower pace. Although FY 2021-22 revenues exceeded pandemic lows by over 40%, they were still 21% below iii
pre-COVID highs. The pandemic accelerated many trends, including online shopping and remote working, that will likely impact visitor behavior and decrease parking demand in future years. Staff anticipates that demand for parking will continue to flatten or decline as consumers adopt alternative transportation methods, including Uber and Lyft, Metro Light Rail, bicycles and scooters.

FY 2021-22 business license taxes, which were based on 2020 calendar year gross receipts, fell nearly 14% from the prior year; they are expected to show a strong recovery beginning in FY 2022-23, but are not expected to reach pre-COVID levels for several more years. FY 2022-23 utility users taxes (UUT) are also projected to increase sharply, primarily due to inflationary pressure on energy prices.

If the anticipated economic softening is worse than expected, the above revenue sources as well as other tax sources such as property taxes and documentary transfer taxes could be negatively impacted.

The City will have the opportunity to expand services addressing the City’s priorities over the next biennial budget period and beyond using three new funding streams approved by Santa Monica voters in November 2022:
 Measure CS funding, generated from an additional 1% Transient Occupancy Tax on hotel stays and 3% on home-share stays. Staff is recommending that these funds be programmed, according to community and Council direction, to address homelessness, improve 911 emergency response times and neighborhood police protection, and improvements to the safety and cleanliness of our public spaces.
 Measure GS, a citizens’ initiative authorizing the City to enact a third tier documentary transfer tax of an additional 5% for property sales over $8 million, with revenue going to fund homelessness prevention, affordable housing projects, and schools. There is currently a reverse validation action that seeks to invalidate Measure GS. This is discussed further in Note 15 (Commitments and Contingencies).
 In future years, if the Council agrees to amend its Municipal Code to allow for an increase of cannabis-related retail establishments, Measure HMP, which imposes a 3% tax on non-medicinal cannabis retailers, 2% on medicinal cannabis retailers, and 1% on other licensed cannabis businesses, with a maximum of 10% gross tax at the discretion of the City Council, will also bring additional revenues to the General Fund.

Looking ahead, as revenues recover, the City will remain centered on preserving jobs and services, ensuring that we can continue to restore programs and services in a responsible manner, as resources allow, and continue to advance a bold agenda that is responsive to community need. Alongside these goals, staff will continue to rebuild the City’s capital improvement program to a level that allows for preventive maintenance and lower cost pay as you go capital investments, as well as rebuild the City’s contingency reserve balance to 15%.

CITYWIDE BUDGET
For over a decade, the City has followed a biennial budgeting process. This technique improves budget development efficiency by reducing the amount of staff time needed to produce the budget in the second year and allows for long-term planning. Staff prepares and presents the City’s Operating Biennial Budget in odd-numbered years, and the Capital Improvement Program (CIP) Biennial Budget in the evennumbered years. Because the City’s Charter requires the Council to adopt a budget annually, the Council adopts the first year of the biennial budget and approves the budget plan for the second year at the same time. Council then adopts the second-year budget the following year. On June 22, 2021, Council reviewed iv
the FY 2021-23 Biennial Budget, adopted the FY 2021-22 Operating Budget and approved the FY 2022- 23 Operating Budget Plan. At that time, Council also adopted the FY 2021-22 Capital Improvement Program (CIP) Budget.

The budget restored certain priority services going forward, mainly furthering the three Council-adopted community priorities of addressing homelessness, providing clean and safe neighborhood and open spaces, and making progress on an inclusive and equitable economic recovery. The Citywide Adopted FY 2021-22 Budget was $707.8 million, net of reimbursements and transfers, $351.7 million within the General Fund. The FY 2021-22 Adopted Budget included an increase of 23.6 full-time equivalent permanent positions (9.6 in the General Fund) and 39.7 full-time equivalent as-needed positions (34.1 in the General Fund) as compared to the FY 2020-21 Adopted Budget. During the year, the budget was revised to add 31 full-time equivalent permanent positions (23 in the General Fund) and 7.6 full-time equivalent as-needed positions (5.3 in the General Fund). As of June 30, 2022, the City was operating at approximately 86% of its pre-pandemic staffing overall, 83% in the General Fund. At June 30, 2022, higher than anticipated General Fund revenues, due to an earlier-than-anticipated economic recovery, were set aside in the General Fund assigned reserves to cover upcoming contingent liabilities and future working capital to aid the City in providing essential services and honoring labor agreement provisions.

The Adopted FY 2022-23 Citywide expenditure budget is $654.9 million, net of reimbursements and transfers ($393.2 million in the General Fund and $261.7 million in All Other Funds). Given the level of economic uncertainty discussed above, changes made beyond the original budget plan were limited to contract-based compensation adjustments, no-cost operational adjustments to improve service delivery for the community, required budget corrections, and funding for urgent needs, including the continuation of a Directed Action Response Team focused on enhancing public safety in highly-visited areas in the Downtown, Pier and Beach; rent relief for the City’s small business tenants; emergency assistance for the City’s most vulnerable community members; funds to pilot a community response unit in the Fire Department; and to create a faster and simpler process for small businesses seeking building permits.

POLICIES, RESERVES AND TRANSPARENCY
Over the years, the City has worked to add policies and reserves to affirm its commitment to safeguarding public funds through transparent and careful fiscal management. For more than ten years, the City kept an economic uncertainty reserve of $9.7 million in addition to its General Fund Rainy Day Fund contingency reserve totaling 15% of annual operating expenditures. Strong reserves allowed the use of contingency and economic uncertainty funds during the severe economic downturn that resulted from the pandemic, while the City retained a stable Rainy Day Fund reserve level of 12.5% of ongoing expenditures in the event of a new emergency. As noted above, as revenues recover, in FY 2022-23 the Rainy Day Fund level has been elevated to 13%, with the commitment to increase it by 0.5 percentage point a year until it once again reaches 15% in FY 2026-27.

The City ended the fiscal year with a positive operating balance and a General Fund fund balance of $209.9 million which includes nonspendable, restricted, committed, assigned, and unassigned fund balances, each with varying constraints that control how amounts can be spent.

In addition to a comprehensive set of fiscal policies, the Council has approved a Fiscal Sustainability Philosophy, a Compensation Philosophy, and Guiding Principles to Handle Pension Liability. The Compensation Philosophy, adopted on July 24, 2018, established a consistent methodology for determining if the City’s processes to recruit and retain highly qualified staff continue to be in line with the City’s overarching goal of being an “employer of choice” while continuing to be fiscally responsible v
with a goal of this being evaluated every five years.

On June 25, 2019, the Council adopted a Fiscal Sustainability Philosophy included in the City’s Fiscal Policy. The philosophy commits the City to a long-term view of financial planning that addresses economic and fiscal risks to ensure the City lives within its means and has the resources to invest in its infrastructure, facilities, equipment, training and workforce to preserve and enhance community wellbeing.

The Audit Subcommittee of the City Council, made up of three Council members and two residents with financial backgrounds, meets a minimum of four times per year to review the work and reports of the City's internal and external auditors and the progress made on internal controls and departmental efficiency process improvements recommended by the City’s internal auditor.

MANAGING FISCAL CHALLENGES
In addition to the extraordinary fiscal challenges the City is facing during and in the aftermath of the pandemic, longstanding areas of pressure on our finances continue to be considered in our fiscal management. The City continues to proactively manage its longstanding challenges in the areas of pension liabilities, healthcare and workers compensation costs by proactive paydown strategies, longer term contracts fixing rates at low levels, and focused claims administration, respectively. While challenges persist, these approaches continue to mitigate the liabilities. Further detail on these actions is included below.

Revenue losses
In the past few years, the City has had two additional challenges. The first is the persistent reduction in General Fund revenues needed to restore the City’s services to pre-pandemic levels and address important operating needs. In 2022, the City Council placed Measure CS on the November 2022 ballot. This measure, which increased the Transient Occupancy Tax (TOT) by one percentage point for hotel stays and three percentage points for home-share stays, is anticipated to generate over $4 million a year in new revenue. The measure passed with 73.87% of the vote. Community input on the use of these funds has focused on increasing public safety and addressing homelessness. The implementation of Measure HMP, which would generate additional General Fund revenues from cannabis retailers, is pending changes to the City’s zoning laws. New revenues from Measure GS are dedicated to address critical needs in the areas of homelessness prevention, affordable housing and education.

The City is focused on leveraging Federal and State funds to the greatest extent possible. Since 2021, the City has applied for and received direct project funding from the State and Federal government, including the following:
 $16.3M in direct funding in the FY22-23 State Budget, championed by Assemblymember Richard Bloom.
 $10M for the City Yards Modernization Project to fund infrastructure and operational improvements that advance City Yards’ transformation in delivering resident services from a facility with pioneering innovations in sustainability and safety.  $4.8M for the Lincoln Blvd. Neighborhood Corridor (LiNC) Plan to construct medians, crosswalks, lighting and landscaping to promote efficient vehicular travel and pedestrian safety.
 $1.5M for the Santa Monica Behavioral Health Center project, to address the needs of vulnerable residents with around-the-clock response, including access to safe temporary housing and stabilizing care.
vi
 $2M in Federal Community Project Funding in the FY 2021-22 appropriations process to support the City’s project to build a mixed-use affordable housing project on the former site of Parking Structure 3 in Downtown Santa Monica.
 $1.5M in Federal Community Project Funding in the FY 2022-23 appropriations process to support the City’s Behavioral Health project.

In addition, the City entered the bond market twice in FY 2021-22 to issue bonds at exceptionally low interest rates in order to complete important infrastructure improvements at its City Yards site and within its Water system. These projects are discussed further in the Major Capital Projects section below.

Contingent liabilities
The second challenge is the increase in contingent liabilities. Since March 2020, the City has entered into settlement agreements totaling $107.325 million with 104 claimants in suits filed against the City and SM-PAL alleging abuse by Eric Uller and one claimant alleging abuse by another individual performing community service at SM-PAL. Due to recent changes in State law, the statute of limitations for filing sexual abuse claims has been extended. As a result, the City has an estimated 130 additional claims pending based on similar allegations of abuse by Uller. The City continues to work diligently to prevent these liabilities from impacting services and is actively seeking reimbursement from its excess insurance carriers.

Pension liability
With respect to pension liabilities, the City has continually programmed increases in pension costs reflecting the phasing in of the California Public Employees’ Retirement System (CalPERS) discount rate from 7.5% to 7.0%, and additional changes to the methods by which liability is amortized, all of which have the effect of stabilizing the pension fund but resulting in higher contribution rates for employers.

A number of initiatives mitigate the pressure of pension costs on the budget.  49% of current employees receive a reduced level of pension benefits either because of mandated Public Employee Pension Reform Act (PEPRA) reduced benefit levels for staff members hired after January 1, 2013, or the City’s own “Tier 2” levels established on July 1, 2012, six months before the enactment of PEPRA, for non-public safety sworn employees who entered the City and CalPERS during those six months as new Miscellaneous bargaining group employees, and for non-public safety sworn employees who continue to join the City but who were already enrolled in CalPERS as Classic (non-PEPRA) employees at a different agency.  All employee groups have eliminated the employer paid member contribution (EPMC) benefit and the employee-paid portion of the pension cost is deducted from employees’ paychecks and paid directly to PERS.
 In addition to paying the employee portion of the contribution, members of public safety employee bargaining groups who joined CalPERS prior to January 1, 2013 (before PEPRA benefits were established) and have a higher level of benefits also pay a portion of the annual pension contribution cost.
 The City has a long history of paying down its unfunded pension liability at a level above each year’s actuarially determined contribution. These payments reduce the City's net pension liability by decreasing interest costs over time. In 2014, after a series of pay downs funded from year-end savings, Council adopted a policy to program paydowns of at least $1 million from the General Fund and proportional amounts from all other funds’ annual budgets, with the potential to increase this paydown amount if funds were available. In June 2017, responding to the prospect of additional significant pension contribution rate increases beginning in FY 2018-19, Council approved a $45 million pay down of the City’s pension unfunded liability. vii
 In FY 2018-19, the City Manager established an ad hoc Pension Advisory Committee (PAC) made up of residents and City employees. Working with an independent actuary and staff, the PAC unanimously recommended that the City Manager consider an accelerated plan to pay down the City’s current pension unfunded liability over 13 years, to conclude in 2032-33. This accelerated paydown plan was adopted by Council and incorporated into the FY 2019-20 budget as part of the Guiding Principles to Handle Pension Liability. It was projected that the accelerated 13-year repayment would save more than $100 million in interest costs over 30 years ($41 million Present Value). This paydown plan superseded the previous annual pay down plan described above. The first accelerated payment in the amount of $9.3 million was made on October 31, 2019, bringing overall pay downs beyond the annual actuarially determined contributed to $88.1 million. Due to the economic crisis the City experienced with Covid, additional paydowns were suspended for two years; the Council changed the schedule of the accelerated paydowns, per the emergency provision of the policy, to span 15 years. The next additional discretionary payment is budgeted to be made in FY 2022-23.
 The City has prepaid its annual employer contributions to CalPERS since FY 2007-08. The City continued this practice in FY 2020-21. Discounts received from such prepayments are used for pay downs of the net pension liability.

Despite the steps taken by the City outlined above, CalPERS has made a number of changes to actuarial assumptions that have increased contribution rates. In addition to the phase in of the half percent discount rate decrease, CalPERS has shortened the period over which future actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5-year ramp-up and ramp-down on unfunded actuarial liability bases attributable to assumption changes and non-investment gains and losses and removes the 5-year rampdown on investment gains and losses. These changes apply to new unfunded liability bases and are reflected in FY 2021-22 contribution rates. In FY 2020-21, a 21.3% net return on the CalPERS investment portfolio triggered a reduction in the discount rate from 7.0% to 6.8%, per CalPERS’ Funding Risk Mitigation Policy. The lower discount rate increases the likelihood that CalPERS can reach its investment target over the longer term. The impact of the discount rate change, the high returns, and the elimination of the EPMC for miscellaneous employees will be reflected in the FY 2023-24 contribution rates.

In FY 2021-22, the CalPERS investment portfolio experienced a net loss of 6.1%, and FY 2022-23 performance is currently anticipated to also show a loss of approximately 7%. To plan for the higher contribution rates that will follow these loss years, City staff is projecting future year pension contributions with these losses in mind, using the CalPERS Pension Outlook modeling tool.

Other Post Employment Benefit liability
In FY 2014-15, the City began to prefund its Other Postemployment Benefits (OPEB) obligation by paying into an Internal Revenue Code Section 115 irrevocable trust administered through the California Employees’ Retirement Benefit Trust (CERBT), an affiliate of CalPERS. The City paid the equivalent of its annual actuarially determined OPEB contribution into the irrevocable trust each year through FY 2018-19. This has allowed the City to benefit from a higher discount rate used in calculating its OPEB unfunded liability. The City Council suspended the prefunding contributions during FY 2019-20 and FY 2020-21, but contributions resumed in FY 2021-22 and are continuing.

Health insurance costs
To counter the trend of health insurance cost increases, all members from the City’s collective bargaining groups contribute to health insurance premiums. Following the end of a three-year contract in December 2022 that provided lower fixed rates, the current one year contract reflects an industry-wide increase in rates of approximately 9.0%.
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Workers’ compensation liabilities
Risk Management is implementing and managing a variety of measures to help control workers’ compensation costs. FY 2021-22 saw an 11% reduction in the City’s total workers’ compensation liabilities (the total value of open claims), which is the most important measure of the program’s long term fiscal health. This positive development can be attributed to cost control efforts that have been implemented over the past few years. However, staff believes that going forward, it will be almost impossible for these efforts to make such a pronounced impact on the program as new claims filed in FY 2021-22 are likely to be very costly in the long run due to an aging workforce. Among the cost control measures in place are a comprehensive case management for public safety staff that reduces the number of litigated claims, a return to work program that provides employees recovering from work-related injuries with temporary light duty assignments, maintaining a connection to the workplace and lowering temporary disability costs, and the use of a third party administrator for Big Blue Bus claims management, which has lowered liabilities, open claim inventory, and expenses for this fund.

MAJOR CAPITAL PROJECTS
The FY 2021-22 Adopted Capital Improvement Plan (CIP) Budget for the General Fund continued to reflect a 50% decrease in capital funding. As the City gradually recovers from a prolonged period of General Fund revenue loss, the FY 2022-23 CIP Budget is approached strategically to leverage limited resources that have significantly reduced the capacity for new capital investments in the near term. A small increase to the annual General Fund capital funding allotment of $3 million or 14% focuses on a key priority to protect the City’s existing capital investments and minimize future maintenance and replacement costs. However, it is important to note that the capital program remains underfunded, and resources continue to be impacted by significant cost increases resulting from high inflation, market disruptions and ongoing supply chain issues.

Capital projects continue to represent the City’s critical infrastructure needs, projects that cannot be deferred without compromising essential operations or public health and safety, and projects that generate revenue. In addition, efforts were made to continue to advance projects that address the community priorities adopted by Council: Addressing Homelessness, Clean and Safe Santa Monica, and Equitable and Inclusive Economic Recovery.

As a result of limited resources and low-cost financing in FY 2021-22, alternative funding sources and capital financing solutions were also employed to provide additional resources for large projects. In FY 2021-22 the City issued $78 million in Water Revenue Bonds to finance Water System capital improvements undertaken as part of the Sustainable Water Master Plan and also issued $70 million in Lease Revenue Bonds to finance certain capital improvements at the City Yards undertaken as part of the City Yards Modernization Project. Given the multi-year nature of the capital projects, these are ongoing in FY 2022-23 and more detail on these projects is included below. Additionally, in the upcoming months City staff expects to receive and apply for up to $35 million in grants from various agencies including the State of California AB 178 Budget Act of 2022 and Department of Water Resources to assist in the funding of capital projects. Looking to the years ahead, there will be incremental General Fund increases dedicated to capital projects each year, with funding anticipated to be restored to the $21 million annual pre-pandemic level in FY 2025-26. While these small increases will provide additional resources for critical projects, the increase is not enough to address deferred infrastructure and equipment maintenance, price escalation and a renewed focus on community amenities put on hold during the pandemic, such as ix
Memorial Park Expansion and Airport Conversion Planning projects. These will require creative strategies to leverage enterprise funds, grant funds, developer impact fees, and other funding sources to fund priority capital projects.

The City Yards Modernization project is a phased major renovation of the existing 14.7-acre facility located at 2500 Michigan Avenue. The project will retrofit and address long standing functional and space needs of the City’s corporation yards. The current facility accommodates more staff than originally intended when it was built in the 1950s, and the buildings are beyond their useful life. The City Yards houses a majority of the Public Works Department’s field operations equipment and staff; site uses include resource recycling and recovery, water and wastewater operations, fleet maintenance, shop buildings and fire training space. Phases 1 and 2 of the project, a new Fleet Maintenance building and a Public Works Operations Center, have now been completed. Phase 3 of the project, a new 10,000 square foot permanent Fire Training Facility funded with dedicated Fire facility lease revenue bonds issued in 2018, is scheduled for completion in spring of 2023. Phase 4 will establish the start of an electrical microgrid for the site and include solar panels and battery storage. Funded with $10 million from the State of California AB 178 Budget Act of 2022, this phase is expected to start in the summer of 2023.

In 2018, Council adopted the Sustainable Water Master Plan, which outlines several infrastructure projects that will enable the City to achieve water self-sufficiency by 2023. In order to achieve these ambitious goals, the City issued $78 million in Water Revenue Bonds to finance Water System capital improvements undertaken as part of the Sustainable Water Master Plan, procured a $75.9 million loan from the Water State Revolving Fund loan, and plans to apply for $15 million in grants from Department of Water Resources to fund replacement groundwater production wells and two new groundwater injection wells. Water projects underway include:
 The Olympic Well Field Restoration project will maximize local groundwater resources and restore groundwater quality by constructing a new well head advanced water treatment facility (the “Olympic AWTF”), two new groundwater production wells (SM-8 and SM-9), and a new Olympic Pipeline to restore the Olympic Well Field to full production capacity (Olympic is one of three well fields serving the Arcadia Water Treatment Plant). The Olympic AWTF component of this project is funded through funds received from a negotiated settlement agreement with the responsible party. As described in the Official Statement, these groundwater wells and pipelines will be partially funded by proceeds of Series 2021 Bonds, and the treatment portion to restore the well field is funded through settlement funds on hand. The Series 2021 Bonds will fund a small portion of the Olympic Well Field Equipping ($1.6 million) and the Olympic Pipeline ($3.9 million) and the project is scheduled to be completed in summer of 2023.  The Arcadia Water Treatment Plant (WTP) Expansion project will expand the hydraulic treatment capacity of the existing Arcadia WTP to treat additional groundwater available in the local groundwater basin while maintaining sustainable yield levels. Various ancillary facilities (e.g. new pumps, cartridge filters, mechanical piping upgrades, chemical feed systems, air stripping tower, and brine tank and pump station) will be added or expanded to increase the Arcadia WTP treatment capacity from 10 million gallons per day (“mgd”) to 13 mgd and allow the City to operate all four reverse osmosis (“RO”) skids at the same time instead of three on duty and one standby (current arrangement). In addition to the capacity expansion, the existing RO system will be upgraded with a new high recovery technology, Flow Reversal Reverse Osmosis, to increase its production efficiency from 80% to 90% or greater. The Production Efficiency Enhancement x
Project would produce additional drinking water (approximately 1,200 acre-feet per year or “AFY”) without the need to extract additional groundwater. The increase in production of local groundwater supplies will help the City achieve its water self-sufficiency goal and reduce purchase of imported water from The Metropolitan Water District of Southern California. The Production Efficiency Enhancement Project is partially funded by grant funds through the California Department of Water Resources’ Water Desalination Grant Program. The Arcadia WTP Expansion funded by the Series 2021 Bonds totals $48 million and is scheduled to be completed in December 2023.
 The Groundwater Resiliency Enhancement at the Charnock Well Field, the City’s largest groundwater well field consisting of five wells, seeks to maintain resiliency and production of the City’s groundwater supply by replacing two aging wells (Charnock 13 and 18) as they are near the end of their asset life and have lost significant pumping capacity over time. Charnock 13 and 18 have been in service since the 1980s and account for approximately 35% of the total groundwater supply for the City. Replacement of these two aging wells will help maintain local groundwater pumping. The well replacement cost of $8.7 million for Charnock 13 and 18 will be funded through the Series 2021 Bonds and the project is scheduled to be completed in 2024.  AMI Upgrade project is a City-wide retrofit and deployment of AMI smart water meters to replace aging meters, minimize water waste/loss, and increase water use efficiency to support the City’s overall water supply sustainability goals. The AMI smart water meters would provide real time water consumption readings, increase billing efficiency, and improve accuracy in water meter reads. The entire $15 million for the AMI Project will be funded through Series 2021 Bonds and is expected to be completed in 2024.
 The Sustainable Water Infrastructure Project (SWIP) improves drought resiliency, increases water supply, and reduces stormwater discharges into the Santa Monica Bay. The project consists of three elements. Element 1 is a modular reverse osmosis (RO) unit at the Santa Monica Urban Runoff Recycling Facility (SMURRF) and new solar panels that will help offset the energy required for the new RO. Element 2 is a below grade stormwater and sewer treatment facility with 1 million gallons per day (MGD) capacity. Element 3 is a new stormwater harvesting tank with 1.5 million gallon (MG) capacity. The project is funded using the City’s Wastewater, Stormwater, and Clean Beaches and Ocean Parcel Tax Funds with financing from Clean Water State Revolving Fund loan. All elements are being implemented in one phase. Design and construction phases are completed, equipment and water quality testing is ongoing. The advanced treated recycled water from SWIP will also be used to replenish local groundwater supplies through direct injection via the SWIP Injection Well (SM-10i) and help maintain groundwater pumping in the Olympic Well Field. Testing and acceptance of these projects are scheduled to be completed in mid-2023.

AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Santa Monica for its ACFR for the fiscal year ended June 30, 2021. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of State and local government ACFR. In order to be awarded a Certificate of Achievement, a government unit must publish an easily xi
readable and efficiently organized ACFR whose contents conform to program standards. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. The City of Santa Monica has received a Certificate of Achievement for each of the last thirty-eight years. We believe our current ACFR also conforms to the Certificate of Achievement program requirements.

A copy of this ACFR can be viewed by appointment in the City Clerk’s Office. Electronic copies have been provided to City Council and Audit Subcommittee members, City management personnel, bond rating agencies, and other agencies which have expressed an interest in the financial affairs of the City.

It is also available at www.smgov.net/finance. Physical copies can be provided upon request to the City’s Finance Department.

ACKNOWLEDGEMENTS
The preparation and development of this report would not have been possible without the year-round work of the Finance Department staff and their special efforts, working in conjunction with the City’s independent auditors, to produce this report.

I would like to take this opportunity to compliment and thank the staff members of the City who were associated with the preparation of this report. I would also like to thank the City Council for their continued interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner.

Respectfully submitted,
Gigi Decavalles-Hughes
Director of Finance/City Treasurer
xii

OFFICIALS OF THE CITY OF SANTA MONICA
As of February 9, 2023
City Council
Gleam Davis, Mayor
Lana Negrete, Mayor Pro Tempore
Phil Brock
Christine Parra
Oscar De La Torre
Caroline Torosis
Jesse Zwick
Administration and Department Heads
City Manager David White
Assistant City Manager Susan Cline
Deputy City Manager Anuj Gupta
City Attorney Douglas Sloan
City Clerk (Director of Records and Election Services) Denise Anderson-Warren Director of Finance/City Treasurer Gigi Decavalles-Hughes Director of Human Resources Lori Gentles
Chief Information Officer Joseph Cevetello
Chief of Police Ramon Batista
Fire Chief Danny Alvarez
Director of Community Development David Martin
City Librarian Erica Cuyugan
Director of Transit Services Edward F. King
Acting Director of Community Services Danielle Noble
Director of Public Works Rick Valte
xiii

ORGANIZATION OF THE

CITY OF SANTA MONICA
DV RIFebruary 923

CITIZENS

CITY COUNCIL
City Clerk City Attorney
Assistant City Manager
Community Development Community Services
Department of Transportation Finance
Fire Human Resources
Police
Library
Public Works
Information Services
City Manager
Deputy City Manager
xiv
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Santa Monica
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
xv
City of Santa Monica, California
Year Ended June 30, 2022

FINANCIAL SECTION
1611 E. Fourth Street, Suite 200
Santa Ana, CA 92701
(714) 569-1000
203 N. Brea Blvd, Suite 203
Brea, CA 92821
(714) 672-0022
21 Waterway Avenue, Suite 30089
The Woodlands, TX 77380
(936) 828-4587
2151 River Plaza Dr., Suite 150
Sacramento, CA 95833
(916) 503-9691
24422 Avenida de la Carlota, Suite 275
Laguna Hills, CA 92653
(949) 829-8299
www.lslcpas.com
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of Santa Monica, California
Report on the Financial Statements
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 Santa Monica, California, (the “City”) as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major 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 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 audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter
Change in Accounting Principle
As described in Note 3 to the financial statements, in the fiscal year ended June 30, 2022, the City adopted new accounting guidance, GASB Statement No. 87, Leases. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. xvi
To the Honorable Mayor and Members of the City Council
City of Santa Monica, 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.

Auditors’ 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 GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if, there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures 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.

Other Reporting Responsibilities
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison schedules for the General Fund and major special revenue funds, and required pension and other post-employment benefits schedules, as listed on the table of contents, 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 xvii
To the Honorable Mayor and Members of the City Council
City of Santa Monica, California
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 fund financial statements and schedules (supplementary information) are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The 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 supplementary information is 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 introductory section and statistical section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the financial statements does 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.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 9, 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 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
February 9, 2023
xviii

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis
For the fiscal year ended June 30, 2022
(Unaudited)
As management of the City of Santa Monica, California (City), we offer readers of the City’s Annual Comprehensive Financial Report (ACFR) this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2022. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in the City’s basic financial statements, which immediately follow this section, and the ACFR transmittal letter in the preceding Introductory Section.

FINANCIAL HIGHLIGHTS
• Total assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources, also known as net position, by $1,505.2 million as of June 30, 2022. Of this amount, $1,153.3 million represents net investment in capital assets, $262.1 million represents net position restricted for specific purposes, and $89.8 million represents unrestricted net position.

Governmental activities and business-type activities reported unrestricted net positions of ($18.8) and $108.6 million as restated which is an increase of $125.0 and $37.4 million respectively. The increase in governmental activities and business-type activities unrestricted net position is primarily from the decrease in pension liability due to CalPERS’ 21.3% return on pension plan assets, an increase in revenues as the City began to recover from the COVID-19 pandemic. $934.5 million represents net position for governmental activities and $570.7 million represents net position for business-type activities.
• For the fiscal year ended June 30, 2022, the City’s total net position increased by $111.0 million, from $1,394.2 million at June 30, 2021 to $1,505.2 million at June 30, 2022, as restated. This increase was due to increases in governmental activities net position of $74.2 million and business-type activities net position of $36.8 million during FY 2021-22. • At the end of the current fiscal year, the City’s governmental funds reported total ending fund balances of $554.3 million, compared to $511.8 million at the end of the prior fiscal year as restated, which is an increase of $42.5 million or 8.3%. • The General Fund reported an ending fund balance of $209.9 million as of June 30, 2022, compared to $181.3 million as of June 30, 2021 as restated, which represents an increase of $28.6 million or 15.8%. The main reasons for the overall increase in fund balance was increased revenues as the City began to recover from the COVID-19 pandemic offset by a payment to settle legal claims.
• The City’s net capital assets increased by $30.8 million after restatement, or 2.2%, to $1,421.4 million as of June 30, 2022 from $1,390.6 million, as restated, as of June 30, 2021. • The City’s long-term debt (excluding unamortized issuance premiums) increased by $155.4 million or 88.3%, from $176.0 million as of June 30, 2021 to $331.4 million as of June 30, 2022.

The increase is due to issuance of lease revenue bonds to fund construction of the City Yards Modernization project, issuance of water revenue bonds to fund various water projects and continued draws on a loan for water infrastructure offset by annual debt service payments made during FY 2021-22.
• The City’s net pension liability decreased from $481.2 million at June 30, 2021 to $230.9 million at June 30, 2022, a decrease of $250.3 million or 52.0%. The decrease in the liability was due to xix

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
higher than projected CalPERS investment portfolio returns of 21.3% in FY 2020-21. In accordance with the Governmental Accounting Standards Board, the financial statements report the City’s net pension liability as of June 30, 2021.

OVERVIEW OF THE BASIC FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements include three components: government-wide financial statements, fund financial statements, and notes 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 statements of a private-sector business.

The statement of net position presents information on all the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between the assets, deferred outflows of resources, liabilities and deferred inflow of resources 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 City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods.

The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). The governmental activities of the City include general government, public safety (police and fire), general services, library, community services and community development. The business-type activities of the City include water, wastewater, stormwater, resource recovery and recycling, pier, airport, cemetery, transit services, community broadband, and parking.

Component units are included in the basic financial statements and consist of legally separate entities for which the City is financially accountable and that have either the same governing board as the City or a governing board appointed by the City of Santa Monica City Council. The blended component units include the Santa Monica Public Financing Authority, the Parking Authority of the City of Santa Monica, the Housing Authority of the City of Santa Monica, and the Santa Monica Redevelopment Successor Agency.

The government-wide financial statements can be found on pages 1 and 2 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.
xx

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements 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. Such information may be useful in evaluating the City’s near-term financing requirements.

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 City’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances are accompanied by a reconciliation to the government-wide financial statements in order to facilitate this comparison between governmental funds and governmental activities.

The City maintains 19 individual governmental funds for financial reporting purposes. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the General, Special Revenue Source Fund, Low and Moderate Income Housing Asset Fund, and Miscellaneous Grants Fund, which are considered to be major funds. Data for the other 15 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the nonmajor funds supplementary information section of this report.

The City Council adopts an annual appropriated budget for its General Fund and twelve of the special revenue funds (no budget is adopted for the Rent Control Fund and Asset Seizure Fund) and one capital project fund (the Clean Beaches and Ocean Parcel Tax Fund). The City Council does not adopt budgets for the two permanent funds (the cemetery and mausoleum perpetual care funds) or the one debt service fund. A comparison schedule has been provided for the General Fund, Special Revenue Source Fund, Low and Moderate Income Housing Asset Fund, and Miscellaneous Grants Fund, in the required supplementary information to the basic financial statements.

The governmental funds financial statements can be found on pages 4 through 7 of this report.

Proprietary funds. Proprietary funds provide the same type of information as the government-wide financial statements, but in more detail. The proprietary fund financial statements provide separate information for water, wastewater, recycling, and bus operations, which are considered to be major funds of the City. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its vehicle operations, risk management program, and information technology and communications operations. The vehicle operations and insurance services for bus operations primarily benefit businesstype activities and are included within business-type activities in the government-wide financial statements. All other risk management functions, information technology and communication services primarily benefit governmental funds and are included within governmental activities in the government-wide financial statements. Individual fund data for the internal service funds is provided in the supplementary information section of this report. xxi

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
The proprietary funds financial statements can be found at pages 9 through 11 of this report.

Fiduciary funds. Fiduciary funds consist of a private-purpose trust fund and a custodial fund. A privatepurpose trust fund was created in 2012 and is used to pay enforceable obligations of the former Redevelopment Agency (Former Agency). The City’s sole custodial fund, the General Trust Fund, is used to account for resources held by the City for the benefit of parties outside of the City. The fiduciary funds are not included in the government-wide financial statements because the resources are not available to support the City’s operations.

The fiduciary funds financial statements can be found on pages 14 through 15 of this report.

Notes to the basic financial statements. The notes to the basic financial statements 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 basic financial statements begin on page 19 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1.5 billion at the close of the current fiscal year.

As shown on the next page, the largest portion of the City’s net position, $1.2 billion or 76.6%, reflects the City’s investment in capital assets less any related outstanding debt and associated deferred outflows/inflows of resources used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt and associated deferred outflows/inflows of resources, it should be noted that resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate liabilities.

An additional portion of the City’s net position, $262.1 million or 17.4%, represents resources that are subject to external restrictions on how they may be used. At the end of the current fiscal year, the City reported positive balances in net investment in capital assets and restricted net assets for governmental activities and all three categories of net position for business-type activities, however the City reported negative unrestricted assets in governmental activities. The City reported positive net position for all three categories of net assets primarily due to the reduction in pension liability and the City beginning to recover from the economic effect of the COVID-19 pandemic. Governmental activities reported a negative unrestricted net position due to the cumulative revenue shortfalls from the pandemic and settlement payments made in the past few years. The City continues to implement long-held practices to manage its financial challenges, including pension and health benefits cost sharing with employees, longer-term healthcare agreements that control cost increases, and pension contribution prepayments that provide a discount. To meet the additional challenge of COVID-related revenue losses the City is operating with a reduced workforce (85% of pre-pandemic staff levels) focusing on essential services while many programs are still operating at reduced levels, and has scaled back or eliminated capital projects.. Earlier than anticipated recovery, resulting in one-time revenue surpluses, and Federal government subsidies have helped rebuild the City’s unrestricted net position balance. xxii

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
A summary of the government-wide statement of net position follows:
6/30/22 6/30/21 6/30/22 6/30/21 6/30/22 6/30/21
(as restated) (as restated) (as restated)
Current and other assets $ 753.4 717.6 430.0 340.5 1,183.4 1,058.1 Capital assets 915.7 916.1 505.7 474.6 1,421.4 1,390.7
Total assets 1,669.1 1,633.7 935.7 815.1 2,604.8 2,448.8 Deferred outflows of resources 73.1 80.4 14.0 16.6 87.1 97.0 Current and other liabilities 71.7 67.6 84.5 53.0 156.2 120.6 Long-term liabilities 544.5 737.1 209.4 186.7 753.9 923.8 Total liabilities 616.2 804.7 293.9 239.7 910.1 1,044.4 Deferred inflows of resources 191.5 49.1 85.1 58.1 276.6 107.2 Net position:

Net investment in capital assets 703.7 764.4 449.6 442.5 1,153.3 1,206.9 Restricted 249.6 238.8 12.5 13.0 262.1 251.8
Unrestricted (18.8) (142.9) 108.6 78.4 89.8 (64.5)
Total net position $ 934.5 860.3 570.7 533.9 1,505.2 1,394.2

CITY OF SANTA MONICA
Summary of Net Position
(in millions)
Governmental activities Business-type activities Total
Total current and other assets increased $125.3 million or 11.8% from the prior fiscal year.

Governmental activities increased by $35.8 million and business-type activities increased by $89.5 million.

GASB 68 and 75 require that certain differences between expected and actual net liability components are reported on the Statement of Net Position as deferred outflows of resources in the fiscal period they arise and are subsequently amortized. Total deferred outflows of resources decreased $9.9 million or

10.2% from the prior fiscal year, as restated. Governmental activities decreased by $7.3 million and business-type activities decreased by $2.6 million. The decrease is primarily due to the amortization of the past deferred items. Total current and other liabilities increased $35.6 million or 29.5% from the prior fiscal year as restated. Governmental activities increased by $4.1 million and business-type activities increased by $31.5 million primarily from changes in transit unearned revenue.

Total deferred inflows of resources increased by $169.4 million or 158%. Governmental activities increased by $142.4 million and business-type activities increased by $27.0 million. The increase is primarily due to the greater than projected CalPERS and OPEB trust investment returns which are amortized over 5 years.

Total long-term liabilities decreased $169.9 million or 18.4% from the prior fiscal year. The decrease in this category is primarily due to the decrease in net pension liability of $250.3 million and reduction in claims payable of $54.9 million related to several legal settlements offset by $150.9 million in bonds issued and $25.3 million in draws on the State Water Resources Control Board loan. xxiii

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
A summary of the government-wide statement of changes in net position follows:
2021-22 2020-21 2021-22 2020-21 2021-22 2020-21
Revenues As restated As restated As restated
Program revenues:

Charges for services $ 124.4 106.4 124.4 105.6 248.8 212.0 Operating grants and contributions 62.4 58.5 58.3 63.9 120.7 122.4 Capital grants and contributions 2.6 0.6 16.1 4.6 18.7 5.2 General revenues:

Property taxes 76.0 75.3 —— 76.0 75.3
Sales and use taxes 76.7 64.3 —— 76.7 64.3
Transient occupancy taxes 66.7 20.7 —— 66.7 20.7
Utility users taxes 33.6 27.8 —— 33.6 27.8
Business license taxes 29.1 33.7 —— 29.1 33.7
Parking facility taxes 10.0 7.4 —— 10.0 7.4
Real property transfer taxes 17.9 9.3 —— 17.9 9.3
Other taxes 3.7 3.5 —— 3.7 3.5
Investment income (13.4) 3.3 (6.8) 0.3 (20.2) 3.6
Other revenue 8.8 8.1 2.9 5.2 11.7 13.3
Total revenues 498.5 418.9 194.9 179.6 693.4 598.5
Expenses
General government 74.4 100.0 —— 74.4 100.0
Public safety 128.0 168.6 —— 128.0 168.6
General services 80.6 98.8 —— 80.6 98.8
Community services 87.8 80.8 —— 87.8 80.8
Library 7.9 9.4 —— 7.9 9.4
Community development 31.0 39.6 —— 31.0 39.6
Interest on long-term debt 6.2 5.1 —— 6.2 5.1
Water —— 22.5 50.2 22.5 50.2
Resource recovery and recycling —— 26.5 28.7 26.5 28.7
Community broadband —— 2.3 1.6 2.3 1.6
Pier ——

6.6 7.6 6.6 7.6
Wastewater —— 17.3 19.8 17.3 19.8
Airport —— 6.1 9.8 6.1 9.8
Stormwater management —— 0.4 0.4 0.4 0.4
Cemetery —— 2.6 2.6 2.6 2.6
Big Blue Bus —— 82.1 93.5 82.1 93.5
Parking Authority —— 0.1 1.7 0.1 1.7
Total expenses 415.9 502.3 166.5 215.9 582.4 718.2
Excess (deficiency) of revenues
over expenses before special items
and transfers 82.6 (83.4) 28.4 (36.3) 111.0 (119.7)
Special items — (9.8) ——— (9.8)
Transfers (8.4) 27.2 8.4 (27.2) ——
Change in net position 74.2 (66.0) 36.8 (63.5) 111.0 (129.5) Beginning net position, as restated 860.3 926.3 533.9 597.4 1,394.2 1,523.7 Ending net position $ 934.5 860.3 570.7 533.9 1,505.2 1,394.2 Governmental activities Business-type activities Total

CITY OF SANTA MONICA
Summary of Changes in Net Position
(in millions)
xxiv

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Charges for services

24.3%
Operating grants and
contributions

12.2%
Capital grants and
contributions

0.5%
Sales and use taxes

15.0%
Business license
taxes

5.7%
Property taxes

14.8%
Transient occupancy
taxes

13.0%
Utility users taxes

6.6%
Real property
transfer taxes

3.5%
Parking facility taxes

2.0%
Other taxes

0.7%
Other general
revenues

1.7%
Sources of Revenue Governmental Activities*
Governmental Activities. The City’s governmental activities net position increased by $74.2 million, or 8.6%. Analysis of revenues and expenses are discussed below and on the following pages.

Revenue Sources: Governmental Activities. As shown in the chart below, the largest category of revenue for governmental activities is charges for services, which represents 24.3% of total governmental activities revenue. The category totaled $124.4 million in FY 2021-22, compared to $106.4 million in FY 2020-21, which is an increase of $18.0 million or 16.9% due to rebounding parking and parking citations revenue as the City began to recover from the COVID-19 pandemic as well as a large one-time SB90 reimbursement from the State. The second largest category is sales and use taxes which represents

15.0% of total governmental activities revenue, which increased $12.4 million or 19.3% from the prior fiscal year as businesses reopen after pandemic related closures, leading to the beginning of the City’s economic recovery. The third largest category is property taxes, which represent 14.8% of total governmental activities revenue. Property taxes increased $0.7 million or 0.9% from the prior fiscal year. The increase was primarily due to a continued strong rise in the City’s assessed valuation partially offset by a reduction in RPTTF residuals. Transient Occupancy Taxes increased $46.0 million from $20.7 million to $66.7 million or 222.3% as hotels reopened after pandemic closures and domestic tourism began to rebound, bolstered by special events such as the Super Bowl. *Revenue is gross of the negative investment income.
xxv

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Functional Expenses: Governmental Activities. As displayed in the chart below, general government, public safety, general services, community services, and community development accounted for 96.6% of total governmental activities expenses.

Total governmental activities expenses decreased $86.4 million or 17.2% from the prior fiscal year. The three categories with the largest variance from the prior year were public safety, general government, and general services. Public safety decreased $40.6 million or 24.1%, General government expenses decreased $25.6 million or 25.6%. General services decreased $18.2 million or 18.4%. Public safety and General services expenses declined due to reductions in pension expense as a result of the CalPERS

21.3% return on pension plan assets. The decrease in expenses in General government was primarily due to a decrease in pension expense from the greater than expected returns on the pension plan trust assets and settlement expenses from a $54.9 million settlement that was accrued in FY 2020-21 offset by the FAA-directed write-off of advances to the Airport.

General government

17.8%
Public safety

30.8%
General services

19.4%
Community services

21.1%
Library

1.9%
Community
development

7.5%
Interest on long-term debt

1.5%
Functional Expenses
Governmental Activities
xxvi

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Program Expenses: Governmental Activities. The following chart compares program revenues and expenses for governmental activities (excluding interest on long-term debt):

The comparison of direct expenses and program revenues identifies the extent to which each function is self-financing or draws from the general revenues of the City. A higher percentage of program revenues to direct expenses indicates that a function is generally self-financed through program revenues generated by activities within that function. In contrast, a lower percentage of program revenues to direct expenses indicates that a function is primarily financed through general revenues.

The function with the highest percentage of program revenues to direct expenses in FY 2021-22 is community development, which had expenses of $31.0 million and program revenues of $32.4 million, a ratio of 104.8%. This high percentage indicates that all the expenses in this category are financed by revenues generated by activities within the community development category.

The function with the lowest percentage of program revenues to direct expenses in FY 2021-22 is the Library, which had expenses of $7.9 million and program revenues of $0.1 million, a ratio of 1.6%. This low percentage indicates that most of the expenses in this category are financed by the general revenues of the City.
$0
$20
$40
$60
$80
$100
$120
$140
General
government
Public safety General services Community
services
Library Community
development
Expenses and Program Revenues
Governmental Activities
(millions)
Expenses Revenues
xxvii

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Business-type Activities. The City’s business-type activities net position increased $36.8 million or

6.9% from the prior fiscal year after restatement.

Revenue Sources: Business-type activities. The chart below displays the key sources of revenue for business-type activities as a percentage of total revenues. The top three sources of revenue for businesstype activities are charges for services, operating grants and contributions, and capital grants and contributions like those for the Big Blue Bus which includes both Federal and Local Grants. These three categories account for 98.6% of the total business-type activities revenues of $198.8 million.

Charges for services

61.7%
Capital grants and
contributions

8.0%
Operating grants and
contributions

28.9%
Other general
revenues

1.4%
Sources of Revenue
Business-type Activities*
*Revenue is gross of the negative investment income.
xxiii

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Expenses: Business-type Activities. The chart below displays individual business-type activities as a percentage of total business-type activity expenses. The Big Blue Bus, Water, Resource Recovery and Recycling, and Wastewater activities accounted for 89.1% of total business-type activity expenses.

Other business-type activities of the City include the Airport, Pier, Cemetery, Stormwater Management, Parking Authority, and Community Broadband.

Water

13.5%
Resource Recovery
and Recycling

15.9%
Pier

4.0%
Wastewater

10.4%
Airport

3.7%
Stormwater Management

0.2%
Cemetery

1.6%
Big Blue Bus

49.3%
Parking Authority

0.0%
Community
Broadband

1.4%
Business-type Activities Expenses
xxix

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Program Revenues and Expenses: Business-type Activities. The following chart compares program revenues and expenses for business-type activities:

For discussion and analysis of key points of business-type activities, see the following section on the City’s major proprietary funds.

FINANCIAL ANALYSIS OF THE CITY'S MAJOR FUNDS
As noted earlier, the City uses fund accounting to demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the City’s governmental funds is to provide information on nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financial requirements.

The City’s governmental funds total fund balance increased $42.4 million, or 8.3% from the prior fiscal year, as restated. The primary reasons for the increase are discussed on the following pages. $0
$20
$40
$60
$80
$100
Expenses and Program Revenues
Business-type Activities
(in millions)
Expenses Revenues
xxx

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
General Fund
The General Fund is the chief operating fund of the City. Total fund balance in the General Fund increased $28.7 million or 15.8% from the prior fiscal year.

Key factors in changes in revenues and expenditures from the prior year are as follows:

1. Total General Fund revenues increased $80.1 million or 24.6% from the prior fiscal year. The largest revenue source in the General Fund is sales and use taxes followed by property taxes, and finally transient occupancy taxes. Combined, these three categories represented 54.1% of total General Fund revenues for FY 2021-22. Sales and use taxes increased 19.3%, as businesses reopened after pandemic related closures, leading to the beginning of the City’s economic recovery. Property taxes increased 0.9% from the previous year as strong assessed values increases occurred but were offset by reduced RPTTF residual revenues. Transient occupancy taxes increased 222.3% as a result of hotels reopening after pandemic related closures, increased domestic travel, and the impact of special local events like the Super Bowl.

Licenses and permits increased by $9.3 million or 35.5% from the prior year primarily due to a recovery in parking revenue, and investment income decreased by $8.4 million or 1,972.6% due in part to $9.2 million in unrealized losses on the City’s investments, reflecting the dynamic in which the market value of fixed income investments moves in an inverse relationship to interest rates. As a result, the interest rate surges in FY 2021-22 reduced the overall market value of the portfolio. However, because the City typically holds investments to maturity, it is unlikely that these losses will be realized.

2. Total General Fund expenditures increased $17.5 million or 4.8% from the prior fiscal year.

This increase was due primarily to an increase in general government expenditures of $4.1 million or 6.7%, an increase in general services expenditures of $8.2 million or 11.1% and an increase in public safety expenditures of $1.5 million or 1.0%. These three expenditure line items represent the largest expense categories of the General Fund which account for 78.7% of all General Fund expenditures for FY 2021-22. Increases in all categories reflected facility and program reopening once restrictions were lifted, in addition to a small rebuilding of the capital program in the General Government category and to additional parking costs being incurred as parking revenues began to rebound in the General Services category.

3. To comply with an order by the FAA, the General Fund wrote off $5.4 million of advances to the Airport. This was reported as an extraordinary item in Note 21.

Special Revenue Source Fund
Total fund balance in the Special Revenue Source Fund increased $11.3 million or 5.9% from the prior fiscal year primarily due to transfers in of affordable housing funds and developer fees. Total revenues increased $3.2 million or 67.9%. The increase in revenues was primarily due to a $3.8 million increase in developer fees offset by a decrease in investment income due to unrealized losses.

Low and Moderate Income Housing Asset Fund
Total fund balance in the Low and Moderate Income Housing Asset Fund decreased $0.5 million or

0.7% from the prior fiscal year. The principal reason for the decrease in fund balance was due to the cessation of affordable housing transfers from the Parking Authority due to the completion of Successor xxxi

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Agency loan payments and negative investment income driven by unrealized losses in the City’s investment portfolio.

Miscellaneous Grants Fund
Total fund balance in the Miscellaneous Grants Fund decreased by $4.0 million or 266.7%. The main reason for the decrease is the timing of grant reimbursements after allowable grant expenditures have been incurred. These reimbursements were not received within the City’s accrual period and are reported as unavailable revenue on the balance sheet.

Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements but in more detail.

The total net position of all the City’s enterprise funds increased $31.7 million, or 6.4% from the prior fiscal year.

Some proprietary funds revenues may not be spent in the year they are recognized, instead they are held for futures capital purposes. Fee increases include both an operating and capital component.

Water Fund
The total net position of the Water Fund increased $2.6 million, or 4.3% from the prior fiscal year after restatement. Revenues reflect a $4.6 million increase in water service charges primarily from a 14% water rate increase and increase in customer water usage due to economic recovery as workers returned to offices and tourism rebounded.

Wastewater Fund
The total net position of the Wastewater Fund increased $1.6 million, or 0.8% from the prior fiscal year.

The primary reason for the increase was a decrease in contractual services due to an additional $2.0 million true up payment made to the City of Los Angeles for the use of the amalgamated sewer system in FY 2020-21 as well as a $1.9 million increase in revenue due to a rate increase and economic upturn offset by a $1.3 million increase in unrealized loss on investments.

Resource Recovery and Recycling Fund
The total net position of the Resource Recovery and Recycling Fund increased $0.3 million or 4.0% after a prior period adjustment of $2.4 million.

The decrease was primarily related to a decrease in investment income of $1.0 million due to accounting for unrealized losses. A rate study is anticipated with new rates being implemented possibly by August 2023.The study was delayed during the pandemic, resulting in the use of reserves pending the upcoming proposed rate increases.

Big Blue Bus Fund
The total net position of the Big Blue Bus Fund increased $6.0 million, or 3.6% from the prior fiscal year after restatement. The primary reason was the increases in charges for services of $6.0 million due to the reinstatement of fares in February 2021, restoration of 80% of BBB service levels, and a reduction xxxii

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
in pension expense due to CalPERS’ 21.3% return on the pension plan assets. At June 30, 2022, the Big Blue Bus has unearned income of $43.5 million that can be used to fund future operations.

General Fund Budgetary Variances
Revenue Original Budget to Final Amended Budget. The final revenue budget of $384.1 million for the General Fund was $30.7 million (8.7%) greater than the original budget of $353.4 million. Revenue budget changes are approved by the City Council. The primary components of the variance were increased budgets for transient occupancy taxes ($13.6 million), sales and use taxes ($9.2 million), licenses and permits reflecting less parking revenues ($2.8 million), and other taxes ($2.7 million).

Revenue Final Amended Budget to Actuals. Actual General Fund revenues of $405.5 million were $21.4 million (5.6%) more than the final budget of $384.1 as the City’s economy has recovered in some areas faster than originally anticipated. The primary components of the variance were Transient Occupancy Taxes, with actual revenues exceeding the final budgeted amount by $10.0 million or 17.6%, and greater than anticipated revenues from other local taxes ($6.1 million), charges for services ($4.0 million), and licenses and permits ($3.2 million). These were offset by investment income which came in $9.1 million lower than budget due to rising interest rates, causing a large unrealized loss to be reported. Since the City typically holds investments to maturity, it is unlikely the losses will be realized.

Expenditure Original Budget to Final Amended Budget. The final General Fund expenditure budget is greater than the original budget by $65.2 million, or 18.3%. The increase is primarily due to the capital budgeting process. The original capital budget includes only amounts adopted by Council as part of the biennial capital budgeting process. However, large capital projects often span across numerous years and remaining capital budgets from previous fiscal periods are rolled over to the current fiscal year to complete those projects. Funds are reported as Assigned Fund Balance Continuing Capital Projects to cover these costs. The final budget includes both newly adopted and rolled over amounts. Significant projects that were rolled over include the Fire Training Facility, City Yards Modernization and the City Services Building at $4.8 million, $13.3 million and $0.9 million, respectively.

Expenditure Final Amended Budget to Actuals. Actual expenditures (budgetary basis) for the General Fund totaled $407.7 million, while the final budget totaled $421.1 million, a variance of $13.4 million or 3.2%. Almost all the variance is due to capital improvement expenditures, which had actual expenditures of $48.9 million, compared to the final budget of $62.3 million, a variance of $13.4 million. Many capital projects are constructed over numerous fiscal periods and the variance in this category is due to the timing between the establishment of the budget at the beginning of the project and actual capital improvement project spending. Unexpended capital budget will be reappropriated into FY 2022-23 to continue work on projects that have not yet been completed. Actual operating expenditures totaled $358.8 million, compared to the final budget of $358.8 million.

CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets. The City’s capital assets (net of accumulated depreciation) as of June 30, 2022 amounted to $1,421.4 million, an increase of $30.8 million from the prior fiscal year after restatement.

The increase was primarily due to the continued construction of large projects such as various clean water projects and the City Yards Modernization project. xxxiii

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
This investment in a broad range of capital assets, including land, infrastructure, buildings and improvements, equipment, and construction in progress, is detailed as follows:
6/30/22 6/30/21 6/30/22 6/30/21 6/30/22 6/30/21
As restated As restated
Land $ 200.3 200.3 53.4 53.4 253.7 253.7
Land held under easement 72.4 72.4 —— 72.4 72.4
Construction in progress 105.3 81.1 86.3 56.3 191.6 137.4 Buildings 453.7 454.2 150.1 150.1 603.8 604.3
Improvements other than buildings 218.4 218.4 29.9 29.8 248.3 248.2 Machinery and equipment 60.3 60.2 241.3 225.0 301.6 285.2 Infrastructure 376.6 376.6 263.6 254.4 640.2 631.0
Utility systems 1.8 1.8 —— 1.8 1.8
Intangibles 4.9 0.7 120.1 116.8 125.0 117.5
Less accumulated depreciation (578.0) (549.6) (439.0) (411.3) (1,017.0) (960.9) Capital assets, net $ 915.7 916.1 505.7 474.5 1,421.4 1,390.6

CITY OF SANTA MONICA
Capital Assets
(in millions)
Governmental activities Business-type activities Total
Some of the City’s major capital asset events in FY 2021-22 were:

Governmental Activities:

1. Major projects included $4.5 million for grant funded Water Infrastructure Projects, $5.5 million for the construction of the new bond funded City Services Building and $10.2 million for the design and construction of the bond funded City Yards Modernization project.

Business-Type Activities:

1. Major projects included $24.9 million for Water Infrastructure Projects, $5.0 million for pier improvements and a $3.4 million payment for wastewater improvements including a $3.4 payment to the City of Los Angeles for capital improvements to the Amalgamated Sewer System. The Big Blue Bus purchased 12 new electric buses and chargers totaling $12.5 million.

Additional information on the City’s capital assets can be found in note 5 to the basic financial statements.

As of June 30, 2022, the City had $27.1 million in construction commitments. For additional information on commitments see note 15.
xxxiv

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
Long-term Debt. At the end of the current fiscal year, the City’s total long-term debt outstanding (excluding issuance premiums) was $331.4 million, an increase from the prior year of $155.4 million or

88.3%. This increase was due to $135.3 million in debt issuance, $4.1 million in revenue bond debt service and $1.1 million for general obligation bonds debt service, offset by draws on the State Water Resources Control Board loans of $25.3 million.
6/30/22 6/30/21 6/30/22 6/30/21 6/30/22 6/30/21
General obligation bonds
(backed by the City) $ 1.1 2.1 ——1.1 2.1
Revenue bonds
(backed by specific tax, fee 206.5 143.5 70.5 2.3 277.0 145.8 and lease revenues)
Notes and loans - - 53.3 28.1 53.3 28.1
Total $ 207.6 145.6 123.8 30.4 331.4 176.0

CITY O F SANTA MO NICA
Outstanding Debt
(in millions)
Governmental activities Business-type activities Total
On August 4, 2021, the Santa Monica Public Financing Authority issued $64,780,000 in Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Modernization project) Series 2021, bearing interest from 2.125% to 5.00% with a final maturity of July 1, 2051.

On August 25, 2021, the City issued $70,525,000 of City of Santa Monica Water Enterprise Revenue Bonds Series 2021, bearing interest from 2.25% to 5.00% with a final maturity of August 1, 2051.

The City of Santa Monica maintains a “AAA” rating from both Standard and Poor’s and Fitch, and a “Aaa” rating from Moody’s which were reaffirmed in June 2022. There were no changes to any bond ratings during FY 2021-22.

Additional information on the City’s long-term debt can be found in note 9 to the basic financial statements.

ECONOMIC FACTORS AND BIENNIAL BUDGET
The City’s adopted General Fund budget for FY 2022-23 supports the basic responsibilities of local government, the policy interests of the City Council members and diverse concerns of residents. The ongoing COVID-19 pandemic and related economic losses required significant adjustments in the budget compared to pre-pandemic years. As such, management made difficult decisions to assure the financial stability of the City and feels that, in the long term, there are adequate resources available to fund the proposed expenditures.

In preparing the budget for FY 2022-23, many factors were taken into consideration:
• Community priorities:
o Addressing Homelessness
o Clean and Safe Santa Monica
xxxv

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
o Equitable and Inclusive Economic Recovery
• Restoration of certain priority services going forward despite the overall fiscal challenges precipitated by the COVID-19 pandemic.
• Focus on no cost operational adjustments to improve service delivery for the community. • Streamlining operations to provide core services on which the community relies. • Significant cost increases resulting from high inflation, market disruptions from the war in Ukraine, and supply chain issues due to the COVID-19 pandemic. • Resumption of additional pension and OPEB contributions. • Funding for the Directed Action Response Team (DaRT), formerly known as the Pier Vending Task Force, for another year.
• The launch of a supervised afterschool playtime program at all seven SMMUSD elementary schoolyards through one-time funds.
• The restoration of sports fields at Clover Park, Memorial Park, and Los Amigos Park using onetime savings. • Expanded library hours of service using one-time funds. • A Paid Parental Leave Program for City staff effective July 1, 2022, that will provide for six weeks of leave at 100% of an employee’s salary.
• Cost of living adjustments to compensation negotiated in labor agreements with 9 bargaining units.

These restorations are supported by one-time funds and will require additional revenue streams in the future.

The Adopted Capital budget includes:
• Initiate a community process to plan for the future of the Santa Monica Airport in preparation for local control in 2029.
• Upgrade community facilities like the Virginia Avenue Park fitness room and planned maintenance for the swim facilities at the Swim Center and Annenberg Community Beach House.
• Improve the City’s parks and open spaces including Douglas Park playground reconstruction, Beach Park #1 playground equipment replacement, additional beach volleyball courts and lights, Palisades Park pathway and drainage improvements, xxxvi

CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2022
(Unaudited)
• Marine Park parking lot resurfacing, and the urban forest renewal program. Improve vehicles and pedestrian safety and connections to bus service at seven high crash intersections on Wilshire Boulevard.
• Significant investments in water projects that will move the City towards its goal of water selfsufficiency including new groundwater recharge wells, water main replacements, and improvements to the safety and operations of Santa Monica’s water treatment plants and groundwater reservoirs.
• Develop Phase 1 of the Beach Master Plan to prepare the Santa Monica State Beach for future major events like the 2028 Olympics.

CONTACTING THE CITY'S FINANCE DEPARTMENT
This management’s discussion and analysis is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have questions or need additional financial information, please visit the City of Santa Monica’s Finance Department website at www.smgov.net/finance or call (310) 458-8281.
xxxvii
City of Santa Monica, California
Year Ended June 30, 2022

BASIC FINANCIAL STATEMENTS

CITY OF SANTA MONICA, CALIFORNIA
Statement of Net Position
June 30, 2022
Governmental
Activities
Business-Type
Activities Total
ASSETS
Cash and investments (note 2) $ 394,515,359 207,855,409 602,370,768 Receivables (net of allowances for uncollectibles):

Accounts 7,434,148 20,881,228 28,315,376
Interest 1,054,091 521,467 1,575,558
Taxes 26,609,781 8,821 26,618,602
Leases (note 3) 36,242,322 47,419,301 83,661,623
Notes (note 4) 208,651,085 - 208,651,085
Other governments 15,802,603 29,034,913 44,837,516
Internal balances (7,421,966) 7,421,966 -
Inventory - 3,544,088 3,544,088
Deposits 3,258 - 3,258
Prepaids 2,536,855 113,539 2,650,394
Restricted cash and investments (note 2) 24,119,582 37,743,586 61,863,168 Restricted cash with fiscal agent (note 2) 43,802,047 75,464,422 119,266,469 Capital assets (note 5):

Capital assets not being depreciated:

Land 200,323,024 53,380,750 253,703,774
Land held under easement 72,384,923 - 72,384,923
Construction in progress 105,313,584 86,279,101 191,592,685 Capital assets being depreciated:

Buildings 453,729,134 150,050,361 603,779,495
Improvements other than buildings 218,413,200 29,856,305 248,269,505 Utility systems 1,742,913 - 1,742,913
Machinery and equipment 60,274,190 241,320,949 301,595,139 Infrastructure 376,593,979 263,605,818 640,199,797
Intangibles 4,880,800 120,138,394 125,019,194
Less accumulated depreciation (577,929,322) (438,934,917) (1,016,864,239) Total capital assets, net 915,726,425 505,696,761 1,421,423,186 TOTAL ASSETS 1,669,075,590 935,705,501 2,604,781,091

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions (note 11) 62,107,878 12,943,970 75,051,848 Deferred outflows from OPEB (note 11) 11,010,504 1,065,077 12,075,581 TOTAL DEFERRED OUTFLOWS OF RESOURCES 73,118,382 14,009,047 87,127,429

LIABILITIES
Accounts payable 28,232,687 13,529,835 41,762,522
Accrued liabilities 5,893,316 2,760,571 8,653,887
Accrued interest payable 4,132,750 2,045,049 6,177,799
Contracts payable (retained percentage) 3,760,057 4,187,142 7,947,199 Unearned revenue (note 6) 28,788,015 43,534,508 72,322,523 Deposits payable from restricted assets 926,850 18,423,693 19,350,543 Long-term liabilities:

Compensated absences due within one year (note 7) 7,583,961 2,407,975 9,991,936 Compensated absences due in more than one year (note 7) 6,521,809 1,128,243 7,650,052 Claims payable due within one year (note 8) 20,928,432 2,177,393 23,105,825 Claims payable due in more than one year (note 8) 53,393,779 2,142,079 55,535,858 Loans and bonds payable due within one year (note 9) 4,390,000 - 4,390,000 Loans and bonds payable due in more than one year (note 9) 225,550,218 131,521,529 357,071,747 Pollution remediation obligation due within one year (note 10) 352,448 8,947,683 9,300,131 Pollution remediation obligation due in more than one year (note 10) 1,306,020 23,148,749 24,454,769 Net OPEB liability due in more than one year (note 11) 28,726,726 2,778,818 31,505,544 Net pension liability due in more than one year (note 11) 195,720,888 35,189,453 230,910,341 TOTAL LIABILITIES 616,207,956 293,922,720 910,130,676

DEFERRED INFLOWS OF RESOURCES
Deferred gain on refunding 573,081 - 573,081
Deferred inflows leases 34,659,530 43,888,006 78,547,536 Deferred inflows from pensions (note 11) 145,572,013 40,163,890 185,735,903 Deferred inflows from OPEB (note 11) 10,734,808 1,038,408 11,773,216 TOTAL DEFERRED INFLOWS OF RESOURCES 191,539,432 85,090,304 276,629,736

NET POSITION
Net investment in capital assets 703,702,731 449,639,654 1,153,342,385 Restricted for (note 14):

Community development 163,990,463 - 163,990,463
Community services 7,287,282 - 7,287,282
Transportation 37,172,777 - 37,172,777
Clean beaches and ocean parcel tax 10,770,846 - 10,770,846 Debt service 8,508,206 2,298,946 10,807,152
Other 4,891,277 - 4,891,277
Perpetual care - nonexpendable 16,901,605 - 16,901,605
Prop 1B - 10,169,682 10,169,682
Unrestricted (18,778,603) 108,593,242 89,814,639
TOTAL NET POSITION $ 934,446,584 570,701,524 1,505,148,108 See accompanying notes to basic financial statements.
1 CITY OF SANTA MONICA, CALIFORNIA
Statement of Activities
For the fiscal year ended June 30, 2022
Program Revenues Net (Expense) Revenue and Change in Net Position Functions/Programs Expenses
Charges for
Services
Operating Grants
and Contributions
Capital Grants
and Contributions
Governmental
Activities
Business-Type
Activities Total
Governmental Activities:

General government $ 74,357,887 18,739,301 3,729,855 20,482 (51,868,249) - (51,868,249) Public safety 128,036,677 20,418,346 17,179,164 124 (90,439,043) - (90,439,043) General services 80,590,295 40,579,634 12,222,617 2,619,156 (25,168,888) - (25,168,888) Community services 87,796,120 13,398,797 27,967,150 - (46,430,173) - (46,430,173) Library 7,932,667 22,037 106,672 - (7,803,958) - (7,803,958) Community development 30,964,869 31,204,393 1,231,693 - 1,471,217 - 1,471,217 Interest on long-term debt 6,232,438 - - - (6,232,438) - (6,232,438) Total governmental activities 415,910,953 124,362,508 62,437,151 2,639,762 (226,471,532) - (226,471,532) Business-Type Activities:

Water 22,488,694 34,281,775 - - - 11,793,081 11,793,081 Resource recovery and recycling 26,523,962 27,347,038 - - - 823,076 823,076 Community broadband 2,318,193 2,779,595 - - - 461,402 461,402 Pier 6,544,111 6,909,894 - - - 365,783 365,783
Wastewater 17,254,412 19,249,781 - - - 1,995,369 1,995,369 Airport 6,095,503 17,306,908 - - - 11,211,405 11,211,405 Stormwater management 361,328 1,419,613 - - - 1,058,285 1,058,285 Cemetery 2,640,281 2,763,983 - - - 123,702 123,702
Big Blue Bus 82,123,817 12,320,388 58,306,953 16,080,850 - 4,584,374 4,584,374 Parking authority 73,733 - - - - (73,733) (73,733)
Total business-type activities 166,424,034 124,378,975 58,306,953 16,080,850 - 32,342,744 32,342,744 Total Primary Government $ 582,334,987 248,741,483 120,744,104 18,720,612 (226,471,532) 32,342,744 (194,128,788) General revenues:

Taxes:

Property 75,980,972 - 75,980,972
Sales and use 76,698,693 - 76,698,693
Transient occupancy 66,684,095 - 66,684,095
Utility users 33,613,985 - 33,613,985
Business license 29,120,949 - 29,120,949
Parking facility 9,966,669 - 9,966,669
Real property transfer 17,845,968 - 17,845,968
Other 3,670,376 - 3,670,376
Other revenue 8,833,338 2,850,537 11,683,875
Investment income (13,385,275) (6,796,320) (20,181,595) Transfers (8,444,909) 8,444,909 -
Total general revenues and transfers 300,584,861 4,499,126 305,083,987 Change in net position 74,113,329 36,841,870 110,955,199 Net position at beginning of year, as restated (note 20) 860,333,255 533,859,654 1,394,192,909 Net position at end of year $ 934,446,584 570,701,524 1,505,148,108 See accompanying notes to basic financial statements.
2 CITY OF SANTA MONICA, CALIFORNIA
Major Governmental Fund Financial Statements
General Fund – To account for all financial resources necessary to carry out basic governmental activities of the City that are not accounted for in another fund. The General Fund supports essential City services such as police and fire protection, street maintenance, libraries, parks and open space management.

Special Revenue Source Fund (Special Revenue Fund Type) – To account for receipt and expenditure of monies restricted, committed or assigned for specific uses.

Low and Moderate Income Housing Asset Fund (Special Revenue Fund Type) – Under Senate Bill 341, housing assets transferred to the City’s Housing Successor Agency together with any funds generated from those housing assets, shall be maintained in a separate Low and Moderate Income Housing Asset Fund. These funds can be used as previously allowed under the Low and Moderate Income Housing Fund established under Community Redevelopment Law, program monitoring and preserving the long-term affordability of units subject to affordability restrictions, homeless prevention and rapid rehousing services, and for the development of affordable housing for lower income households. Under SB107, 20% of all Successor Agency/City loan payments are distributed to this Fund.

Miscellaneous Grants Fund (Special Revenue Fund Type) – To account for the receipt and expenditure of Federal, State and County awarded grants and special allocations provided to the City. 3 CITY OF SANTA MONICA, CALIFORNIA
Balance Sheet
Governmental Funds
June 30, 2022
Special Revenue Funds
General Fund
Special Revenue
Source Fund
Low and
Moderate
Income Housing
Asset Fund
Miscellaneous
Grants Fund
Nonmajor
governmental
funds
Total
governmental
funds
ASSETS
Cash and investments (note 2) $ 183,109,879 86,495,304 12,945,576 - 26,705,054 309,255,813 Restricted cash and investments (note 2) 426,036 - - - 23,693,546 24,119,582 Receivables (net, where applicable, of allowances for uncollectibles):

Accounts 6,219,271 3,500 - - 913,204 7,135,975
Notes (note 4) - 132,828,521 53,541,185 6,041,411 16,239,968 208,651,085 Taxes 26,462,040 - - - 147,741 26,609,781
Leases (note 3) 23,545,756 - - - 12,696,566 36,242,322
Interest 654,991 35,569 30,741 298 157,176 878,775
Other governments 39,177 - - 14,435,651 1,327,775 15,802,603 Due from other funds (note 17) 14,344,387 - - - - 14,344,387 Deposits - - - - 3,258 3,258
Prepaids 2,510,466 - - - 26,343 2,536,809
Restricted cash with fiscal agent (note 2) 18,549,905 - - - 25,252,142 43,802,047 Advances to other funds (note 17) 4,111,120 1,450,000 - - - 5,561,120 Total assets $ 279,973,028 220,812,894 66,517,502 20,477,360 107,162,773 694,943,557

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND

FUND BALANCES
Liabilities
Accounts payable $ 22,537,617 581,383 40 1,106,754 3,156,365 27,382,159 Accrued liabilities 5,582,811 2 - 26,382 241,545 5,850,740 Contracts payable (retained percentage) 883,928 127,666 - 460,549 2,282,303 3,754,446 Due to other funds (note 17) 7,355,821 - - 12,134,179 2,210,208 21,700,208 Unearned revenue (note 6) 10,311,458 17,326,090 - 447,557 702,910 28,788,015 Deposits payable 554,581 - - - 372,269 926,850
Advances from other funds (note 17) - - - - 5,561,120 5,561,120 Total liabilities 47,226,216 18,035,141 40 14,175,421 14,526,720 93,963,538

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue (note 6) - - - 11,855,706 189,275 12,044,981 Deferred inflows leases 22,811,945 - - - 11,847,585 34,659,530 Total deferred inflows of resources 22,811,945 - - 11,855,706 12,036,860 46,704,511 Fund balances (note 12)
Nonspendable 6,621,586 - - - 16,927,948 23,549,534
Restricted 20,275,914 80,170,137 66,517,462 17,615,298 65,446,523 250,025,334 Committed - 122,607,616 - - - 122,607,616
Assigned 143,217,685 - - - - 143,217,685
Unassigned 39,819,682 - - (23,169,065) (1,775,278) 14,875,339 Total fund balances 209,934,867 202,777,753 66,517,462 (5,553,767) 80,599,193 554,275,508 Total liabilities, deferred inflows of resources, and fund balances $ 279,973,028 220,812,894 66,517,502 20,477,360 107,162,773 694,943,557 See accompanying notes to basic financial statements.
4 CITY OF SANTA MONICA, CALIFORNIA
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position
June 30, 2022
Fund balances - total governmental funds $ 554,275,508
Amounts reported for governmental activities in the statement of net position are different because (Note 16):
(1) Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the balance sheet. 915,666,125 (2) Differences in pension liability reporting under GASB 68 where net pension liabiltiy is reported in the Government Wide statements. (82,799,887)(3) Differences in OPEB reporting under GASB 75 where net OPEB liability is reported in the Government Wide statements. 274,986(4) Deferred gain on refunding of debt is not a current financial resource and, therefore, is not reported in the balance sheet. (573,081) (5) Long-term liabilities and accrued interest are not due and payable in the current period and therefore are not reported in the balance sheet. (473,187,014) (6) Revenue earned, but unavailable to pay for current period expenditures, is reporting as deferred inflows in the balance sheet, but recognized as revenue in the statement of activities. 12,044,981 (7) Internal service funds are used by management to charge the costs of vehicle management, information technology and risk management to individual funds. The assets and liabilities of the information technology and risk management (excluding bus)internal service funds are included in the governmental activities in the statement of net position. 8,744,966 Net position of governmental activities $ 934,446,584See accompanying notes to basic financial statements. 5 CITY OF SANTA MONICA, CALIFORNIA
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds
For the fiscal year ended June 30, 2022
Special Revenue Funds
General Fund
Special Revenue
Source Fund
Low and
Moderate
Income Housing
Asset Fund
Miscellaneous
Grants Fund
Nonmajor
governmental
funds
Total
governmental
funds
Revenues:

Property taxes $ 75,980,972 - - - - 75,980,972
Sales and use taxes 76,698,693 - - - - 76,698,693
Transient occupancy taxes 66,684,095 - - - - 66,684,095 Utility user taxes 33,613,985 - - - - 33,613,985
Business license taxes 29,120,949 - - - - 29,120,949
Other taxes 27,980,038 - - - 3,502,975 31,483,013
Licenses and permits 35,338,164 - - - 129,630 35,467,794 Intergovernmental 1,490,717 - - 22,052,956 42,779,880 66,323,553 Charges for services 43,092,119 826,748 - - 19,713,891 63,632,758 Fines and forfeitures 12,262,875 - - - - 12,262,875
Investment income (7,993,536) (551,643) (478,372) (5,137) (2,123,347) (11,152,035) Rental income 6,905,686 - - - 1,715,386 8,621,072
Settlement income 28,456 - - - - 28,456
Other revenue 4,292,277 7,531,732 366,367 3,000 1,527,016 13,720,392 Total revenues 405,495,490 7,806,837 (112,005) 22,050,819 67,245,431 502,486,572 Expenditures:

Current:

General government 64,873,971 - - 439,419 310,767 65,624,157 Public safety 152,854,088 138,528 - 2,097,688 156,487 155,246,791 General services 81,992,446 1,133,343 - 6,772,018 14,304,558 104,202,365 Community services 54,462,550 3,111,973 - 874,016 31,113,368 89,561,907 Library 8,676,797 - - 41,366 - 8,718,163
Community development 17,622,752 62,296 112 146,809 13,682,787 31,514,756 Debt service expenditures:

Principal - - - - 2,895,000 2,895,000
Interest - - - - 5,387,582 5,387,582
Bond issuance costs 498,057 - - - - 498,057
Total expenditures 380,980,661 4,446,140 112 10,371,316 67,850,549 463,648,778 Excess (deficiency) of revenues over (under) expenditures 24,514,829 3,360,697 (112,117) 11,679,503 (605,118) 38,837,794 Other financing sources (uses):

Transfers in 24,772,407 8,948,023 - - 12,770,307 46,490,737 Transfers out (32,825,789) (1,031,051) (362,715) (15,710,877) (5,182,579) (55,113,011) Bonds issued 64,780,000 - - - - 64,780,000
Premium on debt issued 7,714,767 - - - - 7,714,767
Total other financing sources (uses) 64,441,385 7,916,972 (362,715) (15,710,877) 7,587,728 63,872,493 Special item (note 21) (54,900,000) - - - - (54,900,000) Extraordinary item (note 21) (5,376,172) - - - - (5,376,172) Net change in fund balances 28,680,042 11,277,669 (474,832) (4,031,374) 6,982,610 42,434,115 Fund balances at beginning of year, as restated (note 20) 181,254,825 191,500,084 66,992,294 (1,522,393) 73,616,583 511,841,393 Fund balances at end of year $ 209,934,867 202,777,753 66,517,462 (5,553,767) 80,599,193 554,275,508 See accompanying notes to basic financial statements.
6 Net change in fund balances – total governmental funds $ 42,434,115 Amounts reported for governmental activities in the statement of activities are different because:

Capital assets:
1) The acquisition of capital assets requires the use of current financial resources but has no effect on net position. 28,529,675
2) The cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense in the statement of activities. (28,835,721) Measurement focus:
3) Interest expense accrued when obligated not when paid. (2,182,653) 4) Bond proceeds from issuance of new debt are reporting as other financing sources in the statement of revenues expenditures and changes in fund balance but are reported as an increase in liabilities on the statement of net position. (64,780,000)
5) Bond premium received from issuance of new debt is reported as revenue in the statement of revenues expenditures and changes in fund balance but as an increase in liabilities on the statement of net position. (7,714,767) 6) Principal payments on long-term obligations use current financial resources but have no effect on net position. 2,895,000
7) Bond premiums are recorded as other financing sources in the fund statements but are amortized in the statement of activities. 1,280,994
8) Deferred gain and loss on refunding is amortized in the statement of activities. 56,802 9) The decrease in compensated absences liability does not use current financial resources but is recorded as an increase in expense in the statement of activities 555,257 10) Interest income related to airport advances are recorded as revenue in the statement of activities but are reported as deferred inflows of resources in the fund statements. (163,285) 11) Grant revenue previously recognized in the statement of activities is recorded as revenue in the fund statements. (13,189,311)
12) Grant revenue earned but not yet available being recorded on the statement of activities that are not recorded on the fund statements. 12,044,981
13) Pollution remediation expense activity was recorded in the fund statements and reduced the liability in the statement of activities. 342,183
14) OPEB expense is the cost of benefits earned during the year instead of contributions paid. (1,310,700) 15) Pension expense is the cost of benefits earned during the year instead of contributions paid. 50,894,915 Internal service funds:
16) Certain internal service funds are used by management to charge the costs of information technology and risk management to individual funds.

The net revenue/(expense) of certain internal service funds is reported with governmental activities. 53,255,844
Change in net position (statement of activities, governmental activities) $ 74,113,329 See accompanying notes to basic financial statements.

CITY OF SANTA MONICA, CALIFORNIA
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities
For the fiscal year ended June 30, 2022
7 CITY OF SANTA MONICA, CALIFORNIA
Proprietary Fund Financial Statements
Major Enterprise Funds are used to report any activity for which a fee is charged to external users for goods or services.

Water Fund – To account for revenues and expenses of providing water service to the citizens of the City.

Wastewater Fund – To account for revenues and expenses associated with maintaining the sanitary sewer systems within the City.

Resource Recovery and Recycling Fund – To account for revenues and expenses of operating the City's refuse collection, street sweeping and cleaning, and recycling programs.

Big Blue Bus Fund – To account for revenues and expenses related to operation of the City's municipal bus lines.

Internal Service Funds – To account for the financing of goods or services provided by one department or agency to other departments or agencies of the City or to other governments, on a cost-reimbursement basis.
8 CITY OF SANTA MONICA, CALIFORNIA
Statement of Net Position
Proprietary Funds
June 30, 2022
Business-Type Activities - Enterprise Funds
Water Wastewater
Resource
Recovery and
Recycling Big Blue Bus
Nonmajor
enterprise
funds
Total
enterprise
funds
Total internal
service funds
ASSETS
Current assets:

Cash and investments (note 2) $ 42,348,420 34,158,512 16,871,349 39,124,061 40,989,149 173,491,491 119,623,464 Restricted cash and investments (note 2) 355,474 2,298,946 - 13,834,099 9,574,037 26,062,556 - Receivables (net, where applicable, of
allowances for uncollectibles):

Accounts 7,162,626 4,193,213 5,778,892 2,026,752 1,442,548 20,604,031 575,370 Interest 152,291 82,838 61,819 58,360 99,660 454,968 241,815 Leases (note 3) 3,150,477 - - 9,505,438 34,763,386 47,419,301 - Taxes - - - - 8,821 8,821 -
Due from other funds - - - - 7,355,821 7,355,821 -
Due from other governments - - - 29,034,913 - 29,034,913 - Inventory - - - 3,531,115 - 3,531,115 12,973
Prepaids 51,148 - - 62,346 27 113,521 -
Total current assets 53,220,436 40,733,509 22,712,060 97,177,084 94,233,449 308,076,538 120,453,622 Noncurrent assets:

Restricted cash and investments (note 2) 474,892 847,363 10,358,775 - - 11,681,030 - Restricted cash with fiscal agent 75,464,422 - - - - 75,464,422 - Capital assets (note 5):

Land 21,006 3,189,132 - 48,807,900 1,362,712 53,380,750 - Construction in progress 19,926,729 54,486,806 - 449,148 11,416,418 86,279,101 60,300 Buildings 1,532,511 251,447 314,223 131,604,733 16,347,447 150,050,361 - Improvements other than buildings 2,008,072 297,592 99,731 15,312,973 12,137,937 29,856,305 - Machinery and equipment 3,778,029 1,649,296 246,078 188,886,784 3,403,384 197,963,571 44,889,068 Infrastructure 69,615,224 165,868,182 - - 28,122,412 263,605,818 - Intangibles 3,575,000 116,563,394 - - - 120,138,394 -
Less: accumulated depreciation (36,901,722) (125,014,078) (561,410) (209,675,244) (38,211,826) (410,364,280) (30,102,327) Net capital assets 63,554,849 217,291,771 98,622 175,386,294 34,578,484 490,910,020 14,847,041 Total noncurrent assets 139,494,163 218,139,134 10,457,397 175,386,294 34,578,484 578,055,472 14,847,041 TOTAL ASSETS 192,714,599 258,872,643 33,169,457 272,563,378 128,811,933 886,132,010 135,300,663

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions 1,321,036 455,785 1,638,583 7,957,785 1,028,710 12,401,899 857,911 Deferred outflows from OPEB 76,889 22,573 187,663 572,533 142,375 1,002,033 91,384 TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,397,925 478,358 1,826,246 8,530,318 1,171,085 13,403,932 949,295

LIABILITIES
Current liabilities:

Accounts payable 6,653,231 2,029,425 833,898 1,198,946 2,340,735 13,056,235 1,324,128 Accrued liabilities 168,201 57,232 238,744 2,101,318 137,617 2,703,112 100,035 Contracts payable (retained percentage) 1,441,176 2,164,792 - 25,767 555,407 4,187,142 5,611 Compensated absences due within one year (note 7) 245,154 85,043 313,609 1,501,637 181,483 2,326,926 131,254 Claims payable due within one year (note 8) - - - - - - 23,105,825 Unearned revenue (note 6) - - - 43,534,508 - 43,534,508 - Accrued interest payable 917,536 1,127,513 - - - 2,045,049 - Liabilities payable from restricted assets - deposits 774,820 - 15,682,852 129,649 1,836,372 18,423,693 - Pollution remediation obligation due within one year (note 10) 8,947,683 - - - - 8,947,683 - Total current liabilities 19,147,801 5,464,005 17,069,103 48,491,825 5,051,614 95,224,348 24,666,853 Long-term liabilities:

Compensated absences due in more than one year (note 7) 230,819 76,508 147,758 360,462 198,902 1,014,449 228,812 Claims payable due in more than one year (note 8) - - - - - - 55,535,858 Loans and bonds payable due in more than one year (note 9) 78,191,500 53,330,029 - - - 131,521,529 - Pollution remediation obligation due in more than one year (note 10) 23,148,749 - - - - 23,148,749 -
Net OPEB liability due in more than one year (note 11) 200,607 58,894 489,619 1,493,755 371,460 2,614,335 238,423 Net pension liability due in more than one year (note 11) 3,591,366 1,239,096 4,454,649 21,634,019 2,796,650 33,715,780 2,332,316 Total long-term liabilities 105,363,041 54,704,527 5,092,026 23,488,236 3,367,012 192,014,842 58,335,409 TOTAL LIABILITIES 124,510,842 60,168,532 22,161,129 71,980,061 8,418,626 287,239,190 83,002,262

DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions 4,099,047 1,414,257 5,084,366 24,692,238 3,191,988 38,481,896 2,662,017 Deferred inflows from OPEB 74,964 22,008 182,964 558,197 138,810 976,943 89,095 Deferred inflows from leases 2,080,387 - - 8,628,069 33,179,550 43,888,006 - TOTAL DEFERRED INFLOWS OF RESOURCES 6,254,398 1,436,265 5,267,330 33,878,504 36,510,348 83,346,845 2,751,112

NET POSITION
Net investment in capital assets 60,827,771 163,961,742 98,622 175,386,294 34,578,484 434,852,913 14,847,041 Restricted for Prop 1B (note 14) - - - 10,169,682 - 10,169,682 - Restricted for debt service - 2,298,946 - - - 2,298,946 - Unrestricted 2,519,513 31,485,516 7,468,622 (10,320,845) 50,475,560 81,628,366 35,649,543 TOTAL NET POSITION $ 63,347,284 197,746,204 7,567,244 175,235,131 85,054,044 528,949,907 50,496,584 Net position, business-type activities - internal service funds 41,685,454 Net adjustment to reflect the allocation of the internal service funds net income 66,163 Net position of business-type activities $570,701,524
See accompanying notes to basic financial statements.
9 CITY OF SANTA MONICA, CALIFORNIA
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds
For the fiscal year ended June 30, 2022
Business-Type Activities - Enterprise Funds
Water Wastewater
Resource
Recovery and
Recycling Big Blue Bus
Nonmajor
enterprise
funds
Total
enterprise
funds
Total
internal
service funds
Operating revenues
Charges for services $ 34,259,154 19,249,781 27,347,038 8,949,470 29,961,068 119,766,511 54,933,456 Total operating revenues 34,259,154 19,249,781 27,347,038 8,949,470 29,961,068 119,766,511 54,933,456 Operating expenses
Personnel services 6,519,232 2,072,471 8,085,383 43,414,192 5,041,598 65,132,876 3,606,943 Administrative indirect 1,628,966 747,911 1,276,612 4,921,405 1,923,706 10,498,600 1,276,586 Contractual services 2,240,502 4,028,380 4,394,206 3,396,569 4,532,868 18,592,525 1,426,187 Repairs and maintenance 1,220,346 1,204,178 3,592,822 1,121,570 1,565,579 8,704,495 1,997,566 Materials and supplies 3,510,658 829,971 7,965,827 6,044,544 4,680,654 23,031,654 3,259,403 Utilities 2,306,738 29,376 92,790 811,580 1,364,517 4,605,001 95,717 Water purchases 6,594,978 - - - - 6,594,978 -
Casualty property and liability costs 523,464 348,827 392,841 5,563,056 1,303,806 8,131,994 258,639 Claims expense net of claims reserve adjustment - - - - - - 17,175,489 Insurance and bonds - - - - - - 10,510,163
Miscellaneous fees and costs 15,770 - - 107,113 4,283 127,166 3,157,839 Depreciation and amortization 1,567,058 5,986,191 4,897 16,432,829 1,261,260 25,252,235 4,555,681 Other 1,287,992 1,274,408 718,584 309,743 1,894,335 5,485,062 323,188 Total operating expenses 27,415,704 16,521,713 26,523,962 82,122,601 23,572,606 176,156,586 47,643,401 Operating income (loss) 6,843,450 2,728,068 823,076 (73,173,131) 6,388,462 (56,390,075) 7,290,055 Nonoperating revenues (expenses)
Operating grants - - - 22,247,777 - 22,247,777 -
Shared sales tax proceeds - - - 37,048,344 - 37,048,344 - Investment income (2,868,001) (1,295,193) (956,418) (932,671) (1,545,607) (7,597,890) (3,749,785) Interest expense (1,631,625) (732,699) - - (15,354) (2,379,678) - Gain on disposal of capital assets - - - 13,229 - 13,229 156,819 Other nonoperating revenues 698,394 382,892 698,161 4,236,092 2,277,414 8,292,953 8,024 Total nonoperating revenues (expenses) net (3,801,232) (1,645,000) (258,257) 62,612,771 716,453 57,624,735 (3,584,942) Income (loss) before capital contributions and
transfers 3,042,218 1,083,068 564,819 (10,560,360) 7,104,915 1,234,660 3,705,113 Capital contributions - - - 16,080,850 - 16,080,850 -
Transfers in (note 17) 907,044 1,385,913 506 900,006 11,904,176 15,097,645 2,059,268 Transfers out (note 17) (1,335,052) (833,676) (272,818) (397,084) (3,411,016) (6,249,646) (2,284,993) Special item (note 21) - - - - - - 54,900,000
Extraordinary item (note 21) - - - - 5,554,811 5,554,811 - Change in net position 2,614,210 1,635,305 292,507 6,023,412 21,152,886 31,718,320 58,379,388 Net position at beginning of year, as restated (note 20) 60,733,074 196,110,899 7,274,737 169,211,719 63,901,158 497,231,587 (7,882,804) Net position at end of year $ 63,347,284 197,746,204 7,567,244 175,235,131 85,054,044 528,949,907 50,496,584 Change in net position $ 31,718,320
Net adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 5,123,550 Change in net position of business-type activities $ 36,841,870 See accompanying notes to basic financial statements.
10 Business-type activities - Enterprise Funds
Water Wastewater
Resource Recovery
and Recycling
Big Blue
Bus
Nonmajor
enterprise
funds
Total
enterprise
funds
Total internal
service funds
Cash flows from operating activities:

Cash received from customers $ 34,963,092 19,575,793 30,050,094 7,796,334 33,608,830 125,994,143 109,684,915Cash payments for materials and services (39,959,673) (9,118,152) (18,539,222) (22,536,465) (16,187,403) (106,340,915) (22,045,093)Cash payments to employees for services (7,317,660) (2,494,919) (11,073,763) (52,749,154) (5,997,788) (79,633,284) (4,650,263)Cash paid for claims and related services — — — — — — (74,085,989)Other revenue received 675,773 382,892 698,161 3,323,498 2,091,620 7,171,944 8,024 Net cash provided by (used in) operating activities (11,638,468) 8,345,614 1,135,270 (64,165,787) 13,515,259 (52,808,112) 8,911,594 Cash flows from noncapital financing activities:

Sales tax proceeds — — — 60,216,178 — 60,216,178 —Other operating grants — — — 16,988,018 — 16,988,018 —Advances received from other funds — — — — 12,289 12,289 — Repayment of advances from other funds — — — — (515,731) (515,731) — Transfers in 907,044 1,385,913 506 900,006 4,548,356 7,741,825 — Transfers out (1,335,052) (833,676) (272,818) (397,084) (3,411,016) (6,249,646) (225,725) Net cash provided by (used in) noncapital
financing activities (428,008) 552,237 (272,312) 77,707,118 633,898 78,192,933 (225,725) Cash flows from capital and related financing activities:

Capital contributions received — — — 2,971,965 — 2,971,965 —Acquisition and construction of capital assets (10,008,655) (26,361,603) — (16,012,780) (5,755,574) (58,138,612) (990,412) Proceeds from sale of capital assets — — — 14,447 — 14,447 214,668 Proceeds from long-term obligations 78,191,500 25,250,325 — — — 103,441,825 — Payments on long-term obligations — (2,340,000) — — — (2,340,000) — Interest paid on long-term obligations (714,089) (46,800) — — — (760,889) — Net cash provided by (used in) capital and related financing activities 67,468,756 (3,498,078) — (13,026,368) (5,755,574) 45,188,736 (775,744) Cash flows from investing activities
Investments income 134,302 334,064 248,506 221,776 390,103 1,328,751 944,771 Net cash provided by investing activities 134,302 334,064 248,506 221,776 390,103 1,328,751 944,771 Net increase (decrease) in cash and cash equivalents 55,536,582 5,733,837 1,111,464 736,739 8,783,686 71,902,308 8,854,896 Cash and cash equivalents at beginning of year 66,116,603 33,208,251 27,340,482 53,374,874 43,749,225 223,789,435 115,547,934 Effect of unrealized loss (3,009,977) (1,637,267) (1,221,822) (1,153,453) (1,969,725) (8,992,244) (4,779,366) Cash and cash equivalents at end of year $ 118,643,208 37,304,821 27,230,124 52,958,160 50,563,186 286,699,499 119,623,464 Cash and investments $ 42,348,420 34,158,512 16,871,349 39,124,061 40,989,149 173,491,491 119,623,464 Restricted cash and investments 76,294,788 3,146,309 10,358,775 13,834,099 9,574,037 113,208,008 — Total cash and cash equivalents $ 118,643,208 37,304,821 27,230,124 52,958,160 50,563,186 286,699,499 119,623,464 (Continued)
See accompanying notes to basic financial statements

CITY OF SANTA MONICA, CALIFORNIA
Statement of Cash Flows
Proprietary Funds
For the fiscal year ended June 30, 2022
11 Business-type activities - Enterprise Funds
Water Wastewater
Resource Recovery
and Recycling
Big Blue
Bus
Nonmajor
enterprise
funds
Total
enterprise
funds
Total internal
service funds
Reconciliation of operating income (loss) to net
cash provided by (used in) operating activities:

Operating income (loss) $ 6,843,450 2,728,068 823,076 (73,173,131) 6,388,462 (56,390,075) 62,190,055Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities:

Add depreciation 1,567,058 5,986,191 4,897 16,432,829 1,261,260 25,252,235 4,555,681 Add allowance for doubtful accounts — — — (403,368) (637,193) (1,040,561) — Other revenue received 675,773 382,892 698,161 3,323,498 2,091,620 7,171,944 8,024Change in assets and liabilities and deferred outflows and inflows of resources:
(Increase) decrease in accounts receivable 143,691 326,012 547,148 65,009 4,111,007 5,192,867 (424,718)(Increase) in due from other governments — — — (907,199) — (907,199) —(Increase) in prepaids (50,520) — — (50,661) (27) (101,208) —(Increase) in inventory — — — (114,508) — (114,508) (6,021) Increase (Decrease) in accounts payable 981,357 (1,657,845) (105,540) (116,226) 832,476 (65,778) 266,181 Increase (decrease) in accrued liabilities (4,434) (9,687) (38,409) 15,097 (17,771) (55,204) (18,583) Increase in contracts payable 1,038,172 1,015,884 — 20,510 249,896 2,324,462 — (Decrease) in unearned revenue — (13,140) — — (18,285) (31,425) — Increase in deposits payable from restricted assets 560,247 — 2,155,908 81,674 192,233 2,990,062 —Increase (decrease) in compensated absences payable 69,469 13,237 (51,011) (139,940) 8,640 (99,605) 17,073 (Decrease) in claims payable — — — — — — (56,634,323)(Decrease) in pollution remediation obligation (22,599,268) — — — — (22,599,268) — Net OPEB liability and related changes in deferred
outflows and inflows of resources (205,892) (22,921) (720,367) (621,353) (188,674) (1,759,207) 23,551 Net pension liability and related changes in deferred
outflows and inflows of resources (657,571) (403,077) (2,178,593) (8,578,018) (758,385) (12,575,644) (1,065,326) Total adjustments (18,481,918) 5,617,546 312,194 9,007,344 7,126,797 3,581,963 (53,278,461) Net cash provided by (used in)
operating activities $ (11,638,468) 8,345,614 1,135,270 (64,165,787) 13,515,259 (52,808,112) 8,911,594 Schedule of non-cash capital and related financing activities:

Capital assets acquired through accounts payable $ 1,244,689 619,234 — 26,454 2,775 1,893,152 — See accompanying notes to basic financial statements
Proprietary Funds
For the fiscal year ended June 30, 2022

CITY OF SANTA MONICA, CALIFORNIA
Statement of Cash Flows
12 CITY OF SANTA MONICA, CALIFORNIA
Fiduciary Fund Financial Statements
Private-Purpose Trust Fund is fiduciary in nature and used to receive and distribute the Redevelopment Property Tax Trust Fund distributions and use them to extinguish enforceable obligations approved by the Successor Agency Oversight Board and the California Department of Finance. The Redevelopment Agency of the City of Santa Monica was dissolved on February 1, 2012.

Custodial Fund is custodial in nature and accounts for assets held by the City as a trustee for individuals or other governmental units. The City’s sole custodial fund, the General Trust Fund, accounts for assets held by the City in a custodial capacity, such as fees collected on behalf of and remitted to other governmental agencies.
13 CITY OF SANTA MONICA, CALIFORNIA
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2022
Total
Private-Purpose
Trust Fund
Total
Custodial
Fund
ASSETS
Restricted cash (note 2) $ 5,703,737 1,564,881
Money market funds with fiscal agent(note 2) 7,175,322 - Accounts receivable - 104,588
Total assets 12,879,059 1,669,469

DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on refunding 1,156,937
- -

LIABILITIES
Loans and bonds payable, due within one year (note 18) 6,961,916 - Loans and bonds payable, due in more than one year (note 18) 119,503,939 - Accrued interest payable, due in more than one year 3,204,420 - Total liabilities 129,670,275 -

NET POSITION
Restricted for the dissolution of the Former Redevelopment Agency $ (115,634,279) - Restricted for other governments, organizations and individuals - 1,669,469 See accompanying notes to basic financial statements.
14 CITY OF SANTA MONICA, CALIFORNIA
Statement of Changes in
Fiduciary Net Position
Fiduciary Funds
For the fiscal year ended June 30, 2022
Private-purpose
Trust Fund Custodial Fund
Additions:

Property tax distribution $ 13,443,390 -
Investment income 1,311 -
Held for others - 200,002
Other revenue 176 -
Fees collected for other governments - 2,658,298
Total additions 13,444,877 2,858,300
Deductions:

Project expenses 267,195 -
Interest expense 6,585,390 -
Payments to other governments - 2,892,579
Payments to organizations and individuals - 248,433
Total deductions 6,852,585 3,141,012
Change in net position 6,592,292 (282,712)
Net position at beginning of year (122,226,571) 1,952,181 Net position at end of year $ (115,634,279) 1,669,469
See accompanying notes to basic financial statements.
15 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. THE REPORTING ENTITY
The City of Santa Monica, California (City) was incorporated November 30, 1886. The City operates under a Council-Manager form of government and provides traditional municipal services as authorized by its charter as well as various enterprise services. As required by accounting principles generally accepted in the United States of America (GAAP), the accompanying basic financial statements present the activities of the City and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operations or financial relationships with the City.

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. The following entities are reported as blended component units because they have substantively the same governing board as the primary government and there is either a financial benefit or burden relationship between the City and the component unit or the City’s management has operational responsibility for the component unit.

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. Additional detailed information and/or separately issued financial statements for these component units can be obtained from the City’s Director of Finance.

The Parking Authority of the City of Santa Monica (Parking Authority) was established by the City in 1950 for the acquisition or building of parking facilities owned by the City Parking Authority.

The Housing Authority of the City of Santa Monica (Housing Authority) was established by the City in 1975 to address unsanitary and unsafe inhabited dwelling accommodations and the shortage of affordable safe and sanitary dwelling accommodations for persons with low incomes. Since January 1, 1989, the Housing Authority has administered the Section 8 Housing Assistance Payments Program funded by the United States Department of Housing and Urban Development on behalf of the City.

The Santa Monica Public Financing Authority (PFA) was established in 1995 for the purpose of assisting the City in financing capital improvements, working capital, and liability or other projects.

The Successor Agency for the Redevelopment Agency of the City of Santa Monica (Successor Agency) was established on February 1, 2012 by resolution of City Council. The Successor Agency is primarily responsible for winding down the operations of the former Redevelopment Agency and makes payments and performs existing obligations of the former Redevelopment Agency. The Successor Agency is a fiduciary component unit and is presented as a private-purpose trust fund. 16 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
The Santa Monica Arts Foundation promotes the arts by raising funds to finance art programs. On June 8, 1990, the City Council merged the City’s Arts Commission with the Santa Monica Arts Foundation. While the Arts Foundation meets the requirements of being reported as a component unit of the City, the operating results are immaterial to the City as a whole and therefore it is not included in the City’s basic financial statements.

No separate financial statements are available for the blended component units listed above.

The Santa Monica Pier Corporation, originally named the Santa Monica Pier Restoration Corporation, is an organization created in 1984 as a nonprofit public benefit corporation. The Pier Corporation maintains and operates public educational and recreational programs and events at the Santa Monica Pier as part of a service agreement with the City. It also assists the City with public outreach on Santa Monica Pier related issues. The governing Board of the Corporation is appointed by the City of Santa Monica City Council for the benefit of the citizens of Santa Monica. The Pier Corporation is not presented in the basic financial statements because the economic resources received or held by the individual organization are not significant to the primary government. Separate financial statements for this organization can be obtained from the City’s Director of Finance.

B. BASIC FINANCIAL STATEMENTS
Basic financial statements consist of the following:
• Government-wide financial statements;
• Fund financial statements; and
• Notes to the basic financial statements.

The government-wide financial statements consist of the statement of net position and the statement of activities and report information on all of the non-fiduciary activities of the primary government and its component units. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. All internal balances in the statement of net position have been eliminated, with the exception of those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total government column. In the statement of activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. Exceptions to this general rule are charges between the City’s Water Fund and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). The governmental activities of the City include general government, public safety, 17 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
general services, community services, library and community development. The business-type activities of the City include water, wastewater, stormwater, resource recovery and recycling, pier, airport, cemetery, community broadband, Big Blue Bus, and parking authority.

The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expenses are allocated based on the annual cost allocation plan.

Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions, including special assessments, which are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate fund financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements.

Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

For the year ended June 30, 2022, the City implemented the provisions of Governmental Accounting Standards Board (GASB) Statement No. 87, “Leases.” Statement No. 87 establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Therefore, a lessee is required to recognize a lease liability and an intangible rightto-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources.

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT

PRESENTATION
The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and fiduciary funds financial statements.

Governmental funds financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period.

The City in general considers revenues available if they are collected within 60 days. Additionally, grants and similar items are recognized as receivables as soon as all eligibility requirements have been met and are recognized as revenue when amounts are considered available. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt, which is recognized when due, and certain compensated absences and claims and judgments, which are recognized when payment is due.
18 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
In governmental funds, property taxes, sales taxes, franchise taxes, licenses, interest, special assessments, charges for services and other miscellaneous revenue are all considered to be susceptible to accrual and have been recognized as revenue in the current fiscal period subject to availability.

Entitlements and shared revenues are recorded at the time of receipt or earlier if susceptible to accrual criteria. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred, all other eligibility requirements have been met and are recorded at the time of receipt or earlier, and susceptible to accrual criteria. All other revenue items are considered to be measurable and available only when cash is received by the government.

The accounts of the City are organized on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with financerelated legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements.

The City reports the following major governmental funds:

The General Fund is the City’s primary operating fund. It accounts for all the financial resources and the legally authorized activities of the City, except those required to be accounted for in other specialized funds.

The Special Revenue Source Fund accounts for receipt and expenditure of monies restricted, committed or assigned for specific uses. Funding comes primarily from developer and other fees.

The Low and Moderate Income Housing Asset Fund under Senate Bill 341, requires that housing assets transferred to the City’s Housing Successor Agency, together with any funds generated from those housing assets, be maintained in a separate Low and Moderate Income Housing Asset Fund. These funds can be used as previously allowed under the Low and Moderate Income Housing Fund established under Community Redevelopment Law, for program monitoring and preserving the long-term affordability of units subject to affordability restrictions, homeless prevention and rapid rehousing services, and the development of affordable housing for lower income households.

The Miscellaneous Grants Fund accounts for receipt and expenditure of Federal, State and County awarded grants and special allocations provided to the City.

The City reports the following major enterprise funds:

The Water Fund accounts for the activities of the City’s water service to the citizens.

The Wastewater Fund accounts for the activities of maintaining the sanitary sewer system within the City.
19 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
The Resource Recovery and Recycling Fund accounts for the activities of the City’s refuse collection, street sweeping and cleaning, and recycling programs.

The Big Blue Bus Fund accounts for the activities of the City’s municipal bus lines.

Additionally, the City reports the following fund types:

Special Revenue Funds account for proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.

Capital Projects Funds account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.

Debt Service Funds account for and report financial resources that are restricted to expenditures for principal and interest.

Permanent Funds account for resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support specific programs.

Internal Service Funds account for vehicle operations, risk management, and information technology and communications operations that provide services to other departments of the City on a cost reimbursement basis.

Fiduciary Funds consist of a Private-purpose Trust Fund and Custodial funds. The Privatepurpose Trust Fund was established by the City to succeed the former redevelopment agency. The City serves as a custodian for the assets of the dissolved redevelopment agency pending distribution to the Successor Agency’s creditors for enforceable obligations. The Custodial Fund accounts for assets held by the City as a trustee for individuals or other government units. The Custodial fund is used to report fees collected on behalf of other governmental agencies and other assets held by the City in a custodial capacity.

Proprietary Funds distinguish operating revenues and expenses from nonoperating items.

Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation and amortization on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

D. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, NET

POSITION OR FUND BALANCE
20 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Cash and Investments
In order to maximize the flexibility of its investment program and to aid in cash budgeting, the City pools the cash of all funds, except for monies deposited with fiscal and escrow agents in accordance with related bond indentures and agreements. The cash and investments balance in each fund represents that fund's equity share of the City's cash and investment pool. As the City places no restrictions on the deposit or withdrawal of its equity from the pool by a particular fund, the pool operates like a demand deposit account for the participating funds.

Interest income earned on pooled cash and investments is allocated quarterly to the various funds based on the average month-end balances for the prior three months and is adjusted at year-end. Interest income on restricted cash and investments with fiscal agents is credited directly to the related fund.

The City's investments are carried at fair value, except for guaranteed investment contracts, which are carried at cost because they are not transferable and they have terms that are not affected by changes in market interest rates. The fair value of equity and debt securities is determined based on sales prices or bid-and-asked quotations from Securities and Exchange Commission (SEC) registered securities exchanges or National Association of Securities Dealers Automated Quotations (NASDAQ) dealers.

Changes in fair value are allocated to each participating fund on an annual basis.

The City's share of Local Agency Investment Fund (LAIF) is reported to the City on a quarterly basis.

LAIF operates in accordance with laws and regulations of the State of California. LAIF is not reported at fair value.

For purposes of the statement of cash flows, the City has defined cash and cash equivalents to be equity in the City's cash and investment pool as well as petty cash.

Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as interfund receivables/interfund payables, i.e., due to/due from other funds, the current portion of interfund loans or advances to/from other funds, the non-current portion of interfund loans. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as internal balances.

Advances between funds and notes receivables, as reported in the fund financial statements, are offset by nonspendable fund balance in the applicable governmental funds to indicate that they are not in spendable form and are not available for appropriation. However, if the use of the proceeds from the collection of those receivables is restricted, committed, or assigned, they will be included in the appropriate fund balance classification, rather than nonspendable fund balance.

All trade receivables are shown net of an allowance for uncollectible accounts and estimated refunds 21 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
due. As of June 30, 2022, the allowance for uncollectible accounts for governmental and business-type activities is $1,092,601 and $1,221,874 respectively.

Unbilled service receivables are accrued at year-end.

With the implementation of GASB Statement No. 87, the City as a lessor will recognize a lease receivable and a deferred inflow of resources at the commencement of the lease term. The lease receivable is measured at the present value of lease payments expected to be received during the lease term. The deferred inflow of resources is measured at the value of the lease receivable plus any payments received at or before the commencement of the lease term that relate to future periods. The City will recognize interest revenue on the lease receivable and an inflow of resources from the deferred inflows of resources in a systematic and rational manner over the term of the lease.

Property Taxes
Assessed property values are determined on an annual basis for the period July 1 to June 30 by the Los Angeles County Assessor as of the prior January 1. Article XIIIA of the State Constitution (Proposition 13, approved by voters in June 1978) limits the real property tax rate to 1% of the full market cash value plus rates imposed to fund indebtedness approved by the voters. Locally assessed property is appraised at the 1975-76 full cash value, the base year value, and is adjusted each year after 1975 by the change in the consumer price index, not to exceed an increase of 2%. Property is reappraised to current full value upon either a change in ownership or new construction. If property values decline, the assessed value may be adjusted to reflect the lower value. Taxes are levied annually in September and become a lien on real property at January 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively, at which time applicable penalties and interest are assessed.

Inventory and Prepaid Items
All materials and supplies inventory is valued at cost using the average cost method. The costs of such inventories are recorded as expenditures/expenses when consumed rather than when purchased.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items are recorded as expenditures/expenses when consumed rather than when purchased.

Restricted Assets
Certain proceeds of the City's bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net position and balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants.

In the absence of specific statutory provisions governing the issuance of bonds, certificates or leases, 22 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
these bond monies may be invested in accordance with the ordinance, resolutions or indentures specifying the types of investments its trustees or fiscal agents may make. These ordinances, resolutions and indentures are generally more restrictive than the City's general investment policy. In no instance have additional types of investments been authorized that are not permitted by the City's general investment policy.

Restricted cash represents amounts restricted under agreements with grantors, trustees, developers, customers and lessees. Additionally, restricted cash in the Successor Agency is restricted by redevelopment dissolution legislation.

Capital Assets
Capital assets, which include land, buildings and improvements, machinery and equipment, intangibles, utility systems and infrastructure assets (e.g., roads, sidewalks, curbs and gutters and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets other than buildings, improvements, and infrastructure are defined by the City as assets with an initial individual cost of $50,000 or more and an estimated useful life of more than one year except for the Big Blue Bus Fund, which follows transit funding guidelines by capitalizing any capital expense which is funded by capital grant subsidies not related to bus repairs and maintenance. The City defines buildings, improvements other than buildings, and infrastructure as assets with an individual cost of $100,000 or more and an estimated useful life of more than one year.

Such assets are recorded at historical cost. Donated capital assets are recorded at acquisition value at the date of donation and capital assets received in a service concession arrangement are reported at acquisition value. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are expensed when incurred.

Major outlays for capital assets and improvements are capitalized as projects are constructed.

Capital assets of the City are depreciated using a straight-line method, with a mid-year convention (only half a year’s depreciation is recorded in the first and last year of the asset) over the following estimated useful lives:

Assets Years
Buildings 5 to 85
Improvements other than buildings 5 to 50
Infrastructure 15 to 75
Utility systems 20 to 100
Intangibles 20 to 100
Machinery and equipment 2 to 30
The City has elected not to capitalize its collection of artwork. GASB Statement No. 34 waives the requirement for artwork capitalization if the collection meets all the following conditions:
23 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
• The collection is held for reasons other than financial gain. • The collection is protected, kept unencumbered, cared for, and preserved. • The collection is subject to an organizational policy requiring that the proceeds from sales of collection items be used to acquire other items for collections.

The City’s artwork collection meets the above criteria and therefore qualifies for the exemption from the capitalization requirement. The collection includes both permanent and portable artworks, artworks integrated into overall projects, murals, and stand-alone permanently installed paintings and sculptures, art integrated into the design of public works projects (not stand-alone), and a contemporary collection of almost 100 portable artworks, which are on display in public areas of City facilities.

Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation and sick leave benefits up to a maximum determined by bargaining unit agreements. Employees are paid 100% of their accumulated vacation when they terminate employment for any reason. All vacation is accrued when incurred in the government-wide and proprietary fund financial statements. A liability is reported in the governmental funds only if they have matured, for example, as a result of employee resignations or retirements. Additionally, employees of the International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division are able to exchange unused sick days balances for equal dollars of medical insurance premiums. In order to qualify, the employee must have 10 years of service at retirement and at least 50 days of unused sick leave.

Long-Term Liabilities
In the government-wide financial statements, proprietary funds financial statements and private-purpose trust fund statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or fiduciary fund type statement of net position. Initial-issue bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the unamortized portion of applicable premium or discount. Deferred amounts on refunding are reported as deferred outflows or inflows of resources. Bond issuance costs, including underwriters' discount, are expensed when incurred.

Amortization of bond premiums or discounts and deferred amounts on refunding are included in interest expense.

In the governmental funds financial statements, bond premiums, discounts and issuance costs are recognized during the period issued. The face amount of debt issued is reported as other financing sources. Premiums received are reported as other financing sources, while discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Interest and principal payments are reported as debt service expenditures.
24 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position, governmental fund balance sheet, proprietary statement of net position, and statement of fiduciary net position will sometimes report a separate section for deferred outflows of resources. The deferred outflows of resources is a separate financial statement element that represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of net position and governmental fund balance sheet will sometimes report a separate section for deferred inflows of resources. The deferred inflows of resources is a separate financial statement element that represents an acquisition of net assets that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time.

The City reports the following items as deferred outflows of resources:
• Deferred outflows from pensions
• Deferred outflows from OPEB
The City reports the following items as deferred inflows of resources:
• Deferred inflows from pensions
• Deferred inflows from OPEB
• Deferred gain on refunding
• Deferred inflows from leases
Deferred outflows from pensions and OPEB include contributions made subsequent to the measurement date. Deferred outflows and inflows relating to pensions and OPEB are the result of differences between the expected and actual experience, changes in assumptions, and difference between projected and actual earnings on investments. See note 11 for a detailed discussion of deferred outflows and inflows related to pensions and OPEB.

The deferred gain on refunding is attributable to the unamortized portion of the gain on refunding of debt.

Deferred inflows from leases represents inflows of resources based on the payment provisions of the contract.

Finally, on the governmental funds balance sheet, when an asset is recorded but the revenue is not available, a deferred inflow of resources is reported for unavailable revenue until such time as the revenue becomes available.
25 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Net Position and Fund Balance
In the government-wide financial statements and proprietary funds financial statements, net position is reported in three categories: net investment in capital assets, restricted net position and unrestricted net position. Net investment in capital assets represents capital assets less accumulated depreciation less outstanding principal of related debt. Net investment in capital assets does not include the unspent proceeds of capital debt or the related amount of debt, liabilities and deferred inflows related to those assets. Restricted net position represents assets restricted by parties outside of the City (such as creditors, grantors, contributors, laws and regulations of other governments, or law through constitutional provisions or enabling legislation) and includes unspent proceeds of bonds issued to acquire or construct capital assets and those unspent proceeds are offset by an equivalent amount of debt and deferred inflows to those assets. The nonexpendable portion of permanent funds is reported as a component of restricted net position. The City's other components of restricted net position are temporarily restricted (ultimately expendable) assets. All other components of net position are considered unrestricted.

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

As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent based on the adopted City Council policy in the City’s most recently adopted budget. As of June 30, 2022, fund balances for governmental funds include nonspendable, restricted, committed, assigned and unassigned balances.

In the fund financial statements, governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance represents amounts that are restricted for specific purposes when constraints placed on the use of resources are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. Amounts that can only be used for specific purpose pursuant to constraints imposed by the government’s highest level of decision making authority, the City Council, are reported as committed fund balance. The City Council can create committed fund balance through ordinance, resolution or other council action that is equally binding. Ordinances make up the local laws of the City. An ordinance is a legislative act prescribing general rules of organization or conduct relating to the corporate affairs of the municipality. Council action shall be taken by ordinance when required by law, or where prescribed conduct may be enforced by penalty and represents the most binding constraint. Once adopted, ordinances become effective upon 30 days after publication, unless otherwise set forth. A resolution is an administrative act, which is a formal statement of policy concerning matters of special or temporary character. The adoption of a resolution by the City Council can also establish, modify, or rescind a fund balance commitment previously created by resolution. Assigned fund balance are amounts that are constrained by the government’s intent by the governing body itself or a body or official to which the governing body has delegated the authority to assign amounts to be used for specific purposes. The City Council, in the City’s most recently adopted budget, which included the fiscal 26 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
policies contained in the fund balance policies, has delegated the authority to assign fund balances to the City Manager or their designee. Unassigned fund balance represents fund balance that has not been restricted, committed, or assigned to specific purposes within the general fund. Unassigned fund balance can also be used in other governmental funds where the fund balance is negative, because a negative amount should not be reported for restricted, committed or assigned in any fund. In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is expended in the order of restricted, committed, assigned, and unassigned.

Self-Insurance Program
The City has self-insurance programs to provide for general liability, bus and automobile liability, and workers' compensation claims. These activities are accounted for in self-insurance internal service funds.

Premiums are charged to individual funds and are designed to cover current and future expenses. The City's Risk Manager oversees the self-insurance programs. It is his or her duty to ensure that programs are operated in accordance with City policies. The City’s Risk Manager also provides budget guidance and case reserves and claims analysis. It is the City's intent to maintain cash reserves in the selfinsurance funds equal to or greater than estimated losses.

Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s defined benefit retirement plans, Miscellaneous and Public Safety Police and Fire, of the California 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 due and payable in accordance with the benefit terms. Investments are reported at fair value.

Other Postemployment Benefits (OPEB)
For the purposes of measuring the net OPEB liability, the deferred inflows of resources related to OPEB, and the OPEB expense, information about the fiduciary net position of the City’s OPEB Plan and additions to/deductions from the OPEB Plan’s fiduciary net position have been determined using the same actuarial methods and assumptions. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. 27 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2021
Measurement Period June 30, 2020 to June 30, 2021
Use of Estimates
The preparation of basic financial statements in conformance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the basic financial statements and accompanying notes. Actual results may differ from those estimates. 28 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(2) CASH AND INVESTMENTS
Cash and investments as of June 30, 2022 are classified in the accompanying financial statements as follows:

Statement of net position:

Cash and investments $ 602,370,768
Restricted cash and investments 61,863,168
Restricted cash with fiscal agent 119,266,469
Fiduciary funds:

Restricted cash and investments 7,268,618
Restricted cash with fiscal agent 7,175,322
Total cash and investments $ 797,944,345
Cash and investments as of June 30, 2022 consist of the following:

Cash on hand $ 25,514
Deposits with financial institutions 46,282,198
Investments 751,636,633
Total cash and investments $ 797,944,345
All interest income legally accrues to the benefit of the General Fund in the absence of a legal provision to the contrary. Accordingly, accumulated interest income from the Special Revenue Source Fund in the amount of $344,123 has been included as interest income in the General Fund.

Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code and the City’s investment policy. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, if more restrictive) that address interest rate risk and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy. The table also does not address certain escrow accounts established for purposes such as construction project retention, which are governed by the specific escrow agreement(s).

Authorized *Maximum *Maximum
Investment types by investment *Maximum percentage Investment authorized by state law policy maturity of portfolio in one issuer Local agency bonds Yes 5 years None None
U.S. Treasury obligations Yes 15 years None None
U.S. agency securities/obligations Yes 15 years None 50% State Obligations-California and Others Yes 5 years None None CA Local Agency obligations Yes 5 years None None
Banker's acceptances Yes 180 days 40% 10%
29 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Authorized *Maximum *Maximum
Investment types by investment *Maximum percentage Investment authorized by state law policy maturity of portfolio in one issuer Commercial paper-Pooled funds Yes 270 days 25% 10%
Commercial paper-Non-pooled funds Yes 270 days 25% 10%
Negotiable certificates of deposit Yes 5 years 30% 10%
CD/Deposit Placement services Yes 5 years 50% None
Repurchase agreements Yes 1 year None None
Reverse repurchase agreements Yes 92 days 20% of
base value None
Corporate medium-term notes Yes 5 years 30% None
Supranationals Yes 5 years 30% None
Mutual funds Yes N/A 20% 10%
Money market mutual funds Yes N/A 20% 10%
Mortgage pass-through securities Yes 5 years 20% None
Time deposits Yes 5 years None None
Collateralized certificates of deposit Yes 5 years None None County pooled investment funds Yes N/A None None
Local Agency Investment Fund (LAIF) Yes N/A None None
JPA pools (other investment pools) Yes N/A None None
* Based on state law requirements or investment policy requirements, generally, whichever is more restrictive. However, per State law, the City Council on February 22, 2022 authorized investment of up to 15% of the portfolio in maturities between five and fifteen years in U.S. Treasury Obligations and/or U.S. agency securities/obligations.

Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy.

However, in most cases, the bond agreements generally conform to the City’s policy. The table below identifies the investment types that are generally authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk.

Maximum Maximum
Authorized Maximum percentage Investment
investment type maturity allowed in one issuer
U.S. Treasury obligations None None None
Federal Housing Administration debentures None None None U.S. agency securities None None None
Time deposits None None None
Unsecured certificates of deposit 180 days None None
Banker's acceptances 180 days None None
State obligations None None None
30 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Maximum Maximum
Authorized Maximum percentage Investment
investment type maturity allowed in one issuer
Repurchase agreements 1 year None None
Pre-refunded municipal obligations None None None
Commercial paper 270 days None None
Money market mutual funds None None None
Investment contracts 30 years None None
Investments Authorized by Actions of the City Council
Cemetery and Mausoleum Perpetual Care funds are received from Woodlawn Cemetery users for the perpetual care of cemetery grounds and of the mausoleum. The funds are legally restricted to the extent that only earnings, and not principal, can be used for restricted perpetual care purposes. These funds represent the accumulation of unspent monies from non-government sources and are not considered by the City to constitute “surplus funds” of a local government. Accordingly, these funds are not considered by the City to be subject to the provisions of the California Government Code Section 53601 or the City’s investment policy. These funds have been invested per instructions of the City Council. The table below identifies the investment types generally authorized for these investments. Current City Council instructions limit the amount invested in equities to 60% of the total portfolio with the balance to be invested primarily in fixed income securities. The timing of market value changes as well as the timing of investment transactions may on occasion result in the percentage of equities exceeding 60% for a short period of time until the portfolio can be rebalanced. The table also identifies certain provisions of these agreements that address interest rate risk and concentration of credit risk.

Maximum Maximum
Authorized Maximum percentage Investment
investment type maturity allowed in one issuer
U.S. Treasury obligations None None None
U.S. agency securities None None None
Equities None 60% None
Corporate/Municipal bonds None None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The fair value of callable securities is also sensitive to market changes in that if interest rates decrease between the time of purchase and the call dates, the likelihood that a bond will be called and reinvested at a lower interest rate increases. The City’s portfolio also includes certain callable structured investments for which the coupon interest rate changes if the investments are not called on or before certain pre-determined dates. The fair value of these investments, which primarily falls into the Federal agency security and Supranational categories, is also sensitive to market changes. One of the ways that 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 31 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
portfolio is maturing or coming close to maturity 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 and others) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity. For purposes of the schedule shown below, callable securities are assumed to be held to maturity.

Investment type Amount
12 Months
or Less
13 to 24
Months
25 to 60
Months
More than
60 Months N/A
Held by City:

Federal agency securities $ 352,668,776 71,521,420 83,611,547 194,969,909 2,565,900 — Treasury Bills — — — — — —
Corporate medium term notes 109,749,287 35,930,381 15,468,740 58,350,166 — — Municipal bonds 62,137,359 10,193,100 23,060,422 28,883,837 — — Commercial Paper — — — — — —
Supranationals 26,848,981 6,946,760 — 19,902,221 — —
State investment pool 74,871,637 74,871,637 — — — —
Held by others:

Treasury notes/bonds 50,161,082 41,189,153 6,211,621 1,035,422 1,724,886 — Corporate medium term notes 3,209,836 270,616 166,095 2,207,713 565,412 — Municipal Bonds 123,542 — 123,542 — — —
Common stock 10,150,684 — — — — 10,150,684
Money market funds 61,715,449 61,715,449 — — — —
Total $ 751,636,633 302,638,516 128,641,967 305,349,268 4,856,198 10,150,684 Remaining maturity (in months)
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations The City’s investments as of June 30, 2022 (including investments held by bond trustees) do not include any investments that are highly sensitive to interest rate fluctuations to a greater degree than already indicated in the information provided above.
32 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type.

Minimum
legal
Investment type Amount rating** AAA/A+1 AA+ AA AA- A+ A A- BBB+ BBB BBB- Not rated Held by City:

Corporate medium
term notes $ 109,749,287 A 10,573,112 23,281,989 1,426,035 29,781,484 20,246,577 22,488,930 1,951,160 — — — — Municipal bonds 62,137,359 N/A 7,491,694 10,253,503 10,269,118 20,962,255 4,900,910 8,259,879 — — — — — Commercial Paper — A+1 — — — — — — — — — — —
Supranationals 26,848,981 AA 26,848,981 — — — — — — — — — — State investment
pool 74,871,637 N / A — — — — — — — — — — 74,871,637
273,607,264
Held by others:

Municipal Bonds 123,542 N / A — — 123,542 — — — — — — — — Corporate medium
term notes 3,209,836 N / A 107,130 — — — — 166,095 127,688 379,229 1,505,565 924,129 — Common stock 10,150,684 — — — — — — — — — — 10,150,684
Money market funds 61,715,449 * 61,567,777 — — — — — — — — — 147,672 $ 348,806,775 106,588,694 33,535,492 11,818,695 50,743,739 25,147,487 30,914,904 2,078,848 379,229 1,505,565 924,129 85,169,993 Actual ratings - Standard & Poor's***
*Money market mutual funds must have the highest rating of at least two nationally recognized rating organizations or must have the investment advisor registered with the SEC with no less than 5 yrs. experience and have assets under management in excess of $500 million. The unrated money market fund amount is part of the Cemetery and Mausoleum Perpetual Care Funds and therefore is not subject to the minimum legal rating. However, it does meet the second criteria of no less than 5 year experience and have assets under management in excess of $500 million. ** For purposes of categorization, the “minimum legal rating” applies to the entire rating category. For example, rating category “A” includes ratings of A+, A, and A-. The minimum rating applies as to the time of purchase. *** For bonds not rated by Standard and Poor’s but rated by Fitch Ratings and/or Moody’s, the rating from either Fitch or Moody’s is used Treasury notes/bonds and Federal Agency securities are excluded from this table as they are not subject to credit rick disclosures. 33 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
As of June 30, 2022, all investments were in compliance with State law and the City’s Investment Policy at the time of purchase. State law requires that any investment subject to a credit downgrade subsequent to the time of purchase shall be reviewed for possible sale within a reasonable amount of time after the downgrade. Detail on bonds that were downgraded after the time of purchase are discussed in detail below:
• The portfolio holds one bond issued by Merck Corp with a book value of $0.5 million (about

0.1% of total invested funds) that was downgraded by S&P from AA- to A+ in June 2021. The bond has a relatively short remaining maturity (less than one year) and essentially no default risk.

Given this and the fact that the City would likely realize a loss of approximately $34,000 if the bond were sold, it will continue to be held at this time. • The portfolio holds one Pfizer Inc bond (book value of $6.4 million or about 1.0% of total invested funds) that was downgraded by S&P from AA- to A+ in November 2020. The bond has a short remaining maturity (less than one year) with essentially no default risk, and the City would likely realize a loss of approximately $416,000 if the bond were sold. The bond will continue to be held at this time.
• The portfolio holds four bonds issued by Toyota Motor Credit Corp with a total book value of $13.1 million (about 2.0% of total invested funds). One of the bonds was rated AA- by S&P at the time of purchase but was downgraded to A+ in May 2020. The net market value of the bonds is about $1,300,000 less than the book value. The default risk ranges from about 1% to about 5% depending on the remaining maturity of the bonds, which is higher than preferable. However, due to the underlying strength of the company and the loss that would be realized if the bonds were sold, the bonds will continue to be held at this time. Staff continues to monitor the financial condition of the company.

Concentration of Credit Risk
In regards to limitations on the amount held by the City that can be invested in any one issuer, the City’s investment policy generally follows stipulations by the California Government Code. However, the City’s policy adds an additional stipulation that no more than 50% of the portfolio may be invested in a single issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total City investments (excluding investments held by others) are as follows:

Issuer Investment type Reported amount
Federal Home Loan Bank Federal agency securities $ 165,159,894 26.4 % Federal Agricultural Mortgage Assoc. Federal agency securities 54,297,795 8.7 FHLMC (Freddie Mac) Federal agency securities 52,900,810 8.4 FNMA (Fannie Mae) Federal agency securities 45,863,365 7.3 % of
Investments
34 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. The collateral is held by the pledging financial institution’s trust department and is considered held in the City’s name. The investments held by the City were not subject to custodial credit risk at June 30, 2022.

As of June 30, 2022, no City investments were held by the same broker-dealer (counterparty) that was used by the City to buy the securities.

For investments identified herein as held by bond trustee, the bond trustee, under direction of the City/ Redevelopment Successor Agency selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the applicable agency.

Investment in State Investment Pool
Both the City and the Successor Agency (SA) are voluntary participants in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of City investments in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. As of June 30, 2022, $74,870,762 was invested in the City’s account and $875 was invested in the SA account. The total amount invested by all public agencies in LAIF at that date was $35.8 billion.

The LAIF is part of the State’s Pooled Money Investment Account (PMIA). As of June 30, 2022, the investments in the PMIA totaled $232.4 billion (exclusive of demand bank account balances), nearly all of which is invested in non-derivative financial products. The weighted average of PMIA investments was 311 days as of June 30, 2022. LAIF is not rated. LAIF does not impose limits or restrictions on participant withdrawals (other than the number of withdrawals per month and 24-hour notice required for withdrawals of $10 million and over), and the entire balance of the City's investment in the portfolio is available for withdrawal at any time. LAIF is not registered with the Securities and Exchange Commission. Deposits and withdrawals in LAIF are made on the basis of $1 and not fair value.

Accordingly, the City's investment in this pool is measured on uncategorized inputs not defined as Level 1, 2, or 3.
35 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
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 the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City has the following recurring fair value measurements as of June 30, 2022:

Deposits and securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Federal Agency Securities, Municipal Bonds, Corporate Medium Term Notes, and Supranationals are classified in Level 2 of the fair value hierarchy and are valued using information provided by the firm FT Interactive Data using institutional bond quotes.

Totals 1 2 3 Uncategorized
Federal agency securities $ 352,668,776 — 352,668,776 — — Treasury bills — — — — —
Corporate medium term notes 109,749,287 — 109,749,287 — — Municipal bonds 62,137,359 — 62,137,359 — —
Supranationals 26,848,981 — 26,848,981 — —
Local Agency Investment Fund 74,871,637 — — — 74,871,637 Held by Others:

Treasury notes/bonds 50,161,082 50,161,082 — — —
Corporate medium term notes 3,209,836 — 3,209,836 — —
Municipal bonds 123,542 — 123,542 — —
Common stock 10,150,684 10,150,684 — — —
Money market mutual funds 61,715,449 - - — 61,715,449
Investments at Fair Value $ 751,636,633 60,311,766 554,737,781 — 136,587,086 Level
Investment Type
36 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(3) LEASES
A. Change in accounting principles and restatement
For the year ended June 30, 2022, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 87, “Leases.” GASB Statement No. 87 enhances the relevance of the government’s leasing activities and comparability of financial statements. It establishes a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. A lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. These changes were incorporated in the City’s financial statements and had an effect on the beginning net position or fund balance of the General Fund, Beach Fund, Water Fund, Pier Fund, Airport Fund, and Big Blue Bus Fund. Please refer to Note 20 “Prior Period Adjustments” for the restatements.

B. Leases receivables and deferred inflows of resources The City leases land and buildings to various companies and individuals. An initial lease receivable was recorded as of July 1, 2021 in the amount of $97,404,597 and the deferred inflow of resources was $93,213,817. As of June 30, 2022, the value of the leases receivable is $83,661,623. The City reported lease revenue of $14,666,280 and interest revenue of $3,597,348 related to lease payments received.

These leases are summarized as follows:

Fund
Lease Receivable
as of July 1, 2021
Lease Receivable
as of June 30, 2022
Lease
Revenue
Lease
Interest
Revenue
General $ 26,054,432 23,545,756 2,835,484 1,077,284
Beach 13,406,129 12,696,566 988,255 641,399
Water 3,193,089 3,150,477 65,233 158,623
Pier 11,784,206 10,142,848 1,824,021 544,384
Airport 32,365,483 24,620,538 7,748,046 684,683
Big Blue Bus 10,601,258 9,505,438 1,205,241 490,975
Total $ 97,404,597 83,661,623 14,666,280 3,597,348
General Fund Leases – There are a variety of leases including restaurants and business. The most significant lease agreement is with Viceroy Hotel, which began on September 25, 2000, and the City is receiving monthly payments for sixty-five years through 2065.

Beach Fund Leases – The lease types are mostly easements. The most significant lease agreement is with The Beach Club, which began on January 1, 1990, and the City is receiving annual payments for sixty-one years through 2050.
37 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Water Fund Leases – There are only two current leases. On July 1, 1994, the City entered into a sixtyone year lease agreement with Windward School for the sports facility and classrooms above the City’s underground wells. Based on the agreement, the City is receiving monthly payments through 2055.

There are no renewal options included in this lease agreement. The second lease agreement is with Rudy Eisler Enterprises, which began on April 30, 2000 and ended on January 31, 2022.

Pier Fund Leases – There are a variety of leases including restaurant and retail. The most significant lease agreement is with Santa Monica Amusements, LLC, which began on May 26, 1996, and the City is receiving monthly payments for thirty years through 2026.

Airport Fund Leases – There are a variety of leases for offices, artists, hangars, and tiedowns. The most significant lease agreement is with Snapchat, Inc., which began on October 1, 2016, and the City is receiving monthly payments for nine years through 2026.

Big Blue Bus Leases – A majority of the leases are at the Bergamot property and mostly for artists spaces. Most of the lease agreements were entered on December 31, 2021 and are for one year. The City is receiving monthly payments through 2022. The most significant lease agreement is with Kite Pharma, Inc., which began on May 1, 2018, and the City is receiving monthly payments for fourteen years through 2032.

The principal and interest payments that are expected to maturity are as follows:

Fiscal Year
Principal
Payments
Interest
Payments
Total
Payments
2023 $ 3,082,064 1,742,797 4,824,861
2024 3,317,931 1,584,740 4,902,671
2025 3,491,455 1,414,906 4,906,361
2026 2,767,490 1,244,644 4,012,134
2027 958,849 1,158,969 2,117,818
2028 - 2032 3,818,799 5,111,277 8,930,076
2033 - 2037 1,857,317 4,487,781 6,345,098
2038 - 2042 2,383,604 3,961,494 6,345,098
2043 - 2047 3,059,018 3,286,080 6,345,098
2048 - 2052 3,669,171 2,411,731 6,080,902
2053 - 2057 2,369,946 1,680,152 4,050,098
2058 - 2062 3,041,491 1,008,607 4,050,098
2063 - 2067 2,425,138 207,426 2,632,564
2068 - 2072 - 14 14
2073 - 2077 49 7 56
Total $ 36,242,322 29,300,625 65,542,947
Governmental Activities
38 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Fiscal Year
Principal
Payments
Interest
Payments
Total
Payments
2023 $ 10,179,480 2,124,830 12,304,310
2024 8,998,413 1,647,439 10,645,852
2025 8,911,832 1,203,795 10,115,627
2026 6,774,043 776,238 7,550,281
2027 1,919,179 581,861 2,501,040
2028 - 2032 7,426,006 1,709,783 9,135,789
2033 - 2037 897,436 632,650 1,530,086
2038 - 2042 450,433 525,200 975,633
2043 - 2047 578,067 397,566 975,633
2048 - 2052 741,867 233,766 975,633
2053 - 2057 542,545 42,835 585,380
Total $ 47,419,301 9,875,963 57,295,264
Business-Type Activities
39 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(4) NOTES RECEIVABLE
Notes receivable related to governmental activities total $208,651,085 as follows:

Balance at Balance at
June 30, 2021 Transfers Increases Decreases June 30, 2022 Special Revenue Source Fund
Community Corporation of Santa Monica (a) $ 448,280 - - - 448,280 Community Corporation of Santa Monica (b) 7,114,401 - - - 7,114,401 Community Corporation of Santa Monica (c) 4,420,698 - - - 4,420,698 FAME Santa Monica Senior Apartments (d) 7,416,347 - - - 7,416,347 Step Up (e) 2,029,437 - - - 2,029,437
Santa Monica Housing Partners (f) 19,400,000 - - - 19,400,000 Mountain View Mobile Home Park resident (g) 87,830 - - - 87,830 Community Corporation of Santa Monica (h) 3,350,000 - - - 3,350,000 Community Corporation of Santa Monica (i) 6,774,763 - - - 6,774,763 Community Corporation of Santa Monica (j) 10,570,940 - - - 10,570,940 EAH, Inc (k) 11,400,000 - - - 11,400,000
Community Corporation of Santa Monica (l) 429,965 - - - 429,965 Community Corporation of Santa Monica (m) 9,547,656 - - - 9,547,656 Community Corporation of Santa Monica (n) 11,186,848 - 2,161,209 - 13,348,057 Community Corporation of Santa Monica (o) 16,759,859 - 3,890,141 - 20,650,000 EAH, Inc (p) 1,645,205 - - - 1,645,205
Community Corporation of Santa Monica (q) 13,901,565 - 293,377 - 14,194,942 Total Special Revenue Source Fund 126,483,794 - 6,344,727 - 132,828,521 Low and Moderate Income Housing Asset Fund
Community Corporation of Santa Monica (r) 7,979,656 - - - 7,979,656 Community Corporation of Santa Monica (s) 2,738,277 - - - 2,738,277 Community Corporation of Santa Monica (t) 4,437,001 - - - 4,437,001 FAME Santa Monica Senior Apartments (u) 4,058,652 - - - 4,058,652 Step Up (v) 3,011,818 - - - 3,011,818
Community Corporation of Santa Monica (w) 4,234,506 - - - 4,234,506 Community Corporation of Santa Monica (x) 2,900,000 - - - 2,900,000 Community Corporation of Santa Monica (y) 5,408,035 - - - 5,408,035 Step Up (z) 5,870,000 - - - 5,870,000
Santa Monica Housing Partners (aa) 5,684,455 - - - 5,684,455 Community Corporation of Santa Monica (bb) 685,738 - - - 685,738 EAH, Inc (cc) 5,949,089 - 583,958 - 6,533,047
Total Low and Moderate Income Housing Asset Fund 52,957,227 - 583,958 - 53,541,185 Miscelaneous Grants Fund
Ocean Park Community Center (dd) 800,000 - - - 800,000
Step Up (ee) 1,300,000 - - - 1,300,000
MERL Program (ff) 4,010,205 - - 68,794 3,941,411
Total Miscellaneous Grants Fund 6,110,205 - - 68,794 6,041,411 Nonmajor Governmental Funds
Ocean Park Community Center (gg) 400,000 - - - 400,000
Community Corporation of Santa Monica (hh) 6,345,807 - - - 6,345,807 Community Corporation of Santa Monica (ii) 841,600 - - - 841,600 Community Corporation of Santa Monica (jj) 1,691,965 - - - 1,691,965 Community Corporation of Santa Monica (kk) 669,456 - - - 669,456 Low- and moderate-income housing (ll) 676,719 - - - 676,719 MERL Program (mm) 5,687,899 - - 73,478 5,614,421
Total nonmajor governmental funds 16,313,446 - - 73,478 16,239,968 Total notes receivable $ 201,864,672 - 6,928,685 142,272 208,651,085 40 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Special Revenue Source Fund
a. A promissory note dated February 1, 2011 in the amount of $9,407,103 was executed with Community Corporation of Santa Monica for an affordable housing project located at 2602 Broadway. This is a 55- year loan with an interest rate of 3% per annum. As of June 30, 2022, $448,280 had been disbursed to the borrower. See item “r” below for the amount disbursed from the Low and Moderate Income Housing Asset Fund.
b. A promissory note dated January 12, 2009 in the amount of $6,223,333 was executed with Community Corporation of Santa Monica for an affordable housing project located at 430-508 Pico Boulevard. This was a 0% interest loan with the principal amount due and payable after a two-year deferral period. It was superseded by a new loan dated January 26, 2012, which increased the note to $10,947,475, changed the interest rate to 3% and the term to 55 years. As of June 30, 2022, $7,114,401 had been disbursed to the borrower. See item “s” below for amounts disbursed from Low and Moderate Income Housing Asset Fund.
c. A promissory note dated February 2, 2009 in the amount of $5,595,897 was executed with Community Corporation of Santa Monica for an affordable housing project located at 2802 Pico Boulevard. This was a 0% interest loan with the principal amount due and payable after a two-year deferral period. It was superseded by a new loan dated November 29, 2011, which increased the note to $9,207,402, changed the interest rate to 3% and the term to 55 years. As of June 30, 2022, $4,420,698 had been disbursed to the borrower. See item “t” below for the amount disbursed from the Low and Moderate Income Housing Asset Fund.
d. A promissory note dated June 16, 2009 in the amount of $4,424,711 was executed with FAME Santa Monica Senior Apartments, L.P. for an affordable housing project located at 1754 19th Street. This loan was superseded by a loan in the amount of $11,475,000 dated November 17, 2011. It is a 0% interest loan for 55 years. As of June 30, 2022, $7,416,347 had been disbursed to the borrower. See item “u” below for the amount disbursed from the Low and Moderate Income Housing Asset Fund. e. A promissory note dated December 15, 2010 in the amount of $3,645,422 was executed with Step Up on Second Street, Inc. for an affordable housing project at 520 Colorado Avenue. The loan is for the acquisition and predevelopment of the site. This loan was superseded by a loan in the amount of $5,041,255 dated January 25, 2012. It is a 3% interest loan for 55 years. As of June 30, 2022, $2,029,437 had been disbursed to the borrower. See item “v” below for the amount disbursed from the Low and Moderate Income Housing Asset Fund.
f. A promissory note dated December 8, 2011 in the amount of $19,400,000 was executed with Santa Monica Housing Partners for the acquisition and predevelopment expenses for an affordable housing project located at 1725 Ocean Ave. This is a 0% interest loan with the principal amount due and payable after the 55-year anniversary of conversion to permanent financing. As of June 30, 2022, $19,400,000 had been disbursed to the borrower.
41 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
g. A shared appreciation promissory note dated October 18, 2012 in the amount of $87,830 was executed with residents for a unit purchase in Mountain View Mobile Home Park at 1930 Stewart Street. This is a 55-year loan with a 0% interest rate. As of June 30, 2022, $87,830 had been loaned to the borrower. h. A revised promissory note dated October 26, 2004 in the amount of $3,350,000 was executed with 1424 Broadway Apartments Limited Partnership, c/o Community Corporation of Santa Monica, for an affordable housing project located at 1424 Broadway/1512 15th Street. This is a 55-year loan with 3% interest rate per annum. Payments are to be made from residual receipts. As of June 30, 2022, $3,350,000 had been disbursed to the borrower. See item “x” below for the amount disbursed from the Low and Moderate Income Housing Asset Fund.
i. A revised promissory note dated March 9, 2005 in the amount of $6,774,763 was executed with Pacific Court Limited Partnership, c/o Community Corporation of Santa Monica, for an affordable housing project located at 2209 Main Street. Forty-four low- and very low-income housing units were constructed on the site. This is a 55-year loan with 1% interest rate per annum. Payments are to be made from residual receipts. As of June 30, 2022, $6,774,763 had been disbursed to the borrower. j. A revised promissory note dated March 12, 2019 in the amount of $10,570,940 was executed with Community Corporation of Santa Monica for an affordable housing project located at 1820 & 1826 14th Street. This was a 3% interest loan with a fifty-five-year term from the date the project is completed but not later than December 31, 2075. As of June 30, 2022, $10,570,940 had been disbursed to the borrower. k. A promissory note dated March 12, 2020 in the amount of $11,400,000 was executed with Magnolia Villas EAH, LLC for the acquisition and predevelopment expenses for an affordable housing project located at 1445-1453 10th Street. This was a 3% interest loan with a fifty-five-year term. Payments are deferred during construction of the project and then payments of residual receipts are due annually once the construction has been completed. The loan is due and payable at the end of the loan term. As of June 30, 2022, $11,400,000 had been disbursed to the borrower. l. A promissory note dated December 27, 2017 in the amount of $467,735 was executed with Community Corporation of Santa Monica for an affordable housing project located at 1342 Berkeley Street. This is a 0% interest loan with a two-year term and option to extend for additional two and one-half years.

Payments are deferred during loan term including any extensions. The loan is due and payable at the end of the loan term. As of June 30, 2022, $429,965 had been disbursed to the borrower. m. A promissory note dated April 2, 2020 in the amount of $9,745,656 was executed with Community Corporation of Santa Monica for an affordable housing project located at 2120 Lincoln Boulevard. This is 3% interest loan with a fifty-five-year term. Payments are deferred construction of the project and then payments of residual receipts are due annually once the construction has been completed. The loan is due and payable at the end of the loan term. As of June 30, 2022, $9,547,656 had been disbursed to the borrower.
n. A promissory note dated March 18, 2021 in the amount of $13,348,057 was executed with Community Corporation of Santa Monica for an affordable housing project located at 1819 Pico Boulevard et al. This 42 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
is a 2% interest loan with a fifty-five-year term from the date the project is completed but not later than December 31, 2077. Payments are deferred during loan term including any extensions. The loan is due and payable at the end of the loan term. As of June 30, 2022, $13,348,057 had been disbursed to the borrower.
o. A promissory note dated November 24, 2020 in the amount of $20,650,000 was executed with Community Corporation of Santa Monica for an affordable housing project located at 1834-48 14th Street. This is a 3% interest loan with a fifty-five-year term from the date the project is completed but not later than December 31, 2077. Payments are deferred during loan term including any extensions. The loan is due and payable at the end of the loan term. As of June 30, 2022, $20,650,000 had been disbursed to the borrower.
p. A promissory note dated May 29, 2019 in the amount of $8,300,000 was executed with Laurel EAH NC, LLC for the acquisition and predevelopment expenses for an affordable housing project located at 1413 Michigan Avenue. This is a 0% interest loan with a two-year term and option to extend for additional two and one-half years. Payments are deferred during loan term including any extensions. The loan is due and payable at the end of the loan term. As of June 30, 2022, $1,645,205 had been disbursed to the borrower.

A part of the loan balance in this fund was transferred to the Low and Moderate Income Housing Asset Fund. See item "cc" below.
q. A promissory note dated January 14, 2020 in the amount of $15,183,670 was executed with Community Corporation of Santa Monica for an affordable housing project located at 2033-2101 Virginia Ave.

Payments are deferred during loan term including any extensions. The loan is due and payable in full twenty-four (24) months from the date of the Note. This is a 0% interest loan with an eighteen (18) month term and option to extend for an additional twelve (12) months. As of June 30, 2022, $14,194,942 had been disbursed to the borrower.

Low and Moderate Income Housing Asset Fund
r. A promissory note dated February 1, 2011 in the amount of $9,407,103 was executed with Community Corporation of Santa Monica for an affordable housing project located at 2602 Broadway. This is a 55- year loan with an interest rate of 3% per annum. As of June 30, 2022, the outstanding balance is $7,979,656. See item “a” above for the amount disbursed from the Special Revenue Source Fund. s. A promissory note dated January 12, 2009 in the amount of $6,223,333 was executed with Community Corporation of Santa Monica for an affordable housing project located at 430-508 Pico Boulevard. This was a 0% interest loan with the principal amount due and payable after a two-year deferral period. It was superseded by a new loan dated January 26, 2012, which increased the note to $10,947,475, changed the interest rate to 3% and the term to 55 years. As of June 30, 2022, $2,738,277 had been disbursed to the borrower. See item “b” above for amounts disbursed from the Special Revenue Source Fund. t. A promissory note dated February 2, 2009 in the amount of $5,595,897 was executed with Community Corporation of Santa Monica for an affordable housing project located at 2802 Pico Boulevard. This was a 0% interest loan with the principal amount due and payable after a two-year deferral period. It was 43 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
superseded by a new loan dated November 29, 2011, which increased the note to $9,207,402, changed the interest rate to 3% and the term to 55 years. As of June 30, 2022, the outstanding balance is $4,437,001. See item “c” above for the amount disbursed from the Special Revenue Source Fund. u. A promissory note dated June 16, 2009 in the amount of $4,424,711 was executed with FAME Santa Monica Senior Apartments, L.P. for an affordable housing project located at 1754 19th Street. This loan was superseded by a loan in the amount of $11,475,000 dated November 17, 2011. It is a 0% interest loan for 55 years. As of June 30, 2022, $4,058,652 had been disbursed to the borrower. See item “d” above for the amount disbursed from the Special Revenue Source Fund. v. A promissory note dated December 15, 2010 in the amount of $3,645,422 was executed with Step Up on Second Street, Inc. for an affordable housing project at 520 Colorado Avenue. The loan is for the acquisition and predevelopment of the site. This loan was superseded by a loan in the amount of $5,041,255 dated January 25, 2012. It is a 3% interest loan for 55 year. As of June 30, 2022, $3,011,818 had been disbursed to the borrower. See item “e” above for the amount disbursed from the Special Revenue Source Fund.
w. A promissory note dated July 24, 2006 in the amount of $4,234,506 was executed with The Tahiti, L.P. c/o Community Corporation of Santa Monica for an affordable housing project located at 2411-2423 Centinela Avenue. The loan was for the construction of 36 affordable rental housing units. This is a 55- year loan with a simple interest rate of 3% per annum. Payments are to be made from residual receipts.

As of June 30, 2022, $4,234,506 had been disbursed to the borrower. x. A revised promissory note dated October 26, 2004 in the amount of $2,900,000 was executed with 1424 Broadway Apartments Limited Partnership, c/o Community Corporation of Santa Monica, for an affordable housing project located at 1424 Broadway/1512 15th Street. This is a 55-year loan with 3% interest rate per annum. Payments are to be made from residual receipts. As of June 30, 2022, $2,900,000 had been disbursed to the borrower. See item “h” above for the amount disbursed from the Special Revenue Source Fund.
y. Promissory notes dated October 26, 2004, October 26, 2004 and June 12, 2007 in the amount of $4,458,035, $1,691,965 and $950,000, respectively for a total of $7,100,000 were executed with 26th and Santa Monica Family Housing Limited Partnership, c/o Community Corporation of Santa Monica, for an affordable housing project located at 1349 26th Street. Forty-four low- and very low-income housing units were constructed on the site. They are 55-year loans with 3% interest rate per annum. Payments are to be made from residual receipts. As of June 30, 2022, $5,408,035 had been disbursed to the borrower.

This was disbursed from the Low and Moderate Income Housing Asset Fund. See item “jj” below for the amount disbursed from the CDBG Fund.
z. Two promissory notes dated February 13, 2007, one in the amount of $5,870,000 and one for $1,300,000 for a total of $7,170,000 were executed with Step Up on Fifth, L.P. for an affordable housing project located at 1548 Fifth Street. These loans are for the acquisition and construction of the site. This is a 55- year loan with a simple interest rate of 5% per annum. Payments are to be made from residual receipts.

As of June 30, 2022, $5,870,000 had been disbursed to the borrower. This was disbursed from the Low 44 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
and Moderate Income Housing Asset Fund. See item “ee” below for the amount disbursed from the Miscellaneous Grants Fund.
aa. An amended promissory note dated February 22, 2008, in the amount of $5,207,314 and a promissory note dated March 15, 2011 for $477,141 were executed with the Santa Monica Housing Partners, L.P. for the development of 20 units of affordable senior housing at 1458 14th Street. The loans represent land acquisition financing that achieves site control. These are 55-year loans with an interest rate of 3% per annum on the $5,207,314 loan and 4.36% on the $477,141 loan. As of June 30, 2022, the outstanding balance is $5,684,455.
bb. A promissory note dated October 21, 1987 in the amount of $778,603 was executed with Community Corporation of Santa Monica for affordable housing projects located at 504 Ashland, 518 Pier, 536 Ashland, 642 Marine, and 3005 Highland. The overall project is called Ocean Park 43 (OP43). This is a 40 year loan with an interest rate of 5% per annum. As of June 30, 2022, $685,738 had been disbursed to the borrower.
cc. A promissory note dated May 29, 2019 in the amount of $8,300,000 was executed with Laurel EAH NC, LLC for the acquisition and predevelopment expenses for an affordable housing project located at 1413 Michigan Avenue. This is a 0% interest loan with a two-year term and option to extend for additional two and one-half years. Payments are deferred during loan term including any extensions. The loan is due and payable at the end of the loan term. As of June 30, 2022, $6,533,047 had been disbursed to the borrower.

A part of this balance was transferred from the Special Revenue Source Fund. See item "p" above.

Miscellaneous Grants Fund
dd. A promissory note dated September 30, 2003 in the amount of $1,200,000 was executed with Ocean Park Community Center for congregate housing and emergency shelter for very low-income use, located at 1751 Cloverfield Boulevard. This loan is for the acquisition and rehabilitation of the site. This is a 55- year loan with 5.98% interest rate per annum with a two-year deferral period. Payments are to be made from residual receipts. As of June 30, 2022, $800,000 had been disbursed to the borrower. This was disbursed from the Miscellaneous Grants Fund. See item “gg” below for the amount disbursed from the TORCA Fund.
ee. Two promissory notes dated February 13, 2007, one in the amount of $5,870,000 and one for $1,300,000 for a total of $7,170,000 were executed with Step Up on Fifth, L.P. for an affordable housing project located at 1548 Fifth Street. These loans are for the acquisition and construction of the site. This is a 55- year loan with a simple interest rate of 5% per annum. Payments are to be made from residual receipts.

As of June 30, 2022, $1,300,000 had been disbursed to the borrower. This was disbursed from the Miscellaneous Grants Fund. See item “z” above for the amount disbursed from the Low and Moderate Income Housing Asset Fund.
ff. The January 17, 1994 Northridge Earthquake resulted in damaged multifamily residences in the City.

To facilitate repair of damaged multifamily residences, the U.S. Department of Housing and Urban Development awarded the City a total of $33,388,000 in emergency funds to finance the City's 45 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Multifamily Earthquake Repair Loan (MERL) Program. The funds were allocated as follows:
$2,027,000 – HOME Program Emergency Supplemental Fund, $6,361,000 – HOME Program Presidential Contingency Fund, and $25,000,000 – CDBG Program Emergency Supplemental Fund.

Loans were made between 1995 and 2001. As of June 30, 2022, the Miscellaneous Grants Fund outstanding balance is $3,941,411. See item “mm” below for the amount disbursed from the CDBG fund.

Nonmajor Governmental Funds
gg. A promissory note dated September 30, 2003 in the amount of $1,200,000 was executed with Ocean Park Community Center for congregate housing and emergency shelter for very low-income use, located at 1751 Cloverfield Boulevard. This loan is for the acquisition and rehabilitation of the site. This is a 55- year loan with 5.98% interest rate per annum with a two-year deferral period. Payments are to be made from residual receipts. As of June 30, 2022, $400,000 had been disbursed to the borrower. This was disbursed from the TORCA Fund. See item “dd” above for the amount disbursed from the Miscellaneous Grants Fund.
hh. A revised promissory note dated February 8, 2006 in the amount of $6,745,807 was executed with Community Corporation of Santa Monica for an affordable housing project located at 3021-3031 Santa Monica Boulevard. This loan was for the acquisition, predevelopment expenses and construction of lowand very low-income housing. This is a 3% interest loan with the principal amount due and payable February 8, 2061, 55-years from February 8, 2006. As of June 30, 2022, $6,345,807 had been disbursed to the borrower. This was disbursed from the TORCA Fund. ii. A promissory note dated December 22, 1988 in the amount of $841,600 was executed with Community Corporation of Santa Monica for low- and very low-income housing at 2020-2030 Cloverfield Boulevard. This is a 35-year loan with 10.44% interest rate per annum. As of June 30, 2022, $841,600 had been disbursed to the borrower. This was disbursed from the CDBG Fund. jj. Promissory notes dated October 26, 2004, October 26, 2004 and June 12, 2007 in the amount of $4,458,035, $1,691,965 and $950,000, respectively for a total of $7,100,000 were executed with 26th and Santa Monica Family Housing Limited Partnership, c/o Community Corporation of Santa Monica, for an affordable housing project located at 1349 26th Street. Forty-four low- and very low-income housing units were constructed on the site. They are 55-year loans with 3% interest rate per annum.

Payments are to be made from residual receipts. As of June 30, 2022, $1,691,965 had been disbursed to the borrower. This was disbursed from the CDBG Fund. See item “y” above for the amount disbursed from the Low and Moderate Income Housing Asset Fund.
kk. On October 22, 1998, the City executed a promissory note with Community Corporation of Santa Monica for the construction of a twenty unit, large family, affordable housing complex located at 708 Pico Boulevard. $579,000 was funded from the City’s Pico Neighborhood Trust Fund but now known as CDBG Housing Trust Fund, while $221,000 is funded from the Community Development Block Grant (CDBG) Fund. This note is a 0% interest loan to be repaid from residual receipts of the project and is due on October 22, 2053. As of June 30, 2022, the outstanding balance is $669,456. 46 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
ll. These represent non-interest bearing, limited appreciation and shared appreciation loans made between 1991 and 2001 pursuant to Tenant Ownership Rights Charter Amendment (TORCA) Program guidelines to assist low- and moderate-income households to purchase their rental units. The loans are due the earlier of 20 years or 30 years as applicable or upon resale, transfer or default. As of June 30, 2022, the outstanding balances of such loans total $676,719.
mm. The January 17, 1994 Northridge Earthquake resulted in damaged multifamily residences in the City.

To facilitate repair of damaged multifamily residences, the U.S. Department of Housing and Urban Development awarded the City a total of $33,388,000 in emergency funds to finance the City's Multifamily Earthquake Repair Loan (MERL) Program. The funds were allocated as follows:
$2,027,000 – HOME Program Emergency Supplemental Fund, $6,361,000 – HOME Program Presidential Contingency Fund, and $25,000,000 – CDBG Program Emergency Supplemental Fund.

Loans were made between 1995 and 2001. As of June 30, 2022, the CDBG Program Emergency Supplemental Fund outstanding balance is $5,614,421. See item “ff” above for the amount disbursed from the Miscellaneous Grants Fund.
47 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(5) CAPITAL ASSETS
Capital assets activity for the primary government for fiscal year ended June 30, 2022 is as follows:

Balance at
July 1, 2021, as
restated Increases Decreases Transfers
Balance at
June 30, 2022
Governmental activities:

Capital assets, not being depreciated:

Land $ 200,323,024 — — — 200,323,024
Land held under easement 72,384,923 — — — 72,384,923
Construction in progress 81,135,414 28,363,260 — (4,185,090) 105,313,584 Total capital assets, not being depreciated 353,843,361 28,363,260 — (4,185,090) 378,021,531 Capital assets, being depreciated:

Buildings 454,186,102 — (456,968) — 453,729,134
Improvements other than buildings 218,377,457 35,743 — — 218,413,200 Utility systems 1,742,913 — — — 1,742,913
Machinery and equipment 60,233,213 130,672 (89,695) — 60,274,190 Infrastructure 376,593,979 — — — 376,593,979
Intangibles 695,710 — — 4,185,090 4,880,800
Total capital assets being depreciated 1,111,829,374 166,415 (546,663) 4,185,090 1,115,634,216 Less accumulated depreciation for:

Buildings (143,251,857) (9,820,161) 456,968 — (152,615,050) Improvements other than buildings (106,202,379) (7,339,790) — — (113,542,169) Utility systems (1,742,917) — — — (1,742,917)
Machinery and equipment (39,017,767) (2,800,298) 89,695 — (41,728,370) Infrastructure (259,095,217) (8,671,145) — — (267,766,362) Intangibles (283,759) (250,695) — — (534,454)
Total accumulated depreciation (549,593,896) (28,882,089) 546,663 — (577,929,322) Total capital assets, being depreciated, net 562,235,478 (28,715,674) — 4,185,090 537,704,894 Subtotal governmental activities 916,078,839 (352,414) — — 915,726,425 Business-type activities:

Capital assets, not being depreciated:

Land 53,380,750 — — — 53,380,750
Construction in progress 56,297,408 33,159,688 — (3,177,995) 86,279,101 Total capital assets, not being depreciated 109,678,158 33,159,688 — (3,177,995) 139,659,851 Capital assets, being depreciated:

Buildings 150,067,491 — (17,130) — 150,050,361
Improvements other than buildings 29,857,989 — (1,684) — 29,856,305 Machinery and equipment 225,061,611 16,580,499 (2,171,933) 1,850,772 241,320,949 Infrastructure 254,369,876 7,908,719 — 1,327,223 263,605,818 Intangibles 116,765,123 3,373,271 — — 120,138,394
Total capital assets being depreciated 776,122,090 27,862,489 (2,190,747) 3,177,995 804,971,827 Less accumulated depreciation for:

Buildings (75,648,831) (3,728,594) 15,914 — (79,361,511) Improvements other than buildings (19,970,724) (1,119,999) 1,684 — (21,089,039) Machinery and equipment (154,828,809) (16,857,331) 2,114,083 — (169,572,057) Infrastructure (116,779,719) (5,039,216) — — (121,818,935) Intangibles (44,076,967) (3,016,408) — — (47,093,375)
Total accumulated depreciation (411,305,050) (29,761,548) 2,131,681 — (438,934,917) Total capital assets, being depreciated, net 364,817,040 (1,899,059) (59,066) 3,177,995 366,036,910 Subtotal business-type activities 474,495,198 31,260,629 (59,066) — 505,696,761 Total $ 1,390,574,037 30,908,215 (59,066) — 1,421,423,186

48 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Depreciation and amortization expense was charged to functions/programs of the primary government as follows:

Governmental activities:

General government $ 594,026
Public safety 3,527,461
General services 14,784,153
Community services 4,276,729
Library 1,273,460
Community development 4,379,892
Capital assets held by the government's internal service funds are charged to the various functions based on their assets' usage 46,368 Total depreciation and amortization expense - governmental activities $ 28,882,089 Business-type activities:

Water $ 1,567,058
Resource Recovery and Recycling 4,897
Broadband 97,768
Pier 477,254
Wastewater 5,986,191
Airport 302,444
Stormwater management 324,607
Cemetery 42,924
Big Blue Bus 16,432,829
Parking authority 16,263
Capital assets held by the government's internal service funds are charged to the various programs based on their assets' usage 4,509,313 Total depreciation and amortization expense - business-type activities $ 29,761,548 The City’s infrastructure assets are recorded at historical cost and estimated historical cost in the government-wide statements as required by GASB Statement No. 34. 49 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(6) UNEARNED REVENUE AND DEFERRED INFLOWS OF RESOURCES
Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental and enterprise funds also report a liability in connection with resources that have been received as of year-end, but not yet earned (unearned revenue).

The interest on advances reported in the General Fund represents interest on advances to the Successor Agency and the nonmajor enterprise funds and is recognized in the government-wide financial statements.

This interest is earned and included in promissory note balances at year-end. GASB Statement No. 34 requires the City to recognize and present interfund activity between governmental and business-type funds on the government-wide financial statements.

The components of unearned revenue are as follows:

Governmental funds:

General Fund:

Unearned user fees $ 1,511,904
Business license tax 8,799,554
Total General Fund 10,311,458
Special Revenue Source Fund:

Civic Center Village advanced lease
payments 17,326,090
Total Special Revenue Source Fund 17,326,090
Miscellaneous Grants Fund:

Grants received prior to meeting all
eligibility requirements 447,557
Total Miscellaneous Grants Fund 447,557
Nonmajor governmental funds:

Grants received prior to meeting all
eligibility requirements 175,195
Unearned user fees 527,715
Total nonmajor governmental funds: 702,910
Total governmental funds 28,788,015
Enterprise funds:

Big Blue Bus Fund:

Unearned developer fees 185,000
Unearned rent 526
Grant and other funds received prior to
meeting all eligibility requirements 43,348,982
Total Big Blue Bus Fund 43,534,508
Total enterprise funds 43,534,508
Total unearned revenue $ 72,322,523
50 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
The components of deferred inflows of resources for unavailable revenue are as follows:

Fund financial
statements
Recognized in
governmentwide financials
Governmentwide financial
statements
Governmental funds:

Miscellaneous Grants Fund
Grants receivable $ 11,855,706 (11,855,706) —
Total Miscellanours Grants fund 11,855,706 (11,855,706) — Nonmajor governmental funds:

Grants receivable 169,079 (169,079) —
Fees 20,196 (20,196) —
Total Nonmajor governmental funds 189,275 (189,275) —
Total deferred inflows of resources $ 12,044,981 (12,044,981) — 51 CITY OF SANTA MONICA, CALIFORNIA
Notes to Required Supplementary Information
For the fiscal year ended June 30, 2022
(7) COMPENSATED ABSENCES
City employees earn vacation leave at varying amounts based on length of service. All employees may accrue up to the amount earned for a three-year period. In the event of termination of employee, death, or retirement, employees (or their estates) are paid for unused vacation.

Balnce at
July 1, 2021 Additions Reductions
Balance at
June 30, 2022
Due within
one year
Due beyond
one year
Governmental Activities (1) 14,650,750 7,337,049 7,882,029 14,105,770 7,583,961 6,521,809 Business-type activities 3,629,029 2,414,908 2,507,719 3,536,218 2,407,975 1,128,243 Total $ 18,279,779 9,751,957 10,389,748 17,641,988 9,991,936 7,650,052 (1) Compensated absences are predominately liquidated by General Fund resources. 52 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(8) SELF-INSURANCE
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and others; and natural disasters. The City has chosen to establish risk financing internal service funds where assets are set aside for claim settlements associated with such risks of loss up to certain limits and has obtained excess liability coverage through the Authority for California Cities Excess Liability (ACCEL), a joint powers authority of thirteen medium-sized California municipalities. ACCEL is a member of PRISM (Public Risk Innovation, Solutions, and Management) Excess Insurance Authority for the purpose of providing access to excess workers’ compensation coverage for major employee injury risks through a program of pooled self-insurance/reinsurance and insurance on a risk sharing basis.

The City retains self-insurance up to $1,000,000 for general liability, automobile liability, and bus operations liability. The ACCEL pool covers all general liability losses between $1,000,000 and $10,000,000 and purchases excess liability insurance to cover losses over $10,000,000 and up to $55,000,000. The City retains self-insurance up to $1,000,000 for workers’ compensation. PRISM Excess Insurance Authority covers up to an additional $4,000,000 for workers’ compensation and arranges for excess of workers’ compensation over $5,000,000 and up to statutory limits. No claim settlements have exceeded insurance coverage in any of the past three years.

In order to provide funds to pay claims, ACCEL collects premiums from each member. The premiums paid are credited with investment income at the rate earning on the Authority’s investments. Based on ACCEL’s June 30, 2022 audited financial statements, the City’s proportionate share of ACCEL’s net reserves and incurred but not reported (IBNR) amounts related to the City was ($1,082,354) meaning the City’s reserves and IBNR exceeded premiums and interest earned. Accel’s total net reserves and IBNR was ($2,950,279). Total assets of ACCEL at June 30, 2022 were $61,198,842. ACCEL has no capital contributions.

The City’s unpaid claims liabilities are based on the results of actuarial studies. The unpaid claims liabilities are compiled by the Risk Manager of the City and include amounts for claims incurred but not reported as of year-end. Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. Net present values of the unpaid claims liabilities are estimated for the year ended June 30, 2022, based on a

2.0% interest rate. Revenues of the risk management funds, together with funds to be provided in the future, are expected to provide adequate resources to meet liabilities as they come due. Non-incremental claims expenses have not been included as part of the liability for claims. 53 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Changes in the liability for claims during the past two fiscal years for the self-insurance funds follow:

Fund (by fiscal year)
Beginning of
year
Current-year
claims and
changes in
estimates
Claims
payments (net) End of year
Due within one
year
June 30, 2021:

Governmental activities:

General Liability and Automobile $ 40,113,022 59,798,269 (26,609,407) 73,301,884 62,610,214 Workers' Compensation 55,594,553 11,845,381 (9,835,306) 57,604,628 11,173,539 Total Governmental activities $ 95,707,575 71,643,650 (36,444,713) 130,906,512 73,783,753 Business-type activities:

Bus $ 5,170,678 1,648,825 (2,450,009) 4,369,494 2,478,793 Total Business-type activities $ 5,170,678 1,648,825 (2,450,009) 4,369,494 2,478,793 June 30, 2022:

Governmental activities:

General Liability and Automobile $ 73,301,884 6,210,185 (61,642,039) 20,970,030 11,120,846 Workers' Compensation 57,604,628 7,311,753 (11,564,200) 53,352,181 9,807,586 $ 130,906,512 13,521,938 (73,206,239) 74,322,211 20,928,432 Business-type activities:

Bus 4,369,494 3,443 (53,465) 4,319,472 2,177,393
Total Business-type activities $ 4,369,494 3,443 (53,465) 4,319,472 2,177,393 54 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(9) LONG-TERM DEBT
Changes in long-term debt:

Long-term debt activity for the fiscal year ended June 30, 2022, was as follows:

Balance at
July 1, 2021 Additions Reductions
Balance at
June 30, 2022
Due within
one year
Due beyond one
year
Governmental Activities:

Lease Revenue bonds 143,495,000 64,780,000 1,820,000 206,455,000 3,330,000 203,125,000 General obligation bonds 2,135,000 — 1,075,000 1,060,000 1,060,000 — Plus deferred amounts:

For issuance premiums 15,991,447 7,714,767 1,280,996 22,425,218 — 22,425,218 Total loans and bonds
payable 161,621,447 72,494,767 4,175,996 229,940,218 4,390,000 225,550,218 Business-type activities:

Loans payable
from direct borrowings 28,079,704 25,250,325 — 53,330,029 — 53,330,029 Revenue bonds 2,340,000 70,525,000 2,340,000 70,525,000 — 70,525,000 Plus deferred amounts:

For issuance premiums 49,951 7,930,862 314,313 7,666,500 — 7,666,500 Total loans and bonds
payable 30,469,655 103,706,187 2,654,313 131,521,529 — 131,521,529 Total $ 192,091,102 176,200,954 6,830,309 361,461,747 4,390,000 357,071,747 55 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
A summary of long-term debt outstanding at year-end is as follows:
(1) For construction of City facilities.
(2) To fund various water projects.

Management believes it is in compliance with all debt covenants. See Note 18.

Date o f is s ue
Orig ina l
is s ue
Final
m a turity
date
Inte re s t
ra te
B alanc e at
June 30, 2022
Go vernmental activities :

Leas e Revenue bo nds (1):

P ublic Finance Autho rity 2021 Augus t 4, 2021 64,780,000 $ J uly 1, 2051 2.125-5.00% $ 64,780,000 P ublic Finance Autho rity Refunding 2021 (Series A) May 5, 2021 17,860,000 J uly 1, 2031 4.00% 17,860,000 P ublic Finance Autho rity Refunding 2021 (Series B) May 5, 2021 1,840,000 J uly 1, 2023 0.30% 1,840,000 P ublic Finance Autho rity Refunding 2015 J ul 9, 2015 26,360,000 J uly 1, 2033 3.00-5.00% 19,785,000 P ublic Finance Autho rity 2017 Sep 14, 2017 68,565,000 J uly 1, 2047 3.00-5.00% 68,565,000 P ublic Finance Autho rity 2018 J un 6, 2018 34,220,000 J uly 1, 2048 3.625-5.000% 33,625,000 Subto tal leas e revenue bo nds -
go vernmental activities 206,455,000
General o bligatio n bo nds (1):

Main Library Impro vements 2012 May 30, 2012 11,325,000 J uly 1, 2022 0.20-4.00% 1,060,000 Subto tal general o bligatio n
bo nds - go vernmental
activities 1,060,000
Subto tal go vernmental activities 207,515,000
Bus ine s s -type a ctivitie s :

Lo ans payable fro m direct bo rro wings (2):

State Water Res o urces Co ntro l
Bo ard Co ns tructio n Ins tallment Sale Agreement Sep 21, 2017 75,885,903 Dec 31, 2052 1.80% 53,330,029 Revenue bo nds (2):

Water enterpris e revenue bo nds 2021 Aug 25, 2021 70,525,000 Aug 01, 2051 2.25-5.00% 70,525,000 Subto tal bus ines s -type activities 123,855,029
Total $ 331,370,029
56 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Annual debt service requirements to maturity are as follows:

Fiscal year
ending
June 30, Principal Interest Principal Interest Principal Interest 2023 3,330,000 $ 8,110,102 1,060,000 21,200 4,390,000 8,131,302 2024 5,340,000 7,936,592 — — 5,340,000 7,936,5922025 6,840,000 7,700,582 — — 6,840,000 7,700,5822026 7,150,000 7,386,157 — — 7,150,000 7,386,1572027 7,490,000 7,040,707 — — 7,490,000 7,040,7072028-2032 42,815,000 29,848,320 — — 42,815,000 29,848,3202033-2037 31,925,000 21,570,976 — — 31,925,000 21,570,9762038-2042 34,675,000 14,709,213 — — 34,675,000 14,709,2132043-2047 42,450,000 7,017,826 — — 42,450,000 7,017,8262048-2052 24,440,000 1,155,081 — — 24,440,000 1,155,081 $ 206,455,000 112,475,556 1,060,000 21,200 207,515,000 112,496,756 Fiscal year
ending
June 30, Principal Interest Principal Interest Principal Interest 2023 $ — — — 2,202,088 — 2,202,0882024 1,828,161 1,293,946 1,380,000 2,174,488 3,208,161 3,468,434 2025 1,861,068 1,261,039 1,435,000 2,118,188 3,296,068 3,379,227 2026 1,894,568 1,227,540 1,495,000 2,059,588 3,389,568 3,287,128 2027 1,928,670 1,193,438 1,555,000 1,998,588 3,483,670 3,192,026 2028-2032 10,176,757 5,433,781 8,835,000 8,919,250 19,011,757 14,353,031 2033-2037 11,126,237 4,484,301 10,990,000 6,775,313 22,116,237 11,259,614 2038-2042 12,164,302 3,446,236 13,075,000 4,684,238 25,239,302 8,130,474 2043-2047 12,350,266 2,311,321 14,955,000 2,802,338 27,305,266 5,113,659 2048-2052 — — 16,805,000 962,381 16,805,000 962,381
$ 53,330,029 20,651,602 70,525,000 34,696,460 123,855,029 55,348,062 Total
Loan payable from direct
borrowings
General obligation bonds
Revenue bonds
Business-type activities
Total
Governmental Activities
Lease Revenue bonds
57 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Bonds issued
On August 4, 2021, the Santa Monica Public Financing Authority issued $64,780,000 in Santa Monica Public Financing Authority Lease Revenue Bonds (City Yards Modernization project) Series 2021, bearing interest from 2.125% to 5.00% with a final maturity of July 1, 2051. The bonds were issued to fund improvements to the City Yards.

On August 25, 2021, the City issued $70,525,000 of City of Santa Monica Water Enterprise Revenue Bonds Series 2021, bearing interest from 2.25% to 5.00% with a final maturity of August 1, 2051. The bonds were issued to fund the construction of various water projects.

The City’s outstanding balance of a construction installment sale agreement from direct borrowings related to business type activities of $53,330,029 contains a provision that if the agreement were terminated, the City would, upon demand, be required to pay the State Water Board an amount equal to Project Funds disbursed, accrued interest, penalty assessments and additional payments.

Pledged Revenue
The City has a number of debt issues that involve the pledging of revenues. The amounts and terms of the remainder of these commitments and the purposes for which the proceeds of the debt issuances are utilized are indicated in the summary of long-term bonds and loans and notes outstanding at year-end presented in this note. For the current year, debt service payments as a percentage of the pledged gross revenue (net of certain expenses where so specified in debt covenants) are indicated in the table below. These percentages also approximate the relationship of debt service to pledged revenue for the remainder of the term of the commitment.

Annual amount
of pledged
revenue (net of
expenses, where
required)
Annual debt
service
payments (of all
debt secured by
this revenue)
Debt service as
a percentage of
pledged revenue
Future amount
of pledged
revenue
Description of pledged revenue/debt:

Base rental payments
Public Finance Authority 2021 1,994,019 $ 1,994,019 100% 98,426,329 Public Finance Authority Refunding 2021 831,908 831,908 100% 23,781,320 Public Finance Authority Refunding 2015 2,051,944 2,051,944 100% 22,575,844 Public Finance Authority 2017 4,411,600 4,411,600 100% 110,895,500 Public Finance Authority 2018 1,554,387 1,554,387 100% 57,970,020 Library bond tax revenue
Main Library Improvements Refunding 2012 1,056,675 1,056,675 100% - Wastewater charges for services
Hyperion Project Revenue Refunding 2012 2,386,800 2,386,800 100% - Water charges for services
Water enterprise revenue bonds 2021 954,237 954,237 100% 105,221,456 58 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(10) POLLUTION REMEDIATION
The City follows the guidance of GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, establishing accounting and financial reporting standards for pollution (including contamination) remediation obligations, which are obligations to address the current or potential detrimental effects of existing pollution by participating in pollution remediation activities such as site assessments and cleanups.

On December 1, 2006, the City amended a settlement agreement that it had entered into in 2003 with a consortium of oil companies in relation to methyl tertiary butyl ether (“MTBE”) contamination that had occurred at the City’s Charnock Well Field. The Charnock Well Field is used to supply drinking water to the City. The amended 2006 agreement called for the oil companies to pay the City $131.0 million in exchange for the City's agreement to treat to applicable drinking water standards any water produced from the Charnock Well Field, which contains MTBE, tertiary butyl alcohol (“TBA”) and related petroleum hydrocarbons. Prior to this amended 2006 agreement and under the terms of other settlement agreements with other companies, the City received an additional $122.1 million also related to MTBE contamination of the City's Charnock Well Field. Of this amount, $18.0 million was deposited into an escrow account specifically to be used for the design and building of a remediation plant. The account was to be replenished by the consortium of oil companies once exhausted until the remediation construction was complete. The City has received all the proceeds from each of these agreements, including the amended 2006 agreement.

To meet its Charnock Well Field water treatment obligation, the City has constructed and is operating a water treatment remediation plant using the proceeds of the 2006 and the other earlier settlements.

On November 13, 2009, the City entered into a settlement and release agreement with The Gillette Company (Gillette), guaranteed by The Procter & Gamble Company, in relation to groundwater contamination of the City’s Olympic Well Field. The Olympic Well Field is used to supply drinking water to the City. The agreement calls for Gillette to make payments to the City ranging from $150,000 to $11,183,175 annually, totaling $64.8 million over 30 years which included the City receiving title to property valued at $3.2 million.

Under the agreement, the City has agreed to construct and operate facilities for treatment of certain contaminants and treat to applicable drinking water standards any water that it produces from the Olympic Well Field. At the end of FY 2016-17, the City had received cash payments of $42,895,400. During FY 2017-18, the City and Gillette agreed to modify their agreement whereby a lump sum payment of $10,415,000 was made by Gillette in exchange for a release from any and all future liabilities.

On May 15, 2012, the City entered into a settlement and release agreement with The Boeing Company (Boeing) also in relation to groundwater contamination of the City’s Olympic Well Field. The agreement calls for Boeing to make payments to the City ranging from $150,000 to $5,000,000 annually over a tenyear period, totaling $39,500,000. On December 12, 2012, the agreement was modified with $21,000,000 being due from Boeing in January 2013 and payments of $3,670,000 being due from Boeing annually beginning in 2017 through 2021. The City received all of Boeing's payments under the agreement. In return, the City agreed to construct and operate facilities for treatment of certain contaminants and treat to applicable drinking water standards any water that it produces from the Olympic Well Field. 59 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Using the expected cash flow technique utilizing present value, the City has measured the potential water treatment liability under the agreements by the anticipated cost of construction/remediation/operating contracts, which include a contingency of 10% for unforeseen costs. During FY 2020-21, the City revised its pollution remediation liability for both the Charnock and Olympic Well restoration projects estimate based on more current information. This increased the business type activities liability from $34,174,514 as of June 30, 2020 to $54,695,700 as of June 30, 2021. The primary reason for the increase was the refinement of the remediation process based on more current reports from the City’s consultants which estimated higher costs and longer periods of remediation than originally determined. The City believes it has sufficient funds from the Gillette/Boeing settlement to fund current and future estimated remediation costs.

Additionally, the City engages in an ongoing program of non-water pollution remediation related to its various properties. Two such sites are currently undergoing remediation in the form of either soil or vaporous contaminant removal or containment. By State law these occurrences are required to be reported to California Department of Health Services.

The balance of the pollution remediation liability is $1,658,468 in the governmental activities of which $352,448 is due within one year and $32,096,432 in the business-type activities, of which $8,947,683 is due within one year. These liabilities are reported in the business-type and governmental activities in the Statement of Net Position.
60 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022

(11) EMPLOYEE BENEFIT PROGRAMS
Santa Monica Public Employees’ Retirement Plan
General Information about the Pension Plan
The City’s defined benefit pension plan, Santa Monica Public Employees’ Retirement Plan (Plan) provides retirement and disability benefits, annual cost-of living adjustments, and death benefits to plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public Employees’ Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. State statutes within the Public Employees’ Retirement Law establish a menu of benefit provisions as well as other requirements. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through City resolution. CalPERS issues a separate annual comprehensive financial report available from the CalPERS Executive Office, 400 Q Street, Sacramento, California 95811.

Plan Description
All full-time employees of the City and part-time employees who have worked over 1,000 hours during a fiscal year are eligible to participate in either one of the Safety Plans (Police and Fire) or the Miscellaneous Plan (all others). The City is authorized by statute to establish and amend all plan provisions. Related benefits vest after five years of service. Upon five years of service, employees who retire are entitled to receive an annual retirement benefit according to the following Plan provision chart for each employee group:

Hire Date
Prior to
July 1, 2012
Between
July 1, 2012 and
December 31, 2012
On or after
January 1, 2013
Benefit formula 2.70% @ 55 2.00% @ 55 2.00% @ 62
Benefit vesting schedule 5 years service 5 years service 5 years service Benefits payments monthly for life monthly for life monthly for life Retirement age 50-55 50-62 52-67
Monthly benefits, as a % of eligible compensation 2.0% to 2.7% 1.43% to 2.42% 1.00% to 2.50% Cost of living adjustment 2.00% 2.00% 2.00%
Required employee contribution rate 8.00% 7.00% 6.75%
Required employer contribution rate 26.16% 26.16% 26.16% Miscellaneous
61 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
As of June 30, 2022, the City had 1,761 active members of which 894 were considered “classic” members (hired prior to 12/31/2012) and 867 fall under the decreased benefits as prescribed in the Public Employees Pension Reform Act of 2012 (PEPRA). As noted in the tables above, Safety PEPRA members pay a higher employee contribution which, by law, cannot be paid by the employer. Additionally, PEPRA employees have a higher eligible retirement age and a lower benefit formula.

For FY 2017-18, CalPERS changed payment for the employer paid amortization of the unfunded pension liability from using a level percentage of pay to a flat dollar amount. In FY 2021-22, the City paid CalPERS $23,904,923, $10,867,817 and $5,862,365 for the employer paid amortization of the unfunded liability for the miscellaneous, police and fire plans respectively. Because of the financial constraints caused by revenue losses due to the pandemic, the City elected to temporarily suspend its policy of making additional payment towards the unfunded liability. The City intends to reestablish these additional payments beginning FY 2022-23.

Funding Policy
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for the Plans are determined annually on an actuarial basis as of June 30 by CalPERS.

Hire Date
Prior to
December 31, 2012
On or after
January 1, 2013
Benefit formula 3.00% @ 55 2.70% @ 57
Benefit vesting schedule 5 years service 5 years service Benefits payments monthly for life monthly for life
Retirement age 50-55 50-57
Monthly benefits, as a % of eligible compensation 2.40% - 3.00% 2.00% - 2.70% Cost of living adjustment 2.00% 2.00%
Required employee contribution rate 9.00% 10.00%
Required employer contribution rate 48.31% 48.31%
Fire
Hire Date
Prior to
December 31, 2012
On or after
January 1, 2013
Benefit formula 3.00% @ 50 2.70% @ 57
Benefit vesting schedule 5 years service 5 years service Benefits payments monthly for life monthly for life
Retirement age 50 50-57
Monthly benefits, as a % of eligible compensation 3.00% 2.00% - 2.70% Cost of living adjustment 2.00% 2.00%
Required employee contribution rate 9.00% 13.00%
Required employer contribution rate 59.14% 59.14%
Police
62 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Active full-time members in the Plan are required to contribute 6.75% to 8.00% (for miscellaneous employees),

9.00% to 13.00% (for Police safety employees), and 9.00% to 10.00% (for Fire safety employees), of their annual covered salary. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members earned during the year with an additional amount to amortize the unfunded accrued liability. As such, the City contributes the difference between the actuarially determined rate and the contribution rate of employees. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS.

Beginning July 1, 2020, all plan members pay 100% of their employee contributions. In addition, Fire safety members hired before December 31, 2012 reimburse the City an additional 6.0% and Police safety members hired before December 31, 2012 reimburse the City for an additional 8.5%. Starting July 1, 2022, Fire safety members contribution will be reduced to 1.0%.

Employees’ share of pension costs totaled $17,360,165 for FY 2021-22.

Employees Covered
At June 30, 2020, the following employees were covered by the benefit terms for each Plan:

Employees Miscellaneous Police Fire
Inactive employees or their beneficiaries currently
receiving benefits 1,584 334 153
Inactive employees entitled to but not yet receiving benefits 220 11 0 Active members 1,616 212 110
Total 3,420 557 263
Note: Information derived from 2020 CalPERS Census Data Public Safety
Net Pension Liability
The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The total pension liability of each of the Plans is measured as of June 30, 2021, using an annual actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.
63 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Actuarial Methods and Assumptions Used to Determine Total Pension Liability For the measurement period ending June 30, 2021 (the measurement date), the total pension liability was determined using the following actuarial methods and assumptions:

Discount Rate
The discount rate used to measure the total pension liability was 7.15% for each Plan. The projection of cash flows used to determine the discount rate assumed that contributions from all plan members will be made at current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefits to determine total pension liability.

Long Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns net of pension plan investment expense and inflation) are developed for each major asset class.

Miscellaneous Safety - Police Safety - Fire
Valuation date June 30, 2020 June 30, 2020 June 30, 2020 Measurement date June 30, 2021 June 30, 2021 June 30, 2021 Actuarial cost method
Actuarial assumptions:

Discount rate 7.15% 7.15% 7.15%
Inflation 2.50% 2.50% 2.50%
Projected salary increase
Investment rate of return 1 7.15% 7.15% 7.15%
Mortality 2 Derived using CalPERS' membership data for all funds Post retirement benefit increase The lesser of contract COLA up to 2.50% until Purchasing Power Protections Allowance Floor on Purchasing Power applies,

2.50% thereafter
1 Net of pension plan investment expenses, including inflation. 7.0% after 0.15% administrative costs. 2 The mortality table used was developed based on CalPERS-sepcific data. The probabilites of mortality are based on the 2017 CalPERS experience study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates includes 15 years of projected mortality improvement using 90% of Scale MP-2016 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website.

Entry-Age Normal
Varies by entry age and service
64 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
In determining the long-term expected rate of return, CalPERS took into account both the short- and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and adjusted to account for the assumed administrative expenses. The expected real rates of return by asset class are as follows:

Asset Class 1
Assumed asset
allocation
Real Return %
Years 1 - 10 2
Real Return %
Years 11+3
Global equity 50.00 4.80 5.98
Fixed income 28.00 1.00 2.62
Inflation assets - 0.77 1.81
Private equity 8.00 6.30 7.23
Real assets 13.00 3.75 4.93
Liquidity 1.00 - (0.92)
1 In the System's financial statmenets, Fixed Income is included in the Global Debt Securities; Liquidity is included in Short-term investments; Inflation assets are inlcuded in both Global Equity and Securities and Global Debt Securities.
2 An expected inflation rate of 2.00% is used for this period 3 An expected inflation rate of 2.92% is used for this period Amortization of Deferred Outflows and Inflows of Resources Under GASB 68, gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time.

The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense.

The amortization period differs depending on the source of the gain or loss:

Net Difference between projected and 5 year straight-line amortization actual earnings on pension plan investments
All other amounts Straight-line amortization over the expected average remaining service lives (EARSL) of all members that are provided
benefits (active, inactive, and retired) as of the beginning of the measurement period
65 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
The expected average remaining service lifetime (EARSL) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired). Note that inactive employees and retirees have remaining service lifetimes equal to zero. Also note that total future service is based on members’ probability of decrementing due to an event other than receiving a cash refund.

Changes in Net Pension Liability
The following tables display the changes in net pension liability recognized over the measurement period for each of the City’s Plans:

Miscellaneous:

Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
(a) (b) (c)=(a)-(b)
Balance at 6/30/2020 (VD)1 $ 1,257,394,164 990,945,634 266,448,530 Changes recognized for the measurement period
Service cost 23,008,107 —
23,008,107
Interest on total pension liability 88,117,804 —
88,117,804
Differences between expected and actual experience (6,035,074) — (6,035,074)
Contribution - employer —
35,463,537 (35,463,537)
Contribution - employee —9,089,233 (9,089,233)
Net investment income —
223,034,645 (223,034,645)
Benefit payments, includes employee contribution refunds (60,892,615) (60,892,615) — Administrative expense —
(989,856) 989,856
Net changes 44,198,222 205,704,944 (161,506,722)
Balance at 6/30/2021 (MD) $ 1,301,592,386 1,196,650,578 104,941,808 1 VD = Valuation Date
2 MD = Measurement Date
Increase (Decrease)
66 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Public Safety - Police:

Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
(a) (b) (c)=(a)-(b)
Balance at 6/30/2020 (VD)1 $ 523,450,972 390,501,641 132,949,331 Changes recognized for the measurement period
Service cost 10,894,969 —
10,894,969
Interest on total pension liability 36,994,605 —
36,994,605
Differences between expected and actual experience 1,492,957 — 1,492,957
Contribution - employer —
19,121,459 (19,121,459)
Contribution - employee —
3,832,845 (3,832,845)
Net investment income —
88,656,069 (88,656,069)
Benefit payments, includes employee contribution refunds (25,968,665) (25,968,665) - Administrative expense —
(390,087) 390,087
Net changes 23,413,866 85,251,621 (61,837,755)
Balance at 6/30/2021 (MD) $ 546,864,838 475,753,262 71,111,576 1 VD = Valuation Date
2 MD = Measurement Date
Increase (Decrease)
Public Safety - Fire:

Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
(a) (b) (c)=(a)-(b)
Balance at 6/30/2020 (VD)1 $ 269,787,190 188,020,088 81,767,102 Changes recognized for the measurement period
Service cost 4,961,970 —
4,961,970
Interest on total pension liability 19,058,867 —
19,058,867
Differences between expected and actual experience 1,566,296 — 1,566,296
Contribution - employer —
8,636,700 (8,636,700)
Contribution - employee —
1,752,072 (1,752,072)
Net investment income —
42,296,327 (42,296,327)
Benefit payments, includes employee contribution refunds (14,553,773) (14,553,773) — Administrative expense — (187,821) 187,821
Net changes 11,033,360 37,943,505 (26,910,145)
Balance at 6/30/2021 (MD) $ 280,820,550 225,963,593 54,856,957 1 VD = Valuation Date
2 MD = Measurement Date
Increase (Decrease)
67 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the Plans as of the Measurement Date, calculated using the discount rate of 7.15% (7.0% after 0.15% administrative costs), as well as the net pension liability if it were calculated using a discount rate that is 1 percentage-point lower (6.15%) or 1 percentage-point higher (8.15%) than the current rate (all rates are gross of 0.15% administrative cost):

Discount Rate
Miscellaneous Safety - Police Safety - Fire
1% Decrease 6.15% 6.15% 6.15%
Net Pension Liability $ 276,744,560 144,983,919 91,807,517 Current Discount Rate 7.15% 7.15% 7.15%
Net Pension Liability $ 104,941,808 71,111,576 54,856,957 1% Increase 8.15% 8.15% 8.15%
Net Pension Liability $ (37,145,786) 10,453,897 24,341,024 Plan
Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial report.

Pension Expense, Deferred Outflows and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2022, the City recognized pension expense as follows:

Plan Pension
Expense
Miscellaneous $ (6,927,759)
Safety - Police 5,290,335
Safety - Fire 3,435,518
Total $ 1,798,094
Due to CalPERS greater than expected returns of 21.3%, pension expense decreased even became negative for miscellaneous members.
68 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
As of June 30, 2022, the City had deferred outflows and deferred inflows of resources related to pensions as follows:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of assumptions $ — —
Difference between
expected and actual experience 1,970,257 (240,937)
Net difference between projected
and actual earnings on pension
plan investments —
(44,148,990)
Employer contributions subsequent
to the measurement date 20,117,871 —
Total 22,088,128$ (44,389,927)
Safety - Police
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of assumptions $ — (216,985)
Difference between
expected and actual experience 1,697,046 (8,130,003)
Net difference between projected
and actual earnings on pension
plan investments —
(111,429,562)
Employer contributions subsequent
to the measurement date 36,904,394 —
Total 38,601,440$ (119,776,550)
Miscellaneous
69 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of assumptions $ 1,416,267 (428,254)
Difference between
expected and actual experience 3,641,110 (101,051)
Net difference between projected
and actual earnings on pension
plan investments —
(21,040,121)
Employer contributions subsequent
to the measurement date 9,304,903 —
Total 14,362,280$ (21,569,426)
Safety - Fire
The amounts above are net of outflows and inflows recognized in the pension expense for the fiscal year ended June 30, 2022.

Contributions of $66,327,168 that were made by the City subsequent to the measurement date but before the end of the reporting period are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the subsequent fiscal year ended June 30, 2023, rather than in the current fiscal year.

Other amounts reported as deferred outflows and inflows of resources will be recognized in future pension expense as follows:

Measurement Periods
ended June 30 Miscellaneous Safety - Police Safety - Fire 2022 $ (30,678,672) (10,389,346) (3,164,905)
2023 (29,288,377) (9,452,148) (4,028,666)
2024 (27,535,774) (10,401,817) (4,220,917)
2025 (30,576,681) (12,176,359) (5,343,387)
2026 —— 245,826
Deferred Outflows / (Inflows) of Resources
70 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
CalPERS Funding Risk Mitigation Policy
The Funding Risk Mitigation (“FRM”) Policy seeks to reduce CalPERS funding risk over time. It establishes a mechanism whereby CalPERS investment performance that significantly outperforms the discount rate triggers adjustments to the discount rate, expected investment return, and strategic asset allocation targets. The Asset Liability Management (ALM) process is an integrated review of CalPERS assets and liabilities to inform decisions designed to achieve a sound and sustainable fund.

The goal of the ALM process is to balance the expected cost of future pension payments with the expected future investment returns. During the process, the CalPERS board reviews its overall risks, taking into consideration the long-term sustainability of the system.

This formal process runs on a four-year cycle and includes a review of CalPERS’ investment portfolios and retirement plan liabilities. Capital Market Assumptions are primarily based on expectations of future investment returns. Liability projections are based on demographic and economic factors and trends, including membership dynamics, future salary and payroll growth, retirement ages, inflation, and life expectancy.

In FY2020-21, the FRM was triggered because investment returns of 21.3% exceeded the current target rate of return (the 7% discount rate) by more than 2 percentage points, thus lowering the discount rate from 7.0% to 6.8%. The maximum amount the discount rate can be lowered in any one year is 0.25%. This will make for a higher contribution rate in future years compared to the rate that would have been used prior to the adoption of the FRM.

Deferred Compensation Plans
The City offers to its employees an optional deferred compensation plan created in accordance with Section 457 of the Internal Revenue Code. This plan is available to substantially all employees and allows participants to defer a portion of their current income until future years to shelter such funds and earnings from state and federal taxation until withdrawal. The deferred compensation is not available to participants until termination, retirement, death or unforeseeable emergency. For the fiscal year ended June 30, 2022, the total employee contributions were $12,656,572.

The City offers an employer discretionary, defined contribution plan established and governed under Internal Revenue Code Section 401(a). Employee-only contributions are calculated based upon a percentage of employee compensation under agreements with employee bargaining groups and unions. For the fiscal year ended June 30, 2022, the total employee contributions were $958,795.

The City offers to its as-needed employees a separate Section 457 deferred compensation plan under the Omnibus Budget Reconciliation Act (OBRA). This plan is available to all as-needed employees who are not eligible to participate in CalPERS. This plan requires equal employer and employee contributions based on a percentage of earnings. For the fiscal year ended June 30, 2022, the combined employee/employer contributions were $178,042.

These plans are administered through third-party administrators. The City does not perform the investing function and has no fiduciary accountability for the plans. Thus, plan assets and any related liabilities to plan participants have been excluded from the City’s basic financial statements. 71 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Other Postemployment Benefits
In addition to providing pension benefits through CalPERS, the City, in accordance with agreements with various bargaining units and groups, provides medical insurance benefits that are considered other postemployment benefits (OPEB) to certain retired employees under a single employer benefit plan. These benefits are subject to negotiations between the City and each bargaining unit and the related memorandum of understanding (MOU) is approved by the City Council. Employees of the Executive Pay Plan group and management employees of the Rent Control Board are eligible for a City paid medical insurance benefit if their combined retirement age and years of public agency service equals or exceeds 70. Under the terms of a MOU between the City and a coalition of the various non-sworn bargaining units (Coalition), all non-sworn permanent retirees are allowed to continue participating in one of the City’s health plans at the same rate as active employees. As with other MOU’s, this benefit is subject to bargaining between the City and the Coalition. The City also maintains minimum benefits for public safety employees provided by the City’s contract with its healthcare provider CalPERS. The City pays for OPEB through employer only contributions to a qualified OPEB trust, with no contribution required from employees. The Plan does not issue a stand-alone financial statement.

Employees Covered
As of the June 30, 2021 actuarial valuation date, the following current and former employees were covered by the benefit terms under the OPEB plan:

Active employees 1,829
Inactive employees or beneficiaries receiving benefits 241 Inactive employees entitled to, but not receiving benefits 124 Total 2,194
Contributions
The OPEB Plan and its contribution requirements are established by Memorandum of Understanding with the applicable employee bargaining units and may be amended by agreements between the City and these bargaining units. The annual contribution is based on the actuarially determined contribution. 72 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2021 and the total OPEB liability used to calculate the net OPEB liability was determined by actuarial valuation dated June 30, 2021 based on the following assumptions:

Actuarial Assumptions:

Discount rate 3.05%
Inflation 2.50%
Salary increases
Investment rate of return 5.55%
Mortality rate
Pre-retirement Turnover
Healthcare Trend Rate 5.8% decreasing to 3.90%
Mortality rates used were those published the
CalPERS 2021 experience study, using data from
2000 to 2019, except for a different basis used to
project future mortality improvments, then projected
using the MacLeod Watts Scale 2022 from 2017
forward.

Assumed rates of termination vary based on the
current age, service and employee type (fire, police
or miscellaneous) as developed by CalPERS and
published in their 2021 Experience Study Report.

3.00% per year, used only to allocate the costs
between service years.

The long-term expected rate of return on OPEB plan investments was determined using a building block method in which future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation of 2.4% per year in years 1 through 5 and 2.3% in years 6 and beyond.
73 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
The target allocation and best estimates of arithmetic real rates for each major asset class are summarized in the following table:

Asset Class
Target
Allocation
Real Return %
Years 1-5
Real Return %
Years 6+
Global equity 34% 4.40% 4.50%
Fixed Income 41% -1.00% 2.20%
Global real estate 17% 3.00% 3.90%
Treasury Inflation
Protected Securities 5% -1.80% 1.30%
Commodities 4% 0.80% 1.20%

Discount Rate
The discount rate used to measure the OPEB liability was 3.05%. This discount rate was determined based on the results of analysis described in GASB 75. Plan benefits for all current and future retirees are projected from year to year from the results of the valuation. Future employer contributions are projected based on levels over the last 5 years and certain assumptions about the benefit costs of future employees. Trust assets are projected based on the projected future contributions and the assumed return on assets. Where the trust is expected to have sufficient assets to pay all retiree benefits in a particular year, the assumed trust rate of return is applied; once that trust is no longer expected to be able to pay plan benefits, the municipal bond rate is applied for the remainder of the projection period.

The Council authorized the suspension of pre-funding payments to the CERBT trust for FY 2019-20 and potentially through FY 2021-22 pending the reemergence of revenues which suffered a downturn caused by the COVID-19 pandemic. Because the City did not contribute to the plan for FY 2020-21 the discount rate was reduced from 3.73% to 2.85% which increased the OPEB liability by $4,391,134. The City resumed contributions in 2021-22 depositing $3,156,420 into its CERBT account. This allowed for the use of a higher discount rate of 3.05% for the calculation of the OPEB liability. If the City continues to contribute at or above the recommended level to the plan, the discount rate should continue to improve up to the assumed rate of return of trust assets (currently 5.5%).
74 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Changes in OPEB liability
The changes in the net OPEB liability for the Plan are as follows:

Total OPEB
Liability
Fiduciary Net
Position Net OPEB Liability
(a) (b) (c)=(a)-(b)
Balance at 6/30/2020 (valuation date) $ 46,761,797 6,528,517 40,233,280 Changes recognized for the measurement period
Investment experience —1,042,413 (1,042,413)
Service cost 2,114,167 — 2,114,167
Interest on total OPEB liability 1,366,059 — 1,366,059
Changes of assumptions (3,248,646) — (3,248,646)
Differences between expected and actual experience (7,573,209) — (7,573,209) Net investment income — 346,159 (346,159)
Benefit payments (1,888,159) (1,888,159) —
Administrative expense — (2,465) 2,465
Net changes (9,229,788) (502,052) (8,727,736)
Balance at 6/30/2021 (measurement date) $ 37,532,009 6,026,465 31,505,544 Increase (Decrease)
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2020:
1% Decrease
(2.05%)
Current
Discount Rate
(3.05%)
1% Increase
(4.05%)
Net OPEB Liability $ 36,754,930 31,505,544 27,207,251
Sensitivity of the Net OPEB Liability to Changes in Health Care Cost Trend Rates The following presents the net OPEB liability of the City if it were calculated using health care cost trend rates that are one percentage point lower or one percentage point higher than the current rate, for measurement period ended June 30, 2021.
1% Decrease
(3.7% decreasing
to 2.9%)
Current
Healthcare Cost
Trend Rates
(4.7% decreasing
to 3.9%)
1% Increase
(5.7% decreasing
to 4.9%)
Net OPEB Liability $ 26,619,872 31,505,544 37,607,329
75 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
OPEB Plan Fiduciary Net Position
CalPERS issues publicly available financial statements for the California Employers’ Retiree Benefit Trust that may be obtained from CalPERS, 400 Q Street, Sacramento, CA 95811 or at www.calpers.ca.gov.

Recognition of Deferred Outflows and Deferred Inflows of Resources Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time.

Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are recognized in future OPEB expense.

The recognition period differs depending on the source of gain or loss:

Net difference between projected and 5 year straight-line amortization actual earnings on investments
All other amounts Straight-line amortization over the expected average remaining service lives of all members that are provided benefits (active, inactive, and retired) as of the beginning of the measurement period (9.92 years for June 30, 2021)
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2022 the City recognized OPEB expense of $2,731,471. As of fiscal year ended June 30, 2022, the City reported deferred outflows/inflows of resources related to OPEB from the following sources:

Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes in assumption $ 8,919,161 (3,063,939)
Differences between expected
and actual experience - (7,736,657)
Net difference between projected and
actual earnings on investments - (972,620)
OPEB contributions subsequent to
measurement date 3,156,420 -
$ 12,075,581 (11,773,216)
76 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Other amounts reported as deferred inflows of resources related to OPEB will be recognized as expense as follows:

Measurement
Year Ending
June 30
Recognized
Deferred
Outflows(Inflows)
of Resources
2022 (383,006) $
2023 (364, 048)
2024 (303,623)
2025 (303,996)
2026 69,587
Thereafter (1,568,969)
In prior years, pension and OPEB liabilities have been extinguished primarily by the general fund.

Medical Trusts
The City contributes, consistent with bargaining unit agreements, monies to medical trusts, a defined contribution plan that provide postemployment medical benefits to employees. The amount of benefits provided to employees under these plans is limited solely to the amount contributed (determined by negotiations between the various bargaining groups and the City) related investment earnings, and forfeitures.

For the fiscal year ended June 30, 2022, the City contributed $3,083,191 towards the retiree medical trusts.

These are administered through third-party administrators and the City does not perform the investing function or have other significant responsibility relating to the management of plan assets. Thus, plan assets and any related liabilities have been excluded from the City’s basic financial statements. 77 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(12) FUND BALANCES
In the fund financial statements fund balance is displayed in categories that describe the nature and extent of constraints on resources that the City is bound to observe. See note 1 for a detailed explanation of the City’s fund balance policies.

Fund balance reported on the governmental funds balance sheet as of June 30, 2022 includes the following:

Nonspendable fund balance
Nonspendable fund balance includes amounts that are not in a spendable form, such as prepaid and advances to other funds, or are required to be maintained intact, such as funds held by the City associated with the perpetual care of the City's cemetery and mausoleum.

Nonspendable fund balances are presented as a component of fund balances as follows:

General Fund
Special Revenue
Source Fund
Low and
Moderate
Income Housing
Asset Fund
Miscellaneous
Grants Fund
Nonmajor
governmental
funds
Total
governmental
funds
Nonspendable
Prepaids $ 2,510,466 — — — 26,343 2,536,809
Advances to Beach 3,842,973 — — — — 3,842,973
Advances to Rent Control 268,147 — — — — 268,147
Perpetual care — — — — 16,901,605 16,901,605
Total nonspendable 6,621,586 $ — — — 16,927,948 23,549,534 Restricted fund balance
Restricted fund balance represents amounts that can only be spent for the specific purposes stipulated by either external resource providers or by enabling legislation that created the revenue source and restricted its use. These restrictions may be changed or lifted only with the consent of the resource providers.

The largest component of restricted fund balance is affordable housing, which represents funds received from grants, taxes, and fees that are all dedicated to ensuring the affordability of housing in the City. Most affordable housing funds are already obligated or loaned to affordable housing developers for eligible projects. The 2017 City Services Building Bonds, 2018 Fire Station 1 Bonds and the 2021 City Yards Modernization Project Bonds represent the unspent portion of lease revenue bond proceeds that were issued to finance these large-scale capital projects. Other significant categories include transportation funds, traffic, roads, and parking, which are all dedicated to improving the City’s transportation systems for its citizens and visitors. Another noteworthy category is cultural and recreation services, which includes funds restricted for beach recreation activities, the upgrade and/or expansion of parks and recreation facilities, and funds that support public art programs. Overnight accommodations funds are to be used for development of low-cost lodging accommodations in the Santa Monica Coastal Zone and for the development, redevelopment, expansion, replacement, repair, operation or use of affordable overnight accommodations within the City of Santa Monica. Childcare programs are designed to assist eligible residents with childcare needs, as well as for the construction of new childcare facilities. Advances to the 78 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Beach Fund were made with funds that will be restricted upon repayment. Finally, debt service represents amounts held by trustees for the future repayment of outstanding City obligations.

Restricted fund balances are presented as a component of fund balances as follows:

General Fund
Special Revenue
Source Fund
Low and Moderate
Income Housing
Asset Fund
Miscellaneous
Grants Fund
Nonmajor
governmental
funds
Total
governmental
funds
Restricted
2017 City Services Building Bonds $ 587,368 — — — — 587,368 2018 Fire Station 1 Bonds 4,652,671 — — — — 4,652,671
2021 City Yards Bonds 12,353,719 — — — — 12,353,719
Affordable housing — 46,453,308 66,517,462 6,981,949 22,495,112 142,447,831 Advances to Beach — 1,450,000 — — — 1,450,000
Childcare programs — 3,266,827 — — — 3,266,827
Clean beaches and ocean parcel tax — — — — 10,770,846 10,770,846 Consumer protection 2,253,730 — — — — 2,253,730
Cultural and recreation services — 7,287,282 — 234,435 — 7,521,717 Debt service — — — — 8,508,206 8,508,206
Disability 428,426 — — — — 428,426
Miscellaneous — 1,633,264 — 953,652 3,258,013 5,844,929 Mobility — — — 2,758,562 — 2,758,562
Overnight accommodations — 3,321,025 — — — 3,321,025
Parking — 1,114,186 — — — 1,114,186
Roads — 44,853 — — 4,537,360 4,582,213
Traffic — 2,748,260 — — — 2,748,260
Transportation — 12,851,132 — — 15,876,986 28,728,118
Water — — — 6,686,700 — 6,686,700
Total restricted $ 20,275,914 80,170,137 66,517,462 17,615,298 65,446,523 250,025,334 Committed fund balance
Committed fund balance represents amounts that can only be used for the specific purposes determined by a formal action of the City Council. Commitments may be changed or lifted only by the City Council taking the same formal action that originally imposed the constraint.

Committed fund balance consists of affordable housing funds received from settlement proceeds, the sale of City-owned properties, funds received from the Successor Agency, and one quarter of the City’s Transaction and Use Tax revenue, which are committed to ensuring the affordability of housing in the City.

Most affordable housing funds are already obligated or loaned to affordable housing developers for eligible projects.
79 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Committed fund balances are presented as a component of fund balances as follows:

General Fund
Special Revenue
Source Fund
Low and
Moderate
Income Housing
Asset Fund
Miscellaneous
Grants Fund
Nonmajor
governmental
funds
Total
governmental
funds
Committed
Affordable housing $ — — 122,607,616 — 122,607,616 —
Total committed $ — 122,607,616 — — 122,607,616 —
Assigned fund balance
Assigned fund balance represents amounts intended to be used by the City for specific purposes expressed by the City Council or by an official to which the City Council has delegated the authority.

The largest component of assigned fund balance is other purposes which represent funds set aside to respond to contingent liabilities and other unanticipated costs. Working capital/operational continuity funds represent funds set aside to allow for the continued delivery of essential General Fund operations during continued COVID-19-related revenue losses and to cover contractual labor obligations. Funds remaining for continuing capital projects represent funds that are dedicated to completing multiyear capital improvement throughout the City, while Yearend CIP savings have been re-appropriated by Council to new projects in the Adopted FY 2022-23 CIP Budget. Other funds are assigned for compensated absences, encumbrances and reappropriation of open contracts and purchase orders, and other key initiatives required for the health and safety of the City and its assets.

Assigned fund balances are presented as a component of fund balances as follows:

General Fund
Special Revenue
Source Fund
Low and
Moderate
Income Housing
Asset Fund
Miscellaneous
Grants Fund
Nonmajor
governmental
funds
Total
governmental
funds
Assigned
Compensated absences $ 13,343,353 — — — — 13,343,353
Continuing capital projects 12,235,787 — — — — 12,235,787 Economic recovery fund 290,184 — — — — 290,184
Encumbrances and reappropriations 12,124,701 — — — — 12,124,701 Other purposes 66,627,849 — — — — 66,627,849
Racial justice fund 14,854 — — — — 14,854
Leases-GASB 87 733,811 — — — — 733,811
Yearend CIP savings 2,847,146 — — — — 2,847,146
Working Ca pita l/Ope ra tiona l Continuity 35,000,000 — — — — 35,000,000 Total assigned $ 143,217,685 — — — — 143,217,685
80 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Unassigned fund balance
Unassigned fund balance is the residual classification for the General Fund and includes all amounts not contained in other classifications. Other governmental funds may report negative unassigned fund balance if expenditures incurred for a specific purpose exceed the resources that are restricted, committed, or assigned to that purpose. This occurs when reimbursements are received after expenditures are incurred and the deficit will be eliminated as reimbursements for eligible grant expenditures are received from grantors.

The largest component of unassigned fund balance is the emergency operating contingency, which represents funds for emergency events and circumstances. These reserves are maintained to safeguard the credit rating and basic operations of the City in the event of an economic or natural emergency or disaster.

The City lowered its contingency reserves from 15% to 12.5% of the following year’s operating and ongoing capital budget in order to make more one-time funds available to withstand the severe revenue decreases resulting from the COVID-19 pandemic. The City will begin increasing its reserves by 0.5 percentage points each year beginning in FY 2022-23, reaching its original 15% level in FY 2026-27. The unrealized loss represents the portion of fund balance related to investments that is not available for appropriation. Negative unassigned fund balance for nonmajor governmental funds is due to the timing of expenditures being incurred prior to reimbursement from grant and other revenue sources. The deficits will be eliminated as future revenues are received.

Unassigned fund balances are presented as a component of fund balances as follows:

General Fund
Special Revenue
Source Fund
Low and
Moderate
Income Housing
Asset Fund
Miscellaneous
Grants Fund
Nonmajor
governmental
funds
Total
governmental
funds
Unassigned
Contingency $ — 50,047,846 — — 50,047,846 —
Unrealized loss (10,228,164) — — — (10,228,164) —
Other unassigned — — (23,169,065) — (1,775,278) (24,944,343) Total unassigned $ — 39,819,682 (23,169,065) — (1,775,278) 14,875,339 81 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(13) FUND DEFICITS
Governmental Funds
A negative fund balance of $1,653,339 exists in the Beach Recreation fund primarily due to the prior year’s parking revenue declines due to the pandemic and capital expenditures for projects such as the beach bike path. The fund deficit decreased from the prior year due to increased revenue and reduced expenditures. It is anticipated that the fund deficit will be eliminated through increased future revenues and reduced future capital projects expenditures.

A negative fund balance of $5,553,767 exists in the Miscellaneous Grants fund primarily due to grant reimbursements receivables from other governments that have not been recognized as revenue based on the City’s revenue recognition policy. Once the funds have been received the negative fund balance will be eliminated.

A negative fund balance of $121,939 exists in the Parks and Recreation fund primarily due to capital expenditures for projects such as the Tongva Park landscape improvements and repurposing of Palisades Park’s petanque courts. Both projects are complete and the negative fund balance may be reduced next year.

Internal Service Funds
A net deficit of $7,382,772 exists in the Self-Insurance General Liability Fund primarily due to the prior year’s settlement of claims related to the Santa Monica Police Activities League and this year’s payment into the qualified settlement fund. Management reduced the deficit in FY 2021-22 through a one-time $54.9 million contribution to the Fund and will fund future contributions as necessary. 82 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(14) RESTRICTED NET POSITION
In the government-wide financial statements and proprietary fund financial statements, restricted net position is reported when constraints on the use of resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations or other governments, or imposed by law through constitutional provisions or enabling legislation. See note 1 for a detailed explanation of the City’s net position policies.

Restricted net position for governmental activities at June 30, 2022 is as follows:

Community development
General Fund $ 2,682,156
Low and moderate income housing funds 66,517,462
Special revenue source funds 54,491,160
Tenant Ownership Rights Charter Amendment (TORCA) funds 10,203,661 Community Development Block Grant (CDBG) funds 8,925,257 Miscellaneous grant funds 17,615,298
Rent control funds 1,387,280
Housing authority funds 2,168,189
Total Community development 163,990,463
Community services
Special revenue source funds 7,287,282
Total Community services 7,287,282
Transportation
Special revenue source funds - traffic 2,748,260
Special revenue source funds - parking 1,114,186
Special revenue source funds - roads 44,853
Special revenue source funds - transit 12,851,132
Local return funds 15,876,986
Gas tax funds 4,537,360
Total transportation 37,172,777
Clean beaches and ocean parcel tax 10,770,846
Debt service 8,508,206
Miscellaneous 4,891,277
Perpetual care - nonexpendable 16,901,605
Total governmental restricted net position $ 249,522,456 83 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Restricted net position for business-type activities at June 30, 2022 is as follows:

Prop 1B $ 10,169,682
Debt service 2,298,946
Total business-type restricted net position $ 12,468,628 84 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(15) COMMITMENTS AND CONTINGENCIES
Litigation
(a) Pico Neighborhood Association, et al. v. City of Santa Monica. In this case, on February 13, 2019, the trial court issued its judgment in favor of plaintiffs and against the City of Santa Monica, holding that the City’s at-large method of electing its City Council violated the California Voting Rights Act (“CVRA”) and the Equal Protection Clause of the California Constitution. Plaintiffs’ counsel then filed motions seeking approximately $950,000 in costs and, under a provision of the CVRA, $23 million in attorneys’ fees. The City appealed on February 22, 2019, and on July 9, 2020, the Court of Appeal reversed the trial court, awarded costs to the City, and directed the trial court to enter judgment for the City. Plaintiffs filed a petition for rehearing on July 24, 2020, which the Court of Appeal denied on August 5, 2020. On August 18, 2020 the plaintiffs requested review by the California Supreme Court, and on October 21, 2020 the California Supreme Court granted the petition for review and ordered the parties to brief the following issue: “What must a plaintiff prove in order to establish vote dilution under the California Voting Rights Act?” The Supreme Court also ordered the Court of Appeal’s opinion depublished. Plaintiffs’ requests for costs and attorneys’ fees remain pending in the trial court awaiting the final outcome of the Supreme Court proceedings and any subsequent proceedings in the Court of Appeal.
(b) Litigation arising from allegations of sexual abuse of minors. On October 22, 2018, the Los Angeles County District Attorney's Office charged City employee Eric Uller with five counts of sexual crimes against four minors. The criminal charges related to alleged incidents dating back to 1989 that were alleged to have occurred while Uller was volunteering and/or working as a City employee at the Santa Monica Police Activities League (“SM-PAL”). On November 5, 2018, Uller pled not guilty to the charges against him; on November 7, Uller bailed out of custody. On the morning of November 15, 2018, the date of his next scheduled court appearance, Uller was found dead in his residence of an apparent suicide.

Following Uller's arrest and subsequent suicide, a total of 23 individuals (all young boys at the time of the alleged abuse) filed suit against the City and SM-PAL alleging abuse by Uller between the late 1980s and early 2000s while he was associated with SM-PAL and one individual (a young girl at the time of the alleged abuse) alleging abuse by another individual within this same time period while he allegedly was a probationer performing community service at SM-PAL. In early 2020, the City reached settlements, fully executed and effective April 7, 2020, with the 24 plaintiffs for a total of $42.6 million payable in two installments. As of October 10, 2020, the City has fully paid these settlements.

After the original March 2020 settlements, an additional 20 plaintiffs sued the City and SM-PAL alleging abuse by Uller between the 1980s and early 2000s while he was associated with SM-PAL. The City reached settlements with all 20 plaintiffs as follows: (a) $9.5 million to be paid to 19 of the plaintiffs in three installments; $4 million 45 days after the effective date of the settlement, $2.4 million on or before July 30, 2021, and $3.1 million on or before July 30, 2022; and (b) $325,000 to be paid to one plaintiff in two installments; $162,500 45 days after the effective date of the settlement and $162,500 on or before October 13, 2021. The City paid two of these settlement payments on November 25, 2020 ($162,500) and December 1, 2020 ($4 million), leaving an outstanding balance as of June 30, 2021 of $5,662,500. On July 30, 2021 ($2.4 million) and October 7, 2021 ($162,500) the City made additional settlement payments and as of June 30, 2022 only $3,100,000 remains outstanding.

The City also reached a settlement with a total of 61 additional claimants totaling $54.9 million. The settlement moneys were paid into a qualified settlement fund on December 22, 2021. 85 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
A global mediation took place on November 14, 2022 and there is another pending mediation for 131 plaintiffs that has yet to occur. No settlement in these cases have been reached as of the date of these financial statements.

The City and SM-PAL have insurance coverage via several insurance carriers covering some of the time when the alleged abuse occurred. Despite numerous and ongoing demands to these carriers by the City, the only monetary contributions to the aforementioned settlements have been $11,000,000 from ACCEL (in exchange for a release) and $163,679 from one SM-PAL insurer, Riverstone, to reimburse select defense costs. After deducting Santa Monica’s required contributions to ACCEL to cover its share of this $11 million, the net recovery from ACCEL was approximately $8,766,089.

The City initiated coverage action against Insurance Co. of the State of Pennsylvania, Insurance Co. of the West, Lexington Insurance Co., Axis Surplus Insurance Co., Arch Specialty Insurance Co. and TIG Insurance Co. for all the settlements to the victims, legal expenses, and damages in the amount sufficient to “deter similar bad faith behavior by the defendants in the future.” The suit is ongoing. ( c) California Business Roundtable v. City of Santa Monica, Santa Monica-Malibu Unified School District, and All Persons Interested in the Matter of Measure GS, Case Number 23-SMCV-00111 Plaintiff, the California Business Roundtable, has filed a reverse validation action that seeks to invalidate Measure GS. Measure GS is a successful citizen’s initiative that obtained support from 53.49% of the voters at the November 8, 2022 General Election. Measure GS increased the City’s real estate transfer tax on properties of $8,000,000 or more from $6.00 per $1,000 to $56.00 per $1,000. Measure GS is a special tax that is estimated to bring in $49,000,000 in additional annual revenue toward public schools, affordable housing, rent relief, and homelessness prevention. Measure GS established two new funds: (1) a Homelessness Prevention and Affordable Housing Fund (“HPAH Fund”); and (2) a School Fund. Measure GS dedicates the first $10,000,000 in increased annual tax revenue to the School Fund and the next $40,000,000 in annual revenue to the HPAH Fund. Measure GS does not contain specific limitations on the uses of the funds in the School Fund. The HPAH Fund, however, is subject to a number minimum and maximum expenditures limits for different categories of services. The lawsuit alleges that Measure GS is invalid because it violates the “single-subject” rule in the California Constitution, which prohibits initiative measures from “embracing” more than one subject, because it provides funding for “general K-12 public education” and also for “a new comprehensive affordable housing program.” See California Constitution, art.

II, § 8(d). The Lawsuit seeks to: (1) invalidate Measure GS as unconstitutional under the single-subject rule; (2) obtain a declaratory judgment that Measure GS is unconstitutional; and (3) obtain attorneys’ fees and costs pursuant to Code of Civil Procedure §1021.5.

Invalidating Measure GS would result in the City being unable to utilize the $49,000,000 in estimated annual revenue, subject to the expenditure limitations in Measure GS.

The City’s initial response is due on or about February 15, 2023. In addition, the proponents of Measure GS may seek to intervene in the lawsuit. Because there is no pending request to stay the implementation of the tax, the tax will go into effect in March 2023. The lawsuit may take several months to resolve. Therefore any tax collected and spent by the City should be considered a contingent liability until resolution of this lawsuit. 86 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Airport
On October 31, 2013, the City filed suit against the Federal Aviation Administration (FAA) regarding the City’s desire to get a judicial determination as to whether its ownership and control of the Santa Monica Airport, including its right to close the Airport if desired, is subject to limitations imposed by federal law.

In dispute was whether a reverter clause in an Instrument of Transfer from 1948 obligated the City to use the land as an airport in perpetuity and if the City attempted to change its use, the land would revert to the federal government.

Additionally, in 1994 the City had accepted several federal grants to fund capital improvements at the Airport.

Outside aviation interests contended that an amendment to an existing grant that was executed in 2003 obligated the City to operate the Airport until 2023, which is the twenty-year federal obligation period for the acceptance of grant funds. The City disputed this and instead contended that the 2003 amendment was not a new grant and that the twenty-year obligation period ended in 2014. This dispute also resulted in a federal court lawsuit.

On January 28, 2017, the City reached an agreement with the FAA, implemented through a consent decree from the court, that settled all legal disputes between the City and the federal government regarding the Airport and included the following:
• City may close the Airport to all aeronautical use forever after December 31, 2028; until that date, the City must continue to operate the Airport subject to FAA rules and requirements, including requirements imposed by certain specified federal grant assurance provisions; • City may reduce the operational runway length to 3,500 feet; • City has the right to establish its own proprietary fixed base operation services.

The City completed the shortening of the runway through markings and lights in FY 2017-18, and completed the removal of runway and taxiway pavement rendered unnecessary by the shortening in FY 2018-19.

On November 8, 2019, the Federal Aviation Administration issued a “Director’s Determination” in Mark Smith, et al., v. City of Santa Monica, FAA Docket No. 16-16-02, an administrative action brought pursuant to 15 C.F.R. Part 16 against the City as the operator of the Santa Monica Airport. Among other things, the Director’s Determination finds that certain loans made by the City’s General Fund to the Airport Fund were “insufficiently and improperly documented as such and fail to satisfy the requirements of loans” under the FAA’s Revenue Use Policy. As a result, the Director’s Determination finds: “Improper interest payments charged to the Airport Fund made after February 5, 2010 totaling $454,292 and $383,173 and the principal overpayment of $188,873 must be credited back to the Airport Fund, plus interest from the date of the improper withdrawals or payments.” The Director’s Determination also requires the City to reduce the interest rate on other loans made by the City to the Airport to no more than “the rate which the City received for other investments” when the loans were issued. The City appealed the Director’s Determination on January 23, 2020.

On July 15, 2022 the Associate Administrator for Airports issued a decision that all of the previously made loans between the General and the Airport Funds should be voided as inconsistent with federal law and required that the City write off loans and accrued interest in the amount of $5,554,811 and repay the Airport $7,355,821. The City is currently in negotiations to enter into a payment plan over the next five years when the Airport closes. It is expected that all of the Airport assets will revert to the City at that time. 87 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Grants
The City recognizes as revenue grant monies received as reimbursement for costs incurred in certain Federal and State programs it administers. Although the City’s Federal grant programs have been audited through June 30, 2021 in accordance with the Uniform Guidance requirements issued by the U.S. Office of Management and Budget, these programs may be subject to financial and compliance audits by the reimbursing agencies.

The amount, if any, of expenditures, which may be disallowed by the granting agencies cannot be determined at this time, although the City expects such amounts, if any, to be immaterial.

Construction Commitments
The City has a number of construction projects currently underway. Purchase orders, contracts and other commitments for these projects are recorded in order to reserve the portion of the applicable appropriation and are segregated at year-end as an unavailable fund balance. Approximately $27.1 million will be payable upon future performance under these contracts.

Other Commitments
In 1999 the City entered into a thirty-year agreement with the City of Los Angeles for the conveyance, treatment, and disposal of wastewater. The Amalgamated System Sewerage System Charge (ASSSC) from this agreement is based on the City of Los Angeles’ estimated costs and actual flows and strengths of wastewater in 2020-21. As of the date of these financial statements, the City of Los Angeles had not issued the bill with the amounts due under the agreement for FY2022-23. In FY2021-22 the City paid $6.49 million and is expecting to pay a similar amount in FY2022-23. This agreement may be renegotiated by either party after the initial 10 years of the agreement.

On June 29, 2018, the City transferred ownership of the Mountain View Mobile Home Park to the Caritas Corporation (Caritas), a 501(c)3 non-profit, for $1. As part of the terms of the sale, Caritas agreed to maintain affordability and resident protections and the City will provide a loan commitment up to $500,000 to cover operating expense overages for the next five years at $100,000 per year. As of June 30, 2022, $321,944 remains to be disbursed.

Encumbrances
The City uses “encumbrances” to control expenditure commitments for the year. Encumbrances represent commitments related to contracts not yet performed and purchase orders not yet filled. Commitments for such expenditures are encumbered to reserve applicable appropriations. As of June 30, 2022, total encumbrances for the governmental funds are reported as follows:

General Fund $ 26,724,288
Special Revenue Fund 1,847,519
Low and Moderate Income Housing Asset Fund —
Miscellaneous Grants Fund 10,646,151
Nonmajor governmental funds 6,456,917
Total $ 45,674,875
88 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(16) RECONCILIATION OF FUND BALANCE SHEET/STATEMENT OF NET POSITION TO

GOVERNMENT-WIDE FINANCIAL STATEMENTS
Amounts reported for governmental activities in the government-wide statement of net position are different from those reported for governmental funds in the funds balance sheet. The following provides a reconciliation of those differences:

Assets
Total
governmental
funds
Long-term assets
and liabilities (1)
Total
governmental
activities
internal service
funds (2)
Other
adjustments and
eliminations
Statement of net
position totals
Cash and investments $ 309,255,813 — 85,259,546 — 394,515,359 Restricted cash and investments 24,119,582 — — — 24,119,582 Receivables (net, where applicable,
of allowances for uncollectibles):

Accounts 7,135,975 — 298,173 — 7,434,148
Notes 208,651,085 — — — 208,651,085
Taxes 26,609,781 — — — 26,609,781
Leases 36,242,322 36,242,322
Interest 878,775 — 175,316 — 1,054,091
Other governments 15,802,603 — — — 15,802,603
Internal balances — — (66,163) (7,355,803) (7,421,966)
Due from other funds 14,344,387 — (14,344,387) —
Deposits 3,258 — — — 3,258
Prepaids 2,536,809 — - 46 2,536,855
Restricted cash and investments with fiscal agent 43,802,047 — — — 43,802,047 Advances to other funds 5,561,120 — — (5,561,120) —
Capital assets, net — 915,666,125 60,300 — 915,726,425
Total assets 694,943,557 915,666,125 85,727,172 (27,261,264) 1,669,075,590 Deferred O utflows of Resources
Deferred outflows from pensions — 61,792,038 315,840 — 62,107,878 Deferred outflows from OPEB — 10,982,164 28,340 — 11,010,504 Total deferred outflow of resources — 72,774,202 344,180 — 73,118,382 Liabilities, Deferred Inflows of Resources and
Fund Balances/Net Position
Liabilities:

Accounts payable 27,382,159 — 850,529 — 28,232,687
Accrued liabilities 5,850,740 — 42,576 — 5,893,316
Accrued interest payable — 4,132,750 — — 4,132,750
Contracts payable (retained percentage) 3,754,446 — 5,611 — 3,760,057 Due to other funds 21,700,208 — — (21,700,208) —
Unearned revenue 28,788,015 — — — 28,788,015
Deposits payable from restricted assets 926,850 — — — 926,850 Advances from other funds 5,561,120 — — (5,561,120) —
Compensated absences due within one year — 7,533,756 50,205 — 7,583,961 Compensated absences due in more than
one year — 6,406,791 115,018 — 6,521,809
Claims payable due within one year — — 20,928,432 — 20,928,432 Claims payable due in more than one year — — 53,393,779 — 53,393,779 Loans and bonds payable due within one year — 4,390,000 — — 4,390,000 Loans and bonds payable due in more than one year — 225,550,218 — — 225,550,218 Pollution remediation obligation due within one year — 352,448 — — 352,448 Pollution remediation obligation due in more than one year — 1,306,020 — — 1,306,020 Net OPEB liability — 28,652,786 73,940 — 28,726,726
Net pension liability — 194,862,245 858,643 — 195,720,888 Total liabilities 93,963,538 473,187,014 76,318,733 (27,261,328) 616,207,956 Deferred Inflows of Resources
Unavailable revenue 12,044,981 — — (12,044,981) —
Deferred gain on refunding — 573,081 — — 573,081
Deferred inflows leases 34,659,530 — — — 34,659,530
Deferred inflows from pensions — 144,591,990 980,023 — 145,572,013 Deferred inflows from OPEB — 10,707,178 27,630 — 10,734,808 Total deferred inflows of resources 46,704,511 155,872,249 1,007,653 (12,044,981) 191,539,432 Total fund balances/net position $ 554,275,508 359,381,064 8,744,966 12,045,045 934,446,584 89 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
1) Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the balance sheet. Capital assets of internal service funds of $60,300 net of accumulated depreciation, are not included in this amount. $ 1,493,595,447
Less accumulated depreciation/amortization (577,929,322) $ 915,666,125
Deferred inflows on refunding $ (573,081)
Deferred outflows from pension 61,792,038
Deferred inflows from pension (144,591,990)
$ (82,799,952)
Deferred outflows from OPEB 10,982,164
Deferred inflows from OPEB (10,707,178)
$ 274,986
General obligation bonds (1,060,000)
Revenue bonds (206,455,000)
Accrued interest on long-term debt (4,132,750)
Unamortized premium on long-term debt (22,425,218)
Employee compensated absences (13,940,547)
Accrued pollution remediation costs (1,658,468)
Net OPEB liability (28,652,786)
Net pension liability (194,862,245)
Total long-term liabilities $ (473,187,014)
2)
$ 8,811,129
(66,163)
$ 8,744,966
Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the balance sheet.

Internal service funds are used by management to charge the costs of information technology and communications operations, self-insurance comprehensive, auto and workers' compensation to individual funds. The assets and liabilities of these internal service funds are included in the governmental activities on the statement of net position.

Adjustments for Internal Service Funds are necessary to "close" those funds by recording charges to and payments from business-type activities to completely cover the Internal Service Funds' costs for the year.
90 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Amounts reported for business-type activities in the government-wide statement of net position are different from those reported for enterprise funds in the fund statement of net position. The following provides a reconciliation of those differences:

Total business- O ther
Total type internal adjustments Statement of
enterprise service and net position
funds funds (1) eliminations totals
Cash and investments $173,491,491 34,363,918 — 207,855,409 Receivables (net, where applicable,
of allowances for uncollectibles):

Accounts 20,604,031 277,197 — 20,881,228
Leases 47,419,301 47,419,301
Interest 454,968 66,499 — 521,467
Taxes 8,821 — — 8,821
Due from other funds 7,355,821 (7,355,821) -
Due from other governments 29,034,913 — — 29,034,913
Internal balances — 66,163 7,355,803 7,421,966
Inventory 3,531,115 12,973 — 3,544,088
Prepaids 113,521 — 18 113,539
Restricted cash and investments 37,743,586 — — 37,743,586 Restricted cash and investments with fiscal agent 75,464,422 — — 75,464,422 Capital assets, net 490,910,020 14,786,741 — 505,696,761 Total assets 886,132,010 49,573,491 935,705,501 -
Deferred outflows from pensions 12,401,899 542,071 — 12,943,970 Deferred outflows from OPEB 1,002,033 63,044 — 1,065,077 Total deferred outflows of resources 13,403,932 605,115 — 14,009,047 Accounts payable 13,056,235 473,600 — 13,529,835
Accrued liabilities 2,703,112 57,459 — 2,760,571
Accrued interest payable 2,045,049 — — 2,045,049
Contracts payable (retained percentage) 4,187,142 — — 4,187,142 Unearned revenue 43,534,508 — — 43,534,508
Liabilities payable from restricted assets 18,423,693 — — 18,423,693 Compensated absences due within one year 2,326,926 81,049 — 2,407,975 Compensated absences due in more than one year 1,014,449 113,794 — 1,128,243 Claims payable due within one year — 2,177,393 — 2,177,393 Claims payable due in more than one year — 2,142,079 — 2,142,079 Loans and bonds payable due within one year — — -
Loans and bonds payable due in more than one year 131,521,529 — — 131,521,529 Pollution remediation obligation due within one year 8,947,683 — — 8,947,683 Pollution remediation obligation due in more than one year 23,148,749 — — 23,148,749 Net OPEB liability due in more than one year 2, 164,483 614,335 — 2,778,818 Net pension liability due in more than one year 33, 1,473,673 715,780 — 35,189,453 Total liabilities 287,239,190 6,683,530 — 293,922,720
Deferred inflows from leases 43,888,006 43,888,006
Deferred inflows from pensions 38,481,896 1,681,994 — 40,163,890 Deferred inflows from OPEB 976,943 61,465 — 1,038,408
Total deferred inflows of resources 83,346,845 1,743,459 — 85,090,304 $528,949,907 41,751,617 — 570,701,524
1)
$ 41,685,454
$ 66,163
Adjustment for Internal Service Funds are necessary to "close" those funds for charges to and payments from participating governmental-type activities to completely cover the Internal Service Funds' costs for the year.

Deferred Inflows of Resources
Assets
Liabilities
Deferred O utflows of Resources
Total Net Position
Internal service funds are used by management to charge the costs of vehicle management, information technology and risk management to individual funds. The assets and liabilities of the vehicle management and self-insurance bus internal service funds are included in business-type activities in the statement of net position.
91 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
(17) INTERFUND TRANSACTIONS
The following tables summarize the due to/from other funds, interfund advances to/from, and transfers in/out as of and for the fiscal year ended June 30, 2022.

Advances to/from
Advances to/from other funds at June 30, 2022 are as follows:

Advances to Advances from
(receivable fund) (payable fund) Amount
General Fund Nonmajor governmental funds $ 4,111,120
Total General Fund 4,111,120
Special Revenue Source Fund Nonmajor governmental funds 1,450,000 Total Special Revenue Source Fund 1,450,000
Total advances to/from $ 5,561,120
Advances represent loans made to cover operating shortfalls or to provide financing resources for capital projects. These amounts are expected to be repaid in future years, subject to the various loan terms.

Due from/to
Balances due to/from other funds at June 30, 2022 are as follows:

Due From Due to
(receivable fund) (payable fund) Amount
General Fund Miscellaneous Grants Fund $ 12,134,179
Nonmajor governmental funds 2,210,208
Total General Fund 14,344,387
Airport Fund General Fund 7,355,821
Total Airport Fund 7,355,821
Total due to/from $ 21,700,208
Due to/from other funds are primarily short-term loans made to eliminate negative cash balances at yearend. These amounts are expected to be repaid in one year. 92 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
Transfers
Transfers to/from other funds for the fiscal year ended June 30, 2022 are as follows:

Transfer in
(receivable fund) Amount
General Fund Special Revenue Source Fund 1,031,051 (1)
Miscellaneous Grants Fund 15,025,590 (2)
Nonmajor governmental funds 3,511,933 (3)
Water Fund 1,328,647 (4)
Big Blue Bus Fund 397,084 (5)
Low/Mod Housing Fund 362,715 (6)
Wastewater Fund 650,302 (7)
Resource Recovery and Recycling Fund 272,818 (8)
Nonmajor enterprise funds 1,966,542 (9)
Internal service funds 225,725 (10)
Total General Fund 24,772,407
Special Revenue Source Fund General Fund 8,948,023 (11) Total Special Revenue Source Fund 8,948,023
Nonmajor governmental funds General Fund 12,611,016 (12) Miscellaneous Grants Fund 92,355 (13)
Nonmajor enterprise funds 66,936 (14)
Total Nonmajor governmental funds 12,770,307
Water Fund General Fund 132,229 (15)
Miscellaneous Grants Fund 591,441 (16)
Wastewater Fund 183,374 (17)
Total Water Fund 907,044
Resource Recovery and Recycling Fund Miscellaneous Grants Fund 506 (8) Total Resource Recovery and Recycling Fund 506
Wastewater Fund General Fund 22,702 (15)
Nonmajor enterprise funds 1,363,211 (18)
Total Wastewater Fund 1,385,913
Big Blue Bus Fund General Fund 216,642 (19)
Nonmajor governmental funds 683,364 (20)
Total Big Blue Bus Fund 900,006
Nonmajor enterprise funds General Fund 10,895,177 (21)
Miscellaneous Grants Fund 985 (22)
Nonmajor governmental funds 987,282 (23)
Water Fund 6,405 (24)
Nonmajor enterprise funds 14,327 (13)
Total Nonmajor enterprise funds 11,904,176
Internal service funds Internal service funds 2,059,268 (25) Total Internal service funds 2,059,268
Total transfers 63,647,650
Transfer out
(payable fund)
93 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
1) Transfer of monies to subsidize cultural arts, community recreation, affordable housing, transportation management, and payments for property used in CityTV operations.
2) Transfer of monies to subsidize literacy and ARPA and CARES Act related expenditures. 3) Transfer of monies to subsidize administrative, watershed management, planning, transportation, and street infrastructure expenditures.
4) Transfer of monies to subsidize infrastructure improvements, environmental program, and engineering expenditures. 5) Transfer of monies to subsidize finance, human resources, police and transit mall maintenance expenditures. 6) Transfer of monies to subsidize low and moderate income housing expenditures. 7) Transfer of monies to subsidize engineering and environmental programs and infrastructure improvement expenditures.
8) Transfer of monies to subsidize environmental programs. 9) Transfer of monies to subsidize the Network Operations Center, infrastructure, environmental, administrative, and community broadband expenditures.
10) Transfer of monies to subsidize risk management program, administrative, and youth program expenditures. 11) Transfer of monies to subsidize affordable housing program expenditures. 12) Transfer of monies for payment of debt service and to subsidize beach and community recreation programs. 13) Transfer of monies to subsidize administrative expenditures. 14) Transfer of monies to subsidize maintenance program expenditures. 15) Transfer of monies to subsidize Sustainable Water Infrastructure Project (SWIP) expenditures. 16) Transfer of monies to subsidize water arrearage program expenditures. 17) Transfer of monies to subsidize pollution remediation expenditures. 18) Transfer of monies to subsidize operating and maintenance expenditures associated with the Santa Monica Urban Runoff Recycling Facility.
19) Transfer of monies to subsidize Big Blue Bus programs. 20) Transfer of monies to subsidize transportation program and infrastructure expenditures. 21) Transfer of monies to subsidize Clean and Safe Beaches program, pier, police and administrative expenditures and expenditures associated to airport feasibility study and airport programs. 22) Transfer of monies to subsidize cemetery operation and maintenance expenditures. 23) Transfer of monies to subsidize operating and maintenance expenditures associated with the Santa Monica Urban Runoff Recycling Facility, cemetery operation and maintenance, administrative expenditures and cemetery programs. 24) Transfer of monies received from Metropolitan Water District Recycled Water Rebate program. 25) Transfer of monies to subsidize risk management program expenditures. 94 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(18) SUCCESSOR AGENCY TRUST FUND FOR ASSETS OF FORMER REDEVELOPMENT AGENCY
On December 29, 2011, the California Supreme Court upheld AB 1X26 (“the Bill”) that provides for the dissolution of all redevelopment agencies in the State of California. This action impacted the reporting entity of the City of Santa Monica that previously reported a redevelopment agency as a blended component unit.

The Bill provides that upon dissolution of a redevelopment agency (RDA), either the sponsoring city or another unit of local government will agree to serve as the “successor agency” to hold the former RDA’s non-housing assets until they are distributed to other units of state and local government and all enforceable obligations have been paid. In accordance with the Bill, the successor agency is a separate legal entity from the sponsoring city or other local government unit. The Bill also provides for the transfer of the former RDA's housing assets to the City, acting in its municipal capacity.

On January 10, 2012, the City Council elected to become the Successor Agency for the Redevelopment Agency of the City of Santa Monica in accordance with the Bill as part of City resolution number 10647.

In accordance with the timeline set forth in the Bill (as modified by the California Supreme Court on December 29, 2011) all redevelopment agencies in the State of California were dissolved and ceased to operate as a legal entity as of February 1, 2012. The assets and activities of the dissolved redevelopment agency are reported in a private-purpose trust fund in the financial statements of the City.

Cash and Investments
Cash and investments as of June 30, 2022 are classified in the accompanying financial statements as follows:

Statement of Fiduciary Net Position:

Restricted cash and investments $ 5,703,737
Restricted cash and investments with fiscal agent 7,175,322 Total cash and investments $ 12,879,059
Investments of the Successor Agency are governed by Government Code Section 53601 and the City’s Investment Policy, which restrict the term and types of investments that can be made. For fair value, authorized investments, disclosures relating to interest rate and credit risk, see Note 2. 95 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022

SUCCESSOR AGENCY LONG-TERM LIABILITIES
Changes in long-term liabilities:

Long-term liability activity for the fiscal year ended June 30, 2022 was as follows:

Balance at
J une 30, 2021 Additio ns Reductio ns
Balance at
J une 30,
2022
Due within
o ne year
Due beyo nd
o ne year
Lo ans and no tes payable
fro m direct bo rro wings 37,120,176 $ — 769,174 36,351,002 821,613 35,529,389 Term lo an fro m direct bo rro wings 22,727,261 — 3,030,303 19,696,958 3,030,303 16,666,655 Tax allo catio n bo nds 73,190,000 — 2,975,000 70,215,000 3,110,000 67,105,000 Les s deferred amo unts :

Fo r is s uance dis co unts (64,665) — (8,084) (56,581) — (56,581) Fo r is s uance premiums 273,132 — 13,656 259,476 — 259,476 To tal lo ans , no tes and bo nds payable $ 133,245,904 — 6,780,049 126,465,855 6,961,916 119,503,939 A summary of long-term bonds and loans outstanding at year-end is as follows:

Date of issue Original issue
Final
maturity
date
Interest
rate
Balance at
June 30, 2022
Tax allocation bonds:

Earthquake Recovery Project 2011 * June 7, 2011 41,050,000 $ July 1, 2042 5.00-5.875% 41,050,000 $ Earthquake Recovery Project Refunding 2006 * April 27, 2006 64,720,000 July 1, 2029 4.00-5.50% 29,165,000 Subtotal tax allocation bonds 70,215,000
Loans and notes from direct borrowings:

Bank of America Term Loan (1) * May 1, 2008 50,000,000 July 15, 2028 LIBOR plus 1.25% 19,696,958 Promissory notes payable to others(2)* Nov 1, 2010 42,500,000 Jan 1, 2042 6.82% 36,351,002 Subtotal loans and notes 56,047,960
Total $ 126,262,960
*Final and conclusive determination received from the Department of Finance (1) To fund low moderate income housing projects
(2) For purchase of real estate
96 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
Annual debt service requirements to maturity are as follows:

Fiscal Year
Ending
June 30, Principal Interest Principal Interest Principal Interest 2023 3,110,000 3,534,295 3,851,917 2,869,218 6,961,917 6,403,513 2024 3,245,000 3,391,308 3,907,916 2,750,647 7,152,916 6,141,955 2025 3,390,000 3,242,020 3,967,770 2,629,029 7,357,770 5,871,049 2026 3,545,000 3,085,983 4,031,687 2,501,788 7,576,687 5,587,771 2027 3,705,000 2,922,858 4,099,960 2,370,960 7,804,960 5,293,818 2028-2032 14,425,000 11,967,979 11,413,257 10,166,473 25,838,257 22,134,452 2033-2037 13,145,000 8,307,200 10,123,762 7,176,237 23,268,762 15,483,437 2038-2042 17,315,000 3,789,319 11,281,470 2,918,529 28,596,470 6,707,848 2043-2044 8,335,000 117,456 3,370,221 229,779 11,705,221 347,235 $ 70,215,000 40,358,418 56,047,960 33,612,660 126,262,960 73,971,078 Loans and notes payable
Tax allocation bonds from direct borrowings Total
The Successor Agency’s outstanding loan of $19,696,958 from a direct borrowing from Bank of America contains a provision that, upon default, increases the interest rate by 2.0% with the total interest rate not to exceed 12.0%.

The Successor Agency’s $70,215,000 of outstanding tax allocation bonds agreements contain provisions that in the event of default the majority of the bondholders can declare the principal balance plus any accrued interest be immediately payable.

The Successor Agency’s outstanding loan of $36,351,002 from a direct borrowing contains a provision that, upon default, the lender may, at its option, increase the interest rate by 5% over the rates otherwise provided for in the agreement, but in no event shall that the rate exceed 12.0% per annum. Additionally, upon default, the agreement allows the lender, at its option, to take one more action including the requirement for the entire amount due to be paid immediately and without prior notice.

Bank of America Term Loan
The Successor Agency has a term loan from Bank of America. Interest on the loan is LIBOR + 1.25%.

In light of the discontinuation of the publication of USD LIBOR, the Successor Agency was notified by Bank of America that as of July 1, 2023, the interest rate on the term loan will reset to the Fed Funds rate + 1.7%, following the USD LIBOR cessation expected on June 30, 2023.

Pledged Revenue
The Former Redevelopment Agency had a number of debt issues that were assumed by the Successor Agency that involve the pledging of revenues. The amounts and terms of the remainder of these commitments and the purposes for which the proceeds of the debt issuances are utilized are indicated in the summary of long-term bonds and loans and notes outstanding at year-end presented in this note. AB1X26 only allows sufficient tax revenues to be allocated to the Successor Agency in an amount equal to pay debt service that is deemed to be an enforceable obligation and debt service payments as a percentage of the 97 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
pledged gross revenue (net of certain expenses where so specified in debt covenants) will always be 100%.

These percentages also approximate the relationship of debt service to pledged revenue for the remainder of the term of the commitment.

Annual amount of
pledged revenue (net
of expenses, where
required)
Annual debt service
payments (of all
debt secured by this
revenue)
Debt service as a
percentage of
pledged revenue
Future amount
of pledged
revenue
Description of pledged revenue/debt:

Tax increment
Earthquake Recovery Project Refunding 2006 4,451,857 $ 4,451,857 100% 31,182,638 $ Earthquake Recovery Project 2011 2,262,413 2,262,413 100% 74,528,643 Note Payable to Others 3,300,000 3,300,000 100% 68,400,000 Bank of America Term Loan 3,396,422 3,396,422 100% 19,403,246 98 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
(19) COVID PANDEMIC
On March 13, 2020, the City issued an emergency declaration in response to the novel coronavirus (COVID-19) public health emergency to enhance the City’s ability to access federal and state dollars for COVID-19 response.

Since then, various emergency orders have been issued and through various State, County and Local orders, various businesses were required to temporarily cease or curtail operations. This affected the City’s operations as well.

On March 27, 2020 the $2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law.

The CARES Act provides that payments from the fund may only be used to cover costs that:
• Are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19)
• Were not accounted for in the budget most recently approved as of March 27, 2020 • Were incurred during the period that begins on March 1, 2020 and ends on December 31, 2020.

In May of 2020, the Department of Housing and Urban Development awarded the Housing Authority $244,968 and in August of 2020 an additional allocation of $357,550 for a total of $602,518 to be spent before December 31, 2021 on administrative expenses associated with the Housing Choice Voucher program.

On July 10, 2020, the City completed certification to become eligible for CARES Act allocations of which the City received an allocation of $1,140,344 which was recognized as revenue in FY 2020-21. Also, in FY 2020-21, the City was provided a credit of $1,655,357 and in FY 2021-22, $127,470, against its State Unemployment Insurance payment.

In FY 2021-22, the City received $17,731 of ARPA funds to offset the cost of terminated employees’ health insurance costs. In addition, the City also received $591,441 of ARPA funds that was passed through the State Water Resources Control Board under the California Water and Wastewater Arrearage program. The funds were allocated as bill credits to customers’ unpaid accounts.

On March 22, 2020, FEMA announced that federal emergency aid has been made available for the State of California to supplement state, tribal and local recovery efforts in the areas affected by the Coronavirus Disease 2019 (COVID-19) pandemic beginning on January 20, 2020, and continuing. In FY 2021-22, the City received $251,002 of FEMA reimbursement for various projects. Total reimbursement received as of June 30, 2022 was $544,023.

The Big Blue Bus received a total of $24,360,412 of CARES Act funding to pay for operating expenses which was recognized as revenue in FY 2020-21.

Additionally, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSAA) includes $14 billion to be allocated to support the transit industry during the COVID-19 public health emergency. In FY 2020-21 the Big Blue Bus was awarded but had not received $22,247,777 in Coronavirus Response and Relief Supplemental Appropriations Act funds. That revenue was recognized in FY 2021-22 with $16,988,018 received in the current fiscal year and the remaining $5,259,759 received in FY 2022-23. 99 CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2022
On March 11, 2021, Congress passed the American Rescue Plan Act of 2021 (ARPA). Included in the act were approximately $350 billion for eligible state, local, territorial, and Tribal governments to respond to the COVID-19 emergency and bring back jobs.

The funding objectives are:
• Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control
• Replace lost revenue for eligible state, local, territorial, and Tribal governments to strengthen support for vital public services and help retain jobs
• Support immediate economic stabilization for households and businesses • Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic
The City, in applying for the funds, calculated lost revenues as defined under the ARPA rules in order to qualify for recognition of the ARPA grant revenue. The estimated revenue loss incurred by the City was determined to be approximately $139 million as of the twelve months ended December 31, 2020 which consisted primarily of losses in transient occupancy taxes, parking charges and taxes, sales and use taxes and various utility charges for services such as solid waste pickup and water/wastewater commodities.

The City’s total allocation of ARPA funds is $28,570,125 of which the first tranche of $14,285,063 has was received and recognized as revenue in FY 2020-21. The second tranche of remaining funds was received in FY 2021-22. The US Treasury’s Interim Final Rule allows recipients to use funds for the provision of government services incurred after March 3, 2021 to the extent of the reduction in revenue and the City elected to allocate the revenue replacement funds to salaries for public safety staff. 100

CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
Year ended June 30, 2022
(20) PRIOR PERIOD ADJUSTMENTS
The accompanying financial statements reflect adjustments resulting from a restatement of fund balance and net position as of June 30, 2022 as follows:

Restatement on Government-wide Statements:

Governmental Business-Type
Activities Activities
Beginning Net Position, as previously reported $ 859,355,964 526,711,056 Restatements:

Recycling revenue not recognized in the correct period — 2,378,610 Record capital asset, previously expensed — 1,556,499
Implementation of GASB 87 977,291 3,213,489
Beginning Net Position, as restated $ 860,333,255 533,859,654 Restatement on Fund Statements, Governmental Funds:

Nonmajor
General governmental
Fund funds
Beginning Net Position, as previously reported $ 180,847,822 71,523,902 Restatements:

Implementation of GASB 87 407,003 570,288
Beginning Fund Balance, as restated $ 181,254,825 72,094,190 Restatement on Fund Statements, Enterprise Funds:

Resource,
Recovery and Nonmajor
Water Recycling Big Blue Bus enterprise
Fund Fund Fund funds
Beginning Net Position, as previously reported $ 59,685,605 4,896,127 168,443,771 60,946,617 Restatements:

Recycling revenue incorrectly recognized — 2,378,610 — — Record asset, previously expensed — — — 1,556,499
Implementation of GASB 87 1,047,469 — 767,948 1,398,042 Beginning Fund Balance, as restated $ 60,733,074 7,274,737 169,211,719 63,901,158 101

CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2022
(21) SPECIAL AND EXTRAORDINARY ITEMS
Extraordinary items are unusual and infrequent in nature and not within the control of management.

The following transaction is reported as an extraordinary item:
• The FAA ruled that transactions that the City had previously reported as loans between the General and the Airport Funds should be voided as inconsistent with federal law. To comply with the FAA’s decision, the General Fund wrote off loans and accrued interest in the amount of $5,554,811 and will repay the Airport fund $7,355,821 of previously made loan payments which the FAA disallowed.

Because a portion of the General Fund loan balance was unearned interest, the amount of the loan write off was $5,376,172. These funds are expected to remain in the Airport Fund until its closure in 2028 when they will revert to the City. See note 15.

Special items are unusual and infrequent in nature and are within the control of management. • The City settled additional legal claims related to an alleged incident of sexual assault of minors in the amount of $54.9 million paid by the City’s General Fund which is reported as a special item. See note

15. 102
City of Santa Monica, California
Year Ended June 30, 2022

REQUIRED SUPPLEMENTARY INFORMATION

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
General Fund
For the fiscal year ended June 30, 2022
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
Revenues:

Property taxes $ 75,443,566 75,693,173 75,980,972 - 75,980,972 287,799 Sales and use taxes 65,100,000 74,280,000 76,698,693 - 76,698,693 2,418,693 Transient occupancy taxes 43,100,000 56,700,000 66,684,095 - 66,684,095 9,984,095 Utility user taxes 29,950,000 31,430,000 33,613,985 - 33,613,985 2,183,985 Business license taxes 29,617,000 29,335,000 29,120,949 - 29,120,949 (214,051) Other taxes 19,179,000 21,849,000 27,980,038 - 27,980,038 6,131,038 Licenses and permits 29,388,615 32,136,237 35,338,164 - 35,338,164 3,201,927 Intergovernmental 1,249,461 1,406,912 1,490,717 - 1,490,717 83,805 Charges for services 38,021,851 39,112,450 43,092,119 - 43,092,119 3,979,669 Fines and forfeitures 11,291,195 11,441,892 12,262,875 - 12,262,875 820,983 Investment income 1,400,000 1,100,000 (7,993,536) - (7,993,536) (9,093,536) Rental income 5,792,364 5,667,961 6,905,686 - 6,905,686 1,237,725 Settlement income - - 28,456 - 28,456 28,456
Other revenue 3,822,996 3,906,511 4,292,277 - 4,292,277 385,766 Total revenues 353,356,048 384,059,136 405,495,490 - 405,495,490 21,436,354 Expenditures:

General government:

City council 766,447 994,158 805,103 2,500 807,603 186,555 City manager 5,281,094 5,763,643 5,038,079 137,486 5,175,565 588,078 Record and election services 2,579,467 2,579,467 2,517,552 - 2,517,552 61,915 Finance 11,181,286 12,032,471 11,127,935 326,097 11,454,032 578,439 City attorney 10,985,926 11,075,097 11,875,745 1,787 11,877,532 (802,435) Human resources 5,121,387 5,552,720 4,950,670 186,254 5,136,924 415,796 Information services 9,053,189 9,188,227 8,935,339 125,304 9,060,643 127,584 Public Works 2,238,138 2,337,169 1,962,531 138,976 2,101,507 235,662 Other 9,990,801 12,074,146 10,673,440 231,976 10,905,416 1,168,730 Capital improvement 4,296,500 12,578,474 6,987,577 2,811,812 9,799,389 2,779,085 Total general government 61,494,235 74,175,572 64,873,971 3,962,192 68,836,163 5,339,409 Public safety:

City Manager 5,334,629 5,565,683 6,073,132 97,922 6,171,054 (605,371) Police 95,651,701 96,132,941 96,096,815 474,945 96,571,760 (438,819) Fire 44,535,959 44,601,007 48,479,257 51,441 48,530,698 (3,929,691) Capital improvement 3,570,000 14,334,953 2,204,884 5,909,393 8,114,277 6,220,676 Total public safety 149,092,289 160,634,584 152,854,088 6,533,701 159,387,789 1,246,795 See accompanying notes to Required Supplementary Information. (Continued) 103

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
General Fund
For the fiscal year ended June 30, 2022
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
General services:

Public works 41,786,282 42,602,986 43,289,779 508,523 43,798,302 (1,195,316) Mobility 23,173,469 24,054,034 22,766,227 151,997 22,918,224 1,135,810 Capital improvement 400,000 32,926,938 15,936,440 14,276,284 30,212,724 2,714,214 Total general services 65,359,751 99,583,958 81,992,446 14,936,804 96,929,250 2,654,708 Community services:

Community services 26,975,807 28,379,174 25,734,331 714,884 26,449,215 1,929,959 Other 24,573,059 26,730,559 28,162,742 - 28,162,742 (1,432,183) Capital improvement 550,000 2,133,221 565,477 119,857 685,334 1,447,887 Total community services 52,098,866 57,242,954 54,462,550 834,741 55,297,291 1,945,663 Library:

Library 8,950,590 9,200,403 8,673,547 218,059 8,891,606 308,797 Capital improvement - 3,806 3,250 556 3,806 -
Total library 8,950,590 9,204,209 8,676,797 218,615 8,895,412 308,797 Community development:

Community development 17,751,003 18,541,139 16,718,585 237,872 16,956,457 1,584,682 Other 850,782 850,782 788,011 363 788,374 62,408
Capital improvement 300,000 313,899 116,156 - 116,156 197,743 Total community development 18,901,785 19,705,820 17,622,752 238,235 17,860,987 1,844,833 Bond issuance costs - 500,748 498,057 - 498,057 2,691
Total expenditures 355,897,516 421,047,845 380,980,661 26,724,288 407,704,949 13,342,896 Excess (deficiency) of revenues
over (under) expenditures (2,541,468) (36,988,709) 24,514,829 (26,724,288) (2,209,459) 34,779,250 Other financing sources (uses):

Transfers in 27,520,221 25,929,038 24,772,407 - 24,772,407 (1,156,631) Transfers out (23,288,546) (24,611,693) (32,825,789) - (32,825,789) (8,214,096) Bonds issued - - 64,780,000 - 64,780,000 64,780,000
Premium on debt issued - - 7,714,767 - 7,714,767 7,714,767 Total other financing sources (uses) 4,231,675 1,317,345 64,441,385 - 64,441,385 63,124,040 Special item:

Special item (note 21) - (54,900,000) (54,900,000) - (54,900,000) - Extraordinary item (note 21) - - (5,376,172) - (5,376,172) (5,376,172) Total special item - (54,900,000) (60,276,172) - (60,276,172) (5,376,172) Net change in fund balance 1,690,207 (90,571,364) 28,680,042 (26,724,288) 1,955,754 92,527,118 Fund balance at beginning of year, as restated 181,254,825 181,254,825 181,254,825 - 181,254,825 - Fund balance at end of year $ 182,945,032 90,683,461 209,934,867 (26,724,288) 183,210,579 92,527,118 See accompanying notes to Required Supplementary Information 104

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Special Revenue Source Fund
For the fiscal year ended June 30, 2022
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
Revenues:

Intergovernmental $ 684,395 684,395 - - - (684,395)
Charges for services 678,107 678,107 826,748 - 826,748 148,641 Investment income 200,000 200,000 (551,643) - (551,643) (751,643) Other 1,248,048 1,248,048 7,531,732 - 7,531,732 6,283,684 Total revenues 2,810,550 2,810,550 7,806,837 - 7,806,837 4,996,287 Expenditures:

General government:

Capital improvement 290,630 420,630 - - - 420,630
Total general government 290,630 420,630 - - - 420,630
Public safety:

Police 4,287 573,088 96,955 16,413 113,368 459,720
Fire 15,000 19,903 11,752 - 11,752 8,151
Capital improvement - 58,412 29,821 - 29,821 28,591
Total public safety 19,287 651,403 138,528 16,413 154,941 496,462 General services:

Mobility 170,066 420,536 203,793 - 203,793 216,743
Capital improvement 1,850,000 7,751,453 929,550 1,431,117 2,360,667 5,390,786 Total general services 2,020,066 8,171,989 1,133,343 1,431,117 2,564,460 5,607,529 Community services:

Community services 3,202,333 3,662,459 2,170,515 162,801 2,333,316 1,329,143 Other - - 19,476 - 19,476 (19,476)
Capital improvement 200,000 1,909,423 921,982 232,095 1,154,077 755,346 Total community services 3,402,333 5,571,882 3,111,973 394,896 3,506,869 2,065,013 Library:

Library - 83,232 - - - 83,232
Total library - 83,232 - - - 83,232
Community development:

Community development - - 62,296 5,093 67,389 (67,389)
Capital improvement - 255,000 - - - 255,000
Total community development - 255,000 62,296 5,093 67,389 187,611 Total expenditures 5,732,316 15,154,136 4,446,140 1,847,519 6,293,659 8,860,477 Excess (deficiency) of revenues
over (under) expenditures (2,921,766) (12,343,586) 3,360,697 (1,847,519) 1,513,178 13,856,764 Other financing sources (uses):

Transfers in 1,000,000 8,353,750 8,948,023 - 8,948,023 594,273 Transfers out (2,505,060) (1,710,425) (1,031,051) - (1,031,051) 679,374 Total other financing sources (uses) (1,505,060) 6,643,325 7,916,972 - 7,916,972 1,273,647 Net change in fund balance (4,426,826) (5,700,261) 11,277,669 (1,847,519) 9,430,150 15,130,411 Fund balance at beginning of year 191,500,084 191,500,084 191,500,084 - 191,500,084 - Fund balance at end of year $ 187,073,258 185,799,823 202,777,753 (1,847,519) 200,930,234 15,130,411 See accompanying notes to Required Supplementary Information. 105

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Low and Moderate Income Housing Asset Special Revenue Fund For the fiscal year ended June 30, 2022
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
Revenues:

Investment income $ 100,000 100,000 (478,372) - (478,372) (578,372) Other 400,000 400,000 366,367 - 366,367 (33,633)
Total revenues 500,000 500,000 (112,005) - (112,005) (612,005) Expenditures:

Community development:

Other - - 112 - 112 (112)
Community development - - 112 - 112 (112)
Total expenditures - - 112 - 112 (112)
Excess (deficiency) of revenues
over (under) expenditures 500,000 500,000 (112,117) - (112,117) (612,117) Other financing sources (uses):

Transfers out - (372,657) (362,715) - (362,715) 9,942
Total other financing sources (uses) - (372,657) (362,715) - (362,715) 9,942 Net change in fund balance 500,000 127,343 (474,832) - (474,832) (602,175) Fund balance at beginning of year 66,992,294 66,992,294 66,992,294 - 66,992,294 - Fund balance at end of year $ 67,492,294 67,119,637 66,517,462 - 66,517,462 (602,175) See accompanying notes to Required Supplementary Information. 106

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Miscellaneous Grants Fund
For the fiscal year ended June 30, 2022
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
Revenues:

Intergovernmental $ 16,923,498 45,543,689 22,052,956 - 22,052,956 (23,490,733) Investment income - - (5,137) - (5,137) (5,137)
Other - - 3,000 - 3,000 3,000
Total revenues 16,923,498 45,543,689 22,050,819 - 22,050,819 (23,492,870) Expenditures:

General government:

City manager - 136,551 14 - 14 136,537
Other - 1,107,985 439,405 199,611 639,016 468,969
Total general government - 1,244,536 439,419 199,611 639,030 605,506 Public safety:

Police - 1,228,735 296,717 - 296,717 932,018
Fire - 3,930,796 1,800,971 387,614 2,188,585 1,742,211
Total public safety - 5,159,531 2,097,688 387,614 2,485,302 2,674,229 General services:

Public works 121,347 403,753 55,741 264,006 319,747 84,006 Capital improvement 500,000 22,230,088 6,716,277 9,102,154 15,818,431 6,411,657 Total general services 621,347 22,633,841 6,772,018 9,366,160 16,138,178 6,495,663 Community services:

Community services 527,100 711,515 828,175 14,732 842,907 (131,392) Capital improvement 4,550,000 5,847,746 45,841 565,421 611,262 5,236,484 Total community services 5,077,100 6,559,261 874,016 580,153 1,454,169 5,105,092 Library:

Library 58,926 129,334 41,366 - 41,366 87,968
Total library 58,926 129,334 41,366 - 41,366 87,968
Community development:

Community development - - 47,685 - 47,685 (47,685)
Capital improvement 1,021,510 1,021,510 99,124 112,613 211,737 809,773 Total community development 1,021,510 1,021,510 146,809 112,613 259,422 762,088 Total expenditures 6,778,883 36,748,013 10,371,316 10,646,151 21,017,467 15,730,546 Excess (deficiency) of revenues
over (under) expenditures 10,144,615 8,795,676 11,679,503 (10,646,151) 1,033,352 (7,762,324) Other financing sources (uses):

Transfers out (14,442,206) (14,442,206) (15,710,877) - (15,710,877) (1,268,671) Total other financing sources (uses) (14,442,206) (14,442,206) (15,710,877) - (15,710,877) (1,268,671) Net change in fund balance (4,297,591) (5,646,530) (4,031,374) (10,646,151) (14,677,525) (9,030,995) Fund balance at beginning of year (1,522,393) (1,522,393) (1,522,393) - (1,522,393) - Fund balance at end of year $ (5,819,984) (7,168,923) (5,553,767) (10,646,151) (16,199,918) (9,030,995) See accompanying notes to Required Supplementary Information. 107

CITY OF SANTA MONICA, CALIFORNIA
Note to Required Supplementary Information
For the fiscal year ended June 30, 2022

BUDGETARY AND LEGAL COMPLIANCE
The City Council is required to adopt an annual budget resolution by June 30 each fiscal year for the General Fund, each special revenue fund and each capital projects fund, except the Rent Control Fund and the Asset Seizure Fund. The legal level of budgetary control is the department level. The City Council also approves annual operating budgets for the City’s proprietary and internal service funds to facilitate management evaluation and control.

The budget is prepared on a non-GAAP budgetary basis, which considers encumbrances outstanding at yearend as an expenditure of that year. Encumbrances outstanding at the beginning of a fiscal year, which were recognized as budgetary expenditures in the prior year, are recognized as GAAP-basis expenditures but not as budgetary expenditures unless re-appropriated. It is the City’s policy to only re-appropriate capital encumbrances and unencumbered balances of specific capital appropriations. Appropriations in governmental funds outstanding at year-end lapse, except for encumbered amounts, for which fund balances are restricted, committed or assigned at year-end for governmental funds.

The actual results of operations on a budgetary basis compared to the appropriations adopted by the City Council for budgeted major governmental funds are presented as required supplementary information. The comparisons of actual results with the budget for nonmajor funds are presented as supplementary information in the combining schedules.

The overages in the Fire Department are due to higher than budgeted overtime to assist with wildfires as part of multiple mutual aid strike team deployments, for which the City was fully reimbursed, and to provide COVID-19 pandemic support (not reimbursed). The overages in the Public Works Department were primarily due to underbudgeting of pension contributions, which has been corrected for FY 2022-

23. The overages in the City Attorney’s Office were primarily due to Public Rights Unit expenses, which are covered by funds set aside in reserves and traditionally not budgeted until actual costs are determined. These departments were also impacted by the pay out of vacation accrual balances for employees that ended their employment with the City, these expenses were in assigned fund balance and traditionally not budgeted because they are difficult to predict. 108

CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios Miscellaneous Plan Last Eight Fiscal Years (Unaudited)
Total Pension Liability 2022 2021 2020 2019 2018 2017 2016 2015 Service Cost $ 23,008,107 26,940,522 27,751,083 27,141,560 27,164,949 24,044,347 23,584,538 24,972,667Interest on the total pension liability 88,117,804 84,780,608 81,225,010 76,677,361 73,555,405 70,686,179 67,091,447 63,926,580 Changes in assumptions - - - (8,896,401) 62,254,788 - (16,726,947) - Difference between expected and actual experience (6,035,074) (7,677,266) 6,325,353 (5,319,485) (14,768,176) (7,701,743) (12,672,814) - Benefit payments, including refunds of employee contributions (60,892,615) (53,198,960) (49,130,828) (44,560,263) (41,097,884) (36,967,774) (35,460,612) (32,834,279) Net change in total pension liability 44,198,222 50,844,904 66,170,618 45,042,772 107,109,082 50,061,009 25,815,612 56,064,968Total pension liability - beginning 1,257,394,164 1,206,549,260 1,140,378,642 1,095,335,870 988,226,788 938,165,779 912,350,167 856,285,199 Total pension liability - ending (a) $ 1,301,592,386 $ 1,257,394,164 1,206,549,260 1,140,378,642 988,226,788 1,095,335,870 938,165,779 912,350,167 Plan fiduciary net positionContribution - employer $ 35,463,537 39,789,326 32,912,163 29,338,109 56,350,053 28,154,218 28,349,184 27,433,064 Contribution - employee 9,089,233 11,287,483 11,502,697 11,221,260 11,398,672 11,256,065 10,754,206 11,418,160Net investment income 223,034,645 48,650,608 58,848,094 70,094,677 82,395,628 3,759,440 15,956,734 104,724,175 Benefit payments (60,892,615) (53,198,960) (49,130,828) (44,560,263) (41,097,884) (36,967,774) (35,460,612) (32,834,279) Plan to plan resource movement - - (1,658) (2,066) (61,526) (767) (909) - Administrative expense (989,894) (1,333,238) (636,732) (1,293,232) (1,065,974) (436,504) (806,463) - Other Miscellaneous Income (Expense) - - 2,066 (2,455,869) - - - - Net change in plan fiduciary - net position 205,704,906 45,195,219 53,495,802 62,342,616 107,918,969 5,764,678 18,792,140 110,741,120 Plan fiduciary net position - beginning 990,945,672 945,750,453 892,254,651 829,912,035 721,993,066 716,228,388 697,436,244 586,695,124 Plan fiduciary net position - ending (b) 1,196,650,578 990,945,672 945,750,453 892,254,651 829,912,035 721,993,066 716,228,384 697,436,244 Net pension liability - ending (a)-(b) $ 104,941,808 266,448,492 260,798,807 248,123,991 265,423,835 266,233,722 221,937,395 214,913,922 Plan fiduciary net position as a percentage of the total pension liability 91.94% 78.81% 78.38% 78.24% 75.77% 73.06% 76.34% 76.44% Covered payroll $ 121,619,165 152,120,397 154,765,955 149,416,791 147,371,283 142,942,436 137,199,170 138,199,596 Net pension liability as a percentage of covered- payroll 86.29% 175.16% 168.51% 166.06% 180.11% 186.25% 161.76% 155.51%Notes to Schedule:Benefit Changes: There were no changes in benefits.Changes of Assumptions: In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). 109

CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios Police Safety Plan Last Eight Fiscal Years (Unaudited)
2022 2021 2020 2019 2018 2017 2016 2015
Total Pension LiabilityService Cost 10,894,969 $ 11,086,298 10,255,581 10,217,345 9,940,041 8,471,379 8,324,522 8,493,146 Interest on the total pension liability 36,994,605 35,384,916 33,763,191 32,412,581 31,045,060 29,901,653 28,537,027 27,132,667Changes in assumptions - - - (2,129,031) 26,521,719 - (7,150,335) -Difference between expected and actual experience 1,492,957 2,033,685 (1,686,562) 587,060 (3,121,761) (1,152,112) (501,077) -Benefit payments, including refunds of employee contributions (25,968,665) (24,742,085) (22,830,569) (21,315,119) (19,596,092) (18,767,835) (17,121,429) (16,130,411)Net change in total pension liability 23,762,814 23,413,866 19,501,641 19,772,836 44,788,967 18,453,085 12,088,708 19,495,402Total pension liability - beginning 499,688,158 523,450,972 480,186,517 460,413,681 415,624,714 397,171,629 385,082,921 365,587,519Total pension liability - ending (a) $ 523,450,972 546,864,838 499,688,158 480,186,517 460,413,681 415,624,714 397,171,629 385,082,921 Plan fiduciary net positionContribution - employer $ 19,121,459 19,904,356 15,926,339 13,774,479 26,559,693 12,697,470 13,033,273 12,515,162 Contribution - employee 3,832,845 3,493,416 3,118,363 3,021,783 2,827,317 2,753,594 2,695,506 3,372,358 Net investment income 88,656,069 18,812,931 23,179,043 28,113,907 32,951,701 1,516,091 6,513,781 43,315,499 Benefit payments (25,968,665) (24,742,085) (22,830,569) (21,315,119) (19,596,092) (18,767,835) (17,121,429) (16,130,411) Plan to plan resource movement - - - (823) 61,526 767 - - Administrative expense (390,087) (526,627) (252,921) (517,855) (428,091) (177,915) (328,610) - Other Miscellaneous Income (Expense) - - 823 (983,415) - - - - Net change in plan fiduciary - net position 85,251,621 16,941,991 19,141,078 22,092,957 42,376,054 (1,977,828) 4,792,521 43,072,608 Plan fiduciary net position - beginning 390,501,641 373,559,650 354,418,572 332,325,615 289,949,561 291,927,389 287,134,868 244,062,260 Plan fiduciary net position - ending (b) 390,501,641 475,753,262 373,559,650 354,418,572 332,325,615 289,949,561 291,927,389 287,134,868 Net pension liability - ending (a)-(b) 71,111,576 $ 132,949,331 126,128,508 125,767,945 128,088,066 125,675,153 105,244,240 97,948,053Plan fiduciary net position as a percentage of the total pension liability 87.00% 74.60% 74.76% 73.81% 72.18% 69.76% 73.50% 74.56%Covered payroll 33,740,999 $ 34,111,685 31,286,093 31,769,364 30,592,273 29,176,438 28,791,622 28,470,873Net pension liability as a percentage of covered- payroll 210.76% 389.75% 403.15% 395.88% 418.69% 430.74% 365.54% 344.03%Notes to Schedule:Benefit Changes: There were no changes in benefits.Changes of Assumptions: In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). 110

CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios Fire Safety Plan Last Eight Fiscal Years (Unaudited)
2022 2021 2020 2019 2018 2017 2016 2015
Total Pension LiabilityService Cost 4,961,970 $ 5,050,337 4,994,560 4,738,879 4,623,044 3,778,677 3,766,398 3,975,757 Interest on the total pension liability 19,058,867 18,311,217 17,610,724 16,808,267 16,174,733 15,730,320 15,338,448 14,735,448 Changes in assumptions - - - (1,206,898) 13,218,472 - (3,653,466) - Difference between expected and actual experience 1,566,296 923,359 2,419,289 1,380,602 (943,161) (2,919,523) (515,792) - Benefit payments, including refunds of employee contributions (14,553,773) (14,300,274) (13,218,568) (12,523,618) (11,813,956) (11,409,171) (10,728,684) (10,085,994) Net change in total pension liability 11,033,360 9,984,639 11,806,005 9,197,232 21,259,132 5,180,303 4,206,904 8,625,211 Total pension liability - beginning 269,787,190 259,802,551 247,996,546 238,799,314 217,540,182 212,359,879 208,152,975 199,527,764 Total pension liability - ending (a) $ 269,787,190 280,820,550 259,802,551 247,996,546 238,799,314 217,540,182 212,359,879 208,152,975 Plan fiduciary net positionContribution - employer 8,636,700 $ 10,703,394 7,213,925 6,276,049 10,375,991 5,320,402 5,142,818 4,954,271 Contribution - employee 1,752,072 1,752,804 1,690,559 1,661,415 1,565,941 1,479,400 1,375,301 1,421,733 Net investment income 42,296,327 9,068,546 11,434,835 13,896,417 16,797,654 706,789 3,458,100 23,479,329 Benefit payments (14,553,773) (14,300,274) (13,218,568) (12,523,618) (11,813,956) (11,409,171) (10,728,684) (10,085,994) Plan to plan resource movement - - - (405) - - - - Administrative expense (187,821) (255,237) (124,209) (257,882) (219,672) (93,112) (171,948) - Other Miscellaneous Income (Expense) - - 405 (489,721) - - - - Net change in plan fiduciary - net position 37,943,505 6,969,233 6,996,947 8,562,255 16,705,958 (3,995,692) (924,413) 19,769,339 Plan fiduciary net position - beginning 188,020,088 181,050,855 174,053,908 165,491,653 148,785,695 152,781,387 153,705,800 133,936,461 Plan fiduciary net position - ending (b) 188,020,088 225,963,593 181,050,855 174,053,908 165,491,653 148,785,695 152,781,387 153,705,800 Net pension liability - ending (a)-(b) $ 81,767,102 54,856,957 78,751,696 73,942,638 73,307,661 68,754,487 59,578,492 54,447,175 Plan fiduciary net position as a percentage of the total pension liability 80.47% 69.69% 69.69% 70.18% 69.30% 68.39% 71.94% 73.84%Covered payroll 18,953,091 $ 19,108,351 18,795,618 17,748,610 16,861,345 15,701,959 15,565,558 15,733,733 Net pension liability as a percentage of covered- payroll 289.44% 427.91% 418.99% 416.61% 434.77% 437.87% 382.76% 346.05% Notes to Schedule:Benefit Changes: There were no changes in benefits.Changes of Assumptions: In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was reduced from 7.65% to 7.15%. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5% (net of administrative expense) to 7.65% (without a reduction for pension plan administrative expense). 111

CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Contributions - Miscellaneous Pension Plan
Last Eight Fiscal Years (Unaudited)
2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 41,185,704 $ 40,186,749 36,620,603 32,707,844 29,021,468 29,097,156 27,377,582 25,320,840Contributions in relation to actuariallydetermined contributions (36,904,394) (35,458,470) (39,786,395) (32,912,563) (29,331,033) (56,352,251) (28,152,578) (28,349,184)Contribution (excess) deficiency 4,281,310 $ (1) 4,728,279 (1) (3,165,792) (204,719) (309,565) (27,255,095) (774,996) (3,028,344)Covered payroll 121,534,739 $ 121,619,165 152,120,397 154,765,955 149,416,791 147,371,283 142,942,436 137,199,170Contributions as a percentage of covered- 30.37% 29.16% 26.15% 21.27% 19.63% 38.24% 19.70% 20.66%payrollNotes to ScheduleValuation dateActuarial Cost Method Entry Age NormalAmortization Method Level Percentage of PayrollAsset Valuation Method Market ValueInflation 2.50%Salary increasesPayroll Growth 2.50%Investments Rate of Return 7.00%Retirement AgeMortality (1)
The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011Actuarially determined contribution rates are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported.Varies by entry age and serviceThe probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries.Because CalPERS bases the Acturially Determined Contribution (ADC) on historical payroll, and the City terminated more than 200 employees on and around June of 2020, the ADC based on current actual payroll would have been much lower. This resulted in the actual contributions appearing less than the ADC. The City has made all payments required by CalPERS. 112

CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Contributions - Safety Police Pension Plan
Last Eight Fiscal Years (Unaudited)
2022 2021 2020 2019 2018 2017 2016
Actuarially determined contribution 20,876,028 $ 18,987,371 17,488,731 15,428,327 13,453,498 13,559,983 12,327,896Contributions in relation to actuarially determined contributions (20,117,871) (19,119,800) (19,904,358) (15,924,164) (13,773,882) (26,557,166) (12,697,470)Contribution excess 758,157 $ (1) (132,429) (2,415,627) (495,837) (320,384) (12,997,183) (369,574)Covered payroll 32,619,907 $ 33,829,867 34,111,685 31,286,093 31,769,364 30,592,273 29,176,438Contributions as a percentage of covered- 61.67% 56.52% 58.35% 50.90% 43.36% 86.81% 43.52%payrollNotes to ScheduleValuation dateActuarial Cost Method Entry Age NormalAmortization Method Level Percentage of PayrollAsset Valuation Method Market ValueInflation 2.50%Salary increasesPayroll Growth 2.50%Investments Rate of Return 7.00%Retirement AgeMortality Actuarially determined contribution rates are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported.Varies by entry age and serviceThe probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries. 113

CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Contributions - Safety Fire Pension Plan
Last Eight Fiscal Years (Unaudited)
2022 2021 2020 2019 2018 2017 2016
Actuarially determined contribution 9,544,076 $ 8,801,916 7,971,960 6,959,294 5,884,665 5,624,625 5,185,401 Contributions in relation to actuarially determined contributions (9,304,903) (8,636,700) (10,703,395) (7,211,427) (6,276,048) (10,372,347) (5,320,402) Contribution (excess) deficiency (1) 165,216 239,173 (1) (2,731,435) (252,133) (391,383) (4,747,722) (135,001) Covered payroll 19,020,772 $ 18,953,091 19,108,351 18,795,618 17,748,610 16,861,345 15,701,959 Contributions as a percentage of covered 48.92% 45.57% 56.01% 38.37% 35.36% 61.52% 33.88%payrollNotes to ScheduleValuation dateActuarial Cost Method Entry Age NormalAmortization Method Level Percentage of PayrollAsset Valuation Method Market ValueInflation 2.50%Salary increasesPayroll Growth 2.50%Investments Rate of Return 7.00%Retirement AgeMortality Actuarially determined contribution rates are calculated as of June 30, three years prior to the end of the fiscal year in which contributions are reported.Varies by entry age and serviceThe probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011The probabilities of mortality are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011. Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries. 114
Fiscal Yearend FYE 2022 FYE 2021 FYE 2020 FYE 2019 FYE 2018 Measurement Date 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017Total OPEB LiabilityService Cost 2,114,167 $ 1,707,389 1,207,816 1,073,506 1,017,718 Interest on the total OPEB liability 1,366,059 1,555,940 2,125,930 2,064,073 2,063,748 Changes in assumptions (10,821,855) 4,391,134 6,467,787 1,443,660 (321,247) Difference between expected and actual experience (1,042,413) - (577,838) - (1,164,748) Benefit payments, including refunds of employee contributions (1,888,159) (1,798,994) (1,708,929) (1,571,807) (1,721,051) Net change in total OPEB liability 5,855,469 (10,272,201) 7,514,766 3,009,432 (125,580) Total OPEB liability - beginning 40,906,328 46,761,797 33,391,562 30,382,130 30,507,710 Total OPEB liability - ending (a) $ 46,761,797 36,489,596 40,906,328 33,391,562 30,382,130 Plan fiduciary net positionContribution - employer - $ - 3,047,011 3,011,934 2,686,113 Net investment income 346,159 432,025 712,791 412,595 325,621 Benefit payments (1,888,159) (1,798,994) (1,708,929) (1,571,807) (1,721,051) Administrative expense (2,465) (3,973) (1,772) (3,600) (2,680) Other expenses - - - (5,303) -
Net change in plan fiduciary - net position (1,370,942) (1,544,465) 2,049,101 1,843,819 1,288,003 Plan fiduciary net position - beginning 7,899,459 6,528,517 5,850,358 4,006,539 2,718,536 Plan fiduciary net position - ending (b) 4,984,052 6,528,517 5,850,358 7,899,459 4,006,539 Net OPEB liability - ending (a)-(b) 31,505,544 $ 40,233,280 33,006,869 27,541,204 26,375,591 Plan fiduciary net position as a percentage of the total OPEB liability 13.66% 13.96% 19.31% 17.52% 13.19%Covered employee payroll 208,969,756 $ 236,995,540 232,059,089 216,623,938 206,778,649 Net OPEB liability as a percentage of covered employee payroll 15.08% 16.98% 14.22% 12.71% 12.76%Notes to Schedule:Benefit Changes: There were no changes in benefits.Changes of Assumptions: Trust rate of return decreased from 6.2% to 5.55%Discount rate for accounting increased from 2.85% to 3.05%

CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Changes in the Net OPEB Liability and Related Ratios Last Five Fiscal Years (Unaudited) 1
1Fiscal year 2018 was first year of implementation, therefore only five years are shown. Historical information is required only for measurement periods for which GASB 75 is applicable. Future years' information will be displayed up to 10 years as information becomes available. 115
FYE 2022 FYE 2021 FYE 2020 FYE 2019 FYE 2018
Actuarially determined contribution $ 2,784,342 2,664,115 2,452,877 2,727,622 2,645,395 Contributions in relation to actuarially determined contributions 3,156,420 - - 3,047,011 3,011,934 Contribution deficiency (excess) $ (372,078) 2,664,115 2,452,877 (319,389) (366,539) Covered employee payroll $ 236,995,540 204,690,556 236,995,540 232,059,089 216,623,938 Contributions as a percentage of covered 1.33% 0.00% 0.00% 1.31% 1.39% employee payroll
Notes to ScheduleValuation Date Used to Determine ADC 6/30/2019Discount Rate Used to Determine ADC 6.10%Actuarial Cost Method Entry Age NormalAmortization Method Level Percentage of PayrollAsset Valuation Method Market ValueInflation 2.50%Salary increasesRetirement AgeMortalityMortality ImprovementHealthcare Cost Trend Rate 6.5% in 2021 to 4.0% in 2076 CalPERS 2017 Experience StudyMacLeod Watts Scale 2020 applied generationally

CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Contributions OPEB
Last Five Fiscal Years (Unaudited)

3.0% per year, used only to allocate the cost of benefits between service years50 to 75 116
City of Santa Monica, California Year
Ended June 30, 2022

SUPPLEMENTARY INFORMATION

CITY OF SANTA MONICA, CALIFORNIA
Nonmajor Governmental Fund Financial Statements
Special Revenue Funds are used to account for specific revenue sources that are restricted or committed to expenditures for particular purposes. The nonmajor special revenue funds used in this report are listed below:

Beach Recreation Fund – To account for beach parking and concession revenues restricted or committed for expenditures related to beach maintenance and recreation activities.

Housing Authority Fund – To account for the receipt and expenditure of Federal and State funds related to housing programs.

Tenant Ownership Rights Charter Amendment (TORCA) Fund – To account for filing fee and conversion tax revenues and expenditures related to various housing programs authorized by Chapter XX of the City Charter.

Asset Seizure Fund – To account for the receipt and expenditure of equitable sharing program funds.

Citizens Option for Public Safety Fund – To account for the receipt and expenditure of the Citizens Option for Public Safety program established by AB3229 of 1996.

Rent Control Fund – To account for revenues and expenditures that are restricted or committed for rent control activities.

Gas Tax Fund – To account for State and County gasoline tax allocations and any Federal funds provided to the City for street-related purposes.

Local Return Fund – To account for State Grant activities including Proposition A and C.

Community Development Block Grant (CDBG) Fund – To account for Federal entitlements under the Housing and Community Development Act of 1974, as amended. The City Council annually allocates CDBG funds to various programs.

South Coast Air Quality Management District (SCAQMD) Fund – To account for the receipt and expenditure of Air Quality Management District funds.

Parks and Recreation Fund – To account for funds collected under the City's Unit Dwelling Tax.

These funds are to be used for the acquisition, improvement and expansion of public parks, playgrounds and recreational facilities.

Capital Projects Funds are used to account for the accumulation of resources that are restricted, committed or assigned for the acquisition or construction of major capital facilities of the City other than those financed by proprietary funds and trust funds. The nonmajor capital projects funds used in this report are listed below:

Clean Beaches and Ocean Parcel Tax Fund – To account for activity related to implementation of Watershed Management Plan and the passage of Measure V in November 2006.

Debt Service Funds are used to accumulate resources that are restricted, committed, or assigned for, and the payment of, general long-term debt principal, interest and related costs. The debt service funds used by the City in this report are listed below:
117

CITY OF SANTA MONICA, CALIFORNIA
Debt Service Fund – To account for accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs for public facilities.

Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for restricted purposes. The specific permanent funds used by the City in this report are listed below:

Cemetery Perpetual Care Fund – To account for all funds received by the City from cemetery users for the perpetual care of the cemetery grounds.

Mausoleum Perpetual Care Fund – To account for all funds designated for perpetual care of the mausoleum located at the City cemetery.
118

CITY OF SANTA MONICA, CALIFORNIA
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022
Special Revenue Funds
Beach
Recreation
Housing
Authority TORCA Asset Seizure
Citizens Option
for Public Safety Rent Control
Assets
Cash and investments (note 2) $ 4,743,039 - 3,572,528 1,706,319 661,058 1,788,106 Restricted cash and investments (note 2) 347,810 2,444,030 - - - - Receivables (net, where applicable, of allowances for uncollectibles):

Accounts 805,126 5,600 - 5,267 - 67,480
Notes (note 4) - - 7,422,526 - - -
Taxes - - - - - -
Leases (note 3) 12,696,566 - - - - -
Interest 7,539 1,125 12,956 3,314 1,215 10,561
Other governments - 676,334 - - - -
Deposits - - - - - -
Prepaids - - - - - 26,343
Restricted cash with fiscal agent (note 2) - - - - - -
Total assets $ 18,600,080 3,127,089 11,008,010 1,714,900 662,273 1,892,490

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES (DEFICIT)
Liabilities
Accounts payable $ 1,516,057 86,767 752,381 143,733 - 83,807 Accrued liabilities 107,968 26,860 - - - 106,717
Contracts payable (retained percentage) 609,048 - 51,968 - - - Due to other funds (note 17) - 670,078 - - - -
Unearned revenue (note 6) 507,519 175,195 - - - 20,196
Deposits payable 372,269 - - - - -
Advances from other funds (note 17) 5,292,973 - - - - 268,147 Total liabilities 8,405,834 958,900 804,349 143,733 - 478,867

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue (note 6) - - - - - -
Deferred inflows leases 11,847,585 - - - - -
Total deferred inflows of resources 11,847,585 - - - - - Fund balances (deficit)
Nonspendable - - - - - 26,343
Restricted - 2,168,189 10,203,661 1,571,167 662,273 1,387,280 Unassigned (1,653,339) - - - - -
Total fund balances (1,653,339) 2,168,189 10,203,661 1,571,167 662,273 1,413,623 Total liabilities and fund balances $ 18,600,080 3,127,089 11,008,010 1,714,900 662,273 1,892,490 continued
119

CITY OF SANTA MONICA, CALIFORNIA
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022
Special Revenue Funds
Capital Projects
Fund
Gas Tax Local Return
Community
Development
Block Grant SCAQMD
Parks and
Recreation
Clean Beaches
and Ocean
Parcel Tax
Assets
Cash and investments (note 2) $ - - - 991,367 - 13,165,670 Restricted cash and investments (note 2) 4,541,797 16,346,649 13,260 - - - Receivables (net, where applicable, of allowances for uncollectibles):

Accounts - - - - - 4,763
Notes (note 4) - - 8,817,442 - - -
Taxes - - - - - 147,741
Leases (note 3) - - - - - -
Interest 8,713 32,682 12 2,629 88 20,608
Other governments 341,528 - 279,336 30,577 - -
Deposits - - 3,258 - - -
Prepaids - - - - - -
Restricted cash with fiscal agent (note 2) - - - - - -
Total assets $ 4,892,038 16,379,331 9,113,308 1,024,573 88 13,338,782

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES (DEFICIT)
Liabilities
Accounts payable $ 15 394,181 4,501 - - 174,923
Accrued liabilities - - - - - -
Contracts payable (retained percentage) 1,562 108,164 - - 7,825 1,503,736 Due to other funds (note 17) 353,101 - 183,550 - 114,202 889,277 Unearned revenue (note 6) - - - - - -
Deposits payable - - - - - -
Advances from other funds (note 17) - - - - - -
Total liabilities 354,678 502,345 188,051 - 122,027 2,567,936

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue (note 6) - - 189,275 - - -
Deferred inflows leases - - - - - -
Total deferred inflows of resources - - 189,275 - - -
Fund balances (deficit)
Nonspendable - - - - - -
Restricted 4,537,360 15,876,986 8,735,982 1,024,573 - 10,770,846 Unassigned - - - - (121,939) -
Total fund balances 4,537,360 15,876,986 8,735,982 1,024,573 (121,939) 10,770,846 Total liabilities and fund balances $ 4,892,038 16,379,331 9,113,308 1,024,573 88 13,338,782 continued
120

CITY OF SANTA MONICA, CALIFORNIA
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2022
Debt Service
Fund Permanent Funds
Debt Service
Cemetery
Perpetual Care
Mausoleum
Perpetual Care
Total nonmajor
governmental
funds
Assets
Cash and investments (note 2) $ - 60,707 16,260 26,705,054 Restricted cash and investments (note 2) - - - 23,693,546 Receivables (net, where applicable, of allowances for uncollectibles):

Accounts - 21,928 3,040 913,204
Notes (note 4) - - - 16,239,968
Taxes - - - 147,741
Leases (note 3) - - - 12,696,566
Interest - 49,539 6,195 157,176
Other governments - - - 1,327,775
Deposits - - - 3,258
Prepaids - - - 26,343
Restricted cash with fiscal agent (note 2) 8,508,206 14,907,436 1,836,500 25,252,142 Total assets $ 8,508,206 15,039,610 1,861,995 107,162,773

LIABILITIES, DEFERRED INFLOWS OF RESOURCES,

AND FUND BALANCES (DEFICIT)
Liabilities
Accounts payable $ - - - 3,156,365
Accrued liabilities - - - 241,545
Contracts payable (retained percentage) - - - 2,282,303 Due to other funds (note 17) - - - 2,210,208
Unearned revenue (note 6) - - - 702,910
Deposits payable - - - 372,269
Advances from other funds (note 17) - - - 5,561,120
Total liabilities - - - 14,526,720

DEFERRED INFLOWS OF RESOURCES
Unavailable revenue (note 6) - - - 189,275
Deferred inflows leases - - - 11,847,585
Total deferred inflows of resources - - - 12,036,860
Fund balances (deficit)
Nonspendable - 15,039,610 1,861,995 16,927,948
Restricted 8,508,206 - - 65,446,523
Unassigned - - - (1,775,278)
Total fund balances 8,508,206 15,039,610 1,861,995 80,599,193 Total liabilities and fund balances $ 8,508,206 15,039,610 1,861,995 107,162,773 121

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
For the fiscal year ended June 30, 2022
Special Revenue Funds
Beach
Recreation
Housing
Authority TORCA Asset Seizure
Citizens Option
for Public Safety Rent Control
Revenues:

Other taxes $ - - 36,732 - - -
Licenses and permits 129,630 - - - - -
Intergovernmental 28,899 26,801,000 - 282,386 228,404 - Charges for services 13,952,793 - - - - 5,292,207
Investment income (105,818) (17,230) (200,800) (51,257) (18,817) (162,425) Rental income 1,715,386 - - - - -
Other revenue 1,342,959 - 183,542 - - 515
Total revenues 17,063,849 26,783,770 19,474 231,129 209,587 5,130,297 Expenditures:

Current:

General government - - - - - -
Public safety - - - 143,733 12,754 -
General services 6,548,355 - - - - -
Community services 2,543,984 25,279,518 2,820,622 - - - Community development 6,912,028 - - - - 5,402,417
Debt service expenditures:

Principal - - - - - -
Interest - - - - - -
Total expenditures 16,004,367 25,279,518 2,820,622 143,733 12,754 5,402,417 Excess (deficiency) of revenues over (under) expenditures 1,059,482 1,504,252 (2,801,148) 87,396 196,833 (272,120) Other financing sources (uses)
Transfers in 141,466 92,355 - - - -
Transfers out (215,703) - (118,647) - - (160,883)
Total other financing sources (uses) (74,237) 92,355 (118,647) - - (160,883) Net change in fund balances 985,245 1,596,607 (2,919,795) 87,396 196,833 (433,003) Fund balances (deficit) at the beginning of year, as restated (2,638,584) 571,582 13,123,456 1,483,771 465,440 1,846,626 Fund balances at end of year $ (1,653,339) 2,168,189 10,203,661 1,571,167 662,273 1,413,623 continued
122

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
For the fiscal year ended June 30, 2022
Special Revenue Funds
Capital Projects
Fund
Gas Tax Local Return
Community
Development
Block Grant SCAQMD
Parks and
Recreation
Clean Beaches
and Ocean
Parcel Tax
Revenues:

Other taxes $ - - - - - 3,466,243
Licenses and permits - - - - - -
Intergovernmental 3,893,162 6,783,793 1,324,848 120,147 - 3,317,241 Charges for services - - - - - -
Investment income (134,779) (505,819) (108) (40,740) (1,301) (317,059) Rental income - - - - - -
Other revenue - - - - - -
Total revenues 3,758,383 6,277,974 1,324,740 79,407 (1,301) 6,466,425 Expenditures:

Current:

General government 5,013 - 24,168 281,586 - -
Public safety - - - - - -
General services 1,323,914 4,099,302 - - - 2,332,987
Community services - 11,460 293,041 - 164,743 -
Community development - - - - - -
Debt service expenditures:

Principal - - - - - -
Interest - - - - - -
Total expenditures 1,328,927 4,110,762 317,209 281,586 164,743 2,332,987 Excess (deficiency) of revenues over (under) expenditures 2,429,456 2,167,212 1,007,531 (202,179) (166,044) 4,133,438 Other financing sources (uses)
Transfers in - - - - - -
Transfers out (2,169,917) (684,378) (125,335) - - (1,239,933) Total other financing sources (uses) (2,169,917) (684,378) (125,335) - - (1,239,933) Net change in fund balances 259,539 1,482,834 882,196 (202,179) (166,044) 2,893,505 Fund balances (deficit) at the beginning of year, as restated 4,277,821 14,394,152 7,853,786 1,226,752 44,105 7,877,341 Fund balances at end of year $ 4,537,360 15,876,986 8,735,982 1,024,573 (121,939) 10,770,846 continued
123

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
For the fiscal year ended June 30, 2022
Debt Service
Fund Permanent Funds
Debt Service
Cemetery
Perpetual Care
Mausoleum
Perpetual Care
Total nonmajor
governmental
funds
Revenues:

Other taxes $ - - - 3,502,975
Licenses and permits - - - 129,630
Intergovernmental - - - 42,779,880
Charges for services - 371,550 97,341 19,713,891
Investment income 342 (502,955) (64,581) (2,123,347)
Rental income - - - 1,715,386
Other revenue - - - 1,527,016
Total revenues 342 (131,405) 32,760 67,245,431
Expenditures:

Current:

General government - - - 310,767
Public safety - - - 156,487
General services - - - 14,304,558
Community services - - - 31,113,368
Community development 1,368,342 - - 13,682,787
Debt service expenditures:

Principal 2,895,000 - - 2,895,000
Interest 5,387,582 - - 5,387,582
Total expenditures 9,650,924 - - 67,850,549
Excess (deficiency) of revenues over (under) expenditures (9,650,582) (131,405) 32,760 (605,118) Other financing sources (uses)
Transfers in 12,536,486 - - 12,770,307
Transfers out - (417,217) (50,566) (5,182,579)
Total other financing sources (uses) 12,536,486 (417,217) (50,566) 7,587,728 Net change in fund balances 2,885,904 (548,622) (17,806) 6,982,610 Fund balances (deficit) at the beginning of year, as restated 5,622,302 15,588,232 1,879,801 73,616,583 Fund balances at end of year $ 8,508,206 15,039,610 1,861,995 80,599,193 124

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Beach Recreation Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Licenses and permits $ 102,250 129,630 - 129,630 27,380 Intergovernmental 28,899 28,899 - 28,899 -
Charges for services 12,327,370 13,952,793 - 13,952,793 1,625,423 Investment income - (105,818) - (105,818) (105,818)
Rental income 1,188,305 1,715,386 - 1,715,386 527,081
Other revenue 775,947 1,342,959 - 1,342,959 567,012
Total revenues 14,422,771 17,063,849 - 17,063,849 2,641,078 Expenditures:

General services:

Public works 5,731,521 5,594,227 14,044 5,608,271 123,250 Other 25,550 17,873 - 17,873 7,677
Capital improvement 2,686,571 936,255 456,406 1,392,661 1,293,910 Total general services 8,443,642 6,548,355 470,450 7,018,805 1,424,837 Community services:

Community services 2,665,821 2,467,981 954 2,468,935 196,886 Capital improvement 402,794 76,003 - 76,003 326,791
Total Community services 3,068,615 2,543,984 954 2,544,938 523,677 Community development:

Community development 6,971,121 6,912,028 6 6,912,034 59,087 Total Community development 6,971,121 6,912,028 6 6,912,034 59,087 Total expenditures 18,483,378 16,004,367 471,410 16,475,777 2,007,601 Excess (deficiency) of revenues
over (under) expenditures (4,060,607) 1,059,482 (471,410) 588,072 4,648,679 Other financing sources (uses):

Transfers in 205,362 141,466 - 141,466 (63,896)
Transfers out (212,235) (215,703) - (215,703) (3,468)
Total other financing sources (uses) (6,873) (74,237) - (74,237) (67,364) Net change in fund balance (4,067,480) 985,245 (471,410) 513,835 4,581,315 Fund balance at beginning of year, as restated 2,638,584 (2,638,584) - (2,638,584) (5,277,168) Fund balance at end of year $ (1,428,896) (1,653,339) (471,410) (2,124,749) (695,853) 125

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Housing Authority Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Intergovernmental $ 25,947,622 26,801,000 - 26,801,000 853,378 Investment income - (17,230) - (17,230) (17,230)
Total revenues 25,947,622 26,783,770 - 26,783,770 836,148 Expenditures:

Community services:

Community services 25,762,476 25,267,149 43 25,267,192 495,284 Capital improvement 12,371 12,369 - 12,369 2
Total community services 25,774,847 25,279,518 43 25,279,561 495,286 Total expenditures 25,774,847 25,279,518 43 25,279,561 495,286 Excess (deficiency) of revenues
over (under) expenditures 172,775 1,504,252 (43) 1,504,209 1,331,434 Other financing sources (uses):

Transfers in 65,258 92,355 - 92,355 27,097
Total other financing sources (uses) 65,258 92,355 - 92,355 27,097 Net change in fund balance 238,033 1,596,607 (43) 1,596,564 1,358,531 Fund balance at beginning of year, as restated 571,582 571,582 - 571,582 - Fund balance at end of year $ 809,615 2,168,189 (43) 2,168,146 1,358,531 126

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Tenant Ownership Rights Charter Amendment
(TORCA) Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Other taxes $ 25,000 36,732 - 36,732 11,732
Investment income 110,000 (200,800) - (200,800) (310,800) Other revenue 50,000 183,542 - 183,542 133,542
Total revenues 185,000 19,474 - 19,474 (165,526)
Expenditures:

Community services:

Community services 6,000 39 - 39 5,961
Other 14,266 1,476,357 - 1,476,357 (1,462,091)
Capital improvement 3,263,576 1,344,226 1,634,243 2,978,469 285,107 Total Community services 3,283,842 2,820,622 1,634,243 4,454,865 (1,171,023) Total expenditures 3,283,842 2,820,622 1,634,243 4,454,865 (1,171,023) Excess (deficiency) of revenues
over (under) expenditures (3,098,842) (2,801,148) (1,634,243) (4,435,391) (1,336,549) Other financing sources (uses):

Transfers out (86,268) (118,647) - (118,647) (32,379)
Total other financing sources (uses) (86,268) (118,647) - (118,647) (32,379) Net change in fund balance (3,185,110) (2,919,795) (1,634,243) (4,554,038) (1,368,928) Fund balance at beginning of year, as restated 13,123,456 13,123,456 - 13,123,456 - Fund balance at end of year $ 9,938,346 10,203,661 (1,634,243) 8,569,418 (1,368,928) 127

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Citizens Option for Public Safety Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Intergovernmental $ 200,000 228,404 - 228,404 28,404
Investment income 5,000 (18,817) - (18,817) (23,817)
Total revenues 205,000 209,587 - 209,587 4,587
Expenditures:

Public safety:

Police 195,455 12,754 85,963 98,717 96,738
Total public safety 195,455 12,754 85,963 98,717 96,738 Total expenditures 195,455 12,754 85,963 98,717 96,738
Net change in fund balance 9,545 196,833 (85,963) 110,870 101,325 Fund balance at beginning of year, as restated 465,440 465,440 - 465,440 - Fund balance at end of year $ 474,985 662,273 (85,963) 576,310 101,325 128

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Gas Tax Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Intergovernmental $ 4,192,087 3,893,162 - 3,893,162 (298,925) Investment income 18,000 (134,779) - (134,779) (152,779) Total revenues 4,210,087 3,758,383 - 3,758,383 (451,704) Expenditures:

General government:

Other 5,138 5,013 - 5,013 125
Total general government 5,138 5,013 - 5,013 125
General services:

Capital improvement 5,604,339 1,323,914 536,616 1,860,530 3,743,809 Total general services 5,604,339 1,323,914 536,616 1,860,530 3,743,809 Total expenditures 5,609,477 1,328,927 536,616 1,865,543 3,743,934 Excess (deficiency) of revenues
over (under) expenditures (1,399,390) 2,429,456 (536,616) 1,892,840 3,292,230 Other financing sources (uses):

Transfers out (2,362,841) (2,169,917) - (2,169,917) 192,924 Total other financing sources (uses) (2,362,841) (2,169,917) - (2,169,917) 192,924 Net change in fund balance (3,762,231) 259,539 (536,616) (277,077) 3,485,154 Fund balance at beginning of year, as restated 4,277,821 4,277,821 - 4,277,821 - Fund balance at end of year $ 515,590 4,537,360 (536,616) 4,000,744 3,485,154 129

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Local Return Fund Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Intergovernmental $ 5,429,381 6,783,793 - 6,783,793 1,354,412 Investment income 150,000 (505,819) - (505,819) (655,819) Total revenues 5,579,381 6,277,974 - 6,277,974 698,593
Expenditures:

General services:

Mobility 494,538 326,327 - 326,327 168,211
Capital improvement 14,805,034 3,772,975 3,096,584 6,869,559 7,935,475 Total general services 15,299,572 4,099,302 3,096,584 7,195,886 8,103,686 Capital improvement 94,207 11,460 82,747 94,207 -
Total expenditures 15,393,779 4,110,762 3,179,331 7,290,093 8,103,686 Excess (deficiency) of revenues
over (under) expenditures (9,814,398) 2,167,212 (3,179,331) (1,012,119) 8,802,279 Other financing sources (uses):

Transfers out (738,000) (684,378) - (684,378) 53,622
Total other financing sources (uses) (738,000) (684,378) - (684,378) 53,622 Net change in fund balance (10,552,398) 1,482,834 (3,179,331) (1,696,497) 8,855,901 Fund balance at beginning of year, as restated 14,394,152 14,394,152 - 14,394,152 - Fund balance at end of year $ 3,841,754 15,876,986 (3,179,331) 12,697,655 8,855,901 130

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Community Development Block Grant Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Intergovernmental $ 1,235,326 1,324,848 - 1,324,848 89,522 Investment income 5,000 (108) - (108) (5,108)
Total revenues 1,240,326 1,324,740 - 1,324,740 84,414
Expenditures:

General government:

Other 107,065 24,168 4,800 28,968 78,097
Total general government 107,065 24,168 4,800 28,968 78,097 General services:

Capital improvement 500,000 - - - 500,000
Total general services 500,000 - - - 500,000
Community services:

Community services 614,630 293,041 - 293,041 321,589
Total community services 614,630 293,041 - 293,041 321,589 Total expenditures 1,221,695 317,209 4,800 322,009 899,686 Excess (deficiency) of revenues
over (under) expenditures 18,631 1,007,531 (4,800) 1,002,731 984,100 Other financing sources (uses):

Transfers out (140,000) (125,335) - (125,335) 14,665
Total other financing sources (uses) (140,000) (125,335) - (125,335) 14,665 Net change in fund balance (121,369) 882,196 (4,800) 877,396 998,765 Fund balance at beginning of year, as restated 7,853,786 7,853,786 - 7,853,786 - Fund balance at end of year $ 7,732,417 8,735,982 (4,800) 8,731,182 998,765 131

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
SCAQMD Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Intergovernmental $ 119,000 120,147 - 120,147 1,147
Investment income 10,000 (40,740) - (40,740) (50,740)
Total revenues 129,000 79,407 - 79,407 (49,593)
Expenditures:

General government:

Other - 7,463 - 7,463 (7,463)
Capital improvement 369,035 274,123 94,913 369,036 (1)
Total general government 369,035 281,586 94,913 376,499 (7,464) General services:

Capital improvement 95,248 - - - 95,248
Total general services 95,248 - - - 95,248
Total expenditures 464,283 281,586 94,913 376,499 87,784 Net change in fund balance (335,283) (202,179) (94,913) (297,092) 38,191 Fund balance at beginning of year, as restated 1,226,752 1,226,752 - 1,226,752 - Fund balance at end of year $ 891,469 1,024,573 (94,913) 929,660 38,191 132

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Parks and Recreation Special Revenue Fund
For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Investment income $ 3,000 (1,301) - (1,301) (4,301)
Total revenues 3,000 (1,301) - (1,301) (4,301)
Expenditures:

Capital improvement 301,284 164,743 22,111 186,854 114,430 Total expenditures 301,284 164,743 22,111 186,854 114,430 Net change in fund balance (298,284) (166,044) (22,111) (188,155) 110,129 Fund balance at beginning of year, as restated 44,105 44,105 - 44,105 - Fund balance at end of year $ (254,179) (121,939) (22,111) (144,050) 110,129 133

CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Clean Beaches and Ocean Parcel Tax Capital Projects Fund For the fiscal year ended June 30, 2022
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:

Other taxes $ 3,518,043 3,466,243 - 3,466,243 (51,800)
Intergovernmental 3,297,465 3,317,241 - 3,317,241 19,776 Investment income 130,000 (317,059) - (317,059) (447,059) Total revenues 6,945,508 6,466,425 - 6,466,425 (479,083) Expenditures:

General services:

Public works 924,533 527,131 158,134 685,265 239,268
Capital improvement 10,993,488 1,805,856 - 1,805,856 9,187,632 Total general services 11,918,021 2,332,987 158,134 2,491,121 9,426,900 Total expenditures 11,918,021 2,332,987 158,134 2,491,121 9,426,900 Excess (deficiency) of revenues
over (under) expenditures (4,972,513) 4,133,438 (158,134) 3,975,304 8,947,817 Other financing sources (uses):

Transfers out (1,611,592) (1,239,933) - (1,239,933) 371,659 Total other financing sources (uses) (1,611,592) (1,239,933) - (1,239,933) 371,659 Net change in fund balance (6,584,105) 2,893,505 (158,134) 2,735,371 9,319,476 Fund balance at beginning of year 7,877,341 7,877,341 - 7,877,341 - Fund balance at end of year $ 1,293,236 10,770,846 (158,134) 10,612,712 9,319,476 134

CITY OF SANTA MONICA, CALIFORNIA
Nonmajor Enterprise Fund Financial Statements
Enterprise Funds are used to report any activity for which a fee is charged to external users for goods or services. Activities are required to be reported as enterprise funds if any one of the following criteria is met: (a) The activity is financed with debt that is secured solely by a pledge of the net revenues from fees and charges of the activity. Debt that is secured by a pledge of net revenues from fees and charges and the full faith and credit of a related primary government or component unit – even if that government is not expected to make any payments – is not payable solely from fees and charges of the activity. (Some debt may be secured, in part, by a portion of its own proceeds but should be considered as payable “solely” from the revenues of the activity.) (b) Laws or regulations require that the activity’s costs of providing services, including capital costs (such as depreciation or debt service), be recovered with fees and charges, rather than with taxes or similar revenues. (c) The pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs (such as depreciation or debt service).

Community Broadband Fund – To account for the activity of leasing the City’s dark and lit fiber networks known as “CityNet”.

Airport Fund – To account for revenues and expenses connected with management of the Santa Monica Municipal Airport.

Pier Fund – To account for revenues and expenses connected with management and development of the Santa Monica Pier.

Stormwater Management Fund – To account for revenues and expenses associated with storm water management.

Cemetery Fund – To account for revenues and expenses associated with operation of Woodlawn Cemetery and Mausoleum.

Parking Authority Fund – To account for acquisition of parking lots or contributing to the construction of parking structures by the City Parking Authority. 135

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Net Position
Nonmajor Enterprise Funds
June 30, 2022
Business-Type Activities - Enterprise Funds
Community
Broadband Airport Pier
Stormwater
Management Cemetery Parking Authority
Total nonmajor
enterprise funds
Assets
Current assets:

Cash and investments (note 2) $ 114,567 32,656,124 5,319,359 - 2,542,338 356,761 40,989,149 Restricted cash and investments (note 2) - 1,278,418 285,937 7,735,071 274,611 - 9,574,037 Receivables (net, where applicable, of
allowances for uncollectibles):

Accounts 307,500 377,416 72,821 45,882 638,929 - 1,442,548 Interest 1,083 64,610 10,152 16,935 4,131 2,749 99,660
Leases (note 3) - 24,620,538 10,142,848 - - - 34,763,386 Taxes - - - 8,821 - - 8,821
Due from other funds - 7,355,821 - - - - 7,355,821
Prepaids - 27 - - - - 27
Total current assets 423,150 66,352,954 15,831,117 7,806,709 3,460,009 359,510 94,233,449 Noncurrent assets:

Capital assets:

Land - 8 - - 4 1,362,700 1,362,712
Construction in progress - 273,366 7,773,603 3,369,449 - - 11,416,418 Buildings - 7,769,091 5,916,024 - 1,716,090 946,242 16,347,447 Improvements other than buildings - 5,604,488 5,461,401 147,299 782,158 142,591 12,137,937 Machinery and equipment 1,902,858 568,080 515,426 35,750 374,033 7,237 3,403,384 Infrastructure - - 17,382,609 10,739,803 - - 28,122,412 Less: accumulated depreciation (144,625) (10,978,961) (18,091,981) (6,060,638) (2,365,691) (569,930) (38,211,826) Net capital assets 1,758,233 3,236,072 18,957,082 8,231,663 506,594 1,888,840 34,578,484 Total noncurrent assets 1,758,233 3,236,072 18,957,082 8,231,663 506,594 1,888,840 34,578,484 Total assets 2,181,383 69,589,026 34,788,199 16,038,372 3,966,603 2,248,350 128,811,933

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions 155,970 309,954 398,982 - 163,804 - 1,028,710 Deferred outflows from OPEB 16,615 24,390 68,404 - 32,966 - 142,375 TOTAL DEFERRED OUTFLOWS OF RESOURCES 172,585 334,344 467,386 - 196,770 - 1,171,085 Liabilities
Current liabilities:

Accounts payable 136,089 1,410,367 716,552 10 77,717 - 2,340,735 Accrued liabilities 22,602 38,534 61,648 - 14,833 - 137,617 Contracts payable (retained percentage) 93,311 112,674 234,195 99,114 16,113 - 555,407 Compensated absences due within one year (note 7) 27,782 58,157 65,341 - 30,203 - 181,483 Liabilities payable from restricted assets - deposits - 1,551,185 285,187 - - - 1,836,372 Total current liabilities 279,784 3,170,917 1,362,923 99,124 138,866 - 5,051,614 Long-term liabilities:

Compensated absences due in more than one year (note 7) 44,425 34,730 107,438 - 12,309 - 198,902 Net OPEB liability due in more than one year (note 11) 43,349 63,633 178,468 - 86,010 - 371,460 Net pension liability due in more than one year (note 11) 424,020 842,641 1,084,672 - 445,317 - 2,796,650 Total long-term liabilities 511,794 941,004 1,370,578 - 543,636 - 3,367,012 Total liabilities 791,578 4,111,921 2,733,501 99,124 682,502 - 8,418,626

DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions 483,960 961,758 1,238,003 - 508,267 - 3,191,988 Deferred inflows from OPEB 16,199 23,779 66,691 - 32,141 - 138,810 Deferred inflows from leases - 23,748,759 9,430,791 - - - 33,179,550 TOTAL DEFERRED INFLOWS OF RESOURCES 500,159 24,734,296 10,735,485 - 540,408 - 36,510,348 Net position
Invested in capital assets 1,758,233 3,236,072 18,957,082 8,231,663 506,594 1,888,840 34,578,484 Unrestricted (696,002) 37,841,081 2,829,517 7,707,585 2,433,869 359,510 50,475,560 Total net position $ 1,062,231 41,077,153 21,786,599 15,939,248 2,940,463 2,248,350 85,054,044 136

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Funds
For the fiscal year ended June 30, 2022
Business-Type Activities - Enterprise Funds
Community
Broadband Airport Pier
Stormwater
Management Cemetery
Parking
Authority
Total
nonmajor
enterprise funds
Operating revenues
Charges for services $ 2,779,595 16,508,310 6,489,567 1,419,613 2,763,983 - 29,961,068 Total operating revenues 2,779,595 16,508,310 6,489,567 1,419,613 2,763,983 - 29,961,068 Operating expenses
Personnel services 676,718 1,656,851 1,962,837 - 744,192 1,000 5,041,598 Administrative indirect 121,003 923,091 612,697 - 266,915 - 1,923,706 Contractual services 1,295,380 1,764,539 1,055,299 - 417,650 - 4,532,868 Repairs and maintenance 109,463 972,531 424,932 - 58,653 - 1,565,579 Materials and supplies 511 3,389,283 410,282 - 824,108 56,470 4,680,654 Utilities 4,477 953,646 235,459 - 170,935 - 1,364,517
Casualty property and liability costs 8,954 470,236 718,574 - 106,042 - 1,303,806 Miscellaneous fees and costs - - - - 4,283 - 4,283
Depreciation and amortization 97,768 302,444 477,254 324,607 42,924 16,263 1,261,260 Other 3,919 1,202,339 646,777 36,721 4,579 - 1,894,335
Total operating expenses 2,318,193 11,634,960 6,544,111 361,328 2,640,281 73,733 23,572,606 Operating income (loss) 461,402 4,873,350 (54,544) 1,058,285 123,702 (73,733) 6,388,462 Nonoperating revenues (expenses)
Investment income (16,073) (1,002,559) (156,821) (261,300) (63,967) (44,887) (1,545,607) Interest expense - (15,354) - - - - (15,354)
Other nonoperating revenues - 1,057,362 420,353 421,359 378,340 - 2,277,414 Total nonoperating revenues (expenses) net (16,073) 39,449 263,532 160,059 314,373 (44,887) 716,453 Income before transfers 445,329 4,912,799 208,988 1,218,344 438,075 (118,620) 7,104,915 Transfers in (note 17) - 7,429,140 3,597,287 394,654 483,095 - 11,904,176 Transfers out (note 17) (822,000) (673,032) (185,673) (1,730,311) - - (3,411,016) Extraordinary item (note 21) - 5,554,811 - - - - 5,554,811 Change in net position (376,671) 17,223,718 3,620,602 (117,313) 921,170 (118,620) 21,152,886 Net position at beginning of year, as restated (note 20) 1,438,902 23,853,435 18,165,997 16,056,561 2,019,293 2,366,970 63,901,158 Net position at end of year $ 1,062,231 41,077,153 21,786,599 15,939,248 2,940,463 2,248,350 85,054,044 137
Community
Broadband Airport Pier
Stormwater
Management Cemetery
Parking
Authority
Total
nonmajor
enterprise
funds
Cash flows from operating activities:

Cash received from customers 4,014,241 $ 17,120,107 8,165,786 1,605,818 2,702,878 — 33,608,830 Cash payments for materials and services (1,425,218) (9,186,650) (3,604,063) (14,984) (1,836,299) (120,189) (16,187,403) Cash payments to employees for services (826,376) (1,758,643) (2,479,481) — (932,288) (1,000) (5,997,788) Other revenue received — 1,054,231 237,690 421,359 378,340 — 2,091,620 Net cash provided by (used in)
operating activities 1,762,647 7,229,045 2,319,932 2,012,193 312,631 (121,189) 13,515,259 Cash flows from noncapital financing activities:

Advances received from other funds — — — 12,289 — — 12,289 Repayment of advances from other funds (515,731) — — — — — (515,731) Transfers in — 73,320 3,597,287 394,654 483,095 — 4,548,356 Transfers out (822,000) (673,032) (185,673) (1,730,311) — — (3,411,016) Net cash provided by (used in)
noncapital financing activities (1,337,731) (599,712) 3,411,614 (1,323,368) 483,095 — 633,898 Cash flows from capital and related financing activities: Acquisition and construction of capital assets (294,273) — (5,026,572) (434,729) — — (5,755,574) Net cash used in capital and related
financing activities (294,273) — (5,026,572) (434,729) — — (5,755,574) Cash flows from investing activities: Investment income 5,333 247,972 43,952 67,247 15,526 10,073 390,103 Net cash used in investing activities 5,333 247,972 43,952 67,247 15,526 10,073 390,103 Net increase (decrease) in cash
and cash equivalents 135,976 6,877,305 748,926 321,343 811,252 (111,116) 8,783,686 Cash and cash equivalents at beginning of year — 28,334,221 5,056,998 7,748,441 2,087,340 522,225 43,749,225 Effect of unrealized loss (21,409) (1,276,984) (200,628) (334,713) (81,643) (54,348) (1,969,725) Cash and cash equivalents at end of year 114,567 33,934,542 5,605,296 7,735,071 2,816,949 356,761 50,563,186Cash and investments 114,567 32,656,124 5,319,359 — 2,542,338 356,761 40,989,149 Restricted cash and investments — 1,278,418 285,937 7,735,071 274,611 — 9,574,037 Total cash and cash equivalents 114,567 33,934,542 5,605,296 7,735,071 2,816,949 356,761 50,563,186 (Continued)

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Cash Flows
Nonmajor Enterprise Funds
For the fiscal year ended June 30, 2022
Business-Type Activities - Enterprise Funds
138

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Cash Flows
Nonmajor Enterprise Funds
For the fiscal year ended June 30, 2022
Business-Type Activities - Enterprise Funds
Community
Broadband Airport Pier
Stormwater
Management Cemetery
Parking
Authority
Total
nonmajor
enterprise
funds
Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss) 461,402 $ 4,873,350 (54,544) 1,058,285 123,702 (73,733) 6,388,462 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Add depreciation 97,768 302,444 477,254 324,607 42,924 16,263 1,261,260 Add allowance for doubtful accounts — — (637,193) — — — (637,193) Other revenue received — 1,054,231 237,690 421,359 378,340 — 2,091,620 Changes in assets and liabilities and deferred outflows and inflows of resources:
(Increase) decrease in accounts receivable 1,234,646 437,849 2,313,412 186,205 (61,105) — 4,111,007 (Increase) in prepaids — (27) — — — — (27)
Increase (decrease) in accounts payable 65,734 433,774 379,819 2 16,866 (63,719) 832,476 Decrease in unearned revenue — (18,285) — — — — (18,285) Increase (decrease) in accrued liabilities (314) (465) 1,252 — (18,244) — (17,771) Increase in contracts payable 52,755 55,268 120,138 21,735 — — 249,896 Increase in deposits payable from restricted assets — 192,233 — — — — 192,233 Increase (decrease) in compensated absences payable 8,197 3,220 2,988 — (5,765) — 8,640Net OPEB liability and related changes in deferred outflows and inflows of resources (422) (35,977) (82,027) — (70,248) — (188,674) Net pension liability and related changes in deferred
outflows and inflows of resources (157,119) (68,570) (438,857) — (93,839) — (758,385) Total adjustments 1,301,245 2,355,695 2,374,476 953,908 188,929 (47,456) 7,126,797 Net cash provided by (used in)
operating activities $ 1,762,647 7,229,045 2,319,932 2,012,193 312,631 (121,189) 13,515,259 Schedule of non-cash capital and related financing activities: Capital assets acquired through accounts payable — — 2,775 — — — 2,775 139

CITY OF SANTA MONICA, CALIFORNIA
Internal Service Fund Financial Statements
Internal Service Funds are used to account for the financing of goods or services provided by one department to other departments of the City or to other governments, on a cost-reimbursement basis.

Vehicle Management Fund – To account for user charges from other funds and expenses related to the replacement, maintenance and the fueling of various City vehicles, including specialized mechanical equipment.

Information Technology Replacement and Services Fund – To account for user charges from other funds and expenses related to replacement of computer equipment.

Self-Insurance, General Liability and Auto Fund – To account for user charges from other funds and expenses related to the administration and payment of general liability and auto claims.

Self-Insurance, Bus Fund – To account for user charges from the Big Blue Bus Fund and expenses related to the administration and payment of municipal bus lines liability claims.

Self-Insurance, Risk Management Administration Fund – To account for user charges from other funds and expenses related to the administration of the risk management division.

Self-Insurance, Workers' Compensation Fund – To account for user charges from other funds and expenses related to the administration and payment of workers' compensation claims. 140

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Net Position
Internal Service Funds
June 30, 2022
Vehicle
Management
Information
Technology
Replacement
and Services
Self - Insurance
General
Liability / Auto
Self - Insurance
Bus
Self - Insurance
Risk
Management
Admin
Self - Insurance
Workers'
Compensation
Total
internal
service
funds
Assets
Current assets:

Cash and investments (note 2) $ 26,670,668 1,347,119 14,013,651 7,693,250 2,403,062 67,495,714 119,623,464 Receivables:

Accounts 277,197 - 710 - 21,996 275,467 575,370
Interest 54,664 5,357 21,022 11,835 118 148,819 241,815 Inventory 12,973 - - - - - 12,973
Total current assets 27,015,502 1,352,476 14,035,383 7,705,085 2,425,176 67,920,000 120,453,622 Noncurrent assets:

Capital assets:

Construction in progress - - - - 60,300 - 60,300
Machinery and equipment 43,349,992 1,517,857 2,849 7,386 919 10,065 44,889,068 Less: accumulated depreciation (28,563,251) (1,517,857) (2,849) (7,386) (919) (10,065) (30,102,327) Net capital assets 14,786,741 - - - 60,300 - 14,847,041 Total assets 41,802,243 1,352,476 14,035,383 7,705,085 2,485,476 67,920,000 135,300,663

DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions 542,071 - - - 315,840 - 857,911 Deferred outflows from OPEB 63,044 - - - 28,340 - 91,384 TOTAL DEFERRED OUTFLOWS OF RESOURCES 605,115 - - - 344,180 - 949,295 Liabilities
Current liabilities:

Accounts payable 452,584 177,389 448,103 21,016 4,640 220,396 1,324,128 Accrued liabilities 57,455 - 22 4 42,545 9 100,035
Contracts payable (retained percentage) - 5,611 - - - - 5,611 Compensated absences due within one year (note 7) 81,049 - - - 50,205 - 131,254 Claims payable due within one year (note 8) - - 11,120,846 2,177,393 - 9,807,586 23,105,825 Total current liabilities 591,088 183,000 11,568,971 2,198,413 97,390 10,027,991 24,666,853 Long-term liabilities:

Compensated absences due in more than one year (note 7) 113,794 - - - 115,018 - 228,812 Claims payable due in more than one year (note 8) - - 9,849,184 2,142,079 - 43,544,595 55,535,858 Net OPEB liability due in more than one year (note 11) 164,483 - - - 73,940 - 238,423 Net pension liability due in more than one year (note 11) 1,473,673 - - - 858,643 - 2,332,316 Total long-term liabilities 1,751,950 - 9,849,184 2,142,079 1,047,601 43,544,595 58,335,409 Total liabilties 2,343,038 183,000 21,418,155 4,340,492 1,144,991 53,572,586 83,002,262

DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions 1,681,994 - - - 980,023 - 2,662,017 Deferred inflows from OPEB 61,465 - - - 27,630 - 89,095 TOTAL DEFERRED INFLOWS OF RESOURCES 1,743,459 - - - 1,007,653 - 2,751,112 Net position
Invested in capital assets 14,786,741 - - - 60,300 - 14,847,041 Unrestricted 23,534,120 1,169,476 (7,382,772) 3,364,593 616,712 14,347,414 35,649,543 Total net position $ 38,320,861 1,169,476 (7,382,772) 3,364,593 677,012 14,347,414 50,496,584 141

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds
For the fiscal year ended June 30, 2022
Vehicle
Management
Information
Technology
Replacement
and Services
Self - Insurance
General
Liability / Auto
Self - Insurance
Bus
Self - Insurance
Risk
Management
Admin
Self - Insurance
Workers'
Compensation
Total
internal
service funds
Operating revenues
Charges for services $ 14,214,770 1,249,018 12,819,187 5,200,000 4,472,123 16,978,358 54,933,456 Total operating revenues 14,214,770 1,249,018 12,819,187 5,200,000 4,472,123 16,978,358 54,933,456 Operating expenses
Personnel services 2,261,201 - - - 1,345,742 - 3,606,943 Administrative indirect 937,158 - - - 339,428 - 1,276,586 Contractual services 318,648 - 54,264 200,272 92,085 760,918 1,426,187 Repairs and maintenance 1,873,678 - 40,665 40,665 1,700 40,858 1,997,566 Materials and supplies 1,302,082 1,923,348 - - 33,973 - 3,259,403 Utilities 94,850 - - - 867 - 95,717
Casualty property and liability costs 225,471 - - - 33,168 - 258,639 Claims expense net of claims reserve adjustment - - 9,860,293 3,443 - 7,311,753 17,175,489 Insurance and bonds - - 2,761,284 2,754,782 4,348,386 645,711 10,510,163 Miscellaneous fees and costs - - 2,155,131 272,547 - 730,161 3,157,839 Depreciation and amortization 4,509,313 46,368 - - - - 4,555,681 Other 316,094 - 479 55 145 6,415 323,188
Total operating expenses 11,838,495 1,969,716 14,872,116 3,271,764 6,195,494 9,495,816 47,643,401 Operating income (loss) 2,376,275 (720,698) (2,052,929) 1,928,236 (1,723,371) 7,482,542 7,290,055 Nonoperating revenues
Investment income (845,097) (82,652) (323,812) (187,598) (1,484) (2,309,142) (3,749,785) Gain on disposal of capital assets 156,819 - - - - - 156,819 Other nonoperating revenues 700 - - - - 7,324 8,024
Total nonoperating revenues (687,578) (82,652) (323,812) (187,598) (1,484) (2,301,818) (3,584,942) Income (loss) before transfers 1,688,697 (803,350) (2,376,741) 1,740,638 (1,724,855) 5,180,724 3,705,113 Transfers in (note 17) - - - - 2,059,268 - 2,059,268
Transfers out (note 17) (63,311) - (502,193) (339,779) - (1,379,710) (2,284,993) Special item (note 21) - - 54,900,000 - - - 54,900,000
Change in net position 1,625,386 (803,350) 52,021,066 1,400,859 334,413 3,801,014 58,379,388 Net position at beginning of year 36,695,475 1,972,826 (59,403,838) 1,963,734 342,599 10,546,400 (7,882,804) Net position at end of year $ 38,320,861 1,169,476 (7,382,772) 3,364,593 677,012 14,347,414 50,496,584 142
Vehicle
Management
Information
Technology
Replacement
and Services
Self-Insurance
General Liability
/ Auto Self-Insurance Bus
Self-Insurance
Risk Management
Administration
Self-Insurance
Workers'
Compensation
Total internal
service funds
Cash flows from operating activities:

Cash received from customers $ 14,080,903 1,249,018 67,719,187 5,200,000 4,457,449 16,978,358 109,684,915Cash payments for materials and services (4,921,486) (2,024,991) (4,757,923) (3,317,582) (4,849,036) (2,174,075) (22,045,093)Cash payments to employees for services (3,052,153) — — — (1,598,110) — (4,650,263)Cash payments for claims and related expenses — — (62,192,857) (53,465) — (11,839,667) (74,085,989)Other revenue received 700 — — — — 7,324 8,024 Net cash provided by (used in) operating activities 6,107,964 (775,973) 768,407 1,828,953 (1,989,697) 2,971,940 8,911,594 Cash flows from noncapital financing activities:

Transfers in — — — — — — —
Transfers out (63,311) — (502,193) (339,779) 2,059,268 (1,379,710) (225,725) Net cash provided by (used in) noncapital financing activities (63,311) — (502,193) (339,779) 2,059,268 (1,379,710) (225,725)Cash flows from capital and related financing activities:

Acquisition and construction of capital assets (990,412) — — — — — (990,412) Proceeds from sale of capital assets 214,668 — — — — — 214,668 Net cash used in capital and related financing activities (775,744) — — — — — (775,744) Cash flows from investing activities – investment income 215,993 23,549 82,611 42,165 730 579,723 944,771 Net increase (decrease) in cash and
cash equivalents 5,484,902 (752,424) 348,825 1,531,339 70,301 2,171,953 8,854,896Cash and cash equivalents at beginning of year 22,266,173 2,205,421 14,080,317 6,395,819 2,335,093 68,265,111 115,547,934 Effect of unrealized loss (1,080,407) (105,878) (415,491) (233,908) (2,332) (2,941,350) (4,779,366)Cash and cash equivalents at end of year 26,670,668 1,347,119 14,013,651 7,693,250 2,403,062 67,495,714 119,623,464Reconciliation of operating income (loss) to net cash provided by (used in) operating income (loss):

Operating income (loss) $ 2,376,275 (720,698) 52,847,071 1,928,236 (1,723,371) 7,482,542 62,190,055Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities:

Add depreciation 4,509,313 46,368 — — — — 4,555,681Other revenue received 700 — — — — 7,324 8,024Changes in assets and liabilities and deferred outflows and inflows of resources:
(Increase) in accounts receivable (133,867) — (710) — (14,674) (275,467) (424,718)(Increase) in inventory (6,021) — — — — — (6,021) Increase (decrease) in accounts payable 152,516 (101,643) 253,878 (49,265) 716 9,979 266,181 Increase (Decrease) in accrued liabilities (14,598) — 22 4 (4,020) 9 (18,583) Increase in compensated absences payable 6,794 — — — 10,279 — 17,073 (Decrease) in claims payable — — (52,331,854) (50,022) — (4,252,447) (56,634,323) Net OPEB liability and related changes in deferred outflows and inflows of resources (40,177) — — — 63,728 — 23,551 Net pension liability and related changes in deferred outflows and inflows of resources (742,971) — — — (322,355) — (1,065,326) Total adjustments 3,731,689 (55,275) (52,078,664) (99,283) (266,326) (4,510,602) (53,278,461) Net cash provided by (used in) operating activities 6,107,964 $ (775,973) 768,407 1,828,953 (1,989,697) 2,971,940 8,911,594 Schedule of non-cash capital and related financing activities: 156,819.00 — — — — — 156,819

CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Cash Flows
Internal Service Funds
For the fiscal year ended June 30, 2022
143
City of Santa Monica, California
Year Ended June 30, 2022

STATISTICAL SECTION
TABLE 1
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 (1) 2013-14 2012-13 Governmental activities
Net investment in capital assets $ 703,702,731 764,429,080 756,311,492 730,135,331 720,769,829 731,842,870 728,041,792 705,144,194 698,223,620 702,392,065 Restricted 249,522,456 238,658,192 228,300,303 226,867,281 209,428,190 198,720,012 196,524,874 178,624,757 136,510,661 126,827,943 Unrestricted (18,778,603) (143,731,308) (56,670,932) 14,716,293 54,400,893 44,676,618 19,956,676 24,292,525 376,983,696 372,285,005 Total governmental activities net position 934,446,584 859,355,964 927,940,863 971,718,905 984,598,912 975,239,500 944,523,342 908,061,476 1,211,717,977 1,201,505,013 Business-type activities
Net investment in capital assets 449,639,654 442,507,176 454,015,095 453,239,103 437,613,109 445,314,626 440,369,455 447,257,495 472,808,694 450,345,204Restricted 12,468,628 13,030,039 17,045,768 19,925,028 23,409,084 18,835,497 12,797,570 15,102,480 11,665,453 13,739,411Unrestricted 108,593,242 71,173,841 118,563,055 157,216,757 136,350,263 127,841,169 130,752,666 50,488,321 115,636,742 126,804,668 Total business-type activities net position 570,701,524 526,711,056 589,623,918 630,380,888 597,372,456 591,991,292 583,919,691 512,848,296 600,110,889 590,889,283Primary government Net investment in capital assets 1,153,342,385 1,206,936,256 1,210,326,587 1,183,374,434 1,158,382,938 1,177,157,496 1,168,411,247 1,152,401,689 1,171,032,314 1,152,737,269Restricted 261,991,084 251,688,231 245,346,071 246,792,309 232,837,274 217,555,509 209,322,444 193,727,237 148,176,114 140,567,354Unrestricted 89,814,639 (72,557,467) 61,892,123 171,933,050 190,751,156 172,517,787 150,709,342 74,780,846 492,620,438 499,089,673 Total primary government net position $ 1,505,148,108 1,386,067,020 1,517,564,781 1,602,099,793 1,581,971,368 1,567,230,792 1,528,443,033 1,420,909,772 1,811,828,866 1,792,394,296 (1) reduction in 2014-15 unrestricted net position due primarily to the implementation of GASB 68

CITY OF SANTA MONICA, CALIFORNIA
Net Position by Component
Last Ten Fiscal Years
(Accrual Basis of Accounting)
144
TABLE 2
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 ExpensesGovernmental activities:

General government $ 74,357,887 131,655,331 83,627,840 87,251,208 94,164,749 69,476,662 56,728,329 74,025,357 73,188,788 56,319,178Public safety 128,036,677 168,577,199 171,485,637 160,531,648 152,313,163 133,497,286 128,149,081 112,278,370 113,899,354 103,594,567General services 80,590,295 67,174,450 95,598,940 85,528,797 85,543,024 84,190,176 84,178,175 71,906,263 69,637,595 64,654,131 Community services (3) 87,796,120 80,831,581 75,276,083 73,315,694 73,826,217 57,709,552 58,427,336 53,694,823 54,339,022 94,635,112 Library 7,932,667 9,390,658 15,023,233 14,985,755 14,802,469 12,945,988 14,338,093 12,678,896 13,286,929 16,179,779Community development (4) 30,964,869 39,576,169 67,260,671 60,314,000 58,442,889 54,613,906 59,633,639 53,831,747 53,652,994 54,539,141 Interest on long-term debt 6,232,438 5,091,436 5,146,663 6,187,333 4,375,324 2,490,698 2,668,433 3,521,630 3,915,313 3,898,325 Total governmental activities 415,910,953 502,296,824 513,419,067 488,114,435 483,467,835 414,924,268 404,123,086 381,937,086 381,919,995 393,820,233 Business-type activities:

Water 22,488,694 50,202,882 21,651,904 23,490,062 25,659,062 23,583,279 23,259,781 21,356,497 24,750,234 20,244,099Resource recovery and recycling 26,523,962 28,722,152 29,322,186 27,292,721 26,293,628 25,512,992 25,419,861 23,819,237 24,115,496 22,743,427 Community broadband 2,318,193 3,215,379 3,065,926 2,519,298 1,926,149 1,907,535 — — — — Pier 6,544,111 7,596,392 8,448,065 9,265,493 7,880,131 7,597,438 6,935,901 6,909,632 6,310,236 6,145,567 Wastewater 17,254,412 19,841,075 17,751,175 20,423,956 18,802,613 17,855,472 16,485,444 17,335,625 20,479,514 16,853,861 Civic auditorium (1) — — — — — — — — — 4,691,051
Airport 6,095,503 9,820,280 12,477,436 9,627,471 12,912,869 8,595,011 5,335,556 5,293,714 5,440,949 5,188,707 Storm water management 361,328 363,288 1,206,606 380,752 359,488 347,197 2,447,698 2,172,116 651,361 406,721Cemetery 2,640,281 2,546,151 2,273,113 1,805,703 2,071,650 2,340,685 2,184,834 2,154,147 2,077,486 1,852,839 Big Blue Bus 82,123,817 93,473,973 100,300,186 100,093,505 95,349,727 93,652,844 90,560,535 83,106,447 79,215,680 79,238,668Parking authority 73,733 1,724,894 27,937 422,090 216,253 16,178 17,742 403,822 369,367 295,651 Total business-type activities 166,424,034 217,506,466 196,524,534 195,321,051 191,471,570 181,408,631 172,647,352 162,551,237 163,410,323 157,660,591Total primary governmental activities expenses $ 582,334,987 719,803,290 709,943,601 683,435,486 674,939,405 596,332,899 576,770,438 544,488,323 545,330,318 551,480,824 Program revenuesGovernmental activities:

Charges for services:

General government $ 18,739,301 19,883,077 20,087,674 19,645,270 19,860,025 18,447,588 19,279,411 56,875,636 55,834,348 51,075,759 Public safety 20,418,346 17,035,556 17,918,929 21,765,362 24,701,782 22,452,698 24,285,947 22,601,990 22,736,167 21,329,504 General services 40,579,634 37,249,257 39,978,065 45,214,114 43,938,775 44,701,036 49,336,541 2,144,800 2,236,781 2,463,402 Community services (3) 13,398,797 5,019,411 19,145,932 23,412,204 25,508,247 20,835,717 22,466,168 21,359,942 20,448,165 17,921,711 Library 22,037 23,764 260,503 437,269 390,306 388,273 487,809 601,618 614,715 486,204 Community development (4) 31,204,393 27,194,589 28,859,612 25,710,747 26,517,764 29,898,563 42,858,129 26,957,697 19,276,227 28,217,736 Operating grants and contributions 62,437,151 58,477,255 41,367,622 32,835,027 28,012,480 27,933,580 24,647,506 26,332,256 27,773,525 25,798,880 Capital grants and contributions 2,639,762 640,520 1,506,048 5,863,192 5,378,290 9,756,158 12,616,479 5,381,978 12,583,594 5,082,847 Total governmental activities program revenues 189,439,421 165,523,429 169,124,385 174,883,185 174,307,669 174,413,613 195,977,990 162,255,917 161,503,522 152,376,043 (continues next page)

CITY OF SANTA MONICA, CALIFORNIA
Changes in Net Position
Last Ten Fiscal Years
145
TABLE 2
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13

CITY OF SANTA MONICA, CALIFORNIA
Changes in Net Position
Last Ten Fiscal Years
(continues from previous page)Business-type activities:

Charges for services:

Water 34,281,775 29,638,341 27,872,084 26,851,412 25,946,122 24,280,023 22,311,686 22,664,712 22,902,640 22,254,867Resource recovery and recycling 27,347,038 26,842,779 27,630,068 27,444,457 26,393,055 25,953,777 26,831,010 24,425,879 23,271,775 23,526,423 Community broadband 2,779,595 3,299,401 3,301,563 2,489,716 2,200,733 1,924,777 — — — — Pier 6,909,894 3,164,586 8,547,985 9,188,924 8,453,618 8,202,073 7,443,351 6,813,625 5,953,173 4,589,503Wastewater 19,249,781 17,330,719 18,366,169 19,626,512 19,802,308 20,221,930 19,316,170 20,162,516 21,033,699 21,126,054Civic auditorium (1) — — — — — — — — — 1,468,300 Airport 17,306,908 15,946,198 16,148,655 15,690,488 14,132,521 13,149,493 8,679,711 5,897,240 5,396,797 4,185,172Storm water management 1,419,613 1,609,230 1,370,311 1,515,810 1,462,683 1,869,476 1,500,877 1,458,352 1,395,628 1,439,522Cemetery 2,763,983 2,443,201 1,789,748 1,730,351 2,043,185 1,713,212 1,501,371 1,604,607 1,325,778 1,315,119 Big Blue Bus 12,320,388 5,366,846 14,194,438 16,313,026 25,552,378 19,202,854 19,895,338 16,664,916 17,060,923 16,869,809 Operating grants and contributions 58,306,953 63,900,481 59,740,351 59,339,434 44,278,243 48,313,010 48,652,428 47,098,487 40,691,095 38,229,718 Capital grants and contributions 16,080,850 4,623,832 10,047,937 23,851,525 17,959,046 23,062,625 23,924,743 10,333,281 28,431,734 21,489,216 Business-type activities program revenues 198,766,778 174,165,614 189,009,309 204,041,655 188,223,892 187,893,250 180,056,685 157,123,615 167,463,242 156,493,703Total primary government program revenues 388,206,199 339,689,043 358,133,694 378,924,840 362,531,561 362,306,863 376,034,675 319,379,532 328,966,764 308,869,746 Net (expense):

Governmental activities (226,471,532) (336,773,395) (344,294,682) (313,231,250) (309,160,166) (240,510,655) (208,145,096) (219,681,169) (220,416,473) (241,444,190) Business-type activities 32,342,744 (43,340,852) (7,515,225) 8,720,604 (3,247,678) 6,484,619 7,409,333 (5,427,622) 4,052,919 (1,166,888) Total primary government net expense (194,128,788) (380,114,247) (351,809,907) (304,510,646) (312,407,844) (234,026,036) (200,735,763) (225,108,791) (216,363,554) (242,611,078)General revenues and other changes in net position
Governmental activities:

Taxes:

Business 29,120,949 33,644,559 33,894,714 31,947,056 31,575,297 30,711,579 30,799,020 31,468,959 30,847,105 28,467,477 Property 75,980,972 75,324,679 67,791,186 62,615,270 56,954,925 56,423,891 50,452,377 52,771,401 47,729,105 43,477,118Transient occupancy (2) 66,684,095 20,691,803 48,624,638 60,762,881 60,631,025 55,532,325 51,021,050 — — — Sales and use 76,698,693 64,301,901 64,665,646 73,709,191 68,479,438 54,505,239 54,802,839 51,089,716 49,210,039 47,880,634 Utility users (2) 33,613,985 27,840,035 28,026,008 28,306,582 29,288,341 29,437,753 30,772,815 — — — Real property transfer (2) 17,845,968 9,334,371 6,856,663 9,808,072 8,169,163 10,951,756 7,850,960 — — — Parking facility (2) 9,966,669 7,374,354 11,072,445 12,699,044 11,557,811 11,231,324 10,718,156 — — — Other 3,670,376 3,512,898 3,441,908 3,275,912 3,285,670 3,256,799 3,111,764 101,677,478 95,604,341 91,384,006 Settlement income — — — — — — — — — 9,608,247
Other revenues 8,833,338 7,201,899 9,263,443 11,328,286 11,168,233 11,724,228 15,572,745 11,518,022 18,092,058 19,917,250Investment earnings (13,385,275) 3,268,921 14,397,259 21,569,426 4,360,799 3,105,772 7,049,816 4,084,621 6,613,322 1,431,317 Special Item — (9,825,000) (34,215,371) — 43,678,729 (1,103,146) (11,893,876) — — — Extraordinary gain (loss) — — — — — — (12,620,539) (5,106,828) (19,149,679) (48,185,126) Transfers (8,444,909) 27,184,761 46,698,101 (15,670,477) 1,381,459 5,449,293 6,969,835 2,341,674 1,683,146 (10,863,258) Total governmental activities 300,584,861 269,855,181 300,516,640 300,351,243 330,530,890 271,226,813 244,606,962 249,845,043 230,629,437 183,117,665(continues next page) 146
TABLE 2
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13

CITY OF SANTA MONICA, CALIFORNIA
Changes in Net Position
Last Ten Fiscal Years
(continues from previous page)Business-type activities:

Other revenues 2,850,537 3,165,760 7,068,596 3,049,645 4,580,112 4,312,287 3,723,521 6,230,537 5,207,445 12,540,746Investment earnings (6,796,320) 280,080 7,810,542 7,051,704 1,573,331 1,620,842 3,489,865 1,408,083 1,644,388 11,259Special Item — — (1,422,782) — 6,408,992 1,103,146 10,617,561 — — — Extraordinary gain (loss) — — — — — — 4,837,753 — — —
Transfers 8,444,909 (27,184,761) (46,698,101) 15,670,477 (1,381,459) (5,449,293) (6,969,835) (2,341,674) (1,683,146) 10,863,258 Total business-type activities 4,499,126 (23,738,921) (33,241,745) 25,771,826 11,180,976 1,586,982 15,698,865 5,296,946 5,168,687 23,415,263 Total primary government 305,083,987 246,116,260 267,274,895 326,123,069 341,711,866 272,813,795 260,305,827 255,141,989 235,798,124 206,532,928Changes in net positionGovernmental activities 74,113,329 (66,918,214) (43,778,042) (12,880,007) 21,370,724 30,716,158 36,461,866 30,163,874 10,212,964 (58,326,525)Business-type activities 36,841,870 (67,079,773) (40,756,970) 34,492,430 7,933,298 8,071,601 23,108,198 (130,676) 9,221,606 22,248,375 Total primary government $ 110,955,199 (133,997,987) (84,535,012) 21,612,423 29,304,022 38,787,759 59,570,064 30,033,198 19,434,570 (36,078,150) (1) Civic auditorium merged with General services in FY 13-14.(2) Included in "Other" in prior fiscal years.(3) Cultural and recreation services restructured to Community services in FY 20-21.(4) Housing and community development restructured to Community development in FY 20-21. 147
TABLE 3
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 General Fund
Nonspendable $ 6,621,586 9,550,950 13,326,312 11,554,753 12,853,565 15,419,253 21,062,205 23,725,864 22,257,819 22,179,119Restricted 20,275,914 11,119,497 21,447,581 69,975,839 97,740,458 1,976,576 18,330,042 17,951,299 12,371,619 23,808,940Committed — — 1,671,078 1,943,558 2,478,476 4,760,409 31,365 520,574 519,937 519,506Assigned 143,217,685 114,285,898 143,176,947 182,199,922 256,273,855 256,059,633 280,303,334 218,630,183 212,669,876 220,409,168Unassigned 39,819,682 45,891,477 46,922,135 75,004,708 66,464,774 68,082,651 67,347,773 114,196,108 118,192,052 117,324,362 Total General Fund 209,934,867 180,847,822 226,544,053 340,678,780 435,811,128 346,298,522 387,074,719 375,024,028 366,011,303 384,241,095All other governmental funds Nonspendable 16,927,948 18,962,549 14,914,052 13,864,136 12,752,261 12,149,082 11,618,768 11,463,849 30,932,430 31,524,610Restricted 229,749,420 217,524,477 210,347,503 209,832,078 192,169,730 184,752,868 167,750,111 144,902,038 128,610,718 124,852,862Committed 122,607,616 114,924,058 100,981,037 80,754,976 59,897,829 44,021,082 26,876,316 17,877,709 4,404,491 4,372,829Assigned — — — — — 414,544 927,562 9,649,617 18,033,673 15,057,474Unassigned (24,944,343) (21,394,804) (2,018,186) (3,571,636) (2,111,163) (4,785,448) (7,279,890) (814,287) (966,157) (1,148,932) Total all other governmental funds $ 344,340,641 330,016,280 324,224,406 300,879,554 262,708,657 236,552,128 199,892,867 183,078,926 181,015,155 174,658,843

CITY OF SANTA MONICA, CALIFORNIA
Fund Balance of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
148
TABLE 4
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Revenues
Property taxes $ 75,980,972 75,324,679 67,791,186 62,615,270 56,954,925 56,423,891 50,452,377 55,044,307 50,113,693 44,392,416 Sales & use taxes 76,698,693 64,301,901 64,665,646 73,709,191 68,479,438 54,505,239 54,802,839 51,089,716 49,210,039 47,880,634 Transient occupancy taxes (1) 66,684,095 20,691,803 48,624,638 60,762,881 60,631,025 55,532,325 51,021,050 — — — Utility user taxes (1) 33,613,985 27,840,035 28,026,008 28,306,582 29,288,341 29,437,753 30,772,815 — — — Business license taxes (1) 29,120,949 33,644,559 33,894,714 31,947,056 31,050,087 30,118,555 29,893,341 — — — Other taxes 31,483,013 20,221,623 21,371,016 25,783,028 23,537,854 26,032,957 22,586,559 132,075,022 126,836,936 118,983,521 Licenses and permits 35,467,794 26,160,634 38,618,898 45,099,447 41,950,905 43,134,856 41,367,924 39,490,688 36,967,493 33,777,567Intergovernmental 66,323,553 58,616,587 43,236,083 38,315,887 37,496,608 39,612,637 39,612,770 31,013,327 33,068,906 26,420,260 Charges for services 63,632,758 54,316,862 61,396,593 65,847,661 66,615,431 63,821,708 61,667,576 56,381,352 55,976,703 50,767,945Fines and forfeitures 12,262,875 7,779,862 10,357,155 14,877,572 16,362,857 15,461,662 15,904,736 16,287,290 16,253,546 15,303,990 Investment earnings (11,152,035) 3,173,678 12,759,040 20,487,980 3,406,372 2,835,151 6,721,207 4,002,879 6,697,552 1,519,576 Interest from promissory note — 5,399,246 — — — — — — — — Rental income 8,621,072 6,133,385 9,104,387 8,986,944 9,596,580 9,047,246 11,683,408 10,602,671 10,311,967 9,843,633 Settlement income 28,456 — — — 14,085,000 6,103,175 2,433,175 2,433,175 2,433,175 52,287,404 Other 13,720,392 8,292,026 15,913,257 13,220,933 15,896,665 18,757,976 34,384,558 21,058,609 19,309,109 25,518,965 Total revenue 502,486,572 411,896,880 455,758,621 489,960,432 475,352,088 450,825,131 453,304,335 419,479,036 407,179,119 426,695,911Expenditures Current General government 65,624,157 61,731,457 137,222,743 105,337,602 89,671,970 70,164,311 61,354,272 74,741,301 68,308,134 62,250,475 Public safety 155,246,791 153,941,421 173,587,760 168,292,252 144,607,883 136,266,910 132,629,455 117,186,887 111,737,328 104,466,191 General services 104,202,365 116,514,243 78,127,241 83,416,269 87,758,312 83,912,385 88,130,346 71,370,399 57,755,687 58,014,505Community services 89,561,907 83,984,895 82,917,053 71,499,049 71,348,237 56,868,240 54,742,936 50,430,614 50,386,583 64,104,725 Library 8,718,163 8,806,350 13,034,198 13,663,753 12,967,345 12,476,127 12,667,433 12,025,143 17,158,001 14,880,934 Community development 31,514,756 33,008,898 62,374,714 56,563,679 56,248,372 53,807,030 67,085,802 53,711,340 72,037,131 107,699,039 Debt service
Principal 2,895,000 3,305,000 4,755,000 4,630,000 9,039,900 6,255,000 8,788,463 6,075,000 5,920,000 3,365,000Interest 5,387,582 6,054,223 6,785,313 6,310,437 3,596,620 3,014,688 3,392,287 3,785,591 3,966,495 3,942,925 Bond issuance costs 498,057 340,135 — 4,025 938,932 — 535,048 — — — Total expenditures 463,648,778 467,686,622 558,804,022 509,717,066 476,177,571 422,764,691 429,326,042 389,326,275 387,269,359 418,723,794 (continues next page)

CITY OF SANTA MONICA, CALIFORNIA
Changes in Fund Balance of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
149
TABLE 4
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13

CITY OF SANTA MONICA, CALIFORNIA
Changes in Fund Balance of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
(continues from previous page)Excess (deficiency) of revenues over (under) expenditures 38,837,794 (55,789,742) (103,045,401) (19,756,634) (825,483) 28,060,440 23,978,293 30,152,761 19,909,760 7,972,117 Other financing sources (uses)
Transfers in 46,490,737 75,609,011 73,508,634 46,580,497 41,609,095 48,828,408 24,241,261 19,778,209 26,210,910 21,906,283 Transfers out (55,113,011) (48,577,094) (27,057,385) (83,785,317) (40,405,415) (43,585,095) (17,271,426) (17,289,889) (24,648,414) (32,010,088) Refunding bonds issued — — — — — — 26,360,000 — — — Bonds issued 64,780,000 19,700,000 — — 102,785,000 — — — — — Premium on bonds issued 7,714,767 3,711,635 — — 12,247,767 — 2,020,710 — — — Payments to refunded bond escrow agent — (23,066,482) — — — — (27,826,666) — — — Total other financing sources (uses) 63,872,493 27,377,070 46,451,249 (37,204,820) 116,236,447 5,243,313 7,523,879 2,488,320 1,562,496 (10,103,805) Special item (54,900,000) (9,825,000) (34,195,723) — — (37,420,689) (4,462,166) — — (21,254,908)Extraordinary gain (loss) (5,376,172) — — — — — 324,615 (21,564,585) (33,345,736) (14,196,057)Net change in fund balance $ 42,434,115 (38,237,672) (90,789,875) (56,961,454) (4,116,936) 115,410,964 27,364,621 11,076,496 (11,873,480) (37,582,653) Debt service as a percentage of noncapital
expenditures (2) 1.90% 2.27% 2.49% 2.41% 2.91% 2.33% 3.16% 2.65% 2.76% 2.07% (1) Included in "Other taxes" in prior fiscal years.(2) Calculation includes only the principal and interest components of debt service expenditures when calculating this ratio for all years. 150
TABLE 5
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Sales and use taxes 76,699 $ 64,302 64,666 73,709 68,480 54,505 54,803 51,090 49,210 47,881 Utility user taxes 33,614 27,840 28,026 28,307 29,288 29,438 30,773 32,066 32,817 31,450Transient occupancy taxes 66,684 20,692 48,625 60,763 60,631 55,532 51,021 47,629 44,396 40,997Property taxes (2) 75,981 75,325 67,791 62,615 56,955 56,424 50,452 55,044 50,114 44,392 Business license taxes 29,121 33,645 33,895 31,947 31,575 30,712 30,799 30,354 29,783 27,518Parking facility tax 9,967 7,374 11,072 12,699 11,558 11,231 10,718 11,072 10,598 9,954 Documentary Transfer Tax 17,846 9,334 6,857 9,808 8,169 10,952 7,851 7,903 6,273 6,027 Vehicle license fees 107 68 74 44 49 42 38 38 39 48
Condominium taxes 60 3 43 25 9 38 73 45 14 18
Total 310,079 $ $ 238,583 $ 261,049 279,917 266,714 248,874 236,528 235,241 223,244 208,285 (1)(2)
Source: City of Santa Monica Finance Department
Does not include Highway Users Taxes, which are recorded in the Gas Tax Fund, Unit Dwelling Taxes, which are recorded in the Parks and Recreation Facilities Fund, or TORCA Conversion Taxes, which are recorded in the TORCA Fund.Includes ad valorem property taxes for purposes of paying debt service on general obligation bonds. Does not include tax increment received by redevelopment area.

Source

CITY OF SANTA MONICA, CALIFORNIA
General Fund Tax Revenues by Source (1)
Last Ten Fiscal Years
(In Thousands)
151
TABLE 6
Fiscal
year Land Improvements
Personal
property Public utilities Secured gross Exemptions (1) Secured net Net unsecured Net assessed
valuations
Total Direct
Tax Rate (2)
2021-22 $ 26,596,010 $ 17,741,523 $ 77,246 $ - $ 44,414,779 $ 1,664,383 $ 42,750,397 $ 1,083,210 $ 43,833,607 1.00%2020-21 25,433,374 17,124,652 369,459 - 42,927,485 1,975,152 40,952,333 1,099,941 42,052,274 1.00%2019-20 23,887,232 16,243,029 84,504 - 40,214,765 1,699,358 38,515,407 1,005,939 39,521,346 1.00%2018-19 22,406,863 15,268,820 428,740 - 38,104,423 1,628,684 36,475,739 1,002,111 37,477,850 1.00%2017-18 20,799,168 14,235,956 124,391 - 35,159,515 1,656,924 33,502,591 925,241 34,427,832 1.00%2016-17 19,308,450 13,550,065 48,643 - 32,907,158 653,548 32,253,610 906,371 33,159,981 1.00%2015-16 17,890,583 472,362 12,932,934 - 31,295,879 1,042,924 30,252,955 902,502 31,155,457 1.00% 2014-15 12,433,379 16,867,678 437,194 742 29,738,993 1,609,033 28,129,960 916,381 29,046,341 1.00% 2013-14 11,701,427 16,046,789 402,171 742 28,151,130 1,573,052 26,578,078 936,031 27,514,109 1.00% 2012-13 10,846,677 14,828,199 370,673 742 26,046,292 1,222,722 24,823,570 942,035 25,765,605 1.00% (1) Excludes Homeowner Exemption. City is reimbursed by State for taxes lost because of these exemptions.(2) Excludes Direct and Overlapping Rates. See Table 7 for Direct and Overlapping Rates.Source: Los Angeles County Auditor-Controller

CITY OF SANTA MONICA, CALIFORNIA
Assessed Value and Actual Value of Taxable Property
Last Ten Fiscal Years
(In Thousands)
152
TABLE 7
Fiscal City County School Miscellaneous
year General Fund General Fund districts special districts Total 2021-22 $ 0.01 $ 1.00 $ 0.16 — $ 1.17
2020-21 0.01 1.00 0.16 — 1.17
2019-20 0.01 1.00 0.17 — 1.18
2018-19 0.01 1.00 0.12 — 1.13
2017-18 0.01 1.00 0.14 — 1.15
2016-17 0.01 1.00 0.13 — 1.14
2015-16 0.01 1.00 0.13 — 1.14
2014-15 0.01 1.00 0.13 — 1.14
2013-14 0.01 1.00 0.13 — 1.14
2012-13 0.01 1.00 0.13 — 1.14

CITY OF SANTA MONICA, CALIFORNIA
Direct and Overlapping Property Tax Rates*
Last Ten Fiscal Years
* Property tax rate is per $100 of assessed value. Since 1978-79, the maximum allowable rate is levied by the County, property taxes are collected by the County, and the County allocates the City's share in accordance with distribution formulas established by law. Effective 1981- 82, Proposition 13 allowed jurisdictions to impose rates over the $1.00 base rate only for bonded debt approved by the voters prior to 1978.

However, in 1986, the State Constitution was amended to allow rates over the $1.00 base rate for voter approved general obligation bonds.

City General Fund is allocated approximately $.14 of each $1.00 of the County General Fund amount.

Source: Los Angeles County Auditor-Controller
153
TABLE 8
Taxable Taxable
assessed assessed
Taxpayer value Rank value Rank
SC Enterprises SMBP LLC $ 1,032,525,260 1 2.36 % 265,000,000 $ 5 1.03 % Douglas Emmett Inc 901,484,758 2 2.06 309,779,339 4 1.20California Colorado Center LLC 559,974,983 3 1.28 482,300,885 1 1.87 Water Garden Company 544,882,209 4 1.24 468,087,352 2 1.82 Office Block Investment LLC 394,141,496 5 0.90 — — Macerich Company LLC 361,155,993 6 0.82 312,945,259 3 1.21 SM Campus LLC 331,327,353 7 0.76 — —
New Santa Monica Beach Hotel LLC 309,283,574 8 0.71 140,417,417 9 0.54Kite Pharma Inc 224,019,952 9 0.51 — — LT Owner LLC 213,049,561 10 0.49 — CREP 2700 Holdings LLC — — 178,600,000 6 0.69Ocean Avenue LLC — — 148,996,296 7 0.58 LUI2 LA Lantana LP — — 143,727,351 8 0.56
Equity Office Properties Trust — — 124,990,000 10 0.49
Total principal property taxpayers assessed value $ 4,871,845,139 11.13 % 2,574,843,899 $ 9.99 % Total City net taxable assessed value $ 43,833,606,820 100.00 % 25,765,604,721 $ 100.00 % Source: City of Santa Monica Finance Department; Hdl, Coren and Cone; Los Angeles County Auditor-Controller value value
of total City of total City
taxable taxable
assessed assessed
Percentage Percentage

CITY OF SANTA MONICA, CALIFORNIA
Principal Property Taxpayers
Current Fiscal Year and Nine Years Ago
2021-22 2012-13
154
TABLE 9
Fiscal year
Total secured tax
levy
Current secured
tax collections
Delinquent secured
tax collections (1)
Total tax
collections
Outstanding
delinquent taxes
(2)
2021-22 38,861,321 $ 38,095,850 $ 98.0 % 560,536 $ 38,656,386 $ 99.5 % 590,406 $ 1.5 % 2020-21 36,996,999 36,306,207 98.1 613,376 36,919,583 99.8 542,504 1.5 2019-20 34,710,721 33,896,039 97.7 540,988 34,437,027 99.2 452,675 1.32018-19 32,779,676 32,167,281 98.1 419,000 32,586,281 99.4 407,817 1.22017-18 30,578,295 30,099,534 98.4 479,245 30,578,779 100.0 379,776 1.22016-17 30,859,806 30,545,235 99.0 489,991 31,035,226 100.6 375,288 1.22015-16 25,198,360 27,662,256 109.8 512,080 28,174,336 111.8 358,568 1.42014-15 26,567,114 26,190,114 98.6 600,642 26,790,756 100.8 438,248 1.62013-14 25,173,273 24,689,372 98.1 570,037 25,259,409 100.3 512,940 2.02012-13 23,446,717 23,428,590 99.9 713,956 24,142,546 103.0 585,417 2.5 (1) Exclusive of penalties and collections related to tax overrides for debt service on general obligation bonds.(2) Source: County of Los Angeles
Reflects City of Santa Monica proportionate share of county-wide outstanding delinquencies. The Los Angeles County property tax system does not provide City of Santa Monica specific statistics related to delinquencies. Should the County change their system to include specific city data, the table will be updated to adjust delinquent taxes by year.

CITY OF SANTA MONICA, CALIFORNIA
Property Tax Levies and Collections
Last Ten Fiscal Years
Percent of levy
collected
Total secured tax
collections as
percent of total tax
levy
Outstanding
delinquent taxes as
percent of total
secured tax levy
155
TABLE 10
Business 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Apparel stores $ 214,904 $ 146,814 $ 322,629 $ 344,337 $ 362,841 $ 395,249 $ 390,071 $ 394,070 $ 401,761 $ 391,145 General merchandise 39,041 19,250 49,204 56,860 78,610 89,282 93,741 100,267 106,569 113,745 Food stores 92,841 94,365 97,024 91,803 87,888 88,196 87,729 86,615 82,367 79,495 Eating & drinking places 597,450 407,938 726,783 716,826 693,473 687,794 638,818 598,468 561,613 540,315 Building materials 134,806 122,302 124,030 114,802 112,587 110,186 113,405 114,156 102,818 88,761 Auto dealers & auto suppliers 980,000 783,207 874,780 854,723 766,512 770,658 757,333 739,833 697,249 653,869 Service stations 76,149 45,161 97,198 101,275 90,164 81,810 96,004 112,717 120,566 127,052 Other retail stores 566,833 562,235 627,046 665,606 695,449 657,236 692,105 677,744 657,413 664,771 Retail stores total 2,702,024 2,181,272 2,918,694 2,946,232 2,887,524 2,880,411 2,869,206 2,823,870 2,730,356 2,659,153 All other outlets 1,073,619 1,093,726 1,060,890 904,103 829,773 804,321 787,252 754,803 707,580 646,311 Total all outlets $ 3,775,643 $ 3,274,998 $ 3,979,584 $ 3,850,335 $ 3,717,297 $ 3,684,732 $ 3,656,458 $ 3,578,673 $ 3,437,936 $ 3,305,464 (1) Prior years amounts have been revised to reflect the change of sales tax administration reporting from the State Board of Equalization to the Department of Taxes and Fees Administration; Amounts do not include allocations from State or County Pools.Source: State Board of Equalization, California Department of Taxes and Fees Administration, State Controller's Office, The HdL Companies

CITY OF SANTA MONICA, CALIFORNIA
Taxable Transactions by Type of Business (1)
Last Ten Calendar Years
(In Thousands)
Calendar Year
156
TABLE 11
Fiscal
year
General
obligation
bonds
Lease revenue
bonds
Term loans
payable (2) Water bonds
Term loans
payable
Total primary
government
Percentage of
net assessed
valuation (1) Per capita
2021-22 1,060,000 $ 228,880,218 — 78,191,500 53,330,029 361,461,747 0.82% 3,912 2020-21 2,273,237 159,348,210 — 2,389,951 28,079,704 192,091,102 0.46% 2,066 2019-20 3,506,472 162,504,543 — 4,764,846 5,550,789 176,326,650 0.45% 1,909 2018-19 4,754,709 166,858,953 200,000 7,074,741 855,820 179,744,223 0.48% 1,920 2017-18 6,012,945 171,078,364 400,000 9,304,636 661,765 187,457,710 0.54% 2,028 2016-17 7,281,181 64,474,634 400,000 9,404,529 921,636 82,481,980 0.25% 879 2015-16 8,554,417 69,944,367 400,000 9,504,426 1,213,411 89,616,621 0.29% 957 2014-15 9,857,652 77,431,209 400,000 9,604,321 1,497,792 98,790,974 0.34% 1,059 2013-14 11,205,890 82,503,548 400,000 9,704,216 1,774,966 105,588,620 0.38% 1,145 2012-13 12,518,284 87,039,302 400,000 17,763,125 2,045,117 119,765,828 0.46% 1,316 Note: Details regarding the City's outstanding debt can be found in Note 9 of the Financial Statements.

All bonds amounts are updated to reflect net of related premiums, discounts, and adjustments.(1) Net assessed property valuations have been used because personal income is not available. See Table 6 for net assessed valuations. (2) Redevelopment debt was transferred to the Successor Agency on February 1, 2012.

CITY OF SANTA MONICA, CALIFORNIA
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental activities Business-type activities
157
TABLE 12
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 General bonded debt outstanding
General obligation bonds 1,060,000 $ 2,273,237 3,506,472 4,754,709 6,012,945 7,281,181 8,554,417 9,857,652 11,205,890 12,518,284 Less: Amounts Available in Debt 1,060,000 1,075,000 1,095,000 1,110,000 1,120,000 1,130,000 1,135,000 1,165,000 1,210,000 1,225,000 Service Fund (3)
Total 1,198,237 - 2,411,472 3,644,709 4,892,945 6,151,181 7,419,417 8,692,652 9,995,890 11,293,284 Assessed value (in thousands) (1) $ 42,052,274 43,833,607 39,521,346 37,477,850 34,427,832 33,159,981 31,155,457 29,046,341 27,514,109 25,765,605 Percentage of assessed
Property value 0.00% 0.00% 0.01% 0.01% 0.01% 0.02% 0.02% 0.03% 0.04% 0.04%Population (2) 92,408 92,968 92,357 93,593 92,416 93,834 93,640 93,283 92,185 91,040 Per capita - 13 26 39 53 66 79 93 108 124
(1) See Table 6 for Assessed Value Data(2) See Table 16 for Population Data (3) This is the amount restricted for debt service principal payments.

All bonds amounts are net of related premiums, discounts, and adjustments.

CITY OF SANTA MONICA, CALIFORNIA
Ratios of General Bonded Debt
Last Ten Fiscal Years
158
TABLE 13
Estimated Estimated share
Debt Percentage of Overlapping
Outstanding Applicable (1) Debt
Overlapping debt:

Los Angeles County General Fund Obligations $ 2,698,357,105 2.474% 66,757,355 $ Los Angeles County Superintendent of Schools Certificates of Participation 3,972,227 2.474% 98,273 Metropolitan Water District 20,175,000 1.292% 260,661
Santa Monica Community College District 737,405,211 66.649% 491,473,199 Los Angeles Unified School District 10,770,060,000 0.0001% 10,770 Santa Monica-Malibu Unified School District 557,399,648 66.713% 371,858,027 Santa Monica-Malibu Unified School District School Facilities Improvement District 1 259,630,000 100.000% 259,630,000 Los Angeles Unified School District Certificates of Participation 120,710,000 0.0001% 121 Los Angeles Community College District 4,146,515,000 0.0130% 539,047 Santa Monica-Malibu Unified School District Certificates of Participation 26,894,301 66.713% 17,941,995 Overlapping Tax Increment Debt (Successor Agency): 70,215,000 100.000% 70,215,000 Subtotal, overlapping debt 1,278,784,448
City direct governmental debt
City of Santa Monica General Obligation Bonds Main Library Improvements (2012) 1,060,000 City of Santa Monica Civic Parking Structure Lease Revenue Bonds (2015) 21,019,878 City of Santa Monica City Services Building Lease Revenue Bonds (2017) 75,932,951 City of Santa Monica Fire Station 1 Lease Revenue Bonds (2018) 36,643,225 City of Santa Monica Parking Structure 6 Lease Revenue Refunding Bonds (2021) 23,046,556 City of Santa Monica Public Financing Authority Lease Revenue Bonds City Yards Project (2021) 72,237,608 Subtotal, direct debt (2) 229,940,218
Total direct and overlapping governmental debt (3) $ 1,508,724,666 (1) Percentage of overlapping agency's assessed valuation located within boundaries of the city. (2) Net of issuance discounts and premiums.
(3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bond and non-bonded capital lease obligations.

Source for overlapping debt information: California Municipal Statistics, Inc.

CITY OF SANTA MONICA, CALIFORNIA
Direct and Overlapping Governmental Activities Debt
As of June 30, 2022
159
TABLE 14
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Total net debt applicable to limit 199,006,792 $ 140,007,696 146,646,915 151,391,076 156,788,174 62,271,351 67,444,525 74,876,302 80,994,650 87,000,048 Debt limit 4,549,799,000 4,402,742,600 4,122,070,400 3,610,653,400 3,608,475,600 3,381,352,900 3,219,838,100 3,065,537,400 2,908,716,082 2,720,223,142Legal debt margin 4,350,792,208 4,262,734,904 3,975,423,485 3,459,262,324 3,451,687,426 3,319,081,549 3,152,393,575 2,990,661,098 2,827,721,432 2,633,223,094 Total net debt applicable to the limit
as a percentage of debt limit 4.37% 3.18% 3.56% 4.19% 4.34% 1.84% 2.09% 2.44% 2.78% 3.20% Net assessed value 43,833,607,000Add: exempt property 1,664,383,000Total gross assessed value 45,497,990,000 $ Debt limit - 10% of total assessed value (1) 4,549,799,000 Amount of debt applicable to debt limit:

Total bonded debt 207,515,000
Less:

Assets in debt service fundsavailable for payment of bonds 8,508,208 Total amount of debt applicable to debt limit 199,006,792Legal debt margin 4,350,792,208 $ (1) Per Section 607 of the City Charter, bonded indebtedness of the City may not exceed 10% of total assessed valuation of property within the City, exclusive of any indebtedness incurred for the purpose of water supply or sewers or storm drains.Source: City of Santa Monica Finance Department

CITY OF SANTA MONICA, CALIFORNIA
Computation of Legal Debt Margin
Last Ten Fiscal Years
160
TABLE 15
Direct Net revenue
Gross operating available for
revenues expense (1) debt service Principal Interest Total Coverage (2) $ 26,054,538 34,259,154 $ 8,204,616 $ — $ 954,237 $ 954,237 $ 8.60 (1)
(2)
Excludes depreciation expense, write-off of disposed assets, and capital-related expenditures.

Bond covenant requires a coverage ratio of 1.20
The Water Enterprise Revenue Bonds were issued August 25, 2021 at an interest rate from 2.25% to 4.00% with a rating of AAA from Standard & Poor's Corporation.

Debt service began in FY 2021-22.

Source: City of Santa Monica Finance Department
CUSIP 802490
2021-22
year

CITY OF SANTA MONICA, CALIFORNIA
Water Enterprise Revenue Bonds Coverage
Last Fiscal Year
Fiscal Debt service requirement
161
TABLE 16

** ** **
Calendar
year
2022 92,408 $ * $ * 4.6 %
2021 ** 93,242 985,473 75,821 7.0
2020 92,995 925,816 70,280 10.1
2019 92,480 860,476 65,006 4.3
2018 92,416 814,755 61,325 4.4
2017 93,834 785,247 59,000 4.5
2016 93,640 759,668 57,135 5.1
2015 93,283 734,219 55,384 5.7
2014 92,185 687,039 52,109 7.0
2013 91,040 648,728 49,479 8.3
Note: Personal income data shown is the Metropolitan Statistical Area of Los Angeles-Long Beach-Santa Ana, CA.

Data by City is not available.

Population and unemployment rate are for Santa Monica
* No data is available for 2022 as of publication date of ACFR ** Data revised per source
Source: (1) California Department of Finance
(2) and (3) Bureau of Economic Analysis
(4) State of California, Employment Development Department, Labor Market Information Division
Population (1) (millions) personal income (3) rate (4)

CITY OF SANTA MONICA, CALIFORNIA
Demographic and Economic Statistics
Last Ten Calendar Years
Personal income (2) Per capita Unemployment
162
TABLE 17
Employers
Number of
employees Rank
Number of
employees Rank
City of Santa Monica 2,059 1 2.55 % 2,528 1 3.10 %
UCLA Medical Center, Santa Monica 1,965 2 2.43 2,079 2 2.55 Santa Monica College 1,865 3 2.31 1,953 3 2.39
SNAP Inc. 1,667 4 2.06 — —
Universal Music Group 1,400 5 1.73 743 7 0.91
Providence Saint John's Health Center 1,386 6 1.72 1,676 4 2.05 Santa Monica-Malibu Unified School District 1,358 7 1.68 1,457 5 1.79 Hulu 1,320 8 1.63 — —
Oracle 950 9 1.18 — —
Activision 919 10 1.14 692 8 0.85
RAND Corporation — — 842 6 1.03
ET Whitehall, Inc. — — 568 9 0.70
(Casa del Mar, Shutters on the Beach)
Lionsgate Entertainment — — 555 10 0.68
Total jobs provided by principal employers 14,889 13,093 Average total jobs in Santa Monica 80,797 81,569
Principal employers as percent of total jobs 18.43% 16.05% Source: City of Santa Monica Economic Development Division, Housing and Economic Development Department Percentage of
total City
employment
Percentage of
total City
employment

CITY OF SANTA MONICA, CALIFORNIA
Principal Employers
Current Year and Nine Years Ago
2021-22 2012-13
163
TABLE 18
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 General government 269.2 250.3 273.5 276.7 277.6 269.7 281.5 265.7 232.9 230.7 Public safety
Police
Sworn 221.0 223.0 229.0 227.0 224.0 224.0 221.0 221.0 216.0 216.0 Non-sworn 174.1 165.8 203.4 203.4 201.4 202.4 202.4 197.4 217.4 220.4 Fire
Sworn 122.0 120.0 120.0 120.0 120.0 120.0 114.0 114.0 108.0 108.0 Non-sworn 15.0 14.0 16.0 16.0 17.0 16.0 15.8 15.8 21.0 21.0 General services 208.0 210.0 270.5 282.0 281.0 281.6 257.3 257.3 256.1 184.3 Community services 118.5 98.2 150.3 152.7 152.7 152.7 153.0 153.7 151.9 231.1 Library 58.3 47.8 112.0 113.5 113.5 112.5 111.0 111.0 114.8 106.1 Community development 97.5 88.5 174.3 164.8 163.2 161.5 159.5 149.8 138.8 144.4 Beach recreation 41.1 35.5 53.3 52.6 52.6 50.5 50.3 48.9 49.9 46.6 Water 52.0 51.0 47.0 47.0 46.0 46.0 46.0 46.0 46.0 46.0 Resource Recovery & Recycling 89.9 81.0 88.3 91.3 92.3 90.7 89.7 87.7 86.7 75.2 Pier 16.9 16.9 21.9 21.9 21.9 20.3 19.3 17.8 17.8 17.2
Wastewater 20.0 21.0 21.0 21.0 22.0 22.2 22.2 22.2 22.2 22.2 Civic Auditorium — — — — — — — — — 11.0Airport 17.0 14.0 15.9 20.9 27.9 37.9 12.9 12.4 12.5 12.2 Cemetery 7.0 7.0 7.0 7.0 8.0 8.1 7.1 7.1 7.1 12.1
Big Blue Bus 414.8 410.8 450.0 463.0 464.0 462.9 464.5 436.0 435.5 419.0 Vehicle management 21.0 21.0 29.3 29.3 29.3 29.0 29.0 28.0 28.0 28.0 Self insurance - workers' compensation 11.0 10.0 13.0 13.0 13.0 13.0 13.0 12.0 12.0 14.0 Community Broadband 5.0 4.0 3.0 3.0 4.0 4.0 — — — —
Total all funds 1,979.3 1,889.8 2,298.7 2,326.1 2,331.4 2,325.0 2,269.5 2,203.8 2,174.6 2,165.5 Note: Includes permanent and temporary employees (2,080 hours = 1 full-time position).Source: City of Santa Monica Budget

CITY OF SANTA MONICA, CALIFORNIA
Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years
Function/Program
164
TABLE 19
Function / program 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13General government:

Electronic requests for government information 8,195,035 9,236,685 10,679,005 11,784,998 12,465,631 13,811,858 12,558,833 13,410,283 12,420,770 12,175,143 Hours of live public meeting coverage 288 257 187 230 210 220 275 319 284 330 Public safety:

Number of emergency response incidents 16,978 15,257 15,802 17,355 17,199 16,384 15,963 14,629 13,637 13,540Number of inspections 5,482 2,221 6,150 8,201 8,795 10,592 10,202 8,119 9,031 8,706Calls to Police Department for service 105,871 95,441 111,310 128,992 134,192 129,524 130,016 133,516 128,323 120,320Police reports issued 11,026 10,932 12,468 16,043 16,298 14,467 14,358 13,984 13,983 13,708Number of crimes recorded 7,527 7,569 8,301 10,369 10,008 8,988 8,774 8,500 8,744 8,986 General services:

Number of square feet of sidewalks repaired 151,679 123,991 161,924 219,871 126,959 99,907 14,001 10,359 6,025 3,279Number of graffiti removals performed 3,185 (1) 448 (1) 33,359 40,156 45,729 43,535 38,311 37,940 37,948 34,289 Feet of sewer mains cleaned 1,836,480 (2) 2,247,313 2,372,320 2,072,933 2,093,410 1,988,287 1,985,816 2,200,810 1,933,560 2,328,874 Cultural and recreation services:

Number of cars parked in beach lots 2,002,648 1,670,062 1,655,820 2,190,104 2,553,233 2,829,771 2,580,752 2,580,225 2,568,733 2,163,186Senior services meals served 171,269 183,652 141,568 118,875 104,472 64,406 52,917 48,253 43,020 64,711Number of low income persons receiving primary health care 3,703 3,516 4,336 4,460 4,711 4,458 4,137 3,089 3,519 3,568Number of youth regularly attending homework assistance programs 378 261 617 687 597 641 745 624 583 469 Library:

Library visitors 133,845 88,974 740,009 1,131,524 1,221,015 1,257,746 1,184,130 1,262,708 1,265,286 1,373,663Materials used 731,077 622,006 1,563,205 1,688,615 1,707,798 1,882,878 1,888,473 1,998,869 2,021,936 2,225,571Public access computer sessions 13,592 21,961 95,630 159,705 175,485 173,702 164,318 182,655 215,907 271,680 Housing and community development:

Building and Safety plan checks completed 4,399 3,936 4,587 4,389 4,412 4,749 2,823 3,080 2,366 1,998Building inspections performed 16,539 18,429 21,860 23,342 24,009 24,080 23,858 20,690 20,732 21,576Rounds of transportation plan check & entitlement application review completed 566 678 793 530 323 640 632 748 839 465 Resident parking passes sold 47,041 32,511 47,161 57,993 53,118 51,325 48,962 56,356 51,674 76,000Number of traffic signs installed, replaced, repaired, or removed 281 200 739 2,951 3,024 2,858 1,659 2,079 2,417 2,859Number of parking meters installed, replaced, repaired, or removed 6,211 (3) 18,822 22,780 21,650 18,605 14,843 13,844 5,875 5,874 6,100 Water:

Number of direct customer accounts 18,480 18,439 18,342 18,342 18,061 17,976 17,842 17,798 17,760 17,705Water sold to direct customers in whole acre feet 10,729 10,605 10,988 11,265 11,718 11,552 11,242 12,323 13,344 15,147 Airport:

Number of tenant aircraft 228 196 195 256 278 310 309 325 274 420 Noise ordinance violations issued 30 38 33 38 130 148 162 118 153 160 Big Blue Bus:

Revenue Miles 3,921,249 3,700,401 4,643,786 4,978,667 5,024,447 4,969,546 4,862,782 4,734,209 4,870,655 5,019,965Farebox revenue (in millions) 5.62 1.99 8.97 11.41 11.72 11.80 12.84 13.36 13.68 14.09 Total passenger trips (in millions) 6.31 5.03 10.29 12.54 13.18 13.30 16.50 18.70 18.80 19.31Number of customer relations phone calls 49,256 23,768 38,445 51,952 30,730 37,187 38,705 56,995 64,525 69,075Total number of charters 0 0 0 0 0 0 0 0 3 3 (1) Due to restructuring, only graffiti removal requested by the public and submitted to the 311 system are tracked and included in the stat. Additional graffiti removal, not currently tracked by City Staff, continues to be performed. Staff has not seen a reduction in quantity of graffiti in our City, however the response time to remove graffiti has increased due to the restructuring. (2) The wastewater fund reduced their sewer main cleaning budget due to revenue contraints.(3) In FY 2020-21, the City invested in parking meters through the CIP Program and replaced over 6,000 outdated on-street meters that had exceeded their useful life. In FY 2021-22, various meters were removed to accommodate for the parklets program. As of FY 2021-22, all meters are new and under warranty reflecting the significant drop in the statistic.

Sources: Various City departments.

CITY OF SANTA MONICA, CALIFORNIA
Operating Indicators by Function/Program
Last Ten Fiscal Years
165
TABLE 20
2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Public safety:

Number of police vehicles 250 244 245 237 243 235 (1) 232 220 223 241 Number of fire vehicles 73 70 71 71 67 67 71 68 64 56
Number of fire stations 5 5 5 5 5 (6) 4 4 4 45
Number of police substations including Public Safety Facility 4 4 3 3 3 3 3 3 34 General services:

Square footage of asphalt paved streets 30,191,740 30,191,740 30,191,740 30,191,740 30,170,740 30,170,740 30,170,740 30,403,785 30,403,785 30,403,785Square footage of concrete paved streets 1,183,981 1,183,981 1,183,981 1,183,981 1,177,981 1,177,981 1,177,981 1,128,034 1,128,034 1,106,834Square footage of sidewalks 8,620,831 8,620,831 8,620,831 8,451,871 8,451,871 8,451,871 8,451,871 8,403,428 8,403,428 8,386,998Square footage of curbs and gutters 1,938,820 1,938,820 1,938,820 1,938,820 1,938,420 1,938,420 (2) 1,938,420 1,930,214 1,930,214 1,927,564 Cultural and recreation services:

Number of beach parking lots 16 16 16 16 16 16 (3) 16 16 17 17 Number of parks 313131 31313029 29 29 29
Number of swim centers 2 2 2 2 2 2 2 2 2 2
Library:

Number of facilities: main and branches 5 5 5 5 5 5 5 5 54 Housing and community development:

Downtown parking structure visitors 3,566,171 2,740,785 4,104,583 (8) 5,171,173 5,339,806 5,753,204 (4) 6,722,688 6,405,636 6,455,602 6,790,058 Water:

Number of feet of water main installed 10,822 10,822 10,822 (9) 4,825 4,500 (7) 2,269 (5) 2,495 10,465 9,510 9,510 Water main system (in miles) 211 211 205 205 205 205 205 205 205 205Reclaimed water main system (in miles) 6 6 5 5 5 5 5 5 5 4 Wastewater:

City sewage flow in million gallons/day 11 12 14 14 13.8 14.2 13.9 13.9 12.2 11.4Sewer main system (in miles) 155 155 152 152 151 151 151 151 151 151 Stormwater:

Daily gallons treated for recycling by SMURRF 212,399 171,746 193,250 186,732 180,699 159,740 160,059 170,000 108,000 123,000Storm drain system (in miles) 59 59 59 59 59 59 59 59 59 59 Airport:

Aircraft operations (departures and arrivals) 74,935 63,870 67,205 74,511 74,130 83,471 89,217 84,633 85,052 102,109 Big Blue Bus:

Number of buses 195 178 189 195 199 200 200 188 201 192 (1) Includes police patrol boat, Mobile Command Center, and SUVs (to eventually replace old Crown Victorias).(2) Per Engineers, curbs and gutters are in linear feet. Thus, use approximate factor of 2 to convert from linear feet to square feet.(3) 1650 Appian is residental parking only and has been removed from count.(4) 2017 Downtown Community Plan (DCP) Downtown perimeter: Wilshire Blvd (north), Lincoln Blvd (east), I-10 Freeway (south), Ocean Avenue (west). - includes Parking Structures 1-8, Main Library Parking Structure, Ken Edwards Center - excludes Parking Structure 9, Civic Center Parking Lot, Civic Center Parking Structure - includes transient (“daily”) visitor parking and does not include monthly permit parkers(5) Per Engineers, this total is lower compared to prior years because no water main CIP was started this year.(6) Per Fire, there were 4 permanent and 1 temporary station @ Station #4 for FY17/18.(7) Total updated per Engineering.(8) Per PCD this count now includes monthly permit parkers.(9) Per Engineers, Water department doubled linear feet on new projects as part of self sufficiency goal.

Sources: Various City departments.

CITY OF SANTA MONICA, CALIFORNIA
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
Function / program
166