City of Santa Monica
City Council Meeting
AGENDA
PHIL BROCK
MAYOR
GLEAM DAVIS LANA NEGRETE
COUNCILMEMBER MAYOR PRO TEM
CHRISTINE PARRA CAROLINE TOROSIS
COUNCILMEMBER COUNCILMEMBER
JESSE ZWICK OSCAR DE LA TORRE
COUNCILMEMBER COUNCILMEMBER
DAVID WHITE
CITY MANAGER
DOUGLAS SLOAN
CITY ATTORNEY
NIKIMA NEWSOME
INTERIM CITY CLERK
STANDARDS OF BEHAVIOR THAT PROMOTE CIVILITY AT ALL PUBLIC MEETINGS:
• Treat everyone courteously; • Embrace respectful disagreement and dissent as democratic rights, inherent components of an inclusive
public process, and tools for forging sound decisions
• Hate has no place in Santa Monica. The City opposes
abusive or threatening hate speech, intolerance, or
dehumanization, and supports basic civil respect and
human decency.
• Listen to others respectfully;
• Exercise self-control;
• Give open-minded consideration
to all viewpoints;
• Focus on the issues and avoid
personalizing debate;
Regular meetings are broadcast live on CityTV cable channel 16 and on the internet at santamonica.gov. Cable television re-broadcasts air on Thursday and Saturday at 11:30 AM. The agenda will air on CityTV on Saturday and Sunday at 11:00 AM and 6:00 PM, and on Monday and Tuesday at 12:30 PM and 6:00 PM.
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RULES OF ORDER FOR THE CONDUCT OF CITY COUNCIL MEETINGS (Resolution No.11547(CCS))
WAYS TO PROVIDE PUBLIC COMMENT
If you are interested in providing public comment at a City Council meeting, there are several ways to participate:
(1) Written public comment. In lieu of oral public comment, the public is strongly encouraged to submit written public comment on agenda items via email to [email protected]. Written public comment submitted by 12:00 pm on the day of the meeting will be available for online viewing. Please note the agenda item number in the subject line of your written comments. (2) Oral public comment. Persons wishing to address the City Council regarding items on the agenda must be present and submit their name and address (optional) to the City Clerk before the public comment section is opened for that item or before the public hearing is opened where one is required by law. Register to speak at the Speaker Kiosk prior to the meeting. Remarks from the public are limited to a total of 6 minutes per City Council meeting, with a maximum of 2 minutes and a minimum of one minute per item. Except for the author of the request, public comment on 15-items are limited to 1 minute. Except on Public Input, speakers appearing at the meeting in person, may donate 2 minutes to another person present in-person at the meeting, who may speak for a total of 4 minutes on that item.
Both the donor of time and the designated speaker must register at the Speaker Kiosk in person together.
Oral public comment from any one individual is limited to a total of 6 minutes per City Council meeting, with a maximum of 2 minutes per agenda item; under some circumstances, Council may change the maximum to 1 minute per agenda item.
Levine Act Disclosure. Pursuant to the Levine Act (Govt Code Section 84308), any party to a permit, license, contract, or other entitlement before the Council is required to disclose on the record any contribution, including aggregated contributions, of more than $250 made by the party or the party's agents within the preceding 12 months to any City official. Participants and agents are requested to make this disclosure as well. The disclosure must include the name of the party, participant, or agent, and any other person making the contribution; the name of the recipient, the amount of the contribution, and the date the contribution was made.
ORDER OF BUSINESS (may not be changed except by majority vote of the City Council.)
1. General Public Input
(members of the public may address the City Council
only on items not on the agenda, but within the
subject matter jurisdiction of the City).
2. Public Comment for Closed Session, Special
Agenda, and Consent Calendar Items Only
(Commendations and Proclamations presented).
3. Special Agenda Items (City Manager’s Report,
Presentations, etc.).
4. Closed Session.
5. Consent Calendar (All items considered in one
motion unless removed by a City Councilmember for
discussion. Public comment shall be heard prior
to City Council discussion).
6. Public Comment on remaining Agenda Items
7. Study Session.
8. Continued Items.
9. Administrative Proceedings.
10. Ordinances:
• 1
st Reading
• 2
nd Reading
11. Staff Administrative Item.
12. Public Hearings.
13. Reports of Boards and Commissions.
14. Resolutions.
15. Written Communications (other than
Reports of Commission and Officers).
16. Councilmember Discussion Items.
Agendas and reports are accessible on the City's webpage at smgov.net/council/agendas. They are also available at the City Clerk's Office and in alternate formats upon request. For a free email subscription to the City Council Agendas, please contact the City Clerk’s Office at (310) 458-8211 or [email protected].
Si desea comunicarse con alguien en español, llame a nuestra oficina al (310) 458-8211 y pida hablar con Esterlina Lugo.
City of Santa Monica Generated: 4/24/2024 1:47 PM Page 3
AGENDAS
CITY OF SANTA MONICA
SPECIAL MEETING
CITY HALL COUNCIL CHAMBERS.
1685 MAIN STREET, ROOM 250, SANTA
MONICA, CA 90401, AND 601 E 6TH STREET,
TUESDAY, APRIL 23, 2024
MEETING BEGINS AT 5:35 PM
The Santa Monica City Council Meeting will be held at 5:35 P.M., on Tuesday, April 23, 2024, in the City Council Chambers, 1685 Main Street, Santa Monica, California 90401 and at a teleconference site located at the Hyatt House Tempe Hotel, 601 E. 6 th Street, Tempe,
Arizona 85281 where one of the Councilmembers will be present and will participate via teleconference.
HOW TO PROVIDE WRITTEN PUBLIC COMMENT:
Written public comment can be submitted via email to [email protected].
Written comments received prior to 12:00 pm on the day of the meeting will be available online. Please note the agenda item number in the subject line of your written comments.
CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL
(This is a special City Council meeting. Public comment is restricted to only items listed on the agenda.)
Levine Act Disclosure. Pursuant to the Levine Act (Govt Code Section 84308), any party to a permit, license, contract, or other entitlement before the Council is required to disclose on the record any contribution, including aggregated contributions, of more than $250 made by the party or the party's agents within the preceding 12 months to any City official.
Participants and agents are requested to make this disclosure as well. The disclosure must include the name of the party, participant, or agent, and any other person making the contribution; the name of the recipient, the amount of the contribution, and the date the contribution was made.
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1. PUBLIC INPUT
(Public comment is permitted only on items not on the agenda that are within the subject matter jurisdiction of the City. State law prohibits the City Council from taking any action on items not listed on the agenda, including issues raised under this agenda item.) . Public Input on Non-Agenda Items will be permitted at this meeting.
1.A. Written Comments
2. PUBLIC INPUT (AGENDA ITEMS UNDER CLOSED SESSION, SPECIAL AGENDA
ITEMS, CONSENT CALENDAR ONLY)
3. SPECIAL AGENDA ITEMS
3.A. 2024 City Clerk Week Proclamation
3.B. Proclamation: Bike Month
3.C. Commendation: Bob's Market
3.D. City Manager Report - 1) 30th Anniversary of Sustainable City Plan and 2) Climate Adaptation Master Plan for Water and General Update from the Metropolitan Water District of Southern California
4. CLOSED SESSIONS
4.A. Conference with legal counsel - existing litigation - Gov. Code §54956.9(d)(1):
Byron Merlos, et al. v. City of Santa Monica, et al.; LASC Case No. 21STCV07334
The following is the order of business for items to be heard no earlier than 7:00 p.m.
5. CONSENT CALENDAR
(All items will be considered and approved in one motion unless removed by a Councilmember for discussion. In accordance with Charter section 615, the adoption of all ordinances and resolutions shall be by reading of title only unless a Councilmember present dissents. No public discussion is permitted on ordinances for second reading and adoption.)
5.A. Present Annual Comprehensive Financial Report (ACFR) for Year Ended June 30, 2023
Recommended Action
Staff recommends that the City Council:
1. Receive and file the City’s Annual Comprehensive Financial Report (ACFR), the Auditors’ Letter to Council, and the Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance City of Santa Monica Generated: 4/24/2024 1:47 PM Page 5 with Government Auditing Standards for the City’s financial statements for the fiscal year ended June 30, 2023; and
2. Adopt a finding of no significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
5.B. Award a Contract for Aging and Disability Strategic Planning Consulting Services to Elizabeth Anderson Consulting
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines;
2. Award RFP #400 to Elizabeth Anderson Consulting for consulting services in connection with establishing a citywide aging and disability strategic plan for the Housing and Human Services Department; and
3. Authorize the City Manager to negotiate and execute an agreement with Elizabeth Anderson Consulting in an amount not to exceed $155,000 for two years with future year funding contingent on Council budget approval.
5.C. Award a Contract to Moss Adams, LLP for Human Services Grants Program Monitoring Services
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines;
2. Award RFP # 402 to Moss Adams, LLP, for ongoing compliance monitoring services for the Housing and Human Services Department; and
3. Authorize the City Manager to negotiate and execute an agreement with Moss Adams, LLP, for two years, with two additional one-year renewal options, for a total amount not to exceed $400,000 over a four year period, with future funding contingent on Council budget approval.
5.D. Approval of the Proposed FY 2024-25 Annual Action Plan Allocating Federal Community Development Block Grant (CDBG) and HOME Investment Partnerships Act Program (HOME) Entitlement Grant Funds Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Approve the Proposed 2024-25 Annual Community Development Block Grant (CDBG) and HOME Action Plan (Attachment A).
3. Authorize the City Manager to submit all documents required to receive the City’s annual CDBG and Home Investment Partnerships Act (HOME) City of Santa Monica Generated: 4/24/2024 1:47 PM Page 6 entitlement grant funds to the U.S. Department of Housing and Urban Development (HUD).
5.E. Approval of First Modification of Agreement #11250 with Steer for Rideshare Program Administration and Outreach
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines;
2. Authorize the City Manager to negotiate and execute a first modification to agreement #11250 in the amount of $96,200 with Steer, Inc. for rideshare program administration and outreach for the Department of Transportation, resulting in a three-year amended agreement (with two one-year optional extensions) with a new total amount not to exceed $1,497,698.48, with future year funding contingent on Council budget approval; and
3. Authorize budget amendment as outlined in the Financial Impacts and Budget Actions section of this report (requires 5 votes).
5.F. Award Bid 4475 to California Waters Development, Inc. to Provide Water Feature and Pond Maintenance Citywide
Recommended Action:
Staff recommends that the City Council:
1. Adopt a finding of categorical exemption pursuant to Section 15301 (Existing Facilities) of the California Environmental Quality Act (CEQA) Guidelines;
2. Award Bid #4475 to California Waters Development, Inc. for the repair and maintenance of water features for the Public Works Department; and
3. Authorize the City Manager to negotiate and execute an agreement with California Waters Development, Inc. for $1,285,596, plus a contingency of $186,429, for a two-year term, with three one-year renewal options, for a total amount not to exceed $1,472,025 over the five year period, with future year funding contingent on Council budget approval.
5.G. Approval to Accept U.S. Department of Energy's Energy Efficiency and Conservation Block Grant
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines;
2. Accept a grant awarded in the amount of $157,730 from the U.S. Department of Energy’s Energy Efficiency and Conservation Block Grant (EECBG) Program to fund an income-qualified electric bicycle (e-bike) voucher program in the Public Works Department, and to accept all grant renewals;
3. Authorize the City Manager to execute all necessary documents to accept the grant and all grant renewals; and
City of Santa Monica Generated: 4/24/2024 1:47 PM Page 7
4. Authorize budget amendment as outlined in the Financial Impacts & Budget Actions section of this report (requires 5 votes).
5.H. Award Bid and Enter into Agreement with Flock Safety for Automatic License Plate Recognition (ALPR) cameras and Award Bid and Enter into Agreement with Constant Technologies for SMART Center Room Build-Out Services Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines;
2. Award RFP #394 to Flock Safety for the installation, leasing, maintenance, and support for 54 ALPR cameras for the Police Department;
3. Award RFP #393 to Constant Technologies for the design, installation, and integration of video displays and workspace consoles for the Santa Monica Analytical Real Time Center (SMART Center) for the Police Department;
4. Authorize the City Manager to negotiate and execute an agreement with Flock Safety, for the leasing of 54 ALPR cameras in an amount not to exceed $494,100. This sum includes installation, maintenance, and support through December 31, 2026, with future year funding contingent on Council Budget approval; and
5. Authorize the City Manager to negotiate and execute an agreement with Constant Technologies, in an amount not to exceed $649,401 (including a $59,000 contingency) for a term of three years, with future year funding contingent on Council Budget approval.
5.I. Adoption of a Resolution that Amends Resolution No. 10325 (CCS) in order to Clarify the Authorization to Levy and Place the Main Street Business Area Festoon Lighting and Sidewalk Cleaning Assessments on the L.A. County Property Tax Rolls Each Year
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Adopt a Resolution to amend Section 6 and Section 8 of Resolution No. 10325 (CCS) in order to clarify that Council authorized the levy and placement of the Main Street Business Area Festoon Lighting and Sidewalk Cleaning assessments on the Los Angeles County property tax rolls to be done annually and not just for FY 2008-2009.
5.J. Adoption of a Resolution Authorizing Climate Grant Applications by City Manager or Designee
City of Santa Monica Generated: 4/24/2024 1:47 PM Page 8 Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines; and
2. Adopt the attached Resolution authorizing the City Manager, or designee, to submit applications for grants and other incentive programs that support projects, programs, or objectives identified in the Council-adopted Climate Action and Adaptation Plan.
6. PUBLIC INPUT ON REMAINING AGENDA ITEMS
7. STUDY SESSION
No items
8. CONTINUED ITEMS
8.A. Cannabis Social Equity Study Session
Recommended Action
Staff recommends that the City Council:
1. Review and discuss the presentation on cannabis social equity programs from other cities;
2. Provide direction on two potential policy options for approach to a cannabis social equity program within the City of Santa Monica which will determine the expansiveness of a social equity program and timeline by which staff returns with an ordinance; and
3. Discuss options and provide direction to staff on locational restrictions for the adult-use cannabis ordinance.
9. ADMINISTRATIVE PROCEEDINGS
No items
10. ORDINANCES
(Public comment is permitted on ordinances for introduction and first reading. No public discussion is permitted on ordinances for second reading and adoption. In accordance with Charter section 615, the adoption of all ordinances and resolutions shall be by reading of title only unless a Councilmember present dissents.)
10.A. Introduction and First Reading of Low-Carbon Concrete Policy Ordinance and Adoption of Local Amendments Findings Resolution
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of categorical exemption pursuant to Section 15308 of the California Environmental Quality Act (CEQA) Guidelines; City of Santa Monica Generated: 4/24/2024 1:47 PM Page 9
2. Introduce for first reading the attached ordinance that adopts the 2022 California Green Building Standards Code including the 2022 intervening code updates, and supports decreasing emissions from concrete;
3. Adopt the attached resolution that provides findings of local climatic, geological, topographical, and environmental conditions as required to adopt Santa Monica local amendments to the 2022 California Green Building Standards Code;
4. Direct the City Manager to file the adopted resolution and ordinance amending the Green Building Standards Code with the California Building Standards Commission following the second reading of the ordinance.
10.B. Introduction and First Reading of an Ordinance Amending the Text of the City's Zoning Ordinance to Update Provisions Related to State Density Bonus Law for Consistency with Recent Amendments to State law Adopted by AB 1287 and Making Other Minor Changes, Corrections, and Clarifications Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
2. Introduce for First Reading of an Ordinance amending the text of the Zoning Ordinance to update provisions related to the implementation of State Density Bonus Law for consistency with recent amendments to State Law adopted by AB 1287 and make other minor changes, corrections, and clarifications.
3. Provide direction regarding the Planning Commission’s recommendation regarding a potential local density bonus program for projects that provide offsite affordable housing.
11. STAFF ADMINISTRATIVE ITEMS
No items
12. PUBLIC HEARINGS
No items
13. REPORTS OF BOARDS AND COMMISSIONS
No items
14. RESOLUTIONS
No items
15. WRITTEN COMMUNICATIONS OTHER THAN REPORTS OF COMMISSION AND
OFFICERS
No items
City of Santa Monica Generated: 4/24/2024 1:47 PM Page 10
16. COUNCILMEMBER DISCUSSION ITEMS
16.A. Recommendation to rescind the appointment of Courtney Lauretano to the Housing Authority Board for failure to attend meetings since appointment; and, authorization for the City Clerk to publish vacancy.
16.B. Request by Mayor Brock to direct the City Manager, City Attorney, and City Clerk to return with an amendment to the Council Rules to provide that Council 16 items may be handled like consent items, with the Council voting on them as one item, except for Council appointments to boards, commissions, and other bodies, and except for certain items that may be pulled for discussion at the Council meeting.
16.C. Request of Councilmember de la Torre that the City Council allocate $5000 from its discretionary funds to the Association of Mexican American Educators in support of the Samohi Latino Graduation, organized by student group Legado Latino. These funds will assist in covering event expenses such as stoles, medals, diplomas, food and drinks, and entertainment. This event offers students a chance to celebrate their accomplishments and showcase their vibrant cultural heritage to the local community.
16.D. Request of Councilmember de la Torre that the City Council authorize use of existing travel funds to cover the costs (registration and travel expenses) of participating in the NALEO 41st Annual Conference, taking place June 18-20, 2024 in Las Vegas, NV. This annual conference provides an opportunity for Latino leaders from all across the country to network, exchange perspectives, and foster solutions around the most pressing policy issues affecting our communities today.
16.E. Request of Vice Mayor Negrete and Councilmember Parra that the City Council: 1) allocate up to $4681.72 from the Council Discretionary funds to cover costs associated with the rental of sound systems, a small stage, chairs, and related expenses for the Memorial Day event the Elks Lodge and American Legion Post are hosting at Woodlawn Cemetery in Santa Monica on May 27, 2024 to honor and pay tribute to those who have bravely fought to protect our nation, and 2) direct the City Manager to promote the event on the City’s social media platforms.
ADJOURNMENT
Agendas and reports are accessible on the City's webpage at www.smgov.net/council/agendas. They are also available at the City Clerk's Office and in alternate formats upon request. For a free email subscription to the City Council Agendas, please contact the City Clerk’s Office at (310) 458-8211 or [email protected].
Members of the public unable to attend a meeting but wishing to comment on an item(s) listed on the agenda may submit written comments prior to the meeting by meeting by mailing them to: City Clerk, 1685 Main Street, Santa Monica, CA 90401 or to [email protected]. Written comments received from the public by 12 PM on the day of the City Council meeting will be distributed to the City Council prior to the City of Santa Monica Generated: 4/24/2024 1:47 PM Page 11 meeting and posted online. Members of the public who submit written public comment on an agenda item may be subject to the Levine Act which requires disclosure of campaign contributions of more than $250 to an officer of the City within the preceding 12 months.
City Hall and the Council Chambers are wheelchair accessible. If you require any special disability related accommodations to either attend or provide public testimony at a Council meeting (i.e. sign language interpreting, access to an amplified sound system, remote option, etc.), please contact the City Clerk’s Office at (310) 458-8211 or TDD: (310) 917- 6626 or via email at [email protected] at least 72 hours prior to the scheduled meeting. Best efforts shall be made to accommodate requests received after the 72-hour deadline. In the case of special meetings, requests should be submitted as early as possible, but no later than noon the day of the special Council meeting.
Si desea comunicarse con alguien en español, llame a nuestra oficina al (310) 458-8211 y pida hablar con Esterlina Lugo.
Santa Monica Blue Bus Lines #1, #2, #3, #5, #9 and the EXPO Line serve City Hall.
Parking is available on Main Street, on Olympic Drive, and in the Civic Center Parking Structure (validation free).
City Council
Report
City Council Meeting: April 23, 2024
Agenda Item: 1.A
1 of 1
To: Mayor and City Council
From: Nikima Newsome, Interim City Clerk, Records and Election Services Department
Subject: Written Comments
Prepared By: Maria Dacanay, Acting Assistant City Clerk Approved Forwarded to Council
Attachments:
A. Written Comments
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Attachment: Written Comments [Revision 2] (6389 : Written Comments) 1 David Yakobson
From: Houman Hemmati <[email protected]>
Sent: Thursday, April 11, 2024 9:24 PM
To: Phil Brock
Cc: Lana Negrete; Christine Parra; Oscar de la Torre; Gleam Davis; Caroline M. Torosis; Jesse Zwick; Douglas Sloan; David White; Clerk Mailbox; councilmtgitems; Ellen Goldstein; Ben Allen; [email protected]; [email protected];
[email protected]
Subject: Urgent Call for Fiscal Responsibility Regarding Homeless Housing Initiative
EXTERNAL
Dear Members of the Santa Monica City Council,
I am compelled to address the recent decision to spend an exorbitant $1 million per person (on construcƟon costs alone, something very likely to increase substanƟally with Ɵme) for homeless housing near Third Street Promenade. While the project is purportedly supported by federal and state grants, this does not absolve the council of its responsibility to steward taxpayer resources wisely. These funds, whether sourced locally, from the state, or federally, are sƟll derived from the hard-earned money of American ciƟzens.
It is deeply concerning that the jusƟficaƟon for this project hinges on the availability of grant money, especially given the financial crises facing both our state and federal governments. California is currently grappling with a $73 billion debt, and the federal government is similarly overextended in a major financial crisis. To proceed with such an extravagant project under these circumstances is not just irresponsible—it is an affront to every taxpayer burdened by these economic challenges.
The allocaƟon of approximately $120 million of prime city-owned land, formerly a revenue-generaƟng parking structure, for this purpose further compounds the fiscal imprudence. The project’s total cost of at least $2 million per homeless individual, not including ongoing maintenance and service costs, is an unsustainable and outrageous use of any public funds, irrespecƟve of their source. It lacks any common sense and has made a mockery of our city, naƟonally and globally.
This iniƟaƟve not only impacts Santa Monica’s economic resilience by removing vital parking infrastructure but also threatens the viability of local businesses, many of which are already struggling or have shuƩered. As you know, the economic engine of our city has been largely destroyed, in major parts due to the presence of drug addicted, criminal, and violent homeless individuals in the downtown Santa Monica area. Rather than doing the obvious, namely, removing them from the area and relocaƟng them as far away as possible, you are welcoming them with open arms, offering them the greatest giŌ ever offered any homeless people on the planet. This is not an exaggeraƟon. Giving them a brand new luxury home, steps from the beach, on some of the most expensive and desirable land on earth, at a Ɵme when many people, including people who have lived here, worked hard, paid taxes, and respected the law, have trouble affording their uƟlity bills, food, and housing.
The project lacks criƟcal components such as mandatory drug rehabilitaƟon or mental health services, essenƟal for true rehabilitaƟon and integraƟon of homeless individuals into the community. Maneuver, in no way do you consider the inevitable destrucƟon of the facility individuals who have no capacity to take care of themselves or be good stewards of a giŌ that has been so generously provided to them. Do you know, as well as I do that this facility, to put it plainly, will be destroyed within weeks or months of it being occupied, forcing taxpayers to spend tens or hundreds of millions of dollars more to rebuild it, all while puƫng its occupants in expensive hotels.
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Attachment: Written Comments [Revision 2] (6389 : Written Comments) 2 I urge you to reconsider the scope and funding of this project. Our city needs soluƟons that are economically sensible and sustainable over the long term, not luxury accommodaƟons that set a troubling precedent for the misuse of public funds. Any person with an IQ of over 12 can easily predict that this Ludacris plan of yours will result intense of thousands, if not more, homeless people from around the naƟon, if not the world, descending on Santa Monica with a promise of also receiving a $2 million condominium by the beach. For life. We already have 1000 homeless people, and at this rate, you would commit to spending $2 billion of our money, while also stripping our city of vital taxpayer owned infrastructure. Even if we had $2 billion to spend on this, what will you do when 10,000 homeless people show up? 100,000 homeless people show up? Just simply surrender our enƟre city to them? Leadership requires making tough choices that might not be the easiest or most popular but are in the best interest of the community’s future.
The conƟnuaƟon of this plan risks significant poliƟcal and public backlash. As you have probably already seen on X or TwiƩer, regarding this situaƟon has gone viral, with tens of thousands of use and comments within the first couple of hours. This is expected to grow into a major naƟonal news story, which is going to produce even greater embarrassment to our city, risking not only our economic vitality, but also your poliƟcal futures. please think about it for one moment:
you really want to be associated with this plan? Have you given any thought the outside world will respond to this? If not, I just told you about.
The people of Santa Monica and broader taxpayers are watching closely and will hold accountable those who choose fiscal recklessness over prudent governance. Accountability will come in many forms, including at the ballot box, in the courtrooms, as well as in the form of protests, media and social media aƩenƟon, as well as many other measures that are legally available to us.
Please act with the foresight and responsibility that your consƟtuents deserve and reevaluate this iniƟaƟve with a focus on cost-effecƟve, pracƟcal soluƟons that address the needs of all ciƟzens.
I look forward to your prompt reconsideraƟon of this maƩer and am prepared to mobilize community support for more responsible leadership if necessary. In fact, given the outrageous magnitude of your acƟons, I am mobilizing community support, and you will soon be hearing about it. It is not too late to do the right thing. I promise you that this is going to blow up in your faces, figuraƟvely speaking.
Sincerely,
Houman David HemmaƟ MD PhD
PS minutes aŌer I posted my tweet regarding this issue, my security camera captured a clearly deranged, homeless woman coming to my doorstep and stealing a package from our front door. Thankfully, in addiƟon to paying obscene amounts of taxes, we pay thousands of dollars a year for private armed security. The security officer responded within seconds, found an apprehended the homeless individual, and got us back our package. we are becoming the wild West out here. People are geƫng injured, killed, and having all of their possessions stolen from them. The people will not accept your inviƟng the world enƟre homeless populaƟon to our city. Enough is enough.
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Attachment: Written Comments [Revision 2] (6389 : Written Comments) City Council
Report
City Council Meeting: April 23, 2024
Agenda Item: 3.A
1 of 1
To: Mayor and City Council
From: Nikima Newsome, Interim City Clerk, Records and Election Services Department
Subject: 2024 City Clerk Week Proclamation
Prepared By: Nikima Newsome, Interim City Clerk
Approved Forwarded to Council
3.A
Packet Pg. 97
City Council
Report
City Council Meeting: April 23, 2024
Agenda Item: 3.B
1 of 1
To: Mayor and City Council
From: Anuj Gupta, Director of Transportation, Mobility (DOT) Subject: Proclamation: Bike Month
Prepared By: Gilbert Portillo, Administrative Staff Assistant Approved Forwarded to Council
Attachments:
A. Written Comments
3.B
Packet Pg. 98
1 David Yakobson
From: Cynthia Rose <[email protected]>
Sent: Tuesday, April 23, 2024 10:49 AM
To: councilmtgitems; Council Mailbox; Gleam Davis; Jesse Zwick; Caroline Torosis; Lana Negrete; Oscar de la Torre; Phil Brock; Christine Parra; David White; Anuj Gupta; Jason Kligier
Cc: [email protected]; Kyle Kozar; Jacqui Swartz; Shayne Smith Subject: Agenda Item 3B: Thank you!
Attachments: 2024-04 Item 3B - CC Bike Month Proclamation.pdf
EXTERNAL
Dear Santa Monica City Council, City Management and Staff Santa Monica Spoke and the Santa Monica Safe Streets Alliance would like to express an enthusiastic thank you for, once again, proclaiming May 2024 to be Bike Month.
Please see our attached letter.
--
Cynthia Rose
Director
Santa Monica Spoke
SMSpoke.org
I acknowledge with respect and gratitude the Tongva, Kizh, and Chumash Peoples on whose traditional territory I live and work.
Item 3-B
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Attachment: Written Comments (6375 : Proclamation: Bike Month - DOT) A community group dedicated
to biking in Santa Monica.
Working to make the
City of Santa Monica a
more sustainable,
bikeable place to live, work and play.
April 23, 2024
Agenda item 3B, Proclaim May as Bike Month Santa Monica! Dear Mayor, City Council and Staff:
Santa Monica Spoke and the Santa Monica Safe Streets Alliance would like to express an enthusiastic thank you for, once again, proclaiming May 2024 to be “Bike Month.” This proclamation helps demonstrate Santa Monica’s continual support to our entire community, and beyond, by promoting a vibrant culture of equitable, sustainable, and active mobility. The Council's proclamation is also an important affirmation of Santa Monica's commitment to a safer and healthier, multi-modal city.
We would also like to take a moment to give a heartfelt thank you to our talented and enthusiastic SaMo DOT Mobility Staff for their leadership and tireless work implementing the community’s and City Council’s forward-thinking vision of safer streets that are inviting to everyone – adults, kids, youth, seniors, students, residents, workers and visitors – a city that aims to be welcoming, safer and healthier for everyone.
We are looking forward to attending tonight’s meeting, we and the community are thrilled to join you in spirit to celebrate this May of 2024 as Bike Month!
With enthusiastic support,
Cynthia Rose
Director, Santa Monica Spoke Cris Gutierrez
Co-Chair, Santa Monica Safe Street Alliance Co-Chair, Santa Monica Safe Streets Alliance SMSpoke.org
SaMoSafeStreets.org
Item 3-B
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3.B.a
Packet Pg. 100 Attachment: Written Comments (6375 : Proclamation: Bike Month - DOT) 2 David Yakobson
From: Cris Gutierrez <[email protected]>
Sent: Tuesday, April 23, 2024 10:51 AM
To: Cynthia Rose
Cc: councilmtgitems; Council Mailbox; Gleam Davis; Jesse Zwick; Caroline Torosis; Lana Negrete; Oscar de la Torre; Phil Brock; Christine Parra; David White; Anuj Gupta; Jason Kligier; [email protected]; Kyle Kozar; Jacqui Swartz; Shayne Smith Subject: Re: Agenda Item 3B: Thank you!
EXTERNAL
Brava!!!!
On Tue, Apr 23, 2024 at 10:50 AM Cynthia Rose <[email protected]> wrote:
Dear Santa Monica City Council, City Management and Staff Santa Monica Spoke and the Santa Monica Safe Streets Alliance would like to express an enthusiastic thank you for, once again, proclaiming May 2024 to be Bike Month.
Please see our attached letter.
--
Cynthia Rose
Director
Santa Monica Spoke
SMSpoke.org
I acknowledge with respect and gratitude the Tongva, Kizh, and Chumash Peoples on whose traditional territory I live and work.
Item 3-B
April 23, 2024
Item 3-B
April 23, 2024
3.B.a
Packet Pg. 101 Attachment: Written Comments (6375 : Proclamation: Bike Month - DOT) City Council
Report
City Council Meeting: April 23, 2024
Agenda Item: 3.C
1 of 1
To: Mayor and City Council
From: Nikima Newsome, Interim City Clerk, Special Agenda Items Subject: Commendation: Bob's Market
Prepared By: Gilbert Portillo, Administrative Staff Assistant Approved Forwarded to Council
3.C
Packet Pg. 102
City Council
Report
City Council Meeting: April 23, 2024
Agenda Item: 3.D
1 of 1
To: Mayor and City Council
From: Nikima Newsome, Interim City Clerk, Special Agenda Items Subject: City Manager Report - 1) 30th Anniversary of Sustainable City Plan and 2) Climate Adaptation Master Plan for Water and General Update from the Metropolitan Water District of Southern California
Prepared By: Gilbert Portillo, Administrative Staff Assistant Approved Forwarded to Council
Attachments:
A. PowerPoint Presentation
B. PowerPoint Presentation
3.D
Packet Pg. 103
Santa Monica uses the power of community to enhance our resources, prevent harm to the natural environment and
human health, and benefit the social and economic well-being of the community for the sake of current and future
generations.
3.D.a
Packet Pg. 104 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 30th Anniversary of the Sustainable City Plan
Celebrating 30 years of service to people & the planet. Planning for the next 30
3.D.a
Packet Pg. 105 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of History
Sustainable City
Plan adopted in
1994
3 3.D.a
Packet Pg. 106 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 4 3.D.a
Packet Pg. 107 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 5 3.D.a
Packet Pg. 108 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Santa Monica becomes 1st city to
purchase 100% renewable energy
3.D.a
Packet Pg. 109 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 7 3.D.a
Packet Pg. 110 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 8 3.D.a
Packet Pg. 111 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 9 3.D.a
Packet Pg. 112 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of City adopts 15 x 15 Plan
(15% reduction by 2015)
3.D.a
Packet Pg. 113 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 11 3.D.a
Packet Pg. 114 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 12 3.D.a
Packet Pg. 115 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 13 3.D.a
Packet Pg. 116 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Zero Waste Strategic Operations Plan
(2030 target)
3.D.a
Packet Pg. 117 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 15 3.D.a
Packet Pg. 118 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 16 3.D.a
Packet Pg. 119 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 17 3.D.a
Packet Pg. 120 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Published Sustainable City Plan
performance report
3.D.a
Packet Pg. 121 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 19 3.D.a
Packet Pg. 122 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 20 3.D.a
Packet Pg. 123 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 21 Road Ahead •Water Self
-Sufficiency
•Zero Waste •Carbon Neutrality
3.D.a
Packet Pg. 124 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 22 Road Ahead
4/28 - NextGen Climate Summit
5/1 - Sustainable Quality Awards
5/15 - Sustainable Student
Poster Contest
3.D.a
Packet Pg. 125 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Community Response
“Your leadership and dedication to
sustainability have played a pivotal role in
shaping our city into the vibrant and
environmentally conscious community it is
today.”
“I am filled with pride to be part of a city that
prioritizes sustainability and embraces
innovation to create a better future for
generations to come.”
3.D.a
Packet Pg. 126 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Climate Adaptation
Master Plan For Water
A comprehensive, adaptive
planning process
The CAMP4W integrates
• water resources planning
• infrastructure development
• climate adaptation
• finance planning
into one interconnected and
iterative process.
Identify
Climate
Impacts
Assess
Climate Risks
and Needs
Evaluate
Options
through Climate
Decision-Making
Framework
Set Targets and
Roadmap for
Taking Action
Identify
Business
Model Options
and Funding
Strategies
Monitor
Progress and
Adapt for
Success
3.D.b
Packet Pg. 127 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Climate Impacts on Operations and Water Supply
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2…2…2…2…2…2…2…2…2…2…2…2…2…2…2…2…2…2…2…2…2…
600,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
1,300,000
1,400,000
1,500,000
1,600,000
MWh/year from Hoover
Contract
SWP
Allocations
CRA Power 2002-2022
from Hoover
System
Vulnerabilities
Exposed
Runoff
Patterns
Changing
3.D.b
Packet Pg. 128 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of CAMP4W
Addresses
Climate Change
Impacts Beyond
Drought
3.D.b
Packet Pg. 129 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Board Priorities Influence Multiple CAMP4W Outcomes
Climate Decision-Making Framework
and Evaluative Criteria
Policies, Initiatives and Partnerships
Business Model and Funding Strategies
Time-Bound Targets
Concurrent CAMP4W Activities
Evaluative Criteria:
Metrics used to score and
rank projects
RELIABILITY
RESILIENCE
FINANCIAL
SUSTAINABILITY
AFFORDABILITY
EQUITY
Time-Bound Targets:
Resource and Policy-based
targets that establish goals
to be achieved in the near-,
mid- and long-term.
3.D.b
Packet Pg. 130 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Climate
Decision
Making
Framework
Integrated Elements:
Time-Bound Targets,
Evaluative Criteria and
Investment Decisions
function together
Time-Bound
Targets
Investment
Decision
Evaluative
Criteria
and
Project
Scoring
Time -Bound
Targets guide
project
development
and inform
scoring of
projects
Adaptive Management:
update resource
development needs
and Time -Bound
Targets based on
updated projections
Scores and Time -Bound Targets inform decision -making
3.D.b
Packet Pg. 131 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of Embracing
Adaptive
Management
Proposed Signposts Metrics Examples
Signposts should be measurable, updateable, and readily available
DEMAND SUPPLY INFRASTRUCTURE FINANCIAL
Population Climate Change
Indicators
Unexpected
Shutdowns
Debt Capacity &
Borrowing Costs
Regulations Regulations Infrastructure Loss Capital Cost Trends Demand
Management
Storage Emergency
Response
Emergency
Response Costs
Local Agency Supply Water Quality Power Interruptions O&M Trends Economy
Signposting and
Monitoring
3.D.b
Packet Pg. 132 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of CAMP4W: Preparing Metropolitan for the Decisions of Today and Tomorrow CAMP4W
Evolution
Climate DecisionMaking Framework
to Support Board
Decisions
Implementation- Long-Term
Adaptive Management
Value-Based
Foundation
DataDriven
decisions
Integrated
climate
planning
across
Metropolitan
Feb-July 2023 Aug 2023-
April 2024 2024 Future
Identify Board
Priorities
3.D.b
Packet Pg. 133 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of 2024 CAMP4W Next Steps
Refine
Framework
• Finalize and
augment Targets
and Adaptive
Management
CAMP4W
Evaluation
• Identify and
evaluate projects
and programs
through the
CAMP4W
Business
Model Action
• Determine next
steps on business
and revenue
models
Community
Engagement
• Work with
Member Agencies
on community
engagement and
partnerships
3.D.b
Packet Pg. 134 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of
3.D.b
Packet Pg. 135 Attachment: PowerPoint Presentation (6309 : City Manager Report - 30th Anniversary of City Council
Report
City Council Meeting: April 23, 2024
Agenda Item: 5.A
1 of 15
To: Mayor and City Council
From: Oscar Santiago, Director, Finance Department, Financial Operations Subject: Present Annual Comprehensive Financial Report (ACFR) for Year Ended June 30, 2023
Recommended Action
Staff recommends that the City Council:
1. Receive and file the City’s Annual Comprehensive Financial Report (ACFR), the Auditors’ Letter to Council, and the Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards for the City’s financial statements for the fiscal year ended June 30, 2023; and
2. Adopt a finding of no significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
Summary
In compliance with accounting and financial reporting standards established by the Governmental Accounting Standards Board (GASB), the ACFR communicates the City’s financial condition and activity in a transparent and organized manner. The report, included as Attachment A, presents historical and comparative information that can be useful to City staff and elected officials, external users such as debt rating agencies, businesses, other public agencies, bondholders, and City residents. A hard copy of the ACFR for the fiscal year ended June 30, 2023 (FY 2022-23) is available at the City Clerk’s office and is also available, along with ACFRs dating back to 2005, on the City’s website at: https://finance.smgov.net/budgets-reports/annual#/
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The ACFR is prepared annually by Finance staff and audited by the City’s independent audit firm, Lance, Soll & Lunghard (LSL), CPAs, and presented to the Audit Subcommittee before it is submitted to the full City Council for receipt and filing. This audit was performed in compliance with City Charter requirements. The independent auditors’ unmodified report, included within the ACFR, communicates that the ACFR, and audited information within, fairly present the City’s financial position for FY 2022-23.
The City of Santa Monica has received an unmodified audit report for more than three decades and has been awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association of the United States and Canada (GFOA) for its ACFR for 39 consecutive years, since it began participating in the program. To make the ACFR more transparent, staff has provided an explanation for key financial performance indicators shown in the report.
LSL’s report on the City’s internal control over financial reporting and compliance (Attachment B) noted no instances of non-compliance. An additional submittal letter from LSL (Attachment C) stated that the City’s independent auditors encountered no difficulties and had no disagreements with management during the audit. If the auditors identified any adjustments that management elected not to adjust in the financial statements, they would be noted on the report under Corrected and Uncorrected Misstatements. There were none noted for FY 2022-23.
FY 2022-23 year saw sustained economic recovery that continues, but challenges persist.
• While General Fund revenues grew, they were below the levels they would have been had the economy not been disrupted by the pandemic. • One-time federal funding in response to economic losses was discontinued. • The City experienced cost increases coming from the highest levels of inflation in forty years, supply chain issues, other market disruptions occurring as a result of the continuing war in Ukraine, and staff compensation increases after two years marked by pay reductions or no cost-of-living increases.
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• The City continued to operate at 88% of previous staffing levels (excluding vacancies) and when vacancies occurred they were difficult to fill due to labor shortages.
• Since March 2020, the City entered into a series of settlement agreements totaling $229.8 million in suits related to a former employee and the City has received additional claims which are being evaluated.
The Statement of Net Position, similar to a balance sheet, reported total assets and total deferred outflows of resources plus total liabilities and total deferred inflows of resources of the City. The total net position of the City for all activities was $1,450.8 million at June 30, 2023, compared to $1,487.8 million at June 30, 2022 as restated, which is a decrease of $37.0 million or 2.5%. The net position for business-type activities, such as water and transit services, increased $7.1 million and the net position for governmental activities, such as public safety and community services, decreased $44.1 million.
The General Fund fund balance decreased by $63.5 million, to $146.4 million over the prior year, primarily due to a $122.5 legal settlement offset by transfers in from other funds.
The City’s three pension plans were approximately 78% funded with a combined unfunded long-term actuarial liability of approximately $497 million. All pension figures presented in the ACFR were based on California Public Employees’ Retirement System (CalPERS) GASB 68 valuations that had a measurement date of June 30, 2022. These valuations are used for financial reporting purposes only and are separate from the CalPERS funding valuations that are used to determine the City’s annual contribution requirements.
Staff presented the ACFR to the Audit Subcommittee of the City Council on February 20, 2024 for a detailed review before presenting the report to the Council as a Consent Calendar item. The Subcommittee has received the annual ACFR report which included
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details of the audit process and the financial reports, a presentation by staff and the independent auditors, and an opportunity for Subcommittee members to ask questions of the auditors and staff.
Background
As required by the City Charter, financial statements were prepared by the City and audited by independent auditors. The City selected its independent auditor through a competitive procurement process that includes members of the Audit Subcommittee as proposal reviewers. The original contract length was for five years. On July 14, 2020, Council approved a modification to the LSL external auditing services contract to extend services for up to an additional three years. LSL was in their seventh year auditing the City.
The quality of the City’s financial reporting and the ACFR are measured in two ways:
1) an unmodified audit report by the independent auditors; and 2) the Certificate of Achievement for Excellence in Financial Reporting, awarded by GFOA, the highest form of recognition in governmental accounting and financial reporting.
Auditors follow audit industry standards established by the American Institute of Certified Public Accountants (AICPA). These standards require auditors to provide an opinion on specific areas of the City’s financial statements based on observations, inquiries, testing of transactions, and analysis.
Discussion
The ACFR for FY 2022-23 received an unmodified opinion by LSL. An unmodified opinion communicates that the financial statements are fairly presented and that the information used in the report is reliable. In their written communications to Council, the auditors noted that they encountered no significant difficulties with management in performing or completing the audit.
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The Statement on Auditing Standards (SAS) 114 established standards for the auditors’ communication with those charged with governance. SAS 115 provides guidance on communicating matters related to the City’s internal controls over financial reporting that have been identified in an audit of the financial statements. These statements require the auditors to consider and report on internal controls, significant audit findings, and other matters as prescribed in the standards as they relate to the audit of the financial statements.
The City of Santa Monica has received an unqualified/unmodified audit report and the GFOA Award for 39 years, since the City first participated in the GFOA program in FY 1983-84.
City staff met with Audit Subcommittee Chair Marc Verville and Audit Subcommittee Member Jeff Bush on February 15, 2024, to discuss the results of the audit and answered questions on the audited financial statements.
The ACFR was presented to the Audit Subcommittee of the Council on February 20, 2024 by staff and Ryan Domino, the engagement partner from LSL. Audit Subcommittee members were given the opportunity to review the report and ask questions of the external auditor and staff.
Topics discussed included:
• Overall financial results of the City.
• Auditors’ evaluation of the City’s financial reporting and related systems of internal control.
• Development of a Popular Annual Financial Report, where information from the ACFR would be summarized in a short form document.
• Pensions, particularly the unfunded liability and future contributions and their impact on the budget.
• Contingent liabilities possibly arising from existing claims against the City.
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• Disclosures included in the Notes to the Basic Financial Statements called “Notes Receivables” including a sample disclosure.
The Audit Subcommittee made a motion to recommend to staff and Council that next year’s ACFR include additional loan disclosures in the Notes Receivable note, including amount and activity by borrower for both non-forgivable and forgiven at maturity, to increase transparency. Based on recommendation from the Audit Subcommittee, staff will include this additional level of disclosure in next year’s ACFR, subject to availability of data and adherence to related laws and regulations. The Audit Subcommittee received and filed the ACFR with a 5-0 vote.
The City’s ACFR included the following major sections and information:
Introductory Section
• Letter of Transmittal – prepared by management and used to communicate information on areas that may have an impact on the City’s finances now and in the future. This included economic factors as well as budget and management factors.
Financial Section (the main body of the ACFR for current year information) • Independent Auditors’ Report – the City’s report card on the content of the ACFR • Management’s Discussion and Analysis (MD&A) – provided an analytical overview of the City’s financial status and results for the year • Basic Financial Statements – reported finances at a point in time (assets - liabilities) and throughout the year (revenues - expenditures), and cash flows o City-Wide Statements – overview of financial information including all of the City’s operations by financial activity
o Fund Financial Statements – a detailed look at funds, reporting on the Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance
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o Notes to the Financial Statements (Notes) – a narrative explanation that accompanied the Basic Financial Statements
Required Supplementary and Supplementary Information Sections • Budget to Actual Comparisons – for all governmental funds with a legally adopted budget
• Pension Information – schedule of changes in the net pension liability and related ratios; schedule of contributions by plan
• OPEB Information – schedule of changes in the net Other Post-Employment Benefits (OPEB) liability and related ratios; schedule of contributions • A breakout of individual non-major funds – for funds that were presented in a cumulative manner in the Financial Section
Statistical Section (current and historical information – up to 10 years) • Financial Trends
• Tax Revenue Information
• Debt Capacity Information
• Demographic and Economic Information
• Operating Information
The following is an explanation of some key indicators reported in the ACFR. Overall, the City’s ACFR showed that City finances were stable.
General Fund Balance
The most notable measure of a City’s financial health is the General Fund balance. As presented in the Basic Financial Statements, the City’s General Fund assets exceeded liabilities by $146.4 million as of June 30, 2023. This balance is comprised of the following categories:
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• $6.7 million nonspendable fund balance included amounts that are not in spendable form, such as prepaid items and advances to other funds; • $8.6 million restricted fund balance is required for specific purposes as stipulated by either external resource providers or enabling legislation, including $6.5 million for bond funded projects;
• There is no committed fund balance, which represented amounts designated for a specific purpose by formal action from City Council;
• $85.9 million assigned funds were set aside to cover continuing capital improvement projects; prior year reappropriations; compensated absences; respond to contingent liabilities and other unanticipated costs; and to provide working capital to support essential services, partial service restorations, contractual labor obligations while revenues continued to recover over the next five years; and
• $45.2 million in unassigned funds as follows:
o $52.2 million rainy day contingency. Historically this has been 15% of the annual expenditure budget; however, the amount was reduced to 12.5% in FY 2019-20 and increased to 13% in FY 2022-23. FY 2023-24 revenues are being set aside to allow the contingency level to increase to 13.5% at June 30, 2024, with the commitment to increase it by 0.5% each fiscal year until it reaches 15.0% at June 30, 2027);
o ($12.0) million unrealized loss on investments;
The General Fund’s rainy day and economic uncertainty reserves have long been an important safeguard for Santa Monica in the event of an emergency or a devastating downturn. Strong reserves contributed to a AAA general obligation bond rating, which allowed the City to pursue lower cost financing structures. Since March 2020, these reserves and contingency funds have allowed the City to continue essential operations despite the severe revenue dip because of the economic crisis caused by the global pandemic and have also provided funding for legal settlements. In March 2021, all three of the United States’ leading credit rating agencies -- Moody’s, S+P, and Fitch Ratings --
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affirmed the City of Santa Monica’s AAA credit rating. Fitch cited that the ‘AAA’ credit rating “is driven by the exceptional resilience of the city to periods of economic stress, underpinned by its very high reserves, notwithstanding recent large operating deficits, and a strong expenditure framework.” 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 2023. There were no changes to any bond ratings during FY 2022-23.
Citywide Net Position
The Statement of Net Position, similar to a balance sheet, reported total assets and liabilities of the City as of June 30, 2023. The total net position of the City for all activities was $1.5 billion. Net position was broken out into three categories: capital, restricted, and unrestricted.
Net Investment in Capital Assets - $1,147.9 million
Net Investment in Capital Assets included land, buildings, improvements, intangibles, infrastructure and utility systems, and construction in progress net of accumulated depreciation/amortization and related debt. Intangible assets represented rights of use for items such as software, water rights and payments for Santa Monica’s cost of improvements to the City of Los Angeles sewage treatment system. Some notable capital projects that were underway as of June 30, 2023 included City Yards Modernization and numerous Sustainable Water Master plan infrastructure projects to help the City achieve water self-sufficiency.
Restricted Net Position - $258.4 million
These assets were subject to agreements with creditors, developers, grantors, or laws or regulations of other governments. Approximately $145 million or 56% is restricted for community development, which included affordable housing and commitments to various other projects. Approximately $40 million or 15% is restricted for transportation, which included federal, state and other grant funds. The remaining amount was restricted for the Cemetery’s trust fund, debt service, development agreement terms, and other grant and legislative constraints.
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Unrestricted Net Position – $44.5 million
This represented the balance of net position that is neither part of capital assets nor restricted. Capital and operating reserves of $111.9 million in the business-type activities demonstrated increased revenues as the City recovers from the COVID-19 pandemic and an increase in the pension liability due to CalPERS negative 6.1% return on plan assets. Governmental activities reported a negative unrestricted net position of $67.4 million, primarily due to the cumulative shortfalls from the pandemic and settlement payments made in the past few years plus an increase in the pension liability. The City already managed its financial challenges by reducing its workforce, focusing on essential services, scaling back or eliminating capital projects, and increasing employees’ cost sharing of benefits. These strategies, recovering revenues, one-time state and Federal government subsidies and lowered expenses continued to rebuild the City’s unrestricted net position balance.
The Citywide Net Position utilized the full accrual basis of accounting, requiring the City to report the full amount of long-term liabilities, such as pension and bond payments, which will be paid over many fiscal years with future revenues. Governmental fund statements utilized the modified accrual basis of accounting, which recognized the current portion of long-term debt to be paid by revenues as they are measurable and available. This difference in accounting method can result in a negative net position on the Citywide financial statements, while individual fund statements, such as the General Fund, did not have a negative fund balance.
Long-Term Debt
The primary source of long-term debt is in the form of bonds issued by the City. At the end of the current fiscal year, the City’s total long-term debt outstanding (excluding issuance premiums) was $326.6 million, a $4.8 million decrease from the prior year.
This decrease was primarily due to draws on the City’s water loan offset by a prearranged $4 million forgiveness of the water loan.
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More information on Long-Term Debt can be found in Note 10, page 51 of the ACFR.
Pension Liability
As noted in the Statement of Net Position on page 1 of the ACFR, the City’s largest liability is the unfunded actuarial pension liability, which was $496.7 million as of June 30, 2023, an increase of $265.8 million from the $230.9 million as of June 30, 2022 as a result of the negative 6.1% return on pension plan assets.
Total net pension liability, or unfunded liability, was based on projected future benefit payments attributed to the current and past employees’ service, less the assets accumulated to pay those liabilities. This was the difference between a total pension liability of approximately $2.2 billion and current plan assets of approximately $1.7 billion, making the City’s three pension plans approximately 78% funded overall. The City’s annual required contributions included a portion to fund currently earned benefits as well as an amount to pay down the unfunded liability.
CalPERS calculated the annual contributions to amortize the unfunded liability. In 2014, after a series of paydowns funded from year end savings, Council adopted the first of a set of policies to pay down a portion of the liability each year in addition to the actuarially determined contribution amount in order to reduce the amortization period thus lowering interest costs over time. In FY 2018-19, the City Manager convened a pension advisory committee consisting of residents and employees. An information item dated April 19, 2019, contained a discussion of the history of the unfunded liability and different methods of management such as utilizing a supplemental trust fund and issuing pension obligation bonds. Included was the advisory committee’s recommendation of making additional payments that would amortize the unfunded liability over 13 years. The pension policy was updated in 2019 to include this 13-year payment schedule and the first additional payment of $9.3 million was made in October 2019, Due to the economic impact of the pandemic and legal settlements, the Council changed the schedule of the accelerated paydowns per the emergency provisions of the policy, to shift to a 15-year paydown schedule. At its April 11, 2023 meeting, the Council voted to suspend any further additional paydowns in order to reprogram the funds to
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critical restorations or enhancements while the City continues to operate at a lower service level. The suspension of the paydown policy will be revisited in FY2027-28 and may based on an evaluation of the City’s financial position.
In the meantime, a number of initiatives have mitigated the pressure of this cost driver on the budget.
• 52% of current employees receive a reduced level of pension benefits.
Employees in all bargaining groups hired after January 1, 2013 receive lower benefits per the Public Employee Pension Reform Act (PEPRA). A lower Tier 2 benefit level was established by Council for non-sworn employees who entered the City between July 1, 2012 and December 31, 2012, or who continue to join the City from previous employment where they were under a non-PEPRA pension plan. 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, Public Safety employee bargaining groups reimburse the City for a portion of the employer cost. • Since FY 2010-11, the City has made $88.1 million in payments towards unfunded pension liability beyond the actuarially required contribution determined by CalPERS.
• The City had been prepaying its annual employer contributions to CalPERS since FY 2007-08 and receives a discount. The savings from the discount is used to offset paydowns of the net pension liability. Because of the Federal Reserve raising interest rates, the return on the City’s portfolio was in excess of what would have been earned prepaying the amortization of the unfunded liability, the City did not prepay in FY 2023-24.
A detailed explanation of the Employee Benefits Programs including detailed pension information by plan is included in Note 12 (pages 57 through 75) and the Required Supplementary Information (pages 106 through 111). Further information on the City’s
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efforts to control pension liability is included in the Letter of Transmittal (pages i through xiv).
Other Postemployment Benefits (OPEB)
Employees of the Executive Pay Plan group and management employees of the Rent Control Board are eligible for a City paid post-employment 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 the 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 annual contribution was based on an actuarially determined contribution (ADC).
Prior to FY 2019-20, the City annually prefunded its OPEB obligations into a 115 trust, CERBT, administered by CalPERS. In response to the global pandemic and the devastating effects on the economy, City Council authorized the suspension of the prefunding contributions to the trust and the City did not make contributions in FY 2019- 20 or FY 2020-21. ADC contributions to the trust resumed in FY 2021-22 and will continue.
A detailed explanation of OPEB is included in Note 12 (pages 69 through 74) and the Required Supplementary Information (pages 112 through 113).
GASB 96 Subscription Based Information Technology Arrangements With GASB 96, the City recognized a Subscription Based Information Technology Arrangement (SBITA) as an intangible right-to-use subscription asset and a corresponding subscription liability at the commencement of the subscription term. The subscription asset is valued at the present value of the subscription payments expected to be made during the subscription term. The City recognized interest expense on the subscription liability and amortization expense on the subscription asset. These changes were incorporated in the City’s financial statements and had an effect on the beginning
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net position of the Water, Wastewater, Fleet, Self-insurance general liability, Selfinsurance bus and Self-insurance workers compensation funds. The total impact of the implementation on the Statement of Net Assets was less than $1 million.
Pending Litigation
The City was a party in numerous pending litigations and the outcome of these cases can have a significant impact on the General Fund.
Since March 2020, the City had entered into settlement agreements totaling $229.8 million with claimants in suits filed against the City. The City is evaluating additional claims pending based on similar allegations of abuse by the same former employee.
The City continues to work diligently to prevent these liabilities from impacting services and is actively seeking reimbursement from its excess insurance carriers.
In 2017, The Pico Neighborhood Group sued the City of Santa Monica alleging that the City’s at-large method of electing City Council members violates the California Voting Rights Act (CVRA). Plaintiffs’ request for costs and attorneys’ fees remains pending further litigation in the Los Angeles Superior Court.
On July 15, 2022 the FAA ruled that all of the previously made loans between the General Fund and the Airport Fund should be voided as inconsistent with federal law and required that the City write off loans and accrued interest in the amount of $5.6 million and repay the Airport $7.4 million of previously made loan payments which the FAA disallowed which was repaid to the Airport subsequent to year end.
More information pertaining to pending litigation is included in Note 16, page 83 of the ACFR.
Cash and Investments
The ACFR also included detailed information on the City’s cash and investments. As of June 30, 2023, the City had $753 million in total cash and investments, all of which were in the form of investments authorized by the California Government Code and the City’s investment policy or in compliance with bond indenture agreements.
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More information on cash and investments is found in Note 2, page 29 of the ACFR.
Environmental Review
The ACFR is exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines. The ACFR is covered by the common sense exemption which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” Therefore, it can be seen with certainty that actions would not result in adverse physical impacts on the environment, and as such, is exempt from CEQA.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action to receive and file this annual report.
Prepared By: Steve Gomez, Financial Operations Manager
Approved Forwarded to Council
Attachments:
A. Attachment A - Annual Comprehensive Financial Report B. Attachment B - Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance with Other Matters Based on an Audit of Financial Statements
C. Attachment C - Auditors’ Communication Letter to Council D. Notes Receivable Sample Disclosure
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City of Santa Monica
California
Annual Comprehensive Financial Report
for the Year Ended June 30, 2023
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Packet Pg. 151 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report City of Santa Monica
California
Annual Comprehensive Financial Report
Year ended June 30, 2023
Prepared by the Finance Department
Gigi Decavalles-Hughes Director of Finance/City Treasurer Stephanie Manglaras Assistant City Treasurer
Steve Gomez 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
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Packet Pg. 152 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Annual Comprehensive Financial Report
For the fiscal year ended June 30, 2023
Table of Contents
Page
INTRODUCTORY SECTION
Letter of Transmittal .......................................................................................................................... i Officials of the City of Santa Monica ................................................................................................ xv Organizational Chart – City of Santa Monica ................................................................................... xvi GFOA Certificate of Achievement for Excellence in Financial Reporting ....................................... xvii
FINANCIAL SECTION
Independent Auditors’ Report ........................................................................................................... xviii Management’s Discussion and Analysis (Required Supplementary Information) ............................ xxi 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 ............................................................................................................ 41 Note 6 – Subscription-Based Information Technology Arrangements ..................................... 43 Note 7 – Unearned Revenue and Deferred Inflows of Resources ............................................. 46 Note 8 – Compensated Absences .............................................................................................. 48 Note 9 – Self-Insurance ............................................................................................................. 49 Note 10 – Long-Term Debt ......................................................................................................... 51 Note 11 – Pollution Remediation ................................................................................................ 55 Note 12 – Employee Benefit Programs ....................................................................................... 57 Note 13 – Fund Balances ............................................................................................................ 76 Note 14 – Fund Deficits .............................................................................................................. 80 Note 15 – Restricted Net Position ............................................................................................... 81 Note 16 – Commitments and Contingencies ............................................................................... 83
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Packet Pg. 153 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Annual Comprehensive Financial Report
For the fiscal year ended June 30, 2023
Table of Contents, Continued
Page
Note 17 – Reconciliation of Fund Balance Sheet/Statement of Net Position to GovernmentWide Financial Statements ......................................................................................... 87 Note 18 – Interfund Transactions ................................................................................................ 90 Note 19 – Successor Agency Trust Fund for Assets of Former Redevelopment Agency............ 93 Note 20 – Prior Period Adjustments ............................................................................................ 97 Note 21 – Covid Pandemic .......................................................................................................... 98 Note 22 – Special Item ................................................................................................................. 100
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund ............................................................................................................................... 101 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Special Revenue Source Fund ..................................................................................................... 103 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Low and Moderate Income Housing Asset Fund ........................................................................ 104 Note to Required Supplementary Information ................................................................................... 105 Schedules of Changes in the Net Pension Liability and Related Ratios ........................................... 106 Schedules of Contributions – Pension Plans...................................................................................... 109 Schedule of Changes in the Net OPEB Liability and Related Ratios ................................................ 112 Schedules of Contributions – OPEB .................................................................................................. 113
SUPPLEMENTARY INFORMATION
NON-MAJOR FUNDS / OTHER FINANCIAL INFORMATION
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet – Nonmajor Governmental Funds ........................................................ 116 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds .................................................................................................. 119 Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) – Budget and Actual – Major and Nonmajor Governmental Funds – Special Revenue Funds:
Beach Recreation ..................................................................................................................... 122 Housing Authority ................................................................................................................... 123 Tenant Ownership Rights Charter Amendment (TORCA) ...................................................... 124 Citizens Option for Public Safety ............................................................................................ 125 Gas Tax ..................................................................................................................................... 126 Local Return ........................................................................................................................... 127 Community Development Block Grant (CDBG) ..................................................................... 128 Miscellaneous Grants .............................................................................................................. 129 South Coast Air Quality Management District (SCAQMD) ................................................... 130 Parks and Recreation ............................................................................................................... 131 Capital Projects Funds:
Clean Beaches and Ocean Parcel Tax ...................................................................................... 132 Combining Statement of Net Position – Nonmajor Enterprise Funds ............................................... 134
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Packet Pg. 154 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Annual Comprehensive Financial Report
For the fiscal year ended June 30, 2023
Table of Contents, Continued
Page
Combining Statement of Revenues, Expenses and Changes in Fund Net Position – Nonmajor Enterprise Funds ........................................................................................................ 135 Combining Statement of Cash Flows – Nonmajor Enterprise Funds ............................................. 136 Combining Statement of Net Position – Internal Service Funds .................................................... 139 Combining Statement of Revenues, Expenses and Changes in Fund Net Position – Internal Service Funds ................................................................................................................ 140 Combining Statement of Cash Flows – Internal Service Funds ..................................................... 141 Notes Receivable Information ........................................................................................................ 142 STATISTICAL SECTION (Unaudited)
Financial Trends Information
Net Position by Component – Last Ten Fiscal Years ........................................................... 1 151 Changes in Net Position – Last Ten Fiscal Years ................................................................. 2 152 Fund Balance of Governmental Funds – Last Ten Fiscal Years .......................................... 3 155 Changes in Fund Balance of Governmental Funds – Last Ten Fiscal Years ........................ 4 156 Revenue Capacity Information
General Fund Tax Revenues by Source – Last Ten Fiscal Years ......................................... 5 158 Assessed Value and Actual Value of Taxable Property – Last Ten Fiscal Years ................ 6 159 Direct and Overlapping Property Tax Rates – Last Ten Fiscal Years .................................. 7 160 Principal Property Taxpayers – Current Fiscal Year and Nine Years Ago .......................... 8 161 Property Tax Levies and Collections – Last Ten Fiscal Years ............................................. 9 162 Taxable Transactions by Type of Business – Last Ten Calendar Years ............................... 10 163 Debt Capacity Information
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ............................................. 11 164 Ratios of General Bonded Debt – Last Ten Fiscal Years ..................................................... 12 165 Direct and Overlapping Governmental Activities Debt........................................................ 13 166 Computation of Legal Debt Margin – Last Ten Fiscal Years ............................................... 14 167 Water Enterprise Revenue Bonds Coverage – Last Fiscal Year ........................................... 15 168 Demographic and Economic Information
Demographic and Economic Statistics – Last Ten Calendar Years ..................................... 16 169 Principal Employers – Current Year and Nine Years Ago ................................................... 17 170 Operating Information
Full-time Equivalent City Government Employees by Function/Program – Last Ten Fiscal Years ........................................................................................................ 18 171 Operating Indicators by Function/Program – Last Ten Fiscal Years ................................... 19 172 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years ................................ 20 173
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Packet Pg. 155 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report City of Santa Monica, California
Year Ended June 30, 202
INTRODUCTORY SECTION
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December 22, 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, 2023 (FY 2022-23).
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 2022-23. 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 councilmanager 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 Councilmember.
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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 2023, the City is projected to have lost approximately $178 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, providing 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 have affirmed Santa Monica’s rating at the highest possible status in their most recent reviews.
Fiscal Year 2022-23 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 also experienced 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-of-living increases.
Furthermore, changes that began with Covid persist and have had an impact on the organization and the local economy: labor market shifts continue to create labor shortages, the shift of office workers to remote work has impacted the local economy and revenue streams that rely on them, and international and business travel is still lagging. 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
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bring back some services and invest in new areas addressing priorities, the City is still operating at 89% 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. At the end of 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 3.2% in FY 2023-24 over prior year budget (less than 1% over prior year actuals) and continue to grow. With limited resources, any new funds are allocated to address five City Council-adopted priorities: Addressing Homelessness, Clean and Safe Santa Monica, Cultivate Economic Recovery & Expand Community & Cultural Offerings, Racial Justice, Equity & Social Diversity, and Sustainable & Connected Community.
The U.S. economy continued to rebound strongly in 2022 from the pandemic-induced recession of 2020.
However, high inflation, lingering supply chain issues, high interest rates, labor shortages, and global unrest are all contributing to a softening of the economy and uncertainty about the future course of the economy.
Per the UCLA Anderson Forecast, December 2023, although a recession is no longer being projected, weak growth is expected in 2024, with three quarters of 1% growth which then accelerates back to 2.5% by 2025 as measured by GDP. High interest rates are expected to temper consumption, housing and business investment, resulting in weaker growth in the following year or two. While unemployment remains near historic lows (below 4%), the rate is expected to grow slightly over the next two years as the economy cools, and a number of companies, particularly in the technology sector, have gone through large layoffs. While inflation has begun to moderate, CPI is still 10% above the level of two years ago.
The California economy is expected to grow faster than the U.S. economy, but it shares the same risks as the national economy- politics, geopolitics, and high interest rates. State unemployment is expected to grow slightly from 4.3% to 4.5%. The Governor’s proposed budget for Fiscal Year 2023-24 projects a deficit of approximately $38 billion. However, the budget avoids spending cuts by using the prior year’s record surplus to fund certain one-time costs and other solutions to bridge the gap.
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 despite the fact that the recovery in international tourism and business travel is still lagging.
Parking revenues, the other significant revenue source affected by visitors, are improving, but at a slower pace. They are anticipated to reach pre-COVID levels in FY 2027-28. 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.
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Property taxes have remained positive as assessed value increases continued during the pandemic. These increases are expected to continue but at a slower pace, reflecting a slight softening in the real estate market due to high interest rates. After some lagging in the number of property transfers in FY 2022-23, this activity has begun to pick up again.
Business License taxes have begun to recover from the pandemic and the City has initiated a review of the existing Business License tax, with the goal of developing an updated set of regulations that is fair and equitable, reflective of today’s economy and easy to understand and administer. While this effort is intended to be revenue neutral, the City may see some increase in overall receipts. In November 2024, staff will ask the voters to approve any changes to the tax code as a result of this effort.
FY 2023-24 utility users taxes (UUT) revenue growth from electric, gas, and cable television utilities is primarily driven by rate changes by Southern California Edison, Southern California Gas Company, Spectrum, and Frontier Communications, respectively. Taxes from water and wastewater services reflect Council-approved utility rates as well as anticipated consumption patterns. Taxes from electricity and natural gas, after spiking in FY 2022-23 due to sharp increases in energy costs, are expected to flatten or decrease beginning in FY 2023-24.
TOT and Documentary Transfer Tax revenues will also be bolstered by voter-approved measures increasing the TOT rate (Measure CS) from 14% to 15% (to 17% for homeshares) and adding a third tier to the City’s Documentary Transfer Tax (Measure GS) of $56 per $1,000 transfer value for transfers of $8 million and over. The voters also approved Measure HMP establishing business license tax rates for cannabis businesses, but no revenue from these sources is anticipated before FY 2025-26.
The FY 2023-25 biennial budget reflects the new revenue sources approved by Santa Monica voters in November 2022:
x Measure CS funding, generated from an additional 1% Transient Occupancy Tax on hotel stays and 3% on home-share stays is anticipated to generate approximately $5 million annually. These funds were programmed to address the impacts of homelessness and enhance public safety. 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, will generate revenue restricted to fund homelessness prevention, affordable housing projects, and schools. While this measure could generate approximately $50 million annually, it is a volatile revenue source, based on sales of very high value properties. Planning and organizational adjustments to accommodate the significant revenue stream and work efforts is progressing in FY 2023-24.
x Voters also approved in 2022 Measure HMP, which imposes an additional tax on cannabis retailers and other licensed cannabis businesses. Further work is required to amend the Municipal Code to allow for an increase of cannabis-related retail establishments and revenues are not anticipated during the upcoming biennial period.
In addition to tax measures, the City has partnered with Big Outdoor to install digital wayfinding kiosks in commercial areas that will provide a way for small businesses to connect with potential customers and will generate additional revenue for the City, with a minimum annual guarantee of $5 million once kiosks are in place. A portion of the annual revenue will be allocated to a Diversity, Equity and inclusion (DEI) 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
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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 oddnumbered years, and the Capital Improvement Program (CIP) Biennial Budget in the even-numbered 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 27, 2023, Council reviewed the FY 2023-25 Biennial Budget, adopted the FY 2023-24 Operating Budget and approved the FY 2024-25 Operating Budget Plan. At that time, Council also adopted the FY 2023-24 Capital Improvement Program (CIP) Budget.
The FY 2023-25 Adopted Biennial Budget includes the most substantial restoration of ongoing services and introduction of enhanced services to date since the 2020 budget restructuring. This is due to a combination of a new voter-approved revenue source, continuing revenue growth, a reallocation of existing funds, new revenues from public and private partnerships, and staff’s ability to expand capacity for cost-covering programs. Budget restorations and enhancements address the five budget priorities noted above. The Citywide Adopted FY 2023-24 Budget was $745.0 million, net of reimbursements and transfers, $436.9 million within the General Fund. The FY 2023-24 Adopted Budget included an increase of 49.3 full-time equivalent permanent positions (32.8 in the General Fund) and 13.0 full-time equivalent as-needed positions (15.0 in the General Fund and a decrease of 2.0 in other funds) as compared to the FY 2022-23 Revised Budget. As of June 30, 2023, the City was operating at approximately 89% of its pre-pandemic staffing overall, 85% in the General Fund. At June 30, 2023, higher than anticipated General Fund revenues, due to an earlier-thananticipated 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 Approved Budget Plan for FY 2024-25 Citywide expenditure budget is $750.6 million, net of reimbursements and transfers ($458.6 million in the General Fund). The FY 2024-25 Citywide expenditure budget represents a small, 0.7% increase over FY 2023-24.
The FY 2023-25 Biennial Budget includes funds to complete a Homelessness Strategic Plan, expand outreach and intake services for people experiencing homelessness, expand uniformed Police Department teams working with people experiencing homelessness and patrolling highly visited areas in the Downtown, Pier and Beach.
The Budget also includes expanded security in parking structures and on buses, a strategic focus on Emergency Medical Service delivery, and specialized teams that will increase the frequency of cleanup of debris from people experiencing homelessness, and enhanced services to address illegal dumping.
Library hours out-of-school time youth programming and recreation facility hours continue to be restored. A Small Business Assistance and Tenant Improvement Fund is established, and positions are restored to assist with permitting and economic development.
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The Budget continues work in language access and racial equity and adds an ADA Coordinator. Finally, the budget continues to support plans to improve sustainability in the areas of Water, Waste, Mobility, and Carbon Neutrality.
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 $146.4 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 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.
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Recovery challenges
In the years after the pandemic, the City has had two additional challenges. The first is that most General Fund revenues have not reached the level that revenues would have been if the pandemic had not occurred.
The second is the significant liability arising from allegations of sexual abuse claims against a former employee. The combined effect of this is a reduction in available General Fund revenues needed to restore the City’s services to pre-pandemic levels and address important operating needs.
The City continues to see additional revenues from numerous tax measures approved by voters in 2022.
Measure CS, which increased the Transient Occupancy Tax (TOT) by one percentage point for hotel stays and three percentage points for home-share stays has generated over $3.3 million in new revenue since inception. These revenue funds are focused on increasing public safety and addressing homelessness.
Measure GS is a 3rd tier to the Documentary Transfer Tax applied to all properties selling for $8 million or more and taxes an additional $50 per $1000 for the total amount of the sale. The Measure GS has generated over $17 million in revenue so far. These funds are dedicated to address critical needs in the areas of homelessness prevention, affordable housing and education. The implementation of Measure HMP, which would generate additional General Fund revenues from cannabis retailers, is pending changes to the City’s zoning laws.
In November 2024 staff will bring the Business License tax modernization changes to the voters. This project will update outdated code and regulations to address new ways of working, including the “gig” economy and remote working. This endeavor seeks to establish regulations that are fair, equitable, reflective of today’s economy, and easy to understand and administer. While the focus of this effort is not to increase revenue, the City may achieve increases in overall receipts. Additional benefits include:
x Attract, retain, and encourage expansion of businesses x Incentivize and support job creation, and equitable and inclusive growth x Make oversight and compliance less burdensome
Since 2021 the City has focused on leveraging grant funds to the greatest extent possible and have applied for and received direct project funding in excess of $36 million in new competitive grant funds. New grants acquired this year include:
x $6.125M State grant funds from the Board of State and Community Corrections for the Santa Monica Police Department to continue and enhance efforts to combat organized retail theft, motor vehicle / motor vehicle accessory theft, or cargo theft.
x $1.4M in Los Angeles County Regional Park and Open Space District Measure A funds for Douglas Park playground reconstruction.
x $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.
Contingent liabilities and long term planning
In previous years, the City noted a significant contingent liability related to sexual abuse claims against a former employee. From May 2020 to July 2022, the City settled sexual abuse claims against a former City employee and volunteer. The settlements, to 104 claimants, totaled $107.325 million. On April 25, 2023, the City Council approved an additional settlement agreement to pay $122.5 million on additional claims related to one of the former employees. The City has tendered the full amount, totaling $229.825 million, to its excess
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liability insurers for reimbursement. Given the significant burden of these payments on the General Fund, on top of the significant revenue losses that the General Fund suffered as a result of the COVID pandemic, other funding sources in addition to the General Fund were needed to make the payment. The non-General Fund funding sources include $6.5 million from the General Fund portion of the Workers’ Compensation Fund, $25 million from the Housing Trust Fund’s General Fund contributions, $5.6 million from the deferral of the FY 2022-23 Measure GSH contribution from the General Fund to the Housing Trust Fund, and $15 million from Boeing Gillette settlement funds held in the Water Fund. The General and non-General Fund reserves used were not legally restricted as to use, but it is the City’s intent that the fund balances of all affected funds be replenished. On October 25, 2023, the City Council approved a plan to replenish these funds over time, prioritizing the operational and financial stability of the General Fund. As of the date of this report, there are an additional 34 plaintiffs named in seven lawsuits against the City.
An ongoing contingent liability is the litigation over a request to transition to district elections. The case was recently heard by the California Supreme Court, which issued an opinion referring the case back to the Court of Appeal for further proceedings. If the City loses the case, the financial impacts to the City will be high.
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 6.8%, 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. x 52% 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.
x 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.
x 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.
x 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 have reduced the City’s net pension liability by decreasing interest costs over time. In 2014, Council adopted a policy to continue 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.
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x 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-19, additional paydowns were suspended. On April 11, 2023, Council authorized a suspension of the accelerated paydown of the City’s unfunded pension liability from FY 2022-23 until FY 2027-28, or later, to restore an array of community services and programs. The decision took into consideration the fact that the previous policy was adopted in 2019, when the City’s programs were operating at full strength and reserves were strong. x 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. In FY 2023-24, the City did not prepay its contributions as interest rates earned on its portfolio exceeded the discount rate.
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 ramp-down 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 is reflected in the FY 2023-24 contribution rates.
In FY 2021-22, the CalPERS investment portfolio experienced a net return of -6.1%, while FY 2022-23 performance showed a return of 5.8%, still less than the projected 6.8% that CalPERS expects. 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 Post Employment 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.
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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%.
Workers’ compensation liabilities
Risk Management is implementing and managing a variety of measures to help control workers’ compensation costs. In FY 2022-23, 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, declined by 1% to their lowest level in more than seven years. 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 2022-23 are likely to be very costly in the long run due to an aging workforce and several catastrophic job-related injuries/illnesses. 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 2022-23 Adopted Capital Improvement Plan (CIP) Budget for the General Fund continued to reflect a 33% decrease in capital funding. As the City gradually recovers from a prolonged period of General Fund revenue loss, the FY 2023-24 CIP Budget is approached strategically to leverage limited resources that have significantly reduced the capacity for new capital investments in the near term. The annual General Fund capital funding allotment focuses on key priorities to protect the City’s existing capital investments and minimizes 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
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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, immense price escalation, and a renewed focus on community amenities put on hold during the pandemic, such as Memorial Park Expansion and Airport Conversion Planning projects. These require creative strategies to leverage enterprise funds, grant funds, developer impact fees, and other funding sources to fund priority capital projects.
In 2022, the phased delivery of Memorial Park Expansion was reimagined to bisect the original phase 1 into two phases to account for significant increases in construction costs since 2019 and to work within the reduced $20 million budget. With City Council direction, staff reengaged in negotiating Fiscal and Use Agreements with SMC and SMMUSD for capital improvement construction costs and their associated programmed joint uses for implementation of phases 1 and 2 of the project. In August 2023, Council authorized a Payment Agreement with SMC that would facilitate a funding contribution in an amount not to exceed $2,750,000 for the design and pre-construction services of phase 1 of the Master Plan, including Environmental Analysis and Geotechnical Engineering, of the proposed renovated and expanded facilities at Memorial Park. Concurrently, $500,000 of Park and Recreation Development Impact Funds were appropriated for the design of phase 2 improvements. Staff will return to council in early 2024 for approval to negotiate an agreement with a recommended design-build team following the Request for Bids process.
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, 2 and 3 of the project, including a new Fleet Maintenance building, a Public Works Operations Center and a new 10,000 square foot permanent Fire Training Facility funded with dedicated Fire facility lease revenue bonds issued in 2018, have now been completed. 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, design of phase 4 started in the summer of 2023 and construction is scheduled for completion in summer of 2025.
City Council certified the Pier Bridge Replacement Project EIR in June 2023 and approved the preferred alternative bridge design. The new bridge would have wider (15’) sidewalk on the south side of the bridge.
Staff and the bridge designer are now working on the final design and development of bidding documents for the construction and the replacement of the 85-year-old bridge. The design is approaching 65% currently.
Construction would be expected to begin in Fall of 2025 and take between 18-24 months, with construction estimated to be completed prior to the Los Angeles 2028 Summer Olympics. The design and construction of the replacement bridge is to be primarily funded with federal Highway Bridge Program (HBP) funding.
In 2018, Council adopted the Sustainable Water Master Plan, which outlines several infrastructure projects that will further the City’s goals 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 secured over $20 million in grants from the Department of Water Resources, State Water Resources Control Board, and Los Angeles County to fund local water supply projects. In FY 2022-
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2023, a $6.1 million grant from the Department of Water Resources was secured to fund a new groundwater injection well to support the SWIP and the City has applied for an additional $4.5 million grant with the United States Bureau of Reclamation to replace an aging groundwater production well to enhance resiliency in the Olympic Well Field. Water projects underway include:
x 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 spring of 2024. x 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 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 has begun high recovery operations at 90% recovery at the end of 2023 and is scheduled to be fully completed in spring 2024.
x 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. x Advanced Metering Infrastructure (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 2025.
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x 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 of these project components and an amendment to the City’s permit with the Regional Water Quality Control Board for groundwater injection was completed in 2023. Groundwater recharge operations will begin in summer of 2024 once the Olympic Well Field Restoration Project is complete.
In FY 2022-23 the Public Works Department began the Airport Conversion project to envision the future of the Santa Monica Airport and received approval from City Council to begin the procurement process. The initial CIP investment of $100,000 enabled staff to begin this work and hire a few consultants for feasibility.
As the project moves forward it will provide: extensive existing condition analysis, robust community engagement, and a process to evaluate three different planning scenarios with the community and City Council in search of a preferred scenario, centered around a “Great Park” consistent with Measure LC. Once Council has approved the preferred scenario then staff can begin to update the regulatory frameworks to enable the plan to be implemented upon closure of the Airport, anticipated 12/31/2028.
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, 2022. 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 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.
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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
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OFFICIALS OF THE CITY OF SANTA MONICA
As of December 22, 2023
City Council
Phil Brock, Mayor
Lana Negrete, Mayor Pro Tempore
Gleam Davis
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 Christopher Smith
City Clerk (Director of Records and Election Services) Denise Anderson-Warren Director of Finance/City Treasurer Gigi Decavalles-Hughes Acting Director of Human Resources Oles Gordeev
Chief Information Officer Vacant
Chief of Police Ramon Batista
Interim Fire Chief Wolfgang Knabe
Director of Community Development David Martin
City Librarian Erica Cuyugan
Director of Transit Services Anuj Gupta
Director Recreation and Arts Jenny Rogers
Director of Public Works Rick Valte
Director of Housing and Human Services Heather Averick
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Packet Pg. 171 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report xvi
ORGANIZATION OF THE
CITY OF SANTA MONICA
as of June 30, 2023
CITY COUNCIL
City Clerk City Manager City Attorney
Assistant City Manager Deputy City Manager
Community Services
Finance
Human Resources
Library
Public Works
CITIZENS
Police
Information Services
Fire
Department of Transportation
Community Development
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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, 2022
Executive Director/CEO
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Year Ended June 30, 202
FINANCIAL SECTION
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xx
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Packet Pg. 177 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
x[i
Management’s Discussion and Analysis
For the fiscal year ended June 30, 2023
(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, 2023. 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
x Total assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources, also known as net position, by $1,450.8 million as of June 30, 2023. Of this amount, $1,147.9 million represents net investment in capital assets, $258.4 million represents net position restricted for specific purposes, and $44.5 million represents unrestricted net position.
Governmental activities and business-type activities reported unrestricted net positions of ($67.4) and $111.9 million as restated, which is a decrease of $34.8 and an increase of $10.1 million respectively. The decrease in governmental activities was primarily due to the increase in pension liability due to CalPERS negative 6.1% return for FY2021-22 and payments related to the settlement of claims. The increase in business-type activities unrestricted net position is primarily from the normal results of operations less transfers to the governmental activities to fund a portion of the settlement of claims. $879.3 million represents net position for governmental activities and $571.5 million represents net position for business-type activities. x For the fiscal year ended June 30, 2023, the City’s total net position decreased by $37.0 million, from $1,487.8 million (as restated) at June 30, 2022 to $1,450.8 million. This decrease was due to a decrease in governmental activities net position of $44.1 million and an increase in businesstype activities net position of $7.1 million during FY 2022-23. x At the end of the current fiscal year, the City’s governmental funds reported total ending fund balances of $491.9 million, compared to $554.3 million at the end of the prior fiscal year, which is a decrease of $62.4 million or 11.3%.
x The General Fund reported an ending fund balance of $146.4 million as of June 30, 2023, compared to $209.9 million as of June 30, 2022 which represents a decrease of $63.5 million or
30.3%. The main reasons for the overall decrease in fund balance were payments to settle legal claims offset by transfers from other funds to assist with the payments as well as bond funded capital expenditures.
x The City’s net capital assets increased by $34.5 million after restatement, or 2.4%, to $1,459.1 million as of June 30, 2023, from $1,424.6 million, as restated, as of June 30, 2022. x The City’s long-term debt (excluding unamortized issuance premiums) decreased by $4.8 million or 1.4%, from $331.4 million as of June 30, 2022, to $326.6 million as of June 30, 2023. The decrease is due to continued draws on a loan for water infrastructure offset by annual debt service payments made during FY 2022-23.
x The City’s net pension liability increased from $230.9 million at June 30, 2022 to $496.7 million at June 30, 2023, an increase of $265.8 million or 115.1%. The increase in the liability was due to lower than projected CalPERS investment portfolio returns of negative 6.1% in FY 2021-22.
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Packet Pg. 178 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
x[iL
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
In accordance with the Governmental Accounting Standards Board, the financial statements report the City’s net pension liability measured as of June 30, 2022.
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 the 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 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.
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Packet Pg. 179 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
x[LLL
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(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 20 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 Measure GS Fund, which are considered to be major funds. Data for the other 16 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 Measure GS 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.
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Packet Pg. 180 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report x[LY
CITY OF SANTA MONICA, CALIFORNIA
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
The proprietary funds financial statements can be found at pages 9 through 1 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 1 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, $1.1 billion or 79.1%, 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, $258.4 million or 17.8%, 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 as the City continues recovery from the economic effect of the COVID-19 pandemic offset by the payments of legal claims.
Governmental activities reported a negative unrestricted net position due to an increase in the City’s net pension liability plus cumulative revenue shortfalls from the pandemic and settlement payments made in the past few years. The City continues to utilize long-held practices to manage its financial challenges, including pension and health benefits cost sharing with employees, and pension contribution prepayments where the return on City investments exceeds the CalPERS discount rate.
Additionally, the City uses a CalPERS trust to prefund its post-employment healthcare to reduce its future liability and interest expense. To meet the additional challenge of COVID-related revenue losses, the City implemented a workforce reduction in FY 2019- 20 and is still operating with a reduced workforce (93% of pre-pandemic staff levels) focusing on the return of essential services while many programs and capital infrastructure investments are still operating at reduced levels.
Earlier than anticipated recovery, resulting in one-time revenue surpluses, and Federal government subsidies offset by legal settlements have helped rebuild the City’s unrestricted net position balance.
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Packet Pg. 181 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
xxY
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
A summary of the government-wide statement of net position follows:
CITY OF SANTA MONICA
Summary of Net Position
(in millions)
Governmental activities Business-type activities Total
Current and other assets
6/30/23
$ 702.8
6/30/22
(as restated)
753.4
6/30/23
428.7
6/30/22
(as restated)
430.0
6/30/23
1,131.5
6/30/22
(as restated)
1,183.4
Capital assets 920.0 918.4 539.1 506.2 1,459.1 1,424.6
Total assets 1,622.8 1,671.8 967.8 936.2 2,590.6 2,608.0 Deferred outflows of resources 181.6 73.1 42.6 14.0 224.2 87.1 Current and other liabilities 97.8 82.9 133.5 90.8 231.3 173.7 Long-term liabilities 749.1 547.1 257.9 209.9 1,007.0 757.0 Total liabilities 846.9 630.0 391.4 300.7 1,238.3 930.7 Deferred inflows of resources 78.2 191.5 47.5 85.1 125.7 276.6 Net position:
Net investment in capital assets 699.7 706.4 448.2 450.1 1,147.9 1,156.5 Restricted 247.0 249.6 11.4 12.5 258.4 262.1
Unrestricted (67.4) (32.6) 111.9 101.8 44.5 69.2
Total net position $ 879.3 923.4 571.5 564.4 1,450.8 1,487.8 Total current and other assets decreased $51.9 million or 4.4% from the prior fiscal year. Governmental activities decreased by $50.6 million and business-type activities decreased by $1.3 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 increased $137.1 million or 157.4% from the prior fiscal year, as restated. Governmental activities increased by $108.5 million and business-type activities increased by $28.6 million. The increase is primarily due to the deferral of the difference between the expected and actual returns on the CalPERS portfolio. Total current and other liabilities increased $57.6 million or 33.2% from the prior fiscal year, as restated. Governmental activities increased by $14.9 million and business-type activities increased by $42.7 million, primarily from increases in transit unearned revenue.
Total deferred inflows of resources decreased by $150.9 million or 54.6%. Governmental activities decreased by $113.3 million and business-type activities decreased by $37.6 million. The decrease is primarily due to the less than projected CalPERS and OPEB trust investment returns which are amortized over 5 years.
Total long-term liabilities increased $250.0 million or 33.0% from the prior fiscal year. The increase in this category is primarily due to the increase in net pension liability of $265.8 million and $3.7 million in draws on the State Water Resources Control Board loan less $4.0 million forgiveness and scheduled debt service.
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Packet Pg. 182 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
xxYi
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
A summary of the government-wide statement of changes in net position follows:
CITY OF SANTA MONICA
Summary of Changes in Net Position
(in millions)
Governmental activities Business-type activities Total
2022-23 2021-22 2022-23 2021-22 2022-23 2021-22
Revenues
Program revenues:
As restated As restated As restated
Charges for services $ 135.6 124.4 130.3 124.4 265.9 248.8 Operating grants and contributions 53.8 62.4 62.7 58.3 116.5 120.7 Capital grants and contributions 16.8 2.6 10.8 16.1 27.6 18.7 General revenues:
Property taxes 79.7 76.0 — — 79.7 76.0
Sales and use taxes 78.5 76.7 — — 78.5 76.7
Transient occupancy taxes 67.6 66.7 — — 67.6 66.7
Utility users taxes 36.5 33.6 — — 36.5 33.6
Business license taxes 31.4 29.1 — — 31.4 29.1
Parking facility taxes 10.8 10.0 — — 10.8 10.0
Real property transfer taxes 10.7 17.9 — — 10.7 17.9
Other taxes 4.0 3.7 — — 4.0 3.7
Investment income 2.1 (13.4) 3.2 (6.8) 5.3 (20.2)
Other revenue 17.2 8.8 18.3 2.9 35.5 11.7
Total revenues 544.7 498.5 225.3 194.9 770.0 693.4
Expenses
General government 184.7 85.5 — — 184.7 85.5
Public safety 168.7 128.0 — — 168.7 128.0
General services 101.3 80.6 — — 101.3 80.6
Community services 96.3 87.8 — — 96.3 87.8
Library 11.1 7.9 — — 11.1 7.9
Community development 38.8 31.0 — — 38.8 31.0
Interest on long-term debt 3.9 6.2 — — 3.9 6.2
Water — — 32.8 22.5 32.8 22.5
Resource recovery and recycling — — 30.2 26.5 30.2 26.5 Community broadband — — 2.0 2.3 2.0 2.3
Pier — — 8.4 6.6 8.4 6.6
Wastewater — — 19.8 17.3 19.8 17.3
Airport — — 13.0 6.1 13.0 6.1
Stormwater management — — 0.5 0.4 0.5 0.4
Cemetery — — 2.1 2.6 2.1 2.6
Big Blue Bus — — 93.3 82.1 93.3 82.1
Parking Authority — — 0.1 0.1 0.1 0.1
Total expenses 604.8 427.0 202.2 166.5 807.0 593.5
Excess (deficiency) of revenues
over expenses before special items
and transfers (60.1) 71.5 23.1 28.4 (37.0) 99.9
Transfers 16.0 (8.4) (16.0) 8.4 — —
Change in net position (44.1) 63.1 7.1 36.8 (37.0) 99.9 Beginning net position, as restated 923.4 860.3 564.4 527.6 1,487.8 1,387.9 Ending net position $ 879.3 923.4 571.5 564.4 1,450.8 1,487.8
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Packet Pg. 183 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
xxvLL
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
Governmental Activities. The City’s governmental activities net position decreased by $44.1 million, or 4.8%. 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 25.0% of total governmental activities revenue. The category totaled $135.6 million in FY 2022-23, compared to $124.4 million in FY 2021-22, which is an increase of $11.2 million or 9.0% due to increased developer fees and a $4.0 million signing bonus related to a digital kiosk licensing agreement. The second largest category is property taxes, which represent 14.7% of total governmental activities revenue. Property taxes increased $3.7 million or 4.9% from the prior fiscal year. The increase was primarily due to a continued strong rise in the City’s assessed valuation plus an increase in RPTTF residuals. The third largest category is sales and use taxes and represents 14.5% of total governmental activities revenue, which increased $1.8 million or 2.3% from the prior fiscal year, as taxable sales level off from their prior year increase when businesses reopened after pandemic related closures and as the City’s post-pandemic economic recovery continues. Transient Occupancy Taxes increased $0.9 million from $66.7 million to $67.6 million or
1.3% as hotel occupancy rates remained steady following their post pandemic reopening. Additionally, several hotels closed during FY 2022-23 for remodeling or franchise changes and did not open until later in the year; or in the case of the Loews, did not reopen during the fiscal year.
Parking facility taxes
2.0%
Real property
transfer taxes
Other taxes
0.7%
Other general
revenues
3.2%
2.0%
Utility users taxes
6.7%
Charges for services
25.0%
Transient occupancy
taxes
12.4%
Operating grants and
contributions
9.9%
Property taxes
14.7%
Business license
taxes
5.8%
Capital grants and
contributions
3.1%
Sales and use taxes
14.5%
Sources of Revenue Governmental Activities*
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Packet Pg. 184 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
xxvLLL
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
Functional Expenses: Governmental Activities. As displayed in the chart below, general government, public safety, general services, community services, and community development accounted for 97.5% of total governmental activities expenses.
Library
1.8%
Community
development
6.4%
Interest on long-term debt
0.7%
Community services
15.9%
General government
30.5%
General services
16.8%
Public safety
27.9%
Total governmental activities expenses increased $177.8 million or 41.6% from the prior fiscal year after restatement. The three categories with the largest variance from the prior year were general government, public safety, and general services. General government expenses increased $99.2 million or 116.0%. Public safety increased $40.7 million or 31.8%. General services increased $20.7 million or 25.7%. General government increased due to payments of legal settlements. Public safety and general services expenses increased primarily due to the increase in pension expense because the CalPERS negative 6.1% return on pension plan assets. Additionally, the City hired over 20 sworn personnel which had been delayed due to the COVID19 pandemic because academies in the region were closed for a portion of FY 2021-22. The increase in expenses in general government and general services was primarily due to the increase in pension expense from the less than expected returns on the pension plan trust assets.
i
Functional Expenses
Governmental Activities
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Packet Pg. 185 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
xxi[
Expenses and Program Revenues
Governmental Activities
(millions)
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
Program Expenses: Governmental Activities. The following chart compares program revenues and expenses for governmental activities (excluding interest on long-term debt):
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
General
government
Public safety General services Community
services
Library Community
development
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 2022-23 is community development, which had expenses of $38.8 million and program revenues of $39.9 million, a ratio of 103.0%. 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 2022-23 is the library, which had expenses of $11.1 million and program revenues of $0.2 million, a ratio of 1.5%.
This low percentage indicates that most of the expenses in this category are financed by the general revenues of the City.
Expenses Revenues
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Packet Pg. 186 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
xx[
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
Business-type Activities. The City’s business-type activities net position increased $7.1 million or
1.3% 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 other general revenues.
These three categories account for 95.1% of the total business-type activities revenues of $222.1 million.
Capital grants and
contributions
4.9%
Other general
revenues
8.2%
Operating grants and
contributions
28.2% Charges for services
58.7%
Sources of Revenue
Business-type Activities*
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Packet Pg. 187 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
xx[i
Business-type Activities Expenses
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(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 87.0% 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.
Parking Authority
0.1% Water
16.2%
Big Blue Bus
46.1%
Resource Recovery
and Recycling
14.9%
Community
Broadband
Pier
4.2%
1.0%
Stormwater
Management
0.3%
Cemetery
1.0%
Airport
6.4%
Wastewater
9.8%
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Packet Pg. 188 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
xxxLL
Expenses and Program Revenues
Business-type Activities
(in millions)
Expenses Revenues
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
Program Revenues and Expenses: Business-type Activities. The following chart compares program revenues and expenses for business-type activities:
$100
$80
$60
$40
$20
$0
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 decreased $62.4 million or 11.3% from the prior fiscal year. The primary reasons for the increase are discussed on the following pages.
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CITY OF SANTA MONICA, CALIFORNIA
xxxLLL
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
General Fund
The General Fund is the chief operating fund of the City. Total fund balance in the General Fund decreased $63.5 million or 30.3% 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 $27.8 million or 6.9% from the prior fiscal year. The largest revenue source in the General Fund is property taxes followed by sales and use taxes, and finally transient occupancy taxes. Combined, these three categories represented 52.1% of the total General Fund revenues for FY 2022-23. Property taxes increased 4.8% from the previous year as strong assessed value increases occurred including an 11.0% increase in RPTTF residual revenues. Transient occupancy taxes increased $0.9 million or 1.4%, reflecting slow recovery as international and business travel continue to lag especially considering the 1% increase in transient occupancy tax on March 1, 2023 as Measure CS became effective.
Investment income increased by $9.3 million due in part to a reduction of $7.0 million in unrealized losses on the City’s investments. The unrealized loss is due to the dynamic, in which the market value of fixed income investments moves in an inverse relationship to interest rates.
As a result, the continued Fed interest rate increases in FY 2022-23 reduced the overall market value of the portfolio. However, due to the City’s lower yielding investments maturing and being replaced by more current and higher yielding investments, the unrealized loss has been reduced compared to FY 2021-22. This plus future anticipated rate reductions in interest rates by the Fed will further reduce unrealized losses. In any event, because the City typically holds investments to maturity, it is unlikely that these losses will be realized.
2. Total General Fund expenditures increased $30.5 million or 8.0% from the prior fiscal year.
This increase was due primarily to an increase in public safety expenditures of $24.5 million or
16.0%, an increase in community services expenditures of $3.8 million or 6.9,% and an increase in general government expenditures of $3.1 million or 4.7%. Public safety, general services, and general government represent the largest expense categories of the General Fund which account for 78.1% of all General Fund expenditures for FY 2022-23. Increases in all categories reflected restoration of programming that had been reduced during the restructuring in 2020; in addition to a small rebuilding of the capital program in the general government category, hiring of sworn personnel as vacancies in Police are filled, and to additional parking costs being incurred as parking revenues began to rebound in the general services category.
3. The City paid $125.6 million in relation to settlement agreements related to sexual abuse claims against a former City employee and volunteer. This was reported as a special item.
Special Revenue Source Fund
Total fund balance in the Special Revenue Source Fund decreased $11.7 million or 5.7% from the prior fiscal year primarily due to transfers to the General Fund to assist in paying a portion of the sexual abuse claims settlement. Total revenues increased $8.5 million or 109.0%. The increase in revenues was primarily due to a $6.3 million increase in other revenues and a $1.1 million increase in charges for services which includes a $5.0 million developer fee paid by St John’s Hospital.
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CITY OF SANTA MONICA, CALIFORNIA
xxxiY
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
Low and Moderate Income Housing Asset Fund
Total fund balance in the Low and Moderate Income Housing Asset Fund decreased $0.1 million or
0.1% from the prior fiscal year.
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 $6.9 million, or 1.3% from the prior fiscal year.
Some proprietary fund 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 decreased $8.5 million, or 13.5% from the prior fiscal year after restatement. Revenues reflect a $3.5 million increase in water service charges primarily from a 14% water rate increase and increase in customer water usage as workers returned to offices and business activity increased. The fund transferred $15.0 million to the General Fund to partially fund the sexual abuse legal settlement.
Wastewater Fund
The total net position of the Wastewater Fund increased $6.5 million, or 3.3% from the prior fiscal year.
The primary reason for the increase was an increase in charges for services of $1.9 million or 9.7%, an increase in investment income due to a decrease in unrealized losses, and an increase in other nonoperating revenues due to a $4.0 million forgiven loan from the State Water Resources Control Board and related accrued interest adjustments.
Resource Recovery and Recycling Fund
The total net position of the Resource Recovery and Recycling Fund decreased $1.8 million or 27.1%.
The decrease was primarily related to an increase in personnel services as returns to prepandemic service levels continue. Council approved new rate increases of approximately 11% on June 13, 2023, which took effect on August 23, 2023. These increases are expected to fund enhanced sanitation services, zero waste and recycling programs, and solid waste collection.
Big Blue Bus Fund
The total net position of the Big Blue Bus Fund decreased $1.9 million, or 1.1% from the prior fiscal year after restatement. The primary reason was the increase in personnel to restore BBB service to 80% of pre-pandemic levels. At June 30, 2023, the Big Blue Bus reported unearned income of $84.2 million that can be used to fund future operations and capital purchases.
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CITY OF SANTA MONICA, CALIFORNIA
xxxY
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
General Fund Budgetary Variances
Revenue Original Budget to Final Amended Budget. The final revenue budget of $429.3 million for the General Fund was $25.9 million (6.4%) greater than the original budget of $403.4 million. Revenue budget changes are approved by the City Council. The primary components of the variance were increased budgets for transient occupancy taxes ($3.1 million), sales and use taxes ($7.2 million), utility user taxes ($2.8 million), and other revenue ($4.0 million).
Revenue Final Amended Budget to Actuals. Actual General Fund revenues of $433.3 million were $4.0 million (0.9%) more than the final budget of $429.3 as the City’s economy continues to recover.
There were no material variances between final revenue budget and actual.
Expenditure Original Budget to Final Amended Budget. The final General Fund expenditure budget is greater than the original budget by $64.6 million, or 16.9%. There were increases in Police and Fire due to compensation adjustments which also increased pension expenditures. Additionally, there were increases in general government related to the increase in payments to the Santa Monica Malibu Unified School District (SMMUSD) as sales tax revenue came in higher than originally budgeted which increased the amount allocated to the SMMUSD. Finally, the remaining 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 and City Yards Modernization at $4.8 million and $11.8 million, respectively.
Expenditure Final Amended Budget to Actuals. Actual expenditures (budgetary basis) for the General Fund totaled $428.4 million, while the final budget totaled $446.9 million, a variance of $18.5 million or 4.1%. General government other was under budget because of unused amounts for employee benefits and COVID contingencies. Community services was under budget due to staffing shortfalls in the administrative departments. Almost all the remaining variance is due to capital improvement expenditures, which had actual expenditures of $36.1 million, compared to the final budget of $49.6 million, a variance of $13.5 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 2023-24 to continue work on projects that have not yet been completed. Actual operating expenditures totaled $392.3 million, compared to the final budget of $397.2 million.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets. The City’s capital assets (net of accumulated depreciation) as of June 30, 2023, amounted to $1,459.2 million, an increase of $34.5 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.
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CITY OF SANTA MONICA, CALIFORNIA
xxxYi
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(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:
CITY OF SANTA MONICA
Capital Assets
(in millions)
Governmental activities Business-type activities Total
6/30/23 6/30/22 6/30/23 6/30/22 6/30/23 6/30/22
As restated 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 90.6 105.3 71.1 86.3 161.7 191.6 Subscription asset 7.5 5.2 2.2 0.9 9.7 6.1
Buildings 460.1 453.7 150.1 150.1 610.2 603.8
Improvements other than buildings 218.6 218.4 32.8 29.9 251.4 248.3 Machinery and equipment 60.8 60.3 251.1 241.3 311.9 301.6 Infrastructure 413.2 376.6 326.6 263.6 739.8 640.2
Utility systems 1.7 1.7 — — 1.7 1.7
Intangibles 4.9 4.9 121.3 120.1 126.2 125.0
Less accumulated depreciation (610.1) (580.4) (469.4) (439.3) (1,079.5) (1,019.7) Capital assets, net $ 920.0 918.4 539.2 506.3 1,459.2 1,424.7 Some of the City’s major capital asset events in FY 2022-23 were:
Governmental Activities:
1. Major projects included $4.7 million for the Fire Training Facility which has now been completed, $7.8 million for the grant funded Arcadia Capacity Expansion project, and $6.3 million for the design and construction of the bond funded City Yards Modernization project.
Business-Type Activities:
1. Major projects included $2.4 million for the Sustainable Water Infrastructure Project which has now been completed, $8.8 million for Water Infrastructure Projects, a $1.2 million payment to the City of Los Angeles for capital improvements to the Amalgamated Sewer System, and $31.1 million for the Arcadia Capacity Expansion project. The Big Blue Bus purchased 6 new electric buses and chargers totaling $5.7 million.
Additional information on the City’s capital assets can be found in note 5 to the basic financial statements.
As of June 30, 2023, the City had $60.4 million in construction commitments. For additional information on commitments, see note 16.
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CITY OF SANTA MONICA, CALIFORNIA
xxxvLL
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
Long-term Debt. At the end of the current fiscal year, the City’s total long-term debt outstanding (excluding issuance premiums) was $326.6 million, a decrease from the prior year of $4.8 million or
1.4%. This decrease was due to scheduled debt service payments and forgiveness of $4.0 million of loans offset by draws on the State Water Resources Control Board loans of $3.6 million.
CITY O F SANTA MO NICA
O utstanding Debt
(in millions)
Governmental acti vitie s Business-type activities Total 6/30/23 6/30/22 6/30/23 6/30/22 6/30/23 6/30/22
General obligation bonds
(backed by the City) $- 1.1 — — - 1.1
Revenue bonds
(backed by specific tax, fee 203.1 206.5 70.5 70.5 273.6 277.0 and lease revenues)
Notes and loans - - 53.0 53.3 53.0 53.3
Total $ 203.1 207.6 123.5 123.8 326.6 331.4
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 2023. There were no changes to any bond ratings during FY 2022-23.
Additional information on the City’s long-term debt can be found in note 10 to the basic financial statements.
ECONOMIC FACTORS AND BIENNIAL BUDGET
The City’s adopted General Fund budget for FY 2023-24 supports the basic responsibilities of local government, the policy interests of the City Council members, and diverse concerns of residents. The Budget sets forth a plan to rebuild and enhance services against a backdrop of continued economic uncertainty driven by labor shortages, supply chain disruptions, inflation, and global conflicts at the national and international levels, in addition to significant liabilities and mounting deferred maintenance at the local level. The Budget reflects the outcomes of a priority setting Council workshop, including restoring key City services and making investments in five priority areas:
• Addressing Homelessness
• Clean & Safe Santa Monica
• Cultivate Economic Recovery & Expand Community & Cultural Offerings • Racial Justice, Equity & Social Diversity
• Sustainable & Connected Community
These priorities continue the necessary work of helping our community recover from the COVID-19 pandemic and its economic and social impacts, but also focuses work on ensuring the long-term resilience and equity of Santa Monica.
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CITY OF SANTA MONICA, CALIFORNIA
xxxvLLL
Management’s Discussion and Analysis, Continued
For the fiscal year ended June 30, 2023
(Unaudited)
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.
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Packet Pg. 195 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report City of Santa Monica, California
Year Ended June 30, 202
BASIC FINANCIAL STATEMENTS
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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.
Measure GS (Special Revenue Fund Type) - To account for receipt and expenditure of Measure GS documentary tax.
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CITY OF SANTA MONICA, CALIFORNIA
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4 5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position
June 30, 2023
Fund balances - total governmental funds $ 491,892,802
Amounts reported for governmental activities in the statement of net position are different because (Note 17):
(1) Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the balance sheet. 919,667,662 (2) Differences in pension liability reporting under GASB 68 where net pension liabiltiy is reported in the Government Wide statements. 138,652,494 (3) Differences in OPEB reporting under GASB 75 where net OPEB liability is reported in the Government Wide statements. (3,355,251) (4) Deferred gain on refunding of debt is not a current financial resource and, therefore, is not reported in the balance sheet. (443,141) (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. (686,346,952) (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. 10,338,852 (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. 8,821,181 Net position of governmental activities $ 879,227,647
See accompanying notes to basic financial statements.
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CITY OF SANTA MONICA, CALIFORNIA
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6 5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report Net change in fund balances – total governmental funds $ (62, 382,706) 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. 31,846,927
2) The cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense in the statement of activities. (30,391,484) Measurement focus:
3) Interest expense accrued when obligated not when paid. 104,450 4) Principal payments on long-term obligations use current financial resources but have no effect on net position. 4,390,000
5) Bond premiums are recorded as other financing sources in the fund statements but are amortized in the statement of activities. 1,134,186
6) Deferred gain and loss on refunding is amortized in the statement of activities. 61,820 7) The increase in compensated absences liability does not use current financial resources but is recorded as an decrease in expense in the statement of activities. (490,385) 8) Grant revenue previously recognized in the statement of activities is recorded as revenue in the fund statements. (12,044,981)
9) Grant revenue earned but not yet available being recorded on the statement of activities that are not recorded on the fund statements. 10,338,852
10) Pollution remediation expense activity was recorded in the fund statements and reduced the liability in the statement of activities. 352,448
11) OPEB expense is the cost of benefits earned during the year instead of contributions paid. 1,198,353 12) Pension expense is the cost of benefits earned during the year instead of contributions paid. 9,420,017 13) Liabilities under SBITA contracts are recognized on the government wide statements. (575,473) 14) Noncurrent liability of employee benefits reported as a reduction of liability in the governemnt wide statements. 2,583,450 15) Previously recognized expenditure. 82,947
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. 255,317
Change in net position (statement of activities, governmental activities) $ (44,116,261) 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, 2023
7 5.A.a
Packet Pg. 203 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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 5.A.a
Packet Pg. 204 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
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5.A.a
Packet Pg. 205 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
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Total
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funds
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10 5.A.a
Packet Pg. 206 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report 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 36,536,712 $ 21,229,512 29,884,804 10,368,309 32,975,480 130,994,817 184,554,265 Cash payments for materials and services (28,836,118) (11,832,883) (19,361,069) (23,870,239) (20,004,481) (103,904,790) (24,816,534) Cash payments to employees for services (8,679,349) (2,757,760) (11,863,239) (56,515,654) (6,626,752) (86,442,754) (5,183,421) Cash paid for claims and related services — — — — — — (142,079,577) Other revenue received 449,843 4,759,452 431,439 5,706,782 3,575,278 14,922,794 7,453 Net cash provided by (used in) operating activities ( 11,398,321 528,912) (908,065) ( 9,919,525 64,310,802) ( 12,482,186 44,429,933) Cash flows from noncapital financing activities:
Sales tax proceeds — — — 66,958,196 — 66,958,196 —
Other operating grants — — — 31,624,849 — 31,624,849 —
Repayment of advances from other funds — — — — 8,821 8,821 — Advnaces from other funds — — — — — — 1, 500,000
Transfers in 443,519 1,262,399 — 712,474 3,798,223 6,216,615 2,556,186 Transfers out (16,551,442) (1,119,816) (1,083,309) (645,150) (2,463,702) (21,863,419) (9,211,729) Net cash provided by (used in) noncapital
financing activities ( 142,583 16,107,923) ( 98,650,369 1,083,309) 1,343,342 82,945,062 (5,155,543) Cash flows from capital and related financing activities:
Capital contributions received — — — 32,562,692 — 32,562,692 — Acquisition and construction of capital assets (37,763,816) (6,140,519) (1,291,198) (9,372,259) (840,048) (55,407,840) (1,158,578) Proceeds from sale of capital assets — — — 7,562 — 7,562 146,899 Payments on long-term obligations (264,362) ( ——— 348,458) ( — 612,820) Payments on SBITA liability (157,630) ( ——— 125,005) (282,635) (125,650) Interest paid on long-term obligations (1,952,977) ( ——— 1,139,840) (3,092,817) (8,461) Net cash provided by (used in) capital
and related financing activities (40,138,785) (7,753,822) ( 23,197,995 1,291,198) (840,048) (26,825,858) (1,145,790) Cash flows from investing activities
Investments income 5,439,539 2,051,498 1,492,230 1,666,966 2,537,012 13,187,245 7,678,054 Net cash provided by investing activities 5,439,539 2,051,498 1,492,230 1,666,966 2,537,012 13,187,245 7,678,054 Net increase (decrease) in cash and
cash equivalents ( 5,838,580 51,336,081) ( 59,204,528 1,790,342) 12,959,831 24,876,516 13,858,907 Cash and cash equivalents at beginning of year 118,643,208 37,304,821 27,230,124 52,958,160 50,563,186 286,699,499 119,623,464 Effect of unrealized loss (2,605,692) (1,804,761) (1,417,102) (1,708,367) (2,632,104) (10,168,026) (7,782,889) Cash and cash equivalents at end of year 64,701,435 $ 41,338,640 24,022,680 110,454,321 60,890,913 301,407,989 125,699,482 Cash and investments 14,824,085 $ 39,039,694 15,006,791 93,330,330 50,680,724 212,881,624 125,699,482 Restricted cash and investments 49,877,350 2,298,946 9,015,889 17,123,991 10,210,189 88,526,365 — Total cash and cash equivalents 64,701,435 $ 41,338,640 24,022,680 110,454,321 60,890,913 301,407,989 125,699,482 (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, 2023
11 5.A.a
nt A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report 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) $ 1,787,264 6,252,084 (1,216,137) ( 7,028,623 84,010,142) ( 6,881,706 70,158,308) Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Add depreciation and amortization 1,759,126 6,714,504 4,897 16,816,674 1,390,554 26,685,755 4,200,688 Add allowance for doubtful accounts — — — — ( (141,368) 141,368) — Other non-oper revenue received 449,843 4,759,452 431,439 5,706,782 3,575,278 14,922,794 7,453 Change in assets and liabilities and deferred outflows
and inflows of resources:
(Increase) decrease in accounts receivable (702,590) ( 190,208 273,541) 413,791 23,903 ( 545,791 348,229) (Increase) in taxes receivable ———— (23,453) ( — 23,453) Decrease in due from other governments — — — 808,109 — 808,109 — Decrease in prepaids 49,548 — — 6,740 27 56,315 —
(Increase) decrease in inventory — — — ( — 262,621) ( 10,418 262,621) Increase (decrease) in accounts payable (1,966,016) ( 425,609 1,839,536) 400,432 (1,249,280) ( 1,304,669 4,228,791) (Decrease) in accrued liabilities (162,870) (98,524) (480,340) (840,462) (88,491) (1,670,687) (134,433) Increase (decrease) in contracts payable 157,095 (11,849) 54,623 795 ( 24,450 176,214) 3,032 Increase (decrease) in deposits payable from restricted assets ( 384,136 508,515) 661,558 19,981 ( 514,321 42,839) — Increase (decrease) in compensated absences payable 44,878 ( 10,209 569) 113,487 35,544 203,549 28,691 (Decrease) in claims payable —————— (82,823)
(Decrease) in pollution remediation obligation ( ———— 5,557,281) ( — 5,557,281) Net OPEB liability and related changes in deferred
outflows and inflows of resources (12,282) (41,833) (102,101) (311,497) (77,462) (545,175) (49,718) Net pension liability and related changes in deferred
outflows and inflows of resources (133,437) (179,678) (888,030) (3,172,871) (335,297) (4,709,313) (233,288) Total adjustments ( 9,611,057 6,780,996) 308,072 19,699,340 2,890,902 25,728,375 5,600,480 Net cash provided by (used in)
operating activities (528,912) $ 11,398,321 (908,065) (64,310,802) 9,919,525 (44,429,933) 12,482,186 Schedule of non-cash capital and related financing activities:
Capital assets acquired through accounts payable 4, $ 433,852 — 182,978 7,268 5,124,391 500,293 1,097,948 Gain/(Loss) on disposal of capital assets — — — 7,562 — 7,562 132,024 See accompanying notes to basic financial statements
Proprietary Funds
For the fiscal year ended June 30, 2023
CITY OF SANTA MONICA, CALIFORNIA
Statement of Cash Flows
12 5.A.a
nt A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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 or as an agent for individuals or other governmental units. The General Trust Fund accounts for assets held by the City in an agency capacity, such as fees collected on behalf of and remitted to other governmental agencies. 13 5.A.a
Packet Pg. 209 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
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14 5.A.a
Packet Pg. 210 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
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15 5.A.a
Packet Pg. 211 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2023
(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 5.A.a
Packet Pg. 212 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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:
x Government-wide financial statements;
x Fund financial statements; and
x 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 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, general services, community services, library and community development. The business-type activities of the City include water, wastewater, stormwater, resource recovery and recycling, pier, 17 5.A.a
Packet Pg. 213 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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, 2023, the City implemented the provisions of Governmental Accounting Standards Board (GASB) Statement No. 96, “Subscription-Based Information Technology Arrangements (SBITA).” Statement No. 96 establishes that a SBITA results in a subscription liability and an intangible right-to-use subscription asset (subscription asset) in the government-wide financial statements.
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.
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. 18 5.A.a
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CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 Measure GS Fund accounts for receipt and expenditure of a third-tier documentary transfer tax of an additional 5% for property sales over $8 million with the revenue going towards homelessness prevention, affordable housings, and schools.
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.
The Resource Recovery and Recycling Fund accounts for the activities of the City’s refuse collection, street sweeping and cleaning, and recycling programs.
19 5.A.a
Packet Pg. 215 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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. 20 5.A.a
Packet Pg. 216 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
D. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, NET
POSITION OR FUND BALANCE
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.
21 5.A.a
Packet Pg. 217 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 due. As of June 30, 2023, the allowance for uncollectible accounts for governmental and business-type activities is $1,092,601 and $1,080,506 respectively.
Unbilled service receivables are accrued at year-end.
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 is 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, these bond monies may be invested in accordance with the ordinance, resolutions or indentures 22 5.A.a
Packet Pg. 218 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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.
Notes Receivable
The City issues notes receivables to various non-profit entities who construct or rehabilitate affordable housing within the City limits. The sources of the loans have been the former redevelopment agency, citywide housing trust fund, CDBG, TORCA, and HOME trust funds, Low-moderate income housing asset trust fund, and the redevelopment replacement housing trust fund.
The borrowers must comply with stringent guidelines such as rent limits, tenant income eligibility, access to the property, local priority of applicants for occupancy, prevailing wages during construction or rehabilitation, and environmental factors. The loans are typically for a 55-year period with an option to extend for another 25 years. Interest rate can range from 0% to current market rates and loan payments are made only if the property achieves net cash flow (known as ‘residual receipts). All loans are secured by deeds of trust that are subordinate to the developer’s senior financing. In the event of default or noncompliance with the loan terms, the City has the right to call the loan and or exercise its right to the underlying property.
For those developments created without low-income housing tax credits, the loans are forgiven at maturity and the City records a corresponding allowance for those amounts.
During FY 2022-23, the City disbursed $195,501 under these types of loan agreements.
The borrower is also subject to annual project monitoring and reporting.
More detailed loan and borrower information is available on the Housing Division’s website https://www.santamonica.gov/housing-trust-funds and in the Supplementary Information.
Capital Assets
Capital assets, which include land, buildings and improvements, machinery and equipment, intangibles, utility systems, infrastructure assets (e.g., roads, sidewalks, curbs and gutters and similar items), and subscription assets, 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 23 5.A.a
Packet Pg. 219 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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/amortized using a straight-line method, with a mid-year convention (one half year’s depreciation/amortization 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
Subscription asset
2 to 30
2 to 7
The City has elected not to capitalize its collection of artworks. GASB Statement No. 34 waives the requirement for artwork capitalization if the collection meets all the following conditions:
x The collection is held for reasons other than financial gain. x The collection is protected, kept unencumbered, cared for, and preserved. x 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.
The GASB Statement No. 96 subscription assets are reported with other capital assets on the statement of net position.
24 5.A.a
Packet Pg. 220 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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.
The GASB Statement No. 96 subscription liabilities are based on the payment provisions of the contract and reported as a long-term liability on the statement of net position.
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. 25 5.A.a
Packet Pg. 221 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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:
x Deferred outflows from pensions
x Deferred outflows from OPEB
The City reports the following items as deferred inflows of resources:
x Deferred inflows from pensions
x Deferred inflows from OPEB
x Deferred gain on refunding
x 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 1 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.
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 26 5.A.a
Packet Pg. 222 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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, 2023, 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 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. 27 5.A.a
Packet Pg. 223 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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.
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, 2022
Measurement Period June 30, 2021 to June 30, 2022
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 5.A.a
Packet Pg. 224 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(2) CASH AND INVESTMENTS
Cash and investments as of June 30, 2023 are classified in the accompanying financial statements as follows:
Statement of net position:
Cash and investments 589,002,285 $
Restricted cash and investments 67,417,596
Restricted cash with fiscal agent 84,079,138
Fiduciary funds:
Restricted cash and investments 5,025,252
Restricted cash with fiscal agent 7,250,183
Total cash and investments 752,774,454 $
Cash and investments as of June 30, 2023 consist of the following:
Cash on hand 24,258 $
Deposits with financial institutions 36,329,414
Investments 716,420,782
Total cash and investments 752,774,454 $
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 $782,352 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 5.A.a
Packet Pg. 225 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 28, 2023 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
5.A.a
Packet Pg. 226 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 5.A.a
Packet Pg. 227 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 375,349,372 $ 111,343,629 69,474,616 153,941,199 40,589,928 — Corporate medium term notes 88,393,323 21,647,951 18,975,314 47,770,058 — — Municipal bonds 52,514,898 23,164,831 15,589,695 13,760,372 — — Treasury bills 9, 9,988,900 988,900 — — — —
Supranationals 28,144,133 — — 28,144,133 — —
State investment pool 70,700,835 70,700,835 — — — —
Held by others:
Treasury notes/bonds 10,076,144 6,658,996 552,358 613,219 2,251,571 — Corporate medium term notes 2,927,719 303,269 704,836 1,012,125 907,489 — Municipal Bonds 122,475 122,475 — — — —
Common stock 10,244,872 — — — — 10,244,872
Money market funds 67,958,111 67,958,111 — — — —
Total 716,420,782 $ 311,888,997 105,296,819 245,241,106 43,748,988 10,244,872 Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations The City’s investments as of June 30, 2023 (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 5.A.a
Packet Pg. 228 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 AA+ AA AA- A+ A A- BBB+ BBB BBB- Not rated Held by City:
Corporate medium
term notes $ A 6,193,804 88,393,323 1 8,354,055 4,943,045 21,750,903 9,861,910 25,290,366 1,999,240 — — — — Municipal bonds N/A 9, 52,514,898 12,689,261 116,300 11,494,584 12,457,803 886,950 — 5,870,000 — — — — Supranationals AA 28 28,144,133 — ,144,133 — — — — — — — — — State investment
pool N / 70,700,835 A— — — — — — — — — — 70,700,835
239,753,189
Held by others:
Municipal Bonds N / A — 122,475 — 122,475 — — — — — — — — Corporate medium
term notes N / A 105,623 2,927,719 — — 321,337 290,104 164,038 167,440 376,212 974,233 528,732 — Common stock N / A — 10,244,872 — — — — — — — — — 10,244,872 Money market funds 67,958,111 * 67 — ,784,991 — — — — — — — — 173,120 $ 111,344,851 321,006,366 27,632,306 19,971,114 34,530,043 11,038,964 25,454,404 8,036,680 376,212 974,233 528,732 81,118,827 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/bills and Federal Agency securities are excluded in this table as they are not subject to credit rick disclosures. 33 5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
As of June 30, 2023, all investments were in compliance with State law and the City’s Investment Policy at the time of purchase. In accordance the “prudent investor rule”, any investment subject to a credit downgrade after the time of purchase is 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:
x The portfolio holds one bond issued by PeaceHealth with a book value of $1,830,600 (less than
0.3% of total invested funds) that was downgraded by S&P from A to A- in July 2023. 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.
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:
% of
Issuer Investment type Reported amount Investments
Federal Home Loan Bank Federal agency securities $ 166,880,237 23.3% Federal Farm Credit Bank Federal agency securities 55,890,066 7.8% FHLMC (Freddie Mac) Federal agency securities 49,121,640 6.9% FNMA (Fannie Mae) Federal agency securities 47,861,985 6.7% FAMC (Farmer Mac) Federal agency securities 51,705,154 7.2% 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, 2023.
34 5.A.a
Packet Pg. 230 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
As of June 30, 2023, 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, 2023, $70,700,835 was invested in the City’s account and $891 was invested in the SA account. The total amount invested by all public agencies in LAIF at that date was $25.7 billion.
The LAIF is part of the State’s Pooled Money Investment Account (PMIA). As of June 30, 2023, the investments in the PMIA totaled $178.4 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 260 days as of June 30, 2023. 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.
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, 2023:
35 5.A.a
Packet Pg. 231 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
36 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 375,349,372 $ — 375,349,372 —— Corporate medium term notes 88,393,323 — 88,393,323 ——
Municipal bonds 52,514,898 — 52,514,898 ——
Supranationals 28,144,133 — 28,144,133 ——
Local Agency Investment Fund 70,700,835 — —— 70,700,835 Treasury bills 9,988,900 9,988,900 —— —
Held by Others: -
Treasury notes/bonds 10,076,144 10,076,144 —— —
Corporate medium term notes 2,927,719 — 2,927,719 ——
Municipal bonds 122,475 — 122,475 ——
Common stock 10,244,872 10,244,872 —— —
Money market mutual funds 67,958,111 — —— 67,958,111
Investments at Fair Value 716,420,782 $ 30,309,916 547,451,920 - 138,658,946 Level
Investment Type
5.A.a
Packet Pg. 232 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(3) LEASES
A. Leases receivables and deferred inflows of resources The City is the lessor and leases land and buildings to various companies and individuals. Under GASB Statement No. 87, the City is required to recognize a lease receivable and a deferred inflow of resources.
At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.
Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts. x The City uses a 5% borrowing rate as the discount rate for leases. x The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.
The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.
The City reported lease revenue of $15,184,570 and interest revenue of $3,942,439 related to lease payments received. These leases are summarized as follows:
Fund
Lease Receivable
as of July 1, 2022 Additions Deductions
Lease Receivable
as of June 30, 2023
General 23,545,756 $ 1,076,114 2,503,916 22,117,954
Beach 12,696,566 394,588 736,682 12,354,472
Water 3,150,477 — 38,477 3,112,000
Pier 10,142,848 190,071 1,813,181 8,519,738
Airport 24,620,538 1,126,305 7,658,696 18,088,147
Big Blue Bus 9,505,438 719,168 1,049,871 9,174,735
Total 83,661,623 $ 3,506,246 13,800,823 73,367,046
37 5.A.a
Packet Pg. 233 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Fund
Lease
Revenue
Lease
Interest
Revenue
General 2,868,194 $ 1,133,842
Beach 1,044,443 627,343
Water 70,337 156,650
Pier 1,838,545 466,144
Airport 8,149,720 1,077,765
Big Blue Bus 1,213,331 480,695
Total 15,184,570 $ 3,942,439
General Fund Leases – There are a variety of leases including restaurants and businesses. The most significant lease agreement is with the 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.
Water Fund Leases –On July 1, 1994, the City entered into a sixty-one 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.
Pier Fund Leases – There are a variety of leases including restaurants 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.
38 5.A.a
Packet Pg. 234 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
The principal and interest payments that are expected to maturity are as follows:
Fiscal Year
Principal
Payments
Interest
Payments
Total
Payments
2024 3,534,878 $ 1,645,691 5,180,569
2025 3,608,454 1,467,037 5,075,491
2026 2,890,156 1,290,795 4,180,951
2027 1,087,792 1,198,845 2,286,637
2028 1,085,489 1,144,611 2,230,100
2029-2033 3,631,398 5,036,306 8,667,704
2034-2038 1,973,500 4,431,365 6,404,865
2039-2043 2,532,709 3,872,157 6,404,866
2044-2048 3,250,374 3,154,492 6,404,866
2049-2053 3,432,976 2,248,693 5,681,669
2054-2058 2,513,858 1,563,584 4,077,442
2059-2063 3,199,245 856,088 4,055,333
2064-2068 1,723,123 104,656 1,827,779
2069-2073 3,520 1,715 5,235
2074-2078 4,954 277 5,231
Total 34,472,426 $ 28,016,312 62,488,738
Governmental Activities
Fiscal Year
Principal
Payments
Interest
Payments
Total
Payments
2024 9,583,744 $ 1,717,177 11,300,921
2025 9,470,821 1,244,130 10,714,951
2026 7,022,150 795,038 7,817,188
2027 2,125,480 590,318 2,715,798
2028 1,701,076 495,535 2,196,611
2029-2033 6,390,830 1,355,076 7,745,906
2034-2038 368,936 606,696 975,632
2039-2043 473,478 502,155 975,633
2044-2048 607,642 367,991 975,633
2049-2053 779,822 195,811 975,633
2054-2058 370,641 19,612 390,253
Total 38,894,620 $ 7,889,539 46,784,159
Business-Type Activities
39 5.A.a
Packet Pg. 235 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
40 (4) NOTES RECEIVABLE
Notes receivable related to governmental activities total $211,435,531 as follows:
Balance at Balance at
June 30, 2022 Increases Decreases June 30, 2023
Major Governmental Funds
Special Revenue Source Fund 132,828,521 3,607,529 756,891 135,679,159 Low and Moderate Income Housing Asset Fund 53,541,185 121,748 - 53,662,933 Total Major Governmental Funds 186,369,706 3,729,277 756,891 189,342,092 Nonmajor Governmental Funds
Total nonmajor governmental funds 22,281,379 40,000 227,940 22,093,439 Total notes receivable 208,651,085 $ 3,769,277 984,831 211,435,531 These loans are not expected to be collected within one year. See supplementary information for further details.
5.A.a
Packet Pg. 236 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(5) CAPITAL ASSETS
Capital assets activity for the primary government for fiscal year ended June 30, 2023 is as follows:
Balance at
July 1, 2022
(As Restated) Increases Decreases Transfers
Balance at
June 30, 2023
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 105,313,584 28,466,150 — (43,200,178) 90,579,556 Total capital assets, not being depreciated 378,021,531 28,466,150 — (43,200,178) 363,287,503 Capital assets, being depreciated:
Subscription Asset 5,174,657 2,311,329 —— 7,485,986
Buildings 453,729,134 —— 6,351,900 460,081,034
Improvements other than buildings 218,413,200 211,967 —— 218,625,167 Utility systems 1,742,913 —— — 1,742,913
Machinery and equipment 60,274,190 1,088,841 (832,255) 248,805 60,779,581 Infrastructure 376,593,979 —— 36,599,473 413,193,452
Intangibles 4,880,800 —— — 4,880,800
Total capital assets being depreciated 1,120,808,873 3,612,137 (832,255) 43,200,178 1,166,788,930 Less accumulated depreciation for:
Subscription Asset (2,475,264) (1,448,638) —— (3,923,902) Buildings (152,615,050) (9,769,358) —— (162,384,408)
Improvements other than buildings (113,542,169) (7,338,254) —— (120,880,423) Utility systems (1,742,917) —— — (1,742,917)
Machinery and equipment (41,728,370) (2,438,723) 832,255 — (43,334,838) Infrastructure (267,766,362) (8,827,074) —— (276,593,436) Intangibles (534,454) (669,205) —— (1,203,659)
Total accumulated depreciation (580,404,586) (30,491,252) 832,255 — (610,063,583) Total capital assets, being depreciated, net 540,404,287 (26,879,115) — 43,200,178 556,725,350 Subtotal governmental activities 918,425,818 1,587,035 —— 920,012,849 Business-type activities:
Capital assets, not being depreciated:
Land 53,380,750 —— — 53,380,750
Construction in progress 86,279,101 43,260,514 — (58,420,124) 71,119,491 Total capital assets, not being depreciated 139,659,851 43,260,514 — (58,420,124) 124,500,241 Capital assets, being depreciated:
Subscription Asset 864,545 1,362,083 —— 2,226,628
Buildings 150,050,361 —— — 150,050,361
Improvements other than buildings 29,856,305 —— 2,934,720 32,791,025 Machinery and equipment 241,320,949 10,400,948 (631,406) — 251,090,491 Infrastructure 263,605,818 7,537,667 — 55,485,404 326,628,889 Intangibles 120,138,394 1,156,386 —— 121,294,780
Total capital assets being depreciated 805,836,372 20,457,084 (631,406) 58,420,124 884,082,174 Less accumulated depreciation for:
Subscription Asset (335,477) (533,364) —— (868,841)
Buildings (79,361,512) (3,582,513) — — (82,944,025)
Improvements other than buildings (21,089,039) (1,027,213) —— (22,116,252) Machinery and equipment (169,572,058) (16,815,934) 616,530 — (185,771,462) Infrastructure (121,818,935) (5,754,605) —— (127,573,540) Intangibles (47,093,374) (3,073,028) —— (50,166,402)
Total accumulated depreciation (439,270,395) (30,786,656) 616,530 — (469,440,519) Total capital assets, being depreciated, net 366,565,977 (10,329,572) (14,876) 58,420,124 414,641,653 Subtotal business-type activities 506,225,828 32,930,942 (14,876) — 539,141,895 Total 1,424,651,646 $ 34,517,977 (14,876) — 1,459,154,744 41 5.A.a
Packet Pg. 237 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Depreciation and amortization expense was charged to functions/programs of the primary government as follows:
Governmental activities:
General government ,
,
Public safety 3,549,945
General services 14,878,346
Community services 4,303,988
Library 1,281,577
Community development 4,407,809
Capital assets held by the government's internal service funds are charged to the various functions based on their assets' usage
,7
Total depreciation and amortization expense - governmental activities 30,491,252 $ Business-type activities:
Water 1,759,126 $
Resource Recovery and Recycling 4,897
Broadband 185,077
Pier 474,641
Wastewater 6,714,504
Airport 294,670
Stormwater management 378,368
Cemetery 41,535
Big Blue Bus 16,816,674
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 4,100,901 Total depreciation and amortization expense - business-type activities 30,786,656 $ 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. 42 5.A.a
Packet Pg. 238 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(6) SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS A. Change in accounting principles and restatement
For the year ended June 30, 2023, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 96, “Subscription-Based Information Technology Arrangements (SBITA).” Statement No. 96 establishes a definition for SBITAs and provides uniform accounting and financial reporting guidance. It enhances the relevance of the government’s SBITA activities and comparability of financial statements.
The City is a subscriber to noncancellable subscription of information technology services. The City recognizes a subscription liability and an intangible right-to-use subscription asset for SBITAs with payments of $100,000 or more over their subscription term.
At the commencement of a subscription, the City initially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for subscription payments made at or before the subscription commencement date, plus certain initial direct costs. SubseTXHQWO\WKHVXEVFULSWLRQDVVHWLVDPRUWL]HGRQDVWUDLJKWဨOLQHEDVLVRYHULWVXVHIXO life.
Key estimates and judgments related to subscriptions include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments.
x The City uses a 5% borrowing rate as the discount rate for subscriptions. x The subscription term includes the noncancellable period of the subscription. Subscription payments included in the measurement of the subscription liability are composed of fixed payments that the City is reasonably certain to exercise.
The City monitors changes in circumstances that would require a remeasurement of its subscriptions and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.
These changes were incorporated in the City’s financial statements and had an effect on the beginning net position or fund balance of the Water Fund, Wastewater Fund, Vehicle Management Fund, SelfInsurance Comprehensive Fund, Self-Insurance Auto Fund, and Self-Insurance Workers’ Compensation Fund.
B. Right-to-use subscription asset and subscription liability
The City utilizes various software that meet the definition of a SBITA. An initial subscription asset was recorded on June 30, 2022 in the amount of $6,039,202 and the subscription liability was $3,124,503. As of June 30, 2023, the value of the subscription liability is $4,451,905. The City reported amortization expense of $1,982,002 and interest expense of $203,622 related to subscription payments. 43 5.A.a
Packet Pg. 239 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
These SBITAs are summarized as follows:
Subscription
Liability
as of June 30, 2022
(As Restated) Additions Deductions
Subscription
Liability
as of June 30, 2023
Due within
one year
Governmental activities 2,617,368 $ 2,311,329 1,808,515 3,120,182 1,588,551 Business-type activities 507,135 1,362,082 537,494 1,331,723 568,377 Total 3,124,503 $ 3,673,411 2,346,009 4,451,905 2,156,928 Subscription
Amortization
Expense
Subscription
Interest
Expense
Governmental activities 1,448,638 $ 142,216
Business-type activities 533,364 61,406
Total 1,982,002 $ 203,622
General Fund SBITAs – This fund contains a majority of the SBITAs including software for library services, cybersecurity, procurement, parking analytics, and employee timekeeping. The most significant SBITA agreement is with Axon Enterprise Inc. for police body camera systems and cloudbased storage. It began on December 24, 2018 and the City is remitting annual payments for five years through 2023 with an option to renew for an additional one year.
Housing Authority Fund SBITAs – On February 1, 2019, the City entered into a five-year agreement with MRI Software LLC for the use of HAPPY software-as-a-service (SaaS) and is remitting bi-annual payments through 2024.
Rent Control Fund SBITAs – On April 5, 2023, the City entered into a five-year agreement with Infor (US), LLC for the use of Rhythm for Civics SaaS and is remitting annual payments through 2028.
Water Fund and Wastewater Fund SBITAs – These funds use most of the same SBITAs including software for cybersecurity and asset management. The most significant SBITA agreement is with Mentor APM for a cloud-hosted Enterprise Asset Management System (EAMS) to track water and wastewater operation field data. It began on August 10, 2022 and the City is remitting annual payments for five years through 2027.
Big Blue Bus Fund SBITAs – This fund contains one significant SBITA with Swiftly, Inc. to provide real-time bus location and predicted arrival times. It began on April 16, 2022 and the City is remitting annual payments for three years through 2025.
Vehicle Management Fund SBITAs – On June 27, 2019, the City entered into a five-year agreement with AssetWorks Inc. for a Fleet Asset Management System (FAMS) to track maintenance and repair activities. There is an option to extend for an additional five-year period and the City will remit annual payments through 2029.
44 5.A.a
Packet Pg. 240 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Self-Insurance Comprehensive Fund, Self-Insurance Auto Fund, and Self-Insurance Worker’s Compensation Fund SBITAs – These funds use the same SBITA, an automated claims management system from Origami Risk, Inc. The three-year agreement began on May 4, 2021 and the City is remitting annual payments through 2024.
The principal and interest payments that are expected to maturity are as follows:
Fiscal Year
Principal
Payments
Interest
Payments
Total
Payments
2024 1,588,551 $ 105,812 1,694,363
2025 738,357 56,386 794,743
2026 377,638 31,508 409,146
2027 340,122 13,019 353,141
2028 75,514 489 76,003
Total 3,120,182 $ 207,214 3,327,396
Governmental Activities
Fiscal Year
Principal
Payments
Interest
Payments
Total
Payments
2024 568,377 $ 45,352 613,729
2025 442,901 19,312 462,213
2026 128,321 11,165 139,486
2027 137,908 4,475 142,383
2028 26,017 1,608 27,625
2029-2033 28,199 302 28,501
Total 1,331,723 $ 82,214 1,413,937
Business-Type Activities
45 5.A.a
Packet Pg. 241 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(7) 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 $ 1,117,660
Business license tax 8,507,016
Total General Fund 9,624,676
Special Revenue Source Fund:
Advanced lease payments 29,913,463
Total Special Revenue Source Fund 29,913,463
Nonmajor governmental funds:
Grants received prior to meeting all
eligibility requirements 2,128,801
Unearned user fees 525,131
Total nonmajor governmental funds: 2,653,932
Total governmental funds 42,192,071
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 84,030,223
Total Big Blue Bus Fund 84,215,749
Total enterprise funds 84,215,749
Total unearned revenue 126,407,820 $
46 5.A.a
Packet Pg. 242 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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:
Nonmajor governmental funds:
Grants receivable 10,338,852 $ (10,338,852) —
Total Nonmajor governmental funds 10,338,852 (10,338,852) — Total deferred inflows of resources 10,338,852 $ (10,338,852) — 47 5.A.a
Packet Pg. 243 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(8) 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, 2022 Additions Reductions
Balance at
June 30, 2023
Due within
one year
Due beyond
one year
Governmental Activities (1) 14,105,770 8,961,074 8,462,182 14,604,662 8,754,062 5,850,600 Business-type activities 3,536,218 2,839,060 2,615,327 3,759,951 2,777,684 982,267 Total 17,641,988 $ 11,800,134 11,077,509 18,364,613 11,531,746 6,832,867 (1) Compensated absences are predominately liquidated by General Fund resources. 48 5.A.a
Packet Pg. 244 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(9) 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, 2023 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 ($2,669,794) meaning the City’s reserves and IBNR exceeded premiums and interest earned. Accel’s total net reserves and IBNR was ($9,613,932). Total assets of ACCEL at June 30, 2023 were $76,472,263. 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, 2023, based on a
5.0% 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. 49 5.A.a
Packet Pg. 245 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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, 2022:
Governmental activities:
General Liability and Automobile 73,301,884 $ 9,310,185 (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 Total Governmental activities 130,906,512 $ 16,621,938 (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 June 30, 2023:
Governmental activities:
General Liability and Automobile 20,970,030 $ 131,408,227 (128,102,198) 24,276,059 13,051,401 Workers' Compensation 53,352,181 5,053,206 (10,027,395) 48,377,992 9,856,917 $ 136,461,433 (138,129,593) 72,654,051 22,908,318 74,322,211 Business-type activities:
Bus 4,319,472 5,082,036 (3,496,699) 5,904,809 2,114,644 Total Business-type activities 4,319,472 $ 5,082,036 (3,496,699) 5,904,809 2,114,644 50 5.A.a
Packet Pg. 246 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(10) LONG-TERM DEBT
Changes in long-term debt:
Long-term debt activity for the fiscal year ended June 30, 2023, was as follows:
Balance at
July 1, 2022 Additions Reductions
Balance at
June 30, 2023
Due within
one year
Due beyond
one year
Governmental Activities:
Lease Revenue bonds 206,455,000 — 3,330,000 203,125,000 5,280,000 197,845,000 General obligation bonds 1,060,000 — 1,060,000 — — —
Plus deferred amounts:
For issuance premiums 22,425,218 — 1,134,185 21,291,033 — 21,291,033 Total loans and bonds
payable 229,940,218 — 5,524,185 224,416,033 5,280,000 219,136,033 Business-type activities:
Loans payable
from direct borrowings 53,330,029 3,651,541 4,000,000 52,981,570 1,352,035 51,629,535 Revenue bonds 70,525,000 — — 70,525,000 1,380,000 69,145,000 Plus deferred amounts:
For issuance premiums 7,666,500 — 264,361 7,402,139 — 7,402,139 Total loans and bonds
payable 131,521,529 3,651,541 4,264,361 130,908,709 2,732,035 128,176,674 Total 361,461,747 $ 3,651,541 9,788,546 355,324,742 8,012,035 347,312,707
51 5.A.a
Packet Pg. 247 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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.
(3) Subsequent to year end, the City and the lender agreed to reduce the loan amount available to $56,046,630.
Management believes it is in compliance with all debt covenants. See Note 1 .
Date of issue
Original
issue
Final
maturity
date
Interest
rate
Balance at
June 30, 2023
Governmental activities:
Lease Revenue bonds (1):
Public Finance Authority 2021 August 4, 2021 64,780,000 $ July 1, 2051 2.125-5.00% 64,780,000 $ Public Finance Authority Refunding 2021 (Series A) May 5, 2021 17,860,000 July 1, 2031 4.00% 19,700,000 Public Finance Authority Refunding 2015 Jul 9, 2015 26,360,000 July 1, 2033 3.00-5.00% 18,495,000 Public Finance Authority 2017 Sep 14, 2017 68,565,000 July 1, 2047 3.00-5.00% 67,145,000 Public Finance Authority 2018 Jun 6, 2018 34,220,000 July 1, 2048 3.625-5.000% 33,005,000 Subtotal lease revenue bonds -
governmental activities 203,125,000
Subtotal governmental activities 203,125,000
Business-type activities:
Loans payable from direct borrowings (2):
State Water Resources Control
Board Construction Installment Sale Agreement (3) Sep 21, 2017 56,046,630 Dec 31, 2052 1.80% 52,981,570 Revenue bonds (2):
Water enterprise revenue bonds 2021 Aug 25, 2021 70,525,000 Aug 01, 2051 2.25-5.00% 70,525,000 Subtotal business-type activities 123,506,570
Total $ 326,631,570
52 5.A.a
Packet Pg. 248 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Annual debt service requirements to maturity are as follows:
Fiscal year
ending
June 30, Principal Interest
2024 5,340,000 $ 7,936,592
2025 6,840,000 7,700,582
2026 7,150,000 7,386,157
2027 7,490,000 7,040,707
2028 7,850,000 6,695,032
2029-2033 42,030,000 27,997,393
2034-2038 31,210,000 20,262,933
2039-2043 36,240,000 13,147,281
2044-2048 43,900,000 5,567,988
2049-2053 15,075,000 630,788
$ 104,365,453 203,125,000
Fiscal year
ending
June 30, Principal Interest Principal Interest Principal Interest 2024 1,352,035 $ 948,824 1,380,000 2,174,488 2,732,035 3,123,312 2025 1,371,527 929,332 1,435,000 2,118,188 2,806,527 3,047,520 2026 1,396,215 904,644 1,495,000 2,059,588 2,891,215 2,964,232 2027 1,421,346 879,512 1,555,000 1,998,588 2,976,346 2,878,100 2028 1,446,931 853,928 1,625,000 1,886,238 3,071,931 2,740,166 2029-2033 7,634,828 3,869,465 9,235,000 7,776,319 16,869,828 11,645,784 2034-2038 8,347,149 3,157,145 11,425,000 6,339,313 19,772,149 9,496,458 2039-2043 9,125,928 2,378,365 13,465,000 4,294,781 22,590,928 6,673,146 2044-2048 9,977,367 1,526,927 15,315,000 2,442,431 25,292,367 3,969,358 2049-2053 10,908,244 596,050 13,595,000 620,381 24,503,244 1,216,431 $ 16,044,192 52,981,570 70,525,000 31,710,315 123,506,570 47,754,507 Business-type activities
Total
Governmental Activities
Lease Revenue bonds
Loan payable from direct
borrowings Revenue bonds
53 5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Construction Installment Sale
On September 21, 2017, the City entered into a Construction Installment Sale agreement with the State Water Resources Control Board (SCRWB) to fund water recycling and conservation projects. The original agreement provides funding in the amount of $56.9 million and is payable with interest at 1.8% over a period of 30 years with the first installment due after all disbursements have been paid and construction of the project has been completed. The agreement called for the forgiveness of $4,000,000 of principal upon completion of the project. On May 27, 2020, to fund additional eligible projects, the SWRCB and the City modified the agreement to increase the loan amount to $75.9 million. The increase loan amount was cancelled in FY 2022-23 due to lack of grant funds to support further work. On December 31, 2022, the SWRCB forgave $4,000,000 of principal. This plus accrued interest of $191,573 is reported as other nonoperating income. Additionally, the SWRCB added construction period interest of $935,941 to the principal balance as of December 31, 2022, the date that construction was deemed to be complete.
The City’s outstanding balance of a construction installment sale agreement from direct borrowings related to business type activities of $52,981,570 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 $ 2,1
, 2,1
, 100%
,,7
Public Finance Authority Refunding 2021 2,559,920 2,559,920 100% 21,221,400 Public Finance Authority Refunding 2015 2,047,443 2,047,443 100% 20,528,400 Public Finance Authority 2017 4,415,600 4,415,600 100% 106,479,900 Public Finance Authority 2018 2,148,637 2,148,637 100% 53,676,745 Water charges for services
Water enterprise revenue bonds 2021 2,202,087 2,202,087 100% 103,019,053 54 5.A.a
Packet Pg. 250 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(11) 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. 55 5.A.a
Packet Pg. 251 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 $1,306,020 in the governmental activities of which $363,022 is due within one year and $26,539,151 in the business-type activities, of which $3,843,243 is due within one year. These liabilities are reported in the business-type and governmental activities in the Statement of Net Position.
56 5.A.a
Packet Pg. 252 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(12) 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 29.54% 29.54% 29.54% Miscellaneous
57 5.A.a
Packet Pg. 253 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
As of June 30, 2023, the City had 1,771 active members of which 843 were considered “classic” members (hired prior to 12/31/2012) and 928 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 2022-23, the City paid CalPERS $26,214,071, $13,685,265 and $6,717,351 for the employer paid amortization of the unfunded liability for the miscellaneous, police and fire plans respectively. On April 11, 2023, the Council authorized staff to suspend the accelerated paydown of the City’s unfunded pension liability from FY 2022-23 to FY2027-28 or later pending restoration of City services and maintenance budgets and reserves. The was further codified in the adopted Fiscal Policies found in the adopted budget.
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 52.88% 52.88%
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 63.38% 63.38%
Police
58 5.A.a
Packet Pg. 254 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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. Alao, in FY2022-23 Police safety members contribute an additional 8.5% and Fire safety members contribute an additional 1%. 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.
Employees’ share of pension costs totaled $17,886,011 for FY 2022-23.
Employees Covered
At June 30, 2021, the following employees were covered by the benefit terms for each Plan:
Employees Miscellaneous Police Fire
Inactive employees or their beneficiaries currently
receiving benefits 1,633 342 150
Inactive employees entitled to but not yet receiving benefits 215 8 0 Active members 1,515 214 114
Total 3,363 564 264
Note: Information derived from 2021 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, 2022, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.
59 5.A.a
Packet Pg. 255 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Actuarial Methods and Assumptions Used to Determine Total Pension Liability For the measurement period ending June 30, 2022 (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 6.9% 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.
Events subsequent to actuarial valuation date
On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for fiscal year 2020-21.
Based on the thresholds specified in CalPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility that corresponds to a reduction in the discount rate used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CalPERS was in the final stages of the four year Asset Liability Management (ALM) cycle, the board elected to defer any changes to the asset allocation until Miscellaneous Safety - Police Safety - Fire
Valuation date June 30, 2021 June 30, 2021 June 30, 2021 Measurement date June 30, 2022 June 30, 2022 June 30, 2022 Actuarial cost method
Actuarial assumptions:
Discount rate 6.90% 6.90% 6.90%
Inflation 2.30% 2.30% 2.30%
Projected salary increase
Investment rate of return 1 6.90% 6.90% 6.90%
Mortality 2 Derived using CalPERS' membership data for all funds Post retirement benefit increase The lesser of contract COLA up to 2.30% until Purchasing Power Protections Allowance Floor on Purchasing Power applies,
2.30% thereafter
1 Net of pension plan investment expenses, including inflation. 2 The mortality table used was developed based on CalPERS-sepcific data. The probabilites of mortality are based on the 2021 CalPERS experience study for the period from 2001 to 2019. Pre-retirement and Post-retirement mortality rates includes generational mortality improvement using 80% of Scale MP2020 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 November 2021 that can be found on the CalPERS website.
Entry-Age Normal
Varies by entry age and service
60 5.A.a
Packet Pg. 256 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
the ALM process concluded, and the board could make its final decision on the asset allocation in November 2021.
On November 17, 2021, the board adopted a new strategic asset allocation. That new asset allocation along with the new capital market assumptions, economic assumptions and administration expense assumption to support a discount rate of 6.9% (net of investment expense but without a reduction for administrative expense) for financial reporting purposes. This includes a reduction in the price inflation assumption from 2.5% to 2.3% as recommended in the November 2021 CalPERS Experience Study and Review of Actuarial Assumptions.
This study also recommended modifications in retirement rates, termination rates, mortality rates and rates of salary increases that were adopted by the board. These new assumptions will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022, measurement date.
Long Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both the short- and long-term market return expectations. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 Basis points. The expected real rates of return by asset class are as follows:
Asset Class 1
Assumed asset
allocation Real Return % 1,2
Global equity - Cap-weighted 30.00 % 4.54 %
Global equity - Non- Cap-weighted 12.00 3.84
Private equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-backed Securities 5.00 0.50
Investment Grade Coporates 10.00 1.56
High Yield 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
(1) An expected inflation of 2.3% used for this period
(2) Figures are based on the 2021 Asset Liability Management study. 61 5.A.a
Packet Pg. 257 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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
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. 62 5.A.a
Packet Pg. 258 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 6/30/2021 (VD)1 $ 1,196,650,540 104,941,846 1,301,592,386 Changes recognized for the measurement period
Service cost 23,414,897 — 23,414,897
Interest on total pension liability 88,372,749 — 88,372,749 Changes of assumptions 43,606,082 — 43,606,082
Differences between expected and actual experience (43,993,486) — (43,993,486) Plan to plan resource movement — (1,661) 1,661
Contribution - employer — 36,918,832 (36,918,832)
Contribution - employee — 9,218,079 (9,218,079)
Net investment income — (90,335,494) 90,335,494
Benefit payments, includes employee contribution refunds (64,295,906) (64,295,906) — Administrative expense — (745,442) 745,442
Net changes 47,104,336 (109,241,592) 156,345,928
Balance at 6/30/2022 (MD) $ 1,087,408,948 1,348,696,722 261,287,774 1 VD = Valuation Date
2 MD = Measurement Date
Increase (Decrease)
63 5.A.a
Packet Pg. 259 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Public Safety - Police:
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability/(Asset)
(a) (b) (c)=(a)-(b)
Balance at 6/30/2021 (VD)1 $ 475,753,262 71,111,576 546,864,838 Changes recognized for the measurement period
Service cost 11,983,989 — 11,983,989
Interest on total pension liability 38,056,896 — 38,056,896 Changes of assumptions 18,737,902 — 18,737,902
Differences between expected and actual experience (6,104,197) — (6,104,197) Plan to plan resource movement — 1,661 (1,661)
Contribution - employer — 20,119,437 (20,119,437)
Contribution - employee — 3,318,392 (3,318,392)
Net investment income — (35,957,533) 35,957,533
Benefit payments, includes employee contribution refunds (27,882,633) (27,882,633) - Administrative expense — (296,366) 296,366
Net changes 34,791,957 (40,697,042) 75,488,999
Balance at 6/30/2022 (MD) $ 435,056,220 581,656,795 146,600,575 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 6/30/2021 (VD)1 $ 225,963,593 54,856,957 280,820,550 Changes recognized for the measurement period
Service cost 5,374,830 — 5,374,830
Interest on total pension liability 19,255,577 — 19,255,577 Changes of assumptions 7,868,131 — 7,868,131
Differences between expected and actual experience (4,732,508) — (4,732,508) Contribution - employer — 9,304,903 (9,304,903)
Contribution - employee — 1,747,250 (1,747,250)
Net investment income — (17,088,459) 17,088,459
Benefit payments, includes employee contribution refunds (15,154,515) (15,154,515) — Administrative expense — (140,762) 140,762
Net changes 12,611,515 (21,331,583) 33,943,098
Balance at 6/30/2022 (MD) $ 204,632,010 293,432,065 88,800,055 1 VD = Valuation Date
2 MD = Measurement Date
Increase (Decrease)
64 5.A.a
Packet Pg. 260 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 6.9%, as well as the net pension liability if it were calculated using a discount rate that is 1 percentage-point lower (5.9%) or 1 percentage-point higher (7.9%) than the current rate:
Discount Rate
Miscellaneous Safety - Police Safety - Fire
1% Decrease 5.90% 5.90% 5.90%
Net Pension Liability $ 226,509,769 442,852,251 128,251,841 Current Discount Rate 6.90% 6.90% 6.90%
Net Pension Liability $ 146,600,575 88,800,055 261,287,774 1% Increase 7.90% 7.90% 7.90%
Net Pension Liability $ 81,257,256 56,322,915 111,638,488 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, 2023, the City recognized pension expense as follows:
Plan Pension
Expense
Miscellaneous 25,108,209 $
Safety - Police 21,218,890
Safety - Fire 11,453,106
Total 57,780,205 $
65 5.A.a
Packet Pg. 261 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
As of June 30, 2023, 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 13,532,929 $ —
Difference between
expected and actual experience 978,785 (4,408,587)
Net difference between projected
and actual earnings on pension
plan investments 21,866,749 —
Employer contributions subsequent
to the measurement date 21,966,216 —
Total $ (4,408,587) 58,344,679
Safety - Police
Deferred Outflows
of Resources
Deferred
Inflows of
Resources
Changes of assumptions 30,392,117 $ -
Difference between
expected and actual experience 154,277 (34,918,831)
Net difference between projected
and actual earnings on pension
plan investments 54,449,442 —
Employer contributions subsequent
to the measurement date 39,558,900 —
Total $ (34,918,831) 124,554,736
Miscellaneous
66 5.A.a
Packet Pg. 262 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes of assumptions 6,534,549 $ (233,593)
Difference between
expected and actual experience 2,602,847 (3,930,388)
Net difference between projected
and actual earnings on pension
plan investments 10,309,431 —
Employer contributions subsequent
to the measurement date 10,601,782 —
Total $ (4,163,981) 30,048,609
Safety - Fire
The amounts above are net of outflows and inflows recognized in the pension expense for the fiscal year ended June 30, 2023.
Contributions of $72,126,898 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, 2024, 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 2023 5,031,201 $ 7,776,179 3,009,253
2024 6,783,803 6,826,510 2,817,002
2025 3,825,031 3,648,221 1,694,532
2026 34,436,970 13,718,966 7,283,746
2027 — — 478,313
Deferred Outflows / (Inflows) of Resources
67 5.A.a
Packet Pg. 263 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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, 2023, the total employee contributions were $12,568,794.
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, 2023, the total employee contributions were $879,765.
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, 2023, the combined employee/employer contributions were $299,861.
68 5.A.a
Packet Pg. 264 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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.
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. 69 5.A.a
Packet Pg. 265 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2022 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 4.45%
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.
70 5.A.a
Packet Pg. 266 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 3% 0.80% 1.20%
Discount Rate
The discount rate used to measure the OPEB liability was 4.45%. 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.
71 5.A.a
Packet Pg. 267 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 6/30/2021 (valuation date) 37,532,009 $ 6,026,465 31,505,544 Changes recognized for the measurement period
Investment experience — (1,076,278) 1,076,278
Service cost 1,491,988 — 1,491,988
Interest on total OPEB liability 1,159,948 — 1,159,948
Changes of assumptions (5,932,712) — (5,932,712)
Contribution - employer — 3,156,420 (3,156,420)
Net investment income — 366,909 (366,909)
Benefit payments (1,985,799) (1,985,799) —
Administrative expense — (1,616) 1,616
Net changes (5,266,575) 459,636 (5,726,211)
Balance at 6/30/2022 (measurement date) 32,265,434 $ 6,486,101 25,779,333 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, 2022:
1% Decrease
(3.45%)
Current
Discount Rate
(4.45%)
1% Increase
(5.45%)
Net OPEB Liability 29, $ 25,779,333 22,427,537 847,292
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, 2022.
72 5.A.a
Packet Pg. 268 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
1% Decrease
(4.8% decreasing
to 2.9%)
Current
Healthcare Cost
Trend Rates
(5.8% decreasing
to 3.9%)
1% Increase
(6.8% decreasing
to 4.9%)
Net OPEB Liability 21, $ 25,779,333 31,024,091 579,228
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, 2022)
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2023 the City recognized OPEB expense of $1,520,836. As of fiscal year ended June 30, 2023, the City reported deferred outflows/inflows of resources related to OPEB from the following sources:
73 5.A.a
Packet Pg. 269 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Changes in assumption $ 7,702,438 8,035,410
Differences between expected
and actual experience - 6,787,603
Net difference between projected and
actual earnings on investments 175,890 -
OPEB contributions subsequent to
measurement date 3,314,085 -
$ 11,192,413 14,823,013
Contributions made subsequent to the measurement date will recognized in next fiscal year.
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
2023 (746,848) $
2024 (686,423)
2025 (686,796)
2026 (313,205)
2027 (688,863)
Thereafter (3,822,550)
In prior years, pension and OPEB liabilities have been extinguished primarily by the general fund. 74 5.A.a
Packet Pg. 270 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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, 2023, the City contributed $3,190,719 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. 75 5.A.a
Packet Pg. 271 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(13) 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, 2023 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 Measure GS
Nonmajor
governmental
funds
Total
governmental
funds
Nonspendable
Advances to Beach 3, $ 842,973 — —— — 3,842,973
Advances to Rent Control 215,894 — —— — 215,894
Perpetual care — — —— 17,372,872 17,372,872
Prepaids 2,685,525 — —— 26,812 2,712,337
Total nonspendable 6,744,392 $ — —— 17,399,684 24,144,076 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 76 5.A.a
Packet Pg. 272 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 Measure GS
Nonmajor
governmental
funds
Total
governmental
funds
Restricted
2017 City Services Building Bonds $ 208,704 ———— 208,704 2018 Fire Station 1 Bonds 7,730 ———— 7,730
2021 City Yards Bonds 6,278,204 ———— 6,278,204
Advances to Beach — 1,450,000 ——— 1,450,000
Affordable housing — 35,721,082 66,576,781 — 28,556,750 130,854,613 Childcare programs — 3,993,049 ——— 3,993,049
Clean beaches and ocean parcel tax ———— 15,641,388 15,641,388 Consumer protection 1,631,841 ———— 1,631,841
Cultural and recreation services — 9,650,499 ——— 9,650,499 Debt service ———— 9,355,612 9,355,612
Disability 422,989 ———— 422,989
Miscellaneous — 7,200,188 —— 4,150,762 11,350,950
Mobility ———— 1,976,851 1,976,851
Overnight accommodations — 3,355,191 ——— 3,355,191
Parking — 1,293,906 ——— 1,293,906
Roads — 2,617,136 —— 5,257,261 7,874,397
Traffic — 2,815,351 ——— 2,815,351
Transportation — 10,700,503 —— 16,825,117 27,525,620
Total restricted 8,549,468 $ 78,796,905 66,576,781 — 81,763,741 235,686,895 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.
77 5.A.a
Packet Pg. 273 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Committed fund balances are presented as a component of fund balances as follows:
General Fund
Special Revenue
So urce Fund
Lo w and Mo derate
Inco me Ho us ing
Asset Fund Meas ure GS
No nmajo r
go vernmental
funds
To tal
go vernmental
funds
Co mmitted
Affo rdable ho us ing $ — 112,322,146 ——— 112,322,146
To tal co mmitted $ — 112,322,146 ——— 112,322,146
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 Measure GS
Nonmajor
governmental
funds
Total
governmental
funds
Assigned
Compensated absences 13,826,372 $ ———— 13,826,372
Continuing capital projects 2,894,298 ———— 2,894,298
Economic recovery fund 271,952 ———— 271,952
Encumbrances and reappropriations 11,853,611 ———— 11,853,611 Other purposes 10,876,662 ———— 10,876,662
Leases-GASB 87 1,096,908 ———— 1,096,908
Self insurance fund supplemental payments 10,100,000 ———— 10,100,000 Yearend CIP savings 1,265,372 ———— 1,265,372
Working Ca pita l/Ope ra tiona l Continuity 33,700,000 ———— 33,700,000 Total assigned 85,885,175 $ ———— 85,885,175
78 5.A.a
Packet Pg. 274 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 Measure GS
Nonmajor
governmental
funds
Total
governmental
funds
Unassigned
Contingency 52,164,761 $ — ——— 52,164,761
Unrealized loss (12,015,666) — ——— (12,015,666)
Other unassigned 5,097,173 — —— (11,391,758) (6,294,585) Total unassigned 45,246,268 $ — —— (11,391,758) 33,854,510 79 5.A.a
Packet Pg. 275 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(14) FUND DEFICITS
Governmental Funds
A negative fund balance of $2,856,685 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 increased from the prior year due to softer parking revenue and increased expenditures. It is anticipated that the fund deficit will be eliminated through increased future revenues and reduced future capital projects expenditures. Additionally, the City is in negotiations for an interim special event licensee for a portion of the beach parking lot which would increase revenues to the fund directly.
A negative fund balance of $126,629 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 pétanque courts. Both projects are complete and given the limited revenue activity in the fund, all future spending will cease. The fund is expected to request reimbursement from the Special Revenue Fund for eligible expenditures.
Internal Service Funds
A net deficit of $8,570,530 exists in the Self-Insurance General Liability Fund primarily due to the settlement of several large, unexpected settlements and the adjustment to the claims reserve. A net deficit of $399,756 exists in the Self-Insurance Bus Liability Fund, due to several large settlements. Increased future contributions are expected to make up the deficits. 80 5.A.a
Packet Pg. 276 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(15) 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, 2023 is as follows:
Community development
General Fund 2,054,830 $
Low and moderate income housing funds 66,576,781
Special revenue source funds 44,519,322
Tenant Ownership Rights Charter Amendment (TORCA) funds 9,380,648 Community Development Block Grant (CDBG) funds 8,818,183 Miscellaneous grant funds 9,808,121
Rent control funds 1,515,306
Housing authority funds 2,091,474
Total Community development 144,764,665
Community services
Special revenue source funds 9,650,499
Total Community services 9,650,499
Transportation
Special revenue source funds - traffic 2,815,351
Special revenue source funds - parking 1,293,906
Special revenue source funds - roads 2,617,136
Special revenue source funds - transit 10,700,503
Local return funds 16,825,117
Gas tax funds 5,257,261
Total transportation 39,509,274
Clean beaches and ocean parcel tax 15,641,388
Debt service 9,355,612
Miscellaneous 10,676,573
Perpetual care - nonexpendable 17,372,872
Total governmental restricted net position 246,970,883 $ 81 5.A.a
Packet Pg. 277 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Restricted net position for business-type activities at June 30, 2023 is as follows:
Prop 1B 9,101,125 $
Debt service 2,298,946
Total business-type restricted net position 11,400,071 $ 82 5.A.a
Packet Pg. 278 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(16) 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. On August 24, 2023, the State Supreme Court directed the case be sent back to the Court of Appeal to evaluate the dilution claim appropriately. Plaintiffs’ requests for costs and attorneys’ fees remain pending in the trial court awaiting the final outcome of proceedings in the Court of Appeal and any subsequent proceedings.
(b) Litigation arising from allegations of sexual abuse of minors. On October 22, 2018, the Los Angeles County District Attorney's Office charged a City employee 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 the employee was volunteering and/or working as a City employee at the Santa Monica Police Activities League (“SM-PAL”). On November 5, 2018, the employee pled not guilty to the charges against him; on November 7, the employee bailed out of custody. On the morning of November 15, 2018, the date of his next scheduled court appearance, the employee was found dead in their residence of an apparent suicide.
Following the employee'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 the employee 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 the employee 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), October 7, 2021 ($162,500) and July 22, 2022 ($3,100,000) the City made additional settlement payments.
83 5.A.a
Packet Pg. 279 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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.
On April 25, 2023, a settlement with 124 claimants was entered into for a total of $122.5 million which was paid into a qualified settlement fund on June 14th and 27th 2023.
An additional seven lawsuits, involving 34 plaintiffs, have been filed 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.
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:
x 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; x City may reduce the operational runway length to 3,500 feet; x City has the right to establish its own proprietary fixed base operation services. 84 5.A.a
Packet Pg. 280 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 July 15, 2022, the Federal Aviation Administration issued its “Final Agency Decision” (“FAD”) in Mark Smith, et al., v. City of Santa Monica, FAA Docket No. 16-16-02, an administrative action brought pursuant to 14 C.F.R. Part 16 against the City as the owner and operator of the Santa Monica Airport. Among other things, the FAD concluded that various interdepartmental transfers made by the City’s General Fund to the Airport Fund were not adequately documented as “loans” under the FAA’s Revenue Use Policy. As a result, FAA ordered that the City write off loans and accrued interest in the amount of $5,554,811 and repay the Airport $7,355,821, plus interest until the time of repayment. The City subsequently proposed a deferred repayment plan. On August 4, 2023, the FAA issued a letter agreeing with the City’s calculation of the amount due but rejected the City’s request to defer repayment. A payment of $7,355,821 from the General Fund to the Airport fund was recorded as of June 30, 2023. The General Fund transferred $7,445,174 to the Airport Fund on October 1, 2023.
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, 2022 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 $60.4 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 2021-22. 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 FY2023-24. In FY2022-23 the City paid $7.57 million and is expecting to pay a similar amount in FY2023-24. 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, 2023, $308,822 remains to be disbursed.
85 5.A.a
Packet Pg. 281 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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, 2023, total encumbrances for the governmental funds are reported as follows:
General Fund 16,921,530 $
Special Revenue Fund 4,884,850
Measure GS —
Low and Moderate Income Housing Asset Fund —
Nonmajor governmental funds 9,815,900
Total 31,622,280 $
86 5.A.a
Packet Pg. 282 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(17) 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 250,412,718 $ — 82,940,660 — 333,353,378 Restricted cash and investments 27,937,591 — — — 27,937,591 Receivables (net, where applicable,
of allowances for uncollectibles):
Accounts 10,024,283 — 17,707 — 10,041,990
Notes 211,435,531 — — — 2 11,435,531
Taxes 28,146,129 — — — 28,146,129
Leases 34,472,426 — — — 34,472,426
Interest 1,855,940 — 314,884 — 2,170,824
Other governments 22,584,073 — — — 22,584,073
Internal balances — — 1,785,967 (7,427,303) (5,641,336) Due from other funds 14,035,430 — — (14,035,430) —
Deposits 482,471 — — — 482,471
Prepaids 2,712,338 — — — 2,712,338
Restricted cash and investments with fiscal agent 35,032,778 — — — 35,032,778 Advances to other funds 5,508,867 — — (5,508,867) —
Capital assets, net - 919,667,662 345,187 — 920,012,849 Total assets 644,640,575 919,667,662 85,404,405 (26,971,600) 1,622,741,042 Deferred Outflows of Resources
Deferred outflows from pensions — 170,143,746 1,061,955 — 171,205,701 Deferred outflows from OPEB — 10,343,567 22,001 — 10,365,568 Total deferred outflow of resources — 180,487,313 1,083,956 — 181,571,269 Liabilities, Deferred Inflows of Resources and
Fund Balances/Net Position
Liabilities:
Accounts payable 27,665,766 — 1,952,687 — 29,618,453
Accrued liabilities 7,209,796 8,418,626 195,659 — 15,824,081 Accrued interest payable — 4,013,426 — — 4,013,426
Contracts payable (retained percentage) 3,692,700 — 8,643 — 3,701,343 Due to other funds 21,462,734 — — (21,462,734) —
Due to other governments 1,190,000 — — — 1,190,000
Unearned revenue 42,192,071 — — — 42,192,071
Deposits payable from restricted assets 1,268,210 — — — 1,268,210 Advances from other funds 5,508,867 — — (5,508,867) —
Compensated absences due within one year — 8,681,905 72,157 — 8,754,062 Compensated absences due in more than
one year — 5,749,027 101,573 — 5,850,600
Claims payable due within one year — — 22,908,318 — 22,908,318 Claims payable due in more than one year — — 49,745,733 — 49,745,733 Loans and bonds payable due within one year — 5,280,000 — — 5,280,000 Loans and bonds payable due in more than one year — 219,136,033 — — 219,136,033 Pollution remediation obligation due within one year — 363,022 — — 363,022 Pollution remediation obligation due in more than one year — 942,998 — — 942,998 Subscription liability due in one year — 1,511,413 77,138 — 1,588,551 Subscription liability due in more than one year — 1,531,631 - — 1,531,631 Net OPEB liability — 23,824,196 50,675 — 23,874,871
Net pension liability — 406,894,675 2,227,742 — 409,122,417 Total liabilities 110,190,144 686,346,952 77,340,325 (26,971,601) 846,905,820 Deferred Inflows of Resources
Unavailable revenue 10,338,852 — — (10,338,852) —
Deferred gain on refunding — 443,141 — — 443,141
Deferred inflows leases 32,218,777 — — — 32,218,777
Deferred inflows from pensions — 31,491,252 297,718 — 31,788,970 Deferred inflows from OPEB — 13,698,818 29,138 — 13,727,956 Total deferred inflows of resources 42,557,629 45,633,211 326,856 (10,338,852) 78,178,844 Total fund balances/net position 491,892,802 $ 368,174,812 8,821,180 10,338,853 879,227,647 87 5.A.a
Packet Pg. 283 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 $345,187 net of accumulated depreciation, are not included in this amount. $ 1,528,031,158
Less accumulated depreciation/amortization (608,363,496) $ 919,667,662
Deferred inflows on refunding $ (443,141)
Deferred outflows from pension 170,143,746
Deferred inflows from pension (31,491,252)
$ 138,652,494
Deferred outflows from OPEB 10,343,567
Deferred inflows from OPEB (13,698,818)
$ (3,355,251)
Revenue bonds (203,125,000)
Accrued employee benefits (8,418,626)
Accrued interest on long-term debt (4,013,426)
Unamortized premium on long-term debt (21,291,033)
Employee compensated absences (14,430,932)
Accrued pollution remediation costs (1,306,020)
Subscription liability (3,043,044)
Net OPEB liability (23,824,196)
Net pension liability (406,894,675)
Total long-term liabilities (686,346,952) $
2)
$ 7,035,214
1,785,967
$ 8,821,181
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.
88 5.A.a
Packet Pg. 284 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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- Other
Total type internal adjustments Statement of
enterprise service and net position
funds funds (1) eliminations totals
Cash and investments $212,881,624 42,767,283 — 255,648,907 Receivables (net, where applicable,
of allowances for uncollectibles):
Accounts 20,633,953 11,872 — 20,645,825
Leases 9,583,744 — — 9,583,744
Interest 745,722 139,187 — 884,909
Taxes 23,453 — — 23,453
Due from other funds 7,427,303 — (7,427,303) -
Due from other governments 14,630,804 — — 14,630,804
Internal balances — (1,785,967) 7,427,303 5,641,336
Inventory 3,793,736 2,555 — 3,796,291
Prepaids 57,206 — — 57,206
Restricted cash and investments 39,480,005 — — 39,480,005 Restricted cash and investments with fiscal agent 49,046,360 — — 49,046,360 Leases receivable, non-current 29,310,876 — — 29,310,876 Capital assets, net 526,243,657 12,898,238 — 539,141,895 Total assets 913,858,443 54,033,168 — 967,891,611
Deferred outflows from pensions 39,972,069 1,770,254 — 41,742,323 Deferred outflows from OPEB 777,903 48,942 — 826,845
Total deferred outflows of resources 40,749,972 1,819,196 — 42,569,168 Accounts payable 13,950,028 1,774,058 — 15,724,086
Accrued liabilities 300,685 6,964,223 — 7,264,908
Accrued interest payable 1,389,526 — — 1,389,526
Contracts payable (retained percentage) 4,213,400 — — 4,213,400 Due to Successor Agency — 1,500,000 — 1,500,000
Unearned revenue 84,215,749 — — 84,215,749
Liabilities payable from restricted assets — — 19,203,699 19,203,699 Compensated absences due within one year 2,656,670 121,014 — 2,777,684 Compensated absences due in more than one year 888,254 94,013 — 982,267 Claims payable due within one year — 2,114,644 — 2,114,644 Claims payable due in more than one year — 3,790,165 — 3,790,165 Loans and bonds payable due within one year 2,732,035 — — 2,732,035 Loans and bonds payable due in more than one year 128,176,674 — — 128,176,674 Pollution remediation obligation due within one year 3,843,243 — — 3,843,243 Pollution remediation obligation due in more than one year 22,695,908 — — 22,695,908 Subscription liability 171,510 1,160,213 — 1,331,723
Net OPEB liability due in more than one year 1,791,734 112,728 — 1,904,462 Net pension liability due in more than one year 83,852,393 3,713,594 — 87,565,987 Total liabilities 377,733,749 13,692,411 — 391,426,160
Deferred inflows from leases 34,712,051 34,712,051
Deferred inflows from pensions 11,206,140 496,289 — 11,702,429 Deferred inflows from OPEB 1,030,239 64,818 — 1,095,057 Total deferred inflows of resources 46,948,430 561,107 — 47,509,537 $529,926,236 41,598,846 — 571,525,082
1)
$ 43,384,813
$ (1,785,967)
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 Outflows 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.
89 5.A.a
Packet Pg. 285 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(18) 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, 2023.
Advances to/from
Advances to/from other funds at June 30, 2023 are as follows:
Advances to Advances from
(receivable fund) (payable fund) Amount
General Fund Nonmajor governmental funds 4,058,867 $
Total General Fund 4,058,867
Special Revenue Source Fund Nonmajor governmental funds 1,450,000 Total Special Revenue Source Fund 1,450,000
Total advances to/from 5,508,867 $
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, 2023 are as follows:
Due From Due to
(receivable fund) (payable fund) Amount
General Fund Nonmajor governmental funds 14,035,430 $
Total General Fund 14,035,430
Private-Purpose Trust Fund Internal service funds 1,500,000 Total Private-Purpose Trust Fund 1,500,000
Airport Fund General Fund 7,427,303
Total Airport Fund 7,427,303
Total due to/from 22,962,733 $
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. 90 5.A.a
Packet Pg. 286 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Transfers
Transfers to/from other funds for the fiscal year ended June 30, 2023 are as follows:
Transfer in
(receivable fund) Amount
General Fund Special Revenue Source Fund 26,507,361 (1) Nonmajor governmental funds 4,605,321 (2)
Low/Mod Housing Fund 411,564 (3)
Water Fund 16,551,442 (4)
Wastewater Fund 805,489 (5)
Resource Recovery and Recycling Fund 1,083,309 (6)
Big Blue Bus Fund 645,150 (7)
Nonmajor enterprise funds 1,164,996 (8)
Internal service funds 6,679,082 (9)
Total General Fund 58,453,714
Special Revenue Source Fund General Fund 3,619,114 (10) Total Special Revenue Source Fund 3,619,114
Nonmajor governmental funds General Fund 13,420,866 (11) Nonmajor governmental funds 71,657 (12)
Nonmajor enterprise funds 73,492 (13)
Total Nonmajor governmental funds 13,566,015
Water Fund General Fund 129,192 (14)
Wastewater Fund 314,327 (15)
Total Water Fund 443,519
Wastewater Fund General Fund 37,185 (14)
Nonmajor enterprise funds 1,225,214 (16)
Total Wastewater Fund 1,262,399
Big Blue Bus Fund Nonmajor governmental funds 712,474 (17) Total Big Blue Bus Fund 712,474
Nonmajor enterprise funds General Fund 3,193,128 (18)
Nonmajor governmental funds 676,577 (19)
Total Nonmajor enterprise funds 3,869,705
Internal service funds General Fund 23,539 (12)
Internal service funds 2,532,647 (20)
Total Internal service funds 2,556,186
Total transfers 84,483,126
Transfer out
(payable fund)
91 5.A.a
Packet Pg. 287 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
1) Payments for property used in CityTV operations, Subsidize affordable housing program, Subsidize legal settlements, Subsidize Arts programs, Subsidize Community Recreation program, Subsidize engineering expenditures, Subsidize police expenditures, Subsidize transportation programs. 2) ARPA Transfer, CARES Act Transfer, FEMA Transfer, Subsidize administrative expenditures, Subsidize finance expenditures, Subsidize library programs, Subsidize infrastructure programs, Subsidize transportation programs, Subsidize watershed management programs.
3) Subsidize Low/Mod Housing expenditures.
4) Subsidize legal settlements, Subsidize administrative expenditures, Subsidize engineering expenditures, Subsidize environmental programs, Subsidize infrastructure improvements, Subsidize infrastructure programs. 5) Subsidize administrative expenditures, Subsidize engineering expenditures, Subsidize environmental programs, Subsidize infrastructure improvements.
6) Debt Service Transfer, Subsidize environmental programs, Subsidize Recycling program expenditures. 7) Subsidize administrative expenditures, Subsidize finance expenditures, Subsidize maintenance programs, Subsidize police expenditures.
8) Debt Service Transfer, Subsidize administrative expenditures, Subsidize environmental programs, Subsidize infrastructure programs, Subsidize Network Operations Center. 9) Subsidize youth programs, Subsidize risk management expenditures and legal settlements. 10) Subsidize affordable housing program.
11) Debt Service Transfer, Subsidize Community Recreation programs. 12) Subsidize administrative expenditures.
13) Subsidize maintenance programs.
14) Subsidize reduced water rates for low-income families. 15) Pollution Remediation Transfer.
16) Subsidize operating and maintenance of Santa Monica Urban Runoff Recycling Facility (SMURRF) expenditures. 17) FEMA Transfer, Subsidize transportation programs and infrastructures. 18) ARPA Transfer, Reimburse Airport for interest related to FAA loans, Subsidize administrative expenditures, Subsidize pier operations expenditures, Subsidize police expenditures. 19) Subsidize administrative expenditures, Subsidize cemetery operations and maintenance. 20) Subsidize risk management program expenditures.
92 5.A.a
Packet Pg. 288 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(19) 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, 2023 are classified in the accompanying financial statements as follows:
Statement of Fiduciary Net Position:
Restricted cash and investments $ 3,727,124
Restricted cash and investments with fiscal agent 7,250,183 Total cash and investments $ 10,977,307
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. 93 5.A.a
Packet Pg. 289 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
SUCCESSOR AGENCY LONG-TERM LIABILITIES
Changes in long-term liabilities:
Long-term liability activity for the fiscal year ended June 30, 2023 was as follows:
Balance at
June 30, 2022 Additions Reductions
Balance at
June 30,
2023
Due within
one year
Due beyond
one year
Loans and notes payable
from direct borrowings 36,351,002 $ — 821,607 35,529,395 877,632 34,651,763 Term loan from direct borrowings 19,696,958 — 3,030,292 16,666,666 3,030,303 13,636,363 Tax allocation bonds 70,215,000 — 3,110,000 67,105,000 3,245,000 63,860,000 Less deferred amounts:
For issuance discounts (56,581) — (8,081) (48,500) — (48,500) For issuance premiums 259,476 — 13,672 245,804 — 245,804 Total loans, notes and bonds payable 126,465,855 $ — 6,967,490 119,498,365 7,152,935 112,345,430 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, 2023
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% 26,055,000 Subtotal tax allocation bonds 67,105,000
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% 16,666,666 Promissory notes payable to others(2)* Nov 1, 2010 42,500,000 Jan 1, 2042 6.82% 35,529,395 Subtotal loans and notes 52,196,061
Total $ 119,301,061
*Final and conclusive determination received from the Department of Finance (1) To fund low moderate income housing projects
(2) For purchase of real estate
94 5.A.a
Packet Pg. 290 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
Annual debt service requirements to maturity are as follows:
Fiscal Year
Ending
June 30, Principal Interest Principal Interest Principal Interest 2024 3,245,000 3,391,308 3,907,935 2,750,647 7,152,935 6,141,955 2025 3,390,000 3,242,020 3,967,771 2,629,029 7,357,771 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 3,870,000 2,750,485 4,172,889 2,235,478 8,042,889 4,985,963 2029-2033 12,920,000 11,186,781 8,951,194 9,479,550 21,871,194 20,666,331 2034-2038 13,875,000 7,486,031 10,913,992 6,486,006 24,788,992 13,972,037 2039-2043 18,275,000 2,758,656 12,150,633 2,149,367 30,425,633 4,908,023 2044 4,280,000 — — — 4,280,000 —
$ 36,824,122 67,105,000 52,196,061 30,602,825 119,301,061 67,426,947 Loans and notes payable
Tax allocation bonds from direct borrowings Total
The Successor Agency’s outstanding loan of $16,666,666 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 $67,105,000 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 $35,529,395 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 Secured Overnight Financing Rate + 1.7%, following the USD LIBOR cessation 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 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.
95 5.A.a
Packet Pg. 291 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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 4,446,908 $ 4,446,908 100% 31,132,638 $ Earthquake Recovery Project 2011 2,262,413 2,262,413 100% 72,266,231 Note Payable to Others 3,300,000 3,300,000 100% 65,100,000 Bank of America Term Loan 3,967,099 3,967,099 100% 16,013,131 96 5.A.a
Packet Pg. 292 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
Year ended June 30, 2023
(20) PRIOR PERIOD ADJUSTMENTS
The accompanying financial statements reflect adjustments resulting from a restatement of fund balance and net position as of June 30, 2023 as follows:
Restatement on Government-wide Statements:
Governmental Business-Type
Activities Activities
Beginning Net Position, as previously reported 934,446,584 $ 570,701,524 Restatements:
Employee benefit liability not recorded (11,184,701) (6,279,914) Implementation of GASB 96 82,025 21,934
Beginning Net Position, as restated 923,343,908 $ 564,443,544 Restatement on Fund Statements, Enterprise Funds:
Resource,
Recovery and Nonmajor
Water Wastewater Recycling Big Blue Bus enterprise
Fund Fund Fund Fund funds
Beginning Net Position, as previously reported 63,347,284 $ 197,746,204 7,567,244 175,235,131 85,054,044 Restatements:
Employee benefit liability not recorded ( (259,912) 569,050) (1,100,964) (3,585,458) (416,413) Implementation of GASB 96 23,305 21,008 — — —
Beginning Net Position, as restated 62,801,539 $ 197,507,300 6,466,280 171,649,673 84,637,631 Restatement on Fund Statements, Internal Service Funds:
Internal
service
funds
Beginning Net Position, as previously reported 50,496,584 $ Restatements:
Employee benefit liability not recorded ( 530,742)
Implementation of GASB 96 (18,876)
Beginning Net Position, as restated 49,946,966 $
After the City eliminated Employer Paid Member Contributions, it entered into an agreement with affected bargaining units’ employees to reimburse them for previously made contributions. The agreement had been entered into prior to 2020 but the amount of the payouts was not previously accrued. The prior period adjustment records this benefit liability.
97 5.A.a
Packet Pg. 293 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
(21) 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:
x Are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19)
x Were not accounted for in the budget most recently approved as of March 27, 2020 x 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, in FY 2021-22, $127,470 and in FY 2022-23, $5,647, against its State Unemployment Insurance payment.
In FY 2021-22 and FY 2022-23, the City received $17,731 and $29,475, respectively 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. The City received an additional amount of $758,080 of FEMA reimbursement in FY 2022-23. Total reimbursement received as of June 30, 2023 was $1,302,103.
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 98 5.A.a
Packet Pg. 294 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2023
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.
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:
x Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control
x Replace lost revenue for eligible state, local, territorial, and Tribal governments to strengthen support for vital public services and help retain jobs
x Support immediate economic stabilization for households and businesses x 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 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.
On June 30, 2022, the Big Blue Bus was awarded $35,755,414 of ARPA 5307 funds to support operating costs from the period beginning July 1, 2022 to June 30, 2025. The Big Blue Bus utilized these funds during the FYE June 30, 2023 for eligible expenses. As such the entire amount of recognized as revenue during the fiscal year. As of June 30, 2023 the Big Blue Bus had received $28,574,849 of ARPA funds. 99 5.A.a
Packet Pg. 295 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements
For the fiscal year ended June 30, 2023
(22) SPECIAL ITEM
Special items are unusual and infrequent in nature and are within the control of management. x The City settled additional legal claims related to an alleged incident of sexual assault of minors in the amount of $125.6 million paid by the City’s General Fund which is reported as a special item. See note
16. 100
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Packet Pg. 296 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report City of Santa Monica, California
Year Ended June 30, 202
REQUIRED SUPPLEMENTARY INFORMATION
5.A.a
Packet Pg. 297 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
Revenues:
Property taxes $ 77,401,349 79,254,752 79,661,790 - 79,661,790 407,038 Sales and use taxes 70,742,000 77,971,800 78,509,804 - 78,509,804 538,004 Transient occupancy taxes 63,410,000 66,488,330 67,627,280 - 67,627,280 1,138,950 Utility user taxes 31,640,000 34,405,000 35,031,946 - 35,031,946 626,946 Real property transfer taxes 12,000,000 11,000,000 10,660,607 - 10,660,607 (339,393) Business license taxes 30,227,000 31,300,000 31,429,074 - 31,429,074 129,074 Parking facility taxes 9,485,000 10,819,200 10,757,242 - 10,757,242 (61,958) Other taxes 40,000 40,000 313,667 - 313,667 273,667
Licenses and permits 35,457,242 34,983,063 36,184,176 - 36,184,176 1,201,113 Intergovernmental 2,117,185 4,435,080 4,350,432 - 4,350,432 (84,648) Charges for services 44,967,374 47,185,218 46,430,833 - 46,430,833 (754,385) Fines and forfeitures 13,352,964 13,381,964 13,641,865 - 13,641,865 259,901 Investment income 1,500,000 2,600,000 1,307,079 - 1,307,079 (1,292,921) Rental income 7,494,251 7,828,021 8,361,442 - 8,361,442 533,421 Settlement income - - 124,550 - 124,550 124,550
Other revenue 3,565,009 7,578,566 8,892,949 - 8,892,949 1,314,383 Total revenues 403,399,374 429,270,994 433,284,736 - 433,284,736 4,013,742 Expenditures:
General government:
City council 879,710 984,239 817,520 2,500 820,020 164,219 City manager 5,914,634 6,381,447 5,661,476 232,210 5,893,686 487,761 Record and election services 3,443,361 3,534,871 3,507,398 26,980 3,534,378 493 Finance 11,775,639 12,474,421 11,364,797 603,726 11,968,523 505,898 City attorney 11,798,166 12,568,481 13,619,198 5,613 13,624,811 (1,056,330) Human resources 5,824,641 6,130,627 5,711,199 136,790 5,847,989 282,638 Information services 10,078,601 10,632,452 10,360,222 103,030 10,463,252 169,200 Public Works 2,313,566 2,524,236 2,318,263 136,140 2,454,403 69,833 Other 9,648,601 10,826,504 6,044,614 99,570 6,144,184 4,682,320 Capital improvement 9,472,004 15,274,897 8,545,043 1,798,017 10,343,060 4,931,837 Total general government 71,148,923 81,332,175 67,949,730 3,144,576 71,094,306 10,237,869 Public safety:
City Manager 5,614,150 5,969,977 5,462,429 43,000 5,505,429 464,548 Police 101,888,455 110,344,074 110,307,759 359,510 110,667,269 (323,195) Fire 46,895,100 52,021,588 55,316,160 159,960 55,476,120 (3,454,532) Capital improvement 2,052,200 14,041,913 6,226,680 3,075,240 9,301,920 4,739,993 Total public safety 156,449,905 182,377,552 177,313,028 3,637,710 180,950,738 1,426,814 See accompanying notes to Required Supplementary Information. (Continued) 101
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ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
General services:
Public works 43,921,944 46,627,859 46,419,829 90,640 46,510,469 117,390 Mobility 24,611,453 24,961,528 22,417,938 882,990 23,300,928 1,660,600 Capital improvement 642,400 17,458,317 7,232,174 7,832,374 15,064,548 2,393,769 Total general services 69,175,797 89,047,704 76,069,941 8,806,004 84,875,945 4,171,759 Community services:
Community services 28,832,295 30,877,747 28,007,873 681,780 28,689,653 2,188,094 Other 26,668,613 29,118,613 29,535,966 - 29,535,966 (417,353) Capital improvement 650,000 2,217,745 670,418 122,300 792,718 1,425,027 Total community services 56,150,908 62,214,105 58,214,257 804,080 59,018,337 3,195,768 Library:
Library 9,497,280 10,577,789 10,024,868 169,800 10,194,668 383,121 Capital improvement 105,000 105,556 20,836 1,460 22,296 83,260 Total library 9,602,280 10,683,345 10,045,704 171,260 10,216,964 466,381 Community development:
Community development 18,564,697 19,748,419 18,812,926 227,310 19,040,236 708,183 Other 887,843 929,438 789,973 2,540 792,513 136,925
Capital improvement 350,000 547,743 446,347 128,050 574,397 (26,654) Total community development 19,802,540 21,225,600 20,049,246 357,900 20,407,146 818,454 Principal - - 1,662,713 - 1,662,713 (1,662,713)
Interest - - 135,018 - 135,018 (135,018)
Total expenditures 382,330,353 446,880,481 411,439,637 16,921,530 428,361,167 18,519,314 Excess (deficiency) of revenues
over (under) expenditures 21,069,021 (17,609,487) 21,845,099 (16,921,530) 4,923,569 22,533,056 Other financing sources (uses):
Transfers in 13,184,748 59,354,175 58,453,714 - 58,453,714 (900,461) Transfers out (24,385,556) (20,171,338) (20,423,024) - (20,423,024) (251,686) Subscription proceeds - - 2,214,647 - 2,214,647 2,214,647 Total other financing sources (uses) (11,200,808) 39,182,837 40,245,337 - 40,245,337 1,062,500 Special item:
Special item (note 22) - (126,500,000) (125,600,000) - (125,600,000) 900,000 Total special item - (126,500,000) (125,600,000) - (125,600,000) 900,000 Net change in fund balance 9,868,213 (104,926,650) (63,509,564) (16,921,530) (80,431,094) 24,495,556 Fund balance at beginning of year 209,934,867 209,934,867 209,934,867 - 209,934,867 - Fund balance at end of year $ 219,803,080 105,008,217 146,425,303 (16,921,530) 129,503,773 24,495,556 See accompanying notes to Required Supplementary Information 102
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ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
Revenues:
Intergovernmental $ 684,395 547,516 547,516 - 547,516 - Charges for services 678,107 678,107 1,901,794 - 1,901,794 1,223,687 Investment income 200,000 200,000 84,079 - 84,079 (115,921) Other 1,335,548 8,005,548 13,783,018 - 13,783,018 5,777,470 Total revenues 2,898,050 9,431,171 16,316,407 - 16,316,407 6,885,236 Expenditures:
General government:
Capital improvement - 420,630 247,897 172,730 420,627 3 Total general government - 420,630 247,897 172,730 420,627 3 Public safety:
Police 4,390 485,774 27,175 - 27,175 458,599
Fire 15,000 15,000 7,005 - 7,005 7,995
Capital improvement 282,000 310,592 102,280 - 102,280 208,312 Total public safety 301,390 811,366 136,460 - 136,460 674,906 General services:
Mobility 174,148 324,533 278,025 - 278,025 46,508
Capital improvement 486,300 10,890,960 1,556,843 4,418,040 5,974,883 4,916,077 Total general services 660,448 11,215,493 1,834,868 4,418,040 6,252,908 4,962,585 Community services:
Community services 3,149,576 3,399,007 2,414,459 114,190 2,528,649 870,358 Other - - 193,261 - 193,261 (193,261)
Capital improvement - 837,440 239,365 38,060 277,425 560,015 Total community services 3,149,576 4,236,447 2,847,085 152,250 2,999,335 1,237,112 Library:
Library - 83,432 - - - 83,432
Total library - 83,432 - - - 83,432
Community development:
Community development - 5,093 20,510 - 20,510 (15,417)
Capital improvement 191,600 491,600 42 141,830 141,872 349,728 Total community development 191,600 496,693 20,552 141,830 162,382 334,311 Total expenditures 4,303,014 17,264,061 5,086,862 4,884,850 9,971,712 7,292,349 Excess (deficiency) of revenues
over (under) expenditures (1,404,964) (7,832,890) 11,229,545 (4,884,850) 6,344,695 14,177,585 Other financing sources (uses):
Transfers in 7,952,500 3,619,114 3,619,114 - 3,619,114 - Transfers out (1,997,174) (27,097,174) (26,507,361) - (26,507,361) 589,813 Total other financing sources (uses) 5,955,326 (23,478,060) (22,888,247) - (22,888,247) 589,813 Net change in fund balance 4,550,362 (31,310,950) (11,658,702) (4,884,850) (16,543,552) 14,767,398 Fund balance at beginning of year 202,777,753 202,777,753 202,777,753 - 202,777,753 - Fund balance at end of year $ 207,328,115 171,466,803 191,119,051 (4,884,850) 186,234,201 14,767,398 See accompanying notes to Required Supplementary Information. 103
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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, 2023
Original
budget
Final
budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance with
final budget
Revenues:
Investment income $ 100,000 100,000 51,406 - 51,406 (48,594) Other 400,000 400,000 419,477 - 419,477 19,477
Total revenues 500,000 500,000 470,883 - 470,883 (29,117) Other financing sources (uses):
Transfers out (372,657) (372,657) (411,564) - (411,564) (38,907) Total other financing sources (uses) (372,657) (372,657) (411,564) - (411,564) (38,907) Net change in fund balance 127,343 127,343 59,319 - 59,319 (68,024) Fund balance at beginning of year 66,517,462 66,517,462 66,517,462 - 66,517,462 - Fund balance at end of year $ 66,644,805 66,644,805 66,576,781 - 66,576,781 (68,024) See accompanying notes to Required Supplementary Information. 104
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CITY OF SANTA MONICA, CALIFORNIA
Note to Required Supplementary Information
For the fiscal year ended June 30, 2023
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 were primarily due to unanticipated staffing shortages from retirements, workers comp injuries and Santa Monica Paid Parental Leave (SMPPL). These shortages are continued drivers of higher than budgeted overtime costs. This is a result of Santa Monica Fire Department's constant staffing model, which aims to ensure readiness to respond to emergencies 24 hours a day, 7 days a week with a fixed level of available staffing. Additionally, the Fire Department’s overtime is impacted when they assist with wildfires as part of mutual aid strike team deployments, for which the City is fully reimbursed – this overtime is unbudgeted as it is difficult to predict from year to year. The overages in the Police Department and City Attorney’s Office were primarily due to settlements with former employees, which are unbudgeted due to their nature and unknown fiscal impact. These departments were also impacted by the pay out of vacation accrual balances for employees that ended their employment with the City. While these expenses are unbudgeted, funding is set-aside in assigned fund balance. Traditionally these types of leaves are not budgeted because they are difficult to predict. 105
5.A.a
Packet Pg. 302 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios Miscellaneous Plan Last Nine Fiscal Years (Unaudited)
Total Pension Liability 2023 2022 2021 2020 2019 2018 2017 2016 2015 Service Cost 23,414,897 $ 23,008,107 26,940,522 27,751,083 27,141,560 27,164,949 24,044,347 23,584,538 24,972,667 Interest on the total pension liability 88,372,749 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 43,606,082 - - - (8,896,401) 62,254,788 - (16,726,947) - Difference between expected and actual experience (43,993,486) (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 (64,295,906) (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 47,104,336 50,844,904 66,170,618 45,042,772 107,109,082 50,061,009 25,815,612 56,064,968 Total pension liability - beginning 1,257,394,164 1,301,592,386 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 1,348,696,722 1,257,394,164 1,206,549,260 1,095,335, 1,140,378,642 988,226,788 870 938,165,779 912,350,167 Plan fiduciary net position
Contribution - employer 36,918,832 $ 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 9,218,079 9,089,233 11,287,483 11,502,697 11,221,260 11,398,672 11,256,065 10,754,206 11,418,160 Net investment income (90,335,494) 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 (64,295,906) (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 (1,661) - - (1,658) (2,066) (61,526) (767) (909) - Administrative expense (745,442) (989,932) (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 205,704,868 (109,241,592) 45,195,219 53,495,802 62,342,616 107,918,969 5,764,678 110,741, 18,792,140 120 Plan fiduciary net position - beginning 990,945,672 1,196,650,540 945,750,453 892,254,651 829,912,035 721,993,066 716,228,388 697,436,244 586,695,124 Plan fiduciary net position - ending (b) 1,196,650,540 1,087,408,948 990,945,672 945,750,453 892,254,651 829,912,035 721,993,066 716,228,384 697,436,244 Net pension liability - ending (a)-(b) 261,287,774 $ 104,941,846 266,448,492 260,798,807 248,123,991 265,423,835 266,233,722 221,937,395 214,913,922 Plan fiduciary net position as a percentage of the
total pension liability 80.63% 91.94% 78.81% 78.38% 78.24% 75.77% 73.06% 76.34% 76.44% Covered payroll 130,526,018 $ 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 200.18% 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).
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nt A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios Police Safety Plan Last Nine Fiscal Years (Unaudited)
2023 2022 2021 2020 2019 2018 2017 2016 2015
Total Pension Liability
Service Cost 11,983,989 $ 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 38,056,896 36,994,605 35,384,916 33,763,191 32,412,581 31,045,060 29,901,653 28,537,027 27,132,667 Changes in assumptions 18,737,902 - - - (2,129,031) 26,521,719 - (7,150,335) - Difference between expected and actual experience (6,104,197) 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 (27,882,633) (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 23,413,866 34,791,957 23,762,814 19,501,641 19,772,836 44,788,967 18,453,085 12,088,708 19,495,402 Total pension liability - beginning 523,450,972 546,864,838 499,688,158 480,186,517 460,413,681 415,624,714 397,171,629 385,082,921 365,587,519 Total pension liability - ending (a) $ 546,864,838 581,656,795 523,450,972 499,688,158 460,413,681 480,186,517 415,624,714 397,171,629 385,082,921 Plan fiduciary net position
Contribution - employer 20,119,437 $ 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 3,318,392 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 (35,957,533) 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 (27,882,633) (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 1,661 - - - (823) 61,526 767 - - Administrative expense (296,366) (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 (40,697,042) 16,941,991 19,141,078 22,092,957 42,376,054 (1,977,828) 43,072,608 4,792,521 Plan fiduciary net position - beginning 390,501,641 475,753,262 373,559,650 354,418,572 332,325,615 289,949,561 291,927,389 287,134,868 244,062,260 Plan fiduciary net position - ending (b) 475,753,262 435,056,220 390,501,641 373,559,650 354,418,572 332,325,615 289,949,561 291,927,389 287,134,868 Net pension liability - ending (a)-(b) $ 71,111,576 146,600,575 132,949,331 126,128,508 125,767,945 128,088,066 125,675,153 105,244,240 97,948,053 Plan fiduciary net position as a percentage of the
total pension liability 74.80% 87.00% 74.60% 74.76% 73.81% 72.18% 69.76% 73.50% 74.56% Covered payroll 35,270,579 $ 33,740,999 34,111,685 31,286,093 31,769,364 30,592,273 29,176,438 28,791,622 28,470,873 Net pension liability as a percentage of covered-
payroll 415.65% 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).
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Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios Fire Safety Plan Last Nine Fiscal Years (Unaudited)
2023 2022 2021 2020 2019 2018 2017 2016 2015
Total Pension Liability
Service Cost 5,374,830 $ 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 19,255,577 18,311,217 17,610,724 16,808,267 16,174,733 15,730,320 15,338,448 14,735,448 Changes in assumptions 7,868,131 - - - (1,206,898) 13,218,472 - (3,653,466) - Difference between expected and actual experience (4,732,508) 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 (15,154,515) (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 12,611,515 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 269,787,190 280,820,550 259,802,551 247,996,546 238,799,314 217,540,182 212,359,879 208,152,975 199,527,764 Total pension liability - ending (a) $ 280,820,550 293,432,065 269,787,190 259,802,551 247,996,546 238,799,314 217,540,182 212,359,879 208,152,975 Plan fiduciary net position
Contribution - employer 9,304,903 $ 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 1,747,250 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 (17,088,459) 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 (15,154,515) (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 (140,762) (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 (21,331,583) 6,969,233 6,996,947 8,562,255 16,705,958 (3,995,692) 19,769,339 (924,413) Plan fiduciary net position - beginning 188,020,088 225,963,593 181,050,855 174,053,908 165,491,653 148,785,695 152,781,387 153,705,800 133,936,461 Plan fiduciary net position - ending (b) 225,963,593 204,632,010 188,020,088 181,050,855 174,053,908 165,491,653 148,785,695 152,781,387 153,705,800 Net pension liability - ending (a)-(b) 88,800,055 $ 54,856,957 81,767,102 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 69.74% 80.47% 69.69% 69.69% 70.18% 69.30% 68.39% 71.94% 73.84% Covered payroll 21,410,869 $ 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 414.74% 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).
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Required Supplementary Information
Schedule of Contributions - Miscellaneous Pension Plan
Last Nine Fiscal Years (Unaudited)
2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 40,771,715 $ 41,185,704 40,186,749 36,620,603 32,707,844 29,021,468 29,097,156 27,377,582 25,320,840 Contributions in relation to actuarially
determined contributions (39,558,900) (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 1,212,815 $ (1) 4,281,310 (1) 4,728,279 (1) (204,719) (3,165,792) (309,565) (27,255,095) (774,996) (3,028,344) Covered payroll 130,526,018 $ 121,534,739 121,619,165 152,120,397 154,765,955 149,416,791 147,371,283 142,942,436 137,199,170 Contributions as a percentage of covered- 30.31% 30.37% 29.16% 26.15% 21.27% 19.63% 38.24% 19.70% 20.66% payroll
Notes to Schedule
Valuation date
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll
Asset Valuation Method Market Value
Inflation 2.50%
Salary increases
Payroll Growth 2.50%
Investments Rate of Return 7.00%
Retirement Age
Mortality
(1)
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 service
The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011
The 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.
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Required Supplementary Information
Schedule of Contributions - Safety Police Pension Plan
Last Nine Fiscal Years (Unaudited)
2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 22,106,470 $ 20,876,028 18,987,371 17,488,731 15,428,327 13,453,498 13,559,983 12,327,896 11,589,142 Contributions in relation to actuarially
determined contributions (21,966,216) (20,117,871) (19,119,800) (19,904,358) (15,924,164) (13,773,882) (26,557,166) (12,697,470) (13,033,273) Contribution excess 140,254 $ (1) 758,157 (1) (2,415,627) (132,429) (495,837) (320,384) (12,997,183) (369,574) (1,444,131) Covered payroll 35,270,579 $ 32,619,907 33,829,867 34,111,685 31,286,093 31,769,364 30,592,273 29,176,438 28,791,622 Contributions as a percentage of covered- 62.28% 61.67% 56.52% 58.35% 50.90% 43.36% 86.81% 43.52% 45.27% payroll
Notes to Schedule
Valuation date
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll
Asset Valuation Method Market Value
Inflation 2.50%
Salary increases
Payroll Growth 2.50%
Investments Rate of Return 7.00%
Retirement Age
Mortality
(1)
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 service
The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011
The 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 was unable to fill positions in the Police department due to the pandemic, 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.
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Required Supplementary Information
Schedule of Contributions - Safety Fire Pension Plan
Last Nine Fiscal Years (Unaudited)
2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution 10,318,162 $ 9,544,076 8,801,916 7,971,960 6,959,294 5,884,665 5,624,625 5,185,401 4,615,293 Contributions in relation to actuarially
determined contributions (10,601,782) (9,304,903) (8,636,700) (10,703,395) (7,211,427) (6,276,048) (10,372,347) (5,320,402) (5,142,818) Contribution (excess) deficiency (283,620) 239,173 (1) (1 165,216 ) (252,133) (2,731,435) (391,383) (4,747,722) (135,001) (527,525) Covered payroll 21,410,869 $ 19,020,772 18,953,091 19,108,351 18,795,618 17,748,610 16,861,345 15,701,959 15,565,558 Contributions as a percentage of covered 49.52% 48.92% 45.57% 56.01% 38.37% 35.36% 61.52% 33.88% 33.04% payroll
Notes to Schedule
Valuation date
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll
Asset Valuation Method Market Value
Inflation 2.50%
Salary increases
Payroll Growth 2.50%
Investments Rate of Return 7.00%
Retirement Age
Mortality
(1)
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 service
The probabilities of Retirement are based on the 2014 CalPERS Experience Study for the period from 1997 to 2011
The 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 was unable to fill positions in the Police department due to the pandemic, 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.
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nt A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report Fiscal Yearend FYE 2023 FYE 2022 FYE 2021 FYE 2020 FYE 2019 Measurement Date 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Total OPEB Liability
Service Cost 1,491,988 $ 2,114,167 1,707,389 1,207,816 1,073,506 Interest on the total OPEB liability 1,159,948 1,366,059 1,555,940 2,125,930 2,064,073 Changes in assumptions (5,932,712) (3,248,646) 4,391,134 6,467,787 1,443,660 Difference between expected and actual experience - (7,573,209) - (577,838) - Benefit payments, including refunds of employee
contributions (1,985,799) (1,888,159) (1,798,994) (1,708,929) (1,571,807) Net change in total OPEB liability (9,229,788) (5,266,575) 5,855,469 7,514,766 3,009,432 Total OPEB liability - beginning 46,761,797 37,532,009 40,906,328 33,391,562 30,382,130 Total OPEB liability - ending (a) $ 37,532,009 32,265,434 46,761,797 40,906,328 33,391,562 Plan fiduciary net position
Contribution - employer 3,156,420 $ - - 3,047,011 3,011,934 Net investment income (709,369) 1,388,572 432,025 712,791 412,595 Benefit payments (1,985,799) (1,888,159) (1,798,994) (1,708,929) (1,571,807) Administrative expense (1,616) (2,465) (3,973) (1,772) (3,600) Other expenses - - - - (5,303)
Net change in plan fiduciary - net position (502,052) 459,636 (1,370,942) 2,049,101 1,843,819 Plan fiduciary net position - beginning 6,528,517 6,026,465 7,899,459 5,850,358 4,006,539 Plan fiduciary net position - ending (b) 6,026,465 6,486,101 6,528,517 7,899,459 5,850,358 Net OPEB liability - ending (a)-(b) 25,779,333 $ 31,505,544 40,233,280 33,006,869 27,541,204 Plan fiduciary net position as a percentage of the
total OPEB liability 20.10% 16.06% 13.96% 19.31% 17.52% Covered employee payroll 208,969,756 $ 208,969,756 236,995,540 232,059,089 216,623,938 Net OPEB liability as a percentage of covered
employee payroll 12.34% 15.08% 16.98% 14.22% 12.71%
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
1 Fiscal 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. 112
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nt A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report FYE 2023 FYE 2022 FYE 2021 FYE 2020 FYE 2019
Actuarially determined contribution 2,148,293 $ 2,784,342 2,664,115 2,452,877 2,727,622 Contributions in relation to actuarially
determined contributions 3,314,085 3,156,420 - - 3,047,011 Contribution deficiency (excess) (1,165,792) $ (372,078) 2,664,115 2,452,877 (319,389) Covered employee payroll 236,995,540 $ 236,995,540 204,690,556 236,995,540 232,059,089 Contributions as a percentage of covered 1.40% 1.33% 0.00% 0.00% 1.31% employee payroll
Notes to Schedule
Valuation Date Used to Determine ADC 6/30/2021
Discount Rate Used to Determine ADC 5.55%
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll
Asset Valuation Method Market Value
Inflation 2.50%
Salary increases
Retirement Age
Mortality
Mortality Improvement
Healthcare Cost Trend Rate 5.8% in 2021 to 3.9% in 2076 CalPERS 2017 Experience Study
MacLeod 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 years
50 to 75
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nt A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report City of Santa Monica, California
<HDUEnded June 30, 202
SUPPLEMENTARY INFORMATION
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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.
Miscellaneous Grants Fund – To account for the receipt and expenditure of Federal, State and County awarded grants and special allocations provided to the City.
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. 114
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CITY OF SANTA MONICA, CALIFORNIA
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:
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.
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Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023
Special Revenue Funds
Beach
Recreation
Housing
Authority TORCA Asset Seizure
Citizens Option
for Public Safety Rent Control
Assets
Cash and investments (note 2) $ 1,515,103 - 1,978,024 1,601,599 760,420 1,861,790 Restricted cash and investments (note 2) 351,389 2,406,134 - - - - Receivables (net, where applicable, of allowances for uncollectibles):
Accounts 1,547,241 1,273 - 8,971 - 43,877
Leases (note 3) 12,354,472 - - - - -
Notes (note 4) - - 7,409,313 - - -
Taxes ------
Interest 18,729 4,768 15,811 6,089 2,509 18,268
Other governments - 1,030,123 - - - -
Deposits ------
Prepaids - - - - - 26,812
Restricted cash with fiscal agent (note 2) - - - - - -
Total assets $ 15,786,934 3,442,298 9,403,148 1,616,659 762,929 1,950,747
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES (DEFICIT)
Liabilities
Accounts payable $ 1,116,546 111,613 - - 1,225 49,389
Accrued liabilities 131,711 46,504 - - - 114,714
Contracts payable (retained percentage) 57,311 - 22,500 - - - Due to other funds (note 18) - 1,029,095 - - - -
Unearned revenue (note 7) 496,499 163,612 - - - 28,632
Deposits payable 350,848 - - - - -
Advances from other funds (note 18) 5,292,973 - - - - 215,894 Total liabilities 7,445,888 1,350,824 22,500 - 1,225 408,629
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue (note 7) - - - - - -
Deferred inflows leases 11,197,731 - - - - -
Total deferred inflows of resources 11,197,731 - - - - - Fund balances (deficit)
Nonspendable - - - - - 26,812
Restricted - 2,091,474 9,380,648 1,616,659 761,704 1,515,306 Unassigned (2,856,685) - - - - -
Total fund balances (2,856,685) 2,091,474 9,380,648 1,616,659 761,704 1,542,118 Total liabilities and fund balances $ 15,786,934 3,442,298 9,403,148 1,616,659 762,929 1,950,747 continued 116
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Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023
Special Revenue Funds
Gas Tax Local Return
Community
Development
Block Grant
Miscellaneous
Grants SCAQMD
Parks and
Recreation
Assets
Cash and investments (note 2) $ - - - - 1,031,287 -
Restricted cash and investments (note 2) 5,386,067 17,350,803 15,034 - - - Receivables (net, where applicable, of allowances for uncollectibles):
Accounts 204,558 536,577 - 225,396 - -
Leases (note 3) ------
Notes (note 4) - - 8,710,017 5,974,109 - -
Taxes ------
Interest 18,792 63,914 130 466 4,369 44
Other governments 186,933 - 405,754 20,594,761 62,366 - Deposits - - 3,257 - - -
Prepaids ------
Restricted cash with fiscal agent (note 2) - - - - - -
Total assets $ 5,796,350 17,951,294 9,134,192 26,794,732 1,098,022 44
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES (DEFICIT)
Liabilities
Accounts payable $ 13,683 876,288 39,007 906,128 - -
Accrued liabilities - - - 23,686 - -
Contracts payable (retained percentage) 65,665 249,889 - 424,035 - - Due to other funds (note 18) 459,741 - 277,002 12,142,919 - 126,673 Unearned revenue (note 7) - - - 1,965,189 - -
Deposits payable ------
Advances from other funds (note 18) - - - - - -
Total liabilities 539,089 1,126,177 316,009 15,461,957 - 126,673
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue (note 7) - - 405,754 9,933,098 - -
Deferred inflows leases - - - - - -
Total deferred inflows of resources - - 405,754 9,933,098 - - Fund balances (deficit)
Nonspendable ------
Restricted 5,257,261 16,825,117 8,412,429 9,808,121 1,098,022 - Unassigned - - - (8,408,444) - (126,629)
Total fund balances 5,257,261 16,825,117 8,412,429 1,399,677 1,098,022 (126,629) Total liabilities and fund balances $ 5,796,350 17,951,294 9,134,192 26,794,732 1,098,022 44 continued 117
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Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2023
Capital Projects
Fund
Debt Service
Fund Permanent Funds
Clean Beaches
and Ocean
Parcel Tax Debt Service
Cemetery
Perpetual Care
Mausoleum
Perpetual Care
Total nonmajor
governmental
funds
Assets
Cash and investments (note 2) $ 15,184,583 - 67,624 9,135 24,009,565 Restricted cash and investments (note 2) 2,002,050 - - - 27,511,477 Receivables (net, where applicable, of allowances for uncollectibles):
Accounts 4,763 - 12,733 - 2,585,389
Leases (note 3) - - - - 12,354,472
Notes (note 4) - - - - 22,093,439
Taxes 78,628 - - - 78,628
Interest 51,880 - 45,845 5,688 257,302
Other governments - - - - 22,279,937
Deposits - - - - 3,257
Prepaids - - - - 26,812
Restricted cash with fiscal agent (note 2) - 9,355,612 15,326,257 1,905,590 26,587,459 Total assets $ 17,321,904 9,355,612 15,452,459 1,920,413 137,787,737
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES (DEFICIT)
Liabilities
Accounts payable $ 155,954 - - - 3,269,833
Accrued liabilities - - - - 316,615
Contracts payable (retained percentage) 1,524,562 - - - 2,343,962 Due to other funds (note 18) - - - - 14,035,430
Unearned revenue (note 7) - - - - 2,653,932
Deposits payable - - - - 350,848
Advances from other funds (note 18) - - - - 5,508,867
Total liabilities 1,680,516 - - - 28,479,487
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue (note 7) - - - - 10,338,852
Deferred inflows leases - - - - 11,197,731
Total deferred inflows of resources - - - - 21,536,583
Fund balances (deficit)
Nonspendable - - 15,452,459 1,920,413 17,399,684
Restricted 15,641,388 9,355,612 - - 81,763,741
Unassigned - - - - (11,391,758)
Total fund balances 15,641,388 9,355,612 15,452,459 1,920,413 87,771,667 Total liabilities and fund balances $ 17,321,904 9,355,612 15,452,459 1,920,413 137,787,737 118
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Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
For the fiscal year ended June 30, 2023
Special Revenue Funds
Beach
Recreation
Housing
Authority TORCA Asset Seizure
Citizens Option
for Public Safety Rent Control
Revenues:
Other taxes $ - - 17,196 - - -
Licenses and permits 75,791 - - - - -
Intergovernmental 36,646 26,635,743 - 169,050 235,684 - Charges for services 13,276,822 - - - - 6,060,710
Investment income (36,610) (19,300) 70,174 2,062 (1,095) 18,493 Rental income 1,904,997 - - - - -
Other revenue 1,467,710 - 173,976 - - 668
Total revenues 16,725,356 26,616,443 261,346 171,112 234,589 6,079,871 Expenditures:
Current:
General government - - - - - -
Public safety - - - 125,620 135,158 -
General services 7,077,502 - - - - -
Community services 2,733,164 26,709,814 904,383 - - -
Library ------
Community development 8,009,396 - - - - 5,874,619
Debt service expenditures:
Principal - 52,505 - - - 20,638
Interest - 2,496 - - - 630
Total expenditures 17,820,062 26,764,815 904,383 125,620 135,158 5,895,887 Excess (deficiency) of revenues over (under) expenditures (1,094,706) (148,372) (643,037) 45,492 99,431 183,984 Other financing sources (uses)
Transfers in 136,295 71,657 - - - -
Transfers out (244,935) - (179,976) - - (152,171)
Subscription proceeds - - - - - 96,682
Total other financing sources (uses) (108,640) 71,657 (179,976) - - (55,489) Net change in fund balances (1,203,346) (76,715) (823,013) 45,492 99,431 128,495 Fund balances (deficit) at the beginning of year (1,653,339) 2,168,189 10,203,661 1,571,167 662,273 1,413,623 Fund balances at end of year $ (2,856,685) 2,091,474 9,380,648 1,616,659 761,704 1,542,118 continued
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5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Special Revenue Funds
Gas Tax Local Return
Community
Development
Block Grant
Miscellaneous
Grants SCAQMD
Parks and
Recreation
Revenues:
Other taxes $ - - - - - -
Licenses and permits - - - - - -
Intergovernmental 4,394,139 7,106,213 230,870 25,083,829 151,523 - Charges for services - - - - - -
Investment income (14,198) (8,277) (586) (291) 4,952 1,082 Rental income - - - - - -
Other revenue - - - 9,397 - -
Total revenues 4,379,941 7,097,936 230,284 25,092,935 156,475 1,082 Expenditures:
Current:
General government 5,497 - 14,942 152,313 83,026 -
Public safety - - - 2,785,151 - -
General services 1,323,195 5,393,601 - 12,468,653 - -
Community services - 51,474 415,854 1,345,808 - 5,772
Library - - - 76,200 - -
Community development - - - 399,240 - -
Debt service expenditures:
Principal ------
Interest ------
Total expenditures 1,328,692 5,445,075 430,796 17,227,365 83,026 5,772 Excess (deficiency) of revenues over (under) expenditures 3,051,249 1,652,861 (200,512) 7,865,570 73,449 (4,690) Other financing sources (uses)
Transfers in ------
Transfers out (2,331,348) (704,730) (123,041) (912,126) - - Subscription proceeds - - - - - -
Total other financing sources (uses) (2,331,348) (704,730) (123,041) (912,126) - - Net change in fund balances 719,901 948,131 (323,553) 6,953,444 73,449 (4,690) Fund balances (deficit) at the beginning of year 4,537,360 15,876,986 8,735,982 (5,553,767) 1,024,573 (121,939) Fund balances at end of year $ 5,257,261 16,825,117 8,412,429 1,399,677 1,098,022 (126,629) continued
120
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Capital Projects
Fund
Debt Service
Fund Permanent Funds
Clean Beaches
and Ocean
Parcel Tax Debt Service
Cemetery
Perpetual Care
Mausoleum
Perpetual Care
Total nonmajor
governmental
funds
Revenues:
Other taxes $ 3,701,772 - - - 3,718,968
Licenses and permits - - - - 75,791
Intergovernmental 3,334,223 - - - 67,377,920
Charges for services - - 338,617 48,309 19,724,458
Investment income (118,268) 10,642 536,150 67,433 512,363 Rental income - - - - 1,904,997
Other revenue - - - - 1,651,751
Total revenues 6,917,727 10,642 874,767 115,742 94,966,248 Expenditures:
Current:
General government - - - - 255,778
Public safety - - - - 3,045,929
General services 1,148,725 - - - 27,411,676
Community services - - - - 32,166,269
Library - - - - 76,200
Community development - 2,915,167 - - 17,198,422
Debt service expenditures:
Principal - 4,390,000 - - 4,463,143
Interest - 5,216,132 - - 5,219,258
Total expenditures 1,148,725 12,521,299 - - 89,836,675
Excess (deficiency) of revenues over (under) expenditures 5,769,002 (12,510,657) 874,767 115,742 5,129,573 Other financing sources (uses)
Transfers in - 13,358,063 - - 13,566,015
Transfers out (898,460) - (461,918) (57,324) (6,066,029) Subscription proceeds - - - - 96,682
Total other financing sources (uses) (898,460) 13,358,063 (461,918) (57,324) 7,596,668 Net change in fund balances 4,870,542 847,406 412,849 58,418 12,726,241 Fund balances (deficit) at the beginning of year 10,770,846 8,508,206 15,039,610 1,861,995 75,045,426 Fund balances at end of year $ 15,641,388 9,355,612 15,452,459 1,920,413 87,771,667 121
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Licenses and permits $ 123,250 75,791 - 75,791 (47,459) Intergovernmental 28,899 36,646 - 36,646 7,747
Charges for services 14,029,040 13,276,822 - 13,276,822 (752,218) Investment income - (36,610) - (36,610) (36,610)
Rental income 1,335,862 1,904,997 - 1,904,997 569,135
Other revenue 782,795 1,467,710 - 1,467,710 684,915
Total revenues 16,299,846 16,725,356 - 16,725,356 425,510 Expenditures:
General services:
Public works 6,507,797 6,518,904 9,170 6,528,074 (20,277) Other 69,005 24,614 - 24,614 44,391
Capital improvement 2,353,293 533,984 450,040 984,024 1,369,269 Total general services 8,930,095 7,077,502 459,210 7,536,712 1,393,383 Community services:
Community services 2,817,214 2,654,114 44,660 2,698,774 118,440 Capital improvement 904,811 79,050 67,380 146,430 758,381 Total Community services 3,722,025 2,733,164 112,040 2,845,204 876,821 Community development:
Community development 7,443,589 8,009,396 400 8,009,796 (566,207) Capital improvement 900,000 - - - 900,000
Total Community development 8,343,589 8,009,396 400 8,009,796 333,793 Total expenditures 20,995,709 17,820,062 571,650 18,391,712 2,603,997 Excess (deficiency) of revenues
over (under) expenditures (4,695,863) (1,094,706) (571,650) (1,666,356) 3,029,507 Other financing sources (uses):
Transfers in 131,511 136,295 - 136,295 4,784
Transfers out (218,322) (244,935) - (244,935) (26,613)
Total other financing sources (uses) (86,811) (108,640) - (108,640) (21,829) Net change in fund balance (4,782,674) (1,203,346) (571,650) (1,774,996) 3,007,678 Fund balance at beginning of year (1,653,339) (1,653,339) - (1,653,339) - Fund balance at end of year $ (6,436,013) (2,856,685) (571,650) (3,428,335) 3,007,678 122
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Intergovernmental $ 27,086,442 26,635,743 - 26,635,743 (450,699) Investment income - (19,300) - (19,300) (19,300)
Total revenues 27,086,442 26,616,443 - 26,616,443 (469,999) Expenditures:
Community services:
Community services 27,517,077 26,697,443 - 26,697,443 819,634 Capital improvement 12,371 12,371 - 12,371 -
Total community services 27,529,448 26,709,814 - 26,709,814 819,634 Principal - 52,505 - 52,505 (52,505)
Interest - 2,496 - 2,496 (2,496)
Total expenditures 27,529,448 26,764,815 - 26,764,815 764,633 Excess (deficiency) of revenues
over (under) expenditures (443,006) (148,372) - (148,372) 294,634 Other financing sources (uses):
Transfers in 65,258 71,657 - 71,657 6,399
Total other financing sources (uses) 65,258 71,657 - 71,657 6,399 Net change in fund balance (377,748) (76,715) - (76,715) 301,033 Fund balance at beginning of year 2,168,189 2,168,189 - 2,168,189 - Fund balance at end of year $ 1,790,441 2,091,474 - 2,091,474 301,033 123
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Other taxes $ 25,000 17,196 - 17,196 (7,804)
Investment income 110,000 70,174 - 70,174 (39,826)
Other revenue 50,000 173,976 - 173,976 123,976
Total revenues 185,000 261,346 - 261,346 76,346
Expenditures:
Community services:
Community services 6,000 - - - 6,000
Capital improvement 1,919,349 904,383 629,970 1,534,353 384,996 Total Community services 1,925,349 904,383 629,970 1,534,353 390,996 Total expenditures 1,925,349 904,383 629,970 1,534,353 390,996 Excess (deficiency) of revenues
over (under) expenditures (1,740,349) (643,037) (629,970) (1,273,007) 467,342 Other financing sources (uses):
Transfers out (86,268) (179,976) - (179,976) (93,708)
Total other financing sources (uses) (86,268) (179,976) - (179,976) (93,708) Net change in fund balance (1,826,617) (823,013) (629,970) (1,452,983) 373,634 Fund balance at beginning of year 10,203,661 10,203,661 - 10,203,661 - Fund balance at end of year $ 8,377,044 9,380,648 (629,970) 8,750,678 373,634 124
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Intergovernmental $ 220,000 235,684 - 235,684 15,684
Investment income 5,000 (1,095) - (1,095) (6,095)
Total revenues 225,000 234,589 - 234,589 9,589
Expenditures:
Public safety:
Police 190,821 135,158 45,560 180,718 10,103
Total public safety 190,821 135,158 45,560 180,718 10,103 Total expenditures 190,821 135,158 45,560 180,718 10,103 Net change in fund balance 34,179 99,431 (45,560) 53,871 19,692 Fund balance at beginning of year 662,273 662,273 - 662,273 - Fund balance at end of year $ 696,452 761,704 (45,560) 716,144 19,692 125
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Intergovernmental $ 4,597,728 4,394,139 - 4,394,139 (203,589) Investment income 18,000 (14,198) - (14,198) (32,198)
Total revenues 4,615,728 4,379,941 - 4,379,941 (235,787) Expenditures:
General government:
Other 5,261 5,497 - 5,497 (236)
Total general government 5,261 5,497 - 5,497 (236)
General services:
Capital improvement 6,480,426 1,323,195 2,122,620 3,445,815 3,034,611 Total general services 6,480,426 1,323,195 2,122,620 3,445,815 3,034,611 Total expenditures 6,485,687 1,328,692 2,122,620 3,451,312 3,034,375 Excess (deficiency) of revenues
over (under) expenditures (1,869,959) 3,051,249 (2,122,620) 928,629 2,798,588 Other financing sources (uses):
Transfers out (2,681,020) (2,331,348) - (2,331,348) 349,672 Total other financing sources (uses) (2,681,020) (2,331,348) - (2,331,348) 349,672 Net change in fund balance (4,550,979) 719,901 (2,122,620) (1,402,719) 3,148,260 Fund balance at beginning of year 4,537,360 4,537,360 - 4,537,360 - Fund balance at end of year $ (13,619) 5,257,261 (2,122,620) 3,134,641 3,148,260 126
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Intergovernmental $ 6,325,938 7,106,213 - 7,106,213 780,275 Investment income 150,000 (8,277) - (8,277) (158,277)
Total revenues 6,475,938 7,097,936 - 7,097,936 621,998
Expenditures:
General services:
Mobility 494,538 357,175 - 357,175 137,363
Capital improvement 14,146,196 5,036,426 1,709,960 6,746,386 7,399,810 Total general services 14,640,734 5,393,601 1,709,960 7,103,561 7,537,173 Capital improvement 82,747 51,474 - 51,474 31,273
Total expenditures 14,723,481 5,445,075 1,709,960 7,155,035 7,568,446 Excess (deficiency) of revenues
over (under) expenditures (8,247,543) 1,652,861 (1,709,960) (57,099) 8,190,444 Other financing sources (uses):
Transfers out (738,000) (704,730) - (704,730) 33,270
Total other financing sources (uses) (738,000) (704,730) - (704,730) 33,270 Net change in fund balance (8,985,543) 948,131 (1,709,960) (761,829) 8,223,714 Fund balance at beginning of year 15,876,986 15,876,986 - 15,876,986 - Fund balance at end of year $ 6,891,443 16,825,117 (1,709,960) 15,115,157 8,223,714 127
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Intergovernmental $ 1,235,326 230,870 - 230,870 (1,004,456) Investment income 5,000 (586) - (586) (5,586)
Total revenues 1,240,326 230,284 - 230,284 (1,010,042)
Expenditures:
General government:
Other 111,865 14,942 - 14,942 96,923
Total general government 111,865 14,942 - 14,942 96,923 General services:
Capital improvement 500,000 - - - 500,000
Total general services 500,000 - - - 500,000
Community services:
Community services 504,097 412,855 35,740 448,595 55,502 Capital improvement 865,700 2,999 101,000 103,999 761,701 Total community services 1,369,797 415,854 136,740 552,594 817,203 Total expenditures 1,981,662 430,796 136,740 567,536 1,414,126 Excess (deficiency) of revenues
over (under) expenditures (741,336) (200,512) (136,740) (337,252) 404,084 Other financing sources (uses):
Transfers out (140,000) (123,041) - (123,041) 16,959
Total other financing sources (uses) (140,000) (123,041) - (123,041) 16,959 Net change in fund balance (881,336) (323,553) (136,740) (460,293) 421,043 Fund balance at beginning of year 8,735,982 8,735,982 - 8,735,982 - Fund balance at end of year $ 7,854,646 8,412,429 (136,740) 8,275,689 421,043 128
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual
Miscellaneous Grants Special Revenue Fund
For the fiscal year ended June 30, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Intergovernmental $ 55,758,553 25,083,829 - 25,083,829 (30,674,724) Investment income - (291) - (291) (291)
Other revenue 289,178 9,397 - 9,397 (279,781)
Total revenues 56,047,731 25,092,935 - 25,092,935 (30,954,796) Expenditures:
General government:
Other 1,038,578 152,313 187,830 340,143 698,435
Total general government 1,038,578 152,313 187,830 340,143 698,435 Public safety:
City Manager 565,000 - - - 565,000
Police 1,670,090 1,037,604 - 1,037,604 632,486
Fire 4,078,094 1,747,547 233,000 1,980,547 2,097,547
Total public safety 6,313,184 2,785,151 233,000 3,018,151 3,295,033 General services:
Public works 644,574 390,904 252,090 642,994 1,580
Capital improvement 33,527,230 12,077,749 1,976,840 14,054,589 19,472,641 Total general services 34,171,804 12,468,653 2,228,930 14,697,583 19,474,221 Community services:
Community services 3,103,638 915,332 80,970 996,302 2,107,336 Capital improvement 565,421 440,330 - 440,330 125,091
Total community services 3,669,059 1,355,662 80,970 1,436,632 2,232,427 Libraries:
Library 98,618 56,659 - 56,659 41,959
Capital improvement 286,948 19,541 1,460 21,001 265,947 Total libraries 385,566 76,200 1,460 77,660 307,906
Community development:
Community development 1,917,575 138,025 - 138,025 1,779,550 Housing - (3) - (3) 3
Capital improvement 5,472,386 251,364 - 251,364 5,221,022 Community development 7,389,961 389,386 - 389,386 7,000,575 Total expenditures 52,968,152 17,227,365 2,732,190 19,959,555 33,008,597 Excess (deficiency) of revenues
over (under) expenditures 3,079,579 7,865,570 (2,732,190) 5,133,380 2,053,801 Other financing sources (uses):
Transfers out (157,144) (912,126) - (912,126) (754,982) Total other financing sources (uses) (157,144) (912,126) - (912,126) (754,982) Net change in fund balance 2,922,435 6,953,444 (2,732,190) 4,221,254 1,298,819 Fund balance at beginning of year (5,553,767) (5,553,767) - (5,553,767) - Fund balance at end of year $ (2,631,332) 1,399,677 (2,732,190) (1,332,513) 1,298,819 129
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Intergovernmental $ 137,004 151,523 - 151,523 14,519
Investment income 10,000 4,952 - 4,952 (5,048)
Total revenues 147,004 156,475 - 156,475 9,471
Expenditures:
General government:
Other - 7,613 7,770 15,383 (15,383)
Capital improvement 94,913 75,413 19,500 94,913 -
Total general government 94,913 83,026 27,270 110,296 (15,383) General services:
Capital improvement 747,248 - 426,500 426,500 320,748
Total general services 747,248 - 426,500 426,500 320,748 Total expenditures 842,161 83,026 453,770 536,796 305,365 Net change in fund balance (695,157) 73,449 (453,770) (380,321) 314,836 Fund balance at beginning of year 1,024,573 1,024,573 - 1,024,573 - Fund balance at end of year $ 329,416 1,098,022 (453,770) 644,252 314,836 130
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Investment income $ 3,000 1,082 - 1,082 (1,918)
Total revenues 3,000 1,082 - 1,082 (1,918)
Expenditures:
Capital improvement 136,542 5,772 20,360 26,132 110,410 Total expenditures 136,542 5,772 20,360 26,132 110,410
Net change in fund balance (133,542) (4,690) (20,360) (25,050) 108,492 Fund balance at beginning of year (121,939) (121,939) - (121,939) - Fund balance at end of year $ (255,481) (126,629) (20,360) (146,989) 108,492 131
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
Budget
Actual,
GAAP basis Encumbrance
Actual,
budgetary
basis
Variance
with budget
Revenues:
Other taxes $ 3,588,404 3,701,772 - 3,701,772 113,368
Intergovernmental 3,297,465 3,334,223 - 3,334,223 36,758 Investment income 130,000 (118,268) - (118,268) (248,268) Total revenues 7,015,869 6,917,727 - 6,917,727 (98,142) Expenditures:
General services:
Public works 939,512 547,427 382,440 929,867 9,645
GS Other 5,223 - - - 5,223
Capital improvement 9,987,633 601,298 360,640 961,938 9,025,695 Total general services 10,932,368 1,148,725 743,080 1,891,805 9,040,563 Total expenditures 10,932,368 1,148,725 743,080 1,891,805 9,040,563 Excess (deficiency) of revenues
over (under) expenditures (3,916,499) 5,769,002 (743,080) 5,025,922 8,942,421 Other financing sources (uses):
Transfers out (2,750,768) (898,460) - (898,460) 1,852,308 Total other financing sources (uses) (2,750,768) (898,460) - (898,460) 1,852,308 Net change in fund balance (6,667,267) 4,870,542 (743,080) 4,127,462 10,794,729 Fund balance at beginning of year 10,770,846 10,770,846 - 10,770,846 - Fund balance at end of year $ 4,103,579 15,641,388 (743,080) 14,898,308 10,794,729 132
5.A.a
ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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. 133
5.A.a
Packet Pg. 331 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Net Position
Nonmajor Enterprise Funds
June 30, 2023
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) $ 731,456 36,794,612 8,353,903 1,006,055 3,440,477 354,221 50,680,724 Restricted cash and investments (note 2) - 1,278,418 286,555 8,518,827 126,389 - 10,210,189 Receivables (net, where applicable, of
allowances for uncollectibles):
Accounts 775,189 176,401 297,548 4,012 572,548 - 1,825,698 Interest 2,171 129,136 17,396 32,785 9,924 1,625 193,037 Leases (note 3) - 6,727,486 1,838,515 - - - 8,566,001
Taxes - - - 23,453 - - 23,453
Due from other funds - 7,427,303 - - - - 7,427,303
Total current assets 1,508,816 52,533,356 10,793,917 9,585,132 4,149,338 355,846 78,926,405 Noncurrent assets:
Lease receivable, non-current - 11,360,661 6,681,223 - - - 18,041,884 Capital assets:
Land - 8 - - 4 1,362,700 1,362,712
Construction in progress - 627,349 8,158,893 57,864 - - 8,844,106 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 3,082,019 782,158 142,591 15,072,657 Machinery and equipment 1,902,858 568,080 515,426 35,750 374,033 7,237 3,403,384 Infrastructure - - 17,382,609 11,224,711 - - 28,607,320 Less: accumulated depreciation and amortization (329,702) (11,273,632) (18,566,621) (6,439,007) (2,407,225) (586,193) (39,602,380) Net capital assets 1,573,156 3,295,384 18,867,732 7,961,337 465,060 1,872,577 34,035,246 Total noncurrent assets 1,573,156 14,656,045 25,548,955 7,961,337 465,060 1,872,577 52,077,130 Total assets 3,081,972 67,189,401 36,342,872 17,546,469 4,614,398 2,228,423 131,003,535
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions 528,634 1,095,237 1,343,989 - 387,885 - 3,355,745 Deferred outflows from OPEB 12,899 18,934 53,104 - 25,593 - 110,530 TOTAL DEFERRED OUTFLOWS OF RESOURCES 541,533 1,114,171 1,397,093 - 413,478 - 3,466,275 Liabilities
Current liabilities:
Accounts payable 12,695 574,517 338,558 75,114 96,030 - 1,096,914 Accrued liabilities 25,306 118,482 153,622 - 34,605 - 332,015 Contracts payable (retained percentage) 102,294 155,808 2,435 102,542 17,922 - 381,001 Compensated absences due within one year (note 8) 47,141 76,878 79,453 - 22,599 - 226,071 Liabilities payable from restricted assets - deposits - 1,508,346 550,872 - - - 2,059,218 Total current liabilities 187,436 2,434,031 1,124,940 177,656 171,156 - 4,095,219 Long-term liabilities:
Accrued liabilities - 58,516 64,792 - 10,217 - 133,525
Compensated absences due in more than one year (note 8) 33,305 30,836 104,050 - 21,667 - 189,858 Net OPEB liability due in more than one year (note 12) 29,710 43,611 122,313 - 58,947 - 254,581 Net pension liability due in more than one year (note 12) 1,108,956 2,297,560 2,819,385 - 813,695 - 7,039,596 Total long-term liabilities 1,171,971 2,430,523 3,110,540 - 904,526 - 7,617,560 Total liabilities 1,359,407 4,864,554 4,235,480 177,656 1,075,682 - 11,712,779
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions 148,202 307,049 376,786 - 108,743 - 940,780 Deferred inflows from OPEB 17,083 25,076 70,329 - 33,894 - 146,382 Deferred inflows from leases - 16,725,221 7,796,769 - - - 24,521,990 TOTAL DEFERRED INFLOWS OF RESOURCES 165,285 17,057,346 8,243,884 - 142,637 - 25,609,152 Net position
Net investment in capital assets 1,573,156 3,288,116 18,867,732 7,961,337 465,060 1,872,577 34,027,978 Unrestricted 525,657 43,093,556 6,392,869 9,407,476 3,344,497 355,846 63,119,901 Total net position $ 2,098,813 46,381,672 25,260,601 17,368,813 3,809,557 2,228,423 97,147,879 134
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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, 2023
Business-Type Activities - Enterprise Funds
Community
Broadband Airport Pier
Stormwater
Management Cemetery
Parking
Authority
Total
nonmajor
enterprise funds
Operating revenues
Charges for services $ 3,227,637 17,268,226 8,793,254 1,379,997 2,490,123 - 33,159,237 Total operating revenues 3,227,637 17,268,226 8,793,254 1,379,997 2,490,123 - 33,159,237 Operating expenses
Personnel services 952,100 2,003,395 2,729,110 2 475,490 949 6,161,046 Administrative indirect 178,897 1,187,725 1,237,937 - 344,736 - 2,949,295 Contractual services 552,956 1,196,528 1,032,855 78,830 390,494 - 3,251,663 Repairs and maintenance 74,083 1,188,598 662,914 - 41,653 - 1,967,248 Materials and supplies 7,442 4,301,366 464,363 - 569,180 37,962 5,380,313 Utilities 5,914 1,120,396 251,286 - 138,861 - 1,516,457 Casualty property and liability costs 9,949 554,675 830,994 - 124,862 - 1,520,480 Miscellaneous fees and costs - - - - 4,963 - 4,963
Depreciation and amortization 185,077 294,670 474,641 378,368 41,535 16,263 1,390,554 Other 329 1,179,097 761,324 27,418 20,427 - 1,988,595
Total operating expenses 1,966,747 13,026,450 8,445,424 484,618 2,152,201 55,174 26,130,614 Operating income (loss) 1,260,890 4,241,776 347,830 895,379 337,922 (55,174) 7,028,623 Nonoperating revenues (expenses)
Investment income (2,308) (40,953) 25,072 (3,341) (15,432) 35,247 (1,715) Other nonoperating revenues - 1,685,446 293,877 2,010,888 87,126 - 4,077,337 Total nonoperating revenues (expenses) net (2,308) 1,644,493 318,949 2,007,547 71,694 35,247 4,075,622 Income before transfers 1,258,582 5,886,269 666,779 2,902,926 409,616 (19,927) 11,104,245 Transfers in (note 18) - 161,996 3,188,467 - 519,242 - 3,869,705 Transfers out (note 18) (222,000) (564,452) (188,960) (1,473,361) (14,929) - (2,463,702) Change in net position 1,036,582 5,483,813 3,666,286 1,429,565 913,929 (19,927) 12,510,248 Net position at beginning of year, as restated (note 20) 1,062,231 40,897,859 21,594,315 15,939,248 2,895,628 2,248,350 84,637,631 Net position at end of year $ 2,098,813 46,381,672 25,260,601 17,368,813 3,809,557 2,228,423 97,147,879 135
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Broadband Airport Pier
Stormwater
Management Cemetery
Parking
Authority
Total nonmajor
enterprise
funds
Cash flows from operating activities:
Cash received from customers 2,759,948 $ 17,426,402 8,834,212 1,398,414 2,556,504 — 32,975,480 Cash payments for materials and services (943,981) (11,528,341) (5,851,428) (27,715) (1,615,054) (37,962) (20,004,481) Cash payments to employees for services (973,682) (2,027,740) (2,862,632) (2) (761,747) (949) (6,626,752) Other revenue received — 1,194,299 282,965 2,010,888 87,126 — 3,575,278 Net cash provided by (used in)
operating activities 842,285 5,064,620 403,117 3,381,585 266,829 (38,911) 9,919,525 Cash flows from noncapital financing activities:
Repayment of advances received from other funds — — — 8,821 — — 8,821 Transfers in — 90,514 3,188,467 — 519,242 — 3,798,223
Transfers out (222,000) (564,452) (188,960) (1,473,361) (14,929) — (2,463,702) Net cash provided by (used in)
noncapital financing activities (222,000) (473,938) 2,999,507 (1,464,540) 504,313 — 1,343,342 Cash flows from capital and related financing activities:
Acquisition and construction of capital assets — (346,715) (385,290) (108,043) — — (840,048) Net cash used in capital and related
financing activities — (346,715) (385,290) (108,043) — — (840,048) Cash flows from investing activities:
Investment income 26,211 1,655,307 255,028 427,838 114,095 58,533 2,537,012 Net cash provided by investing activities 26,211 1,655,307 255,028 427,838 114,095 58,533 2,537,012 Net increase in cash
and cash equivalents 646,496 5,899,274 3,272,362 2,236,840 885,237 19,622 12,959,831 Cash and cash equivalents at beginning of year 114,567 33,934,542 5,605,296 7,735,071 2,816,949 356,761 50,563,186 Effect of unrealized loss (29,607) (1,760,786) (237,200) (447,029) (135,320) (22,162) (2,632,104) Cash and cash equivalents at end of year 731,456 38,073,030 8,640,458 9,524,882 3,566,866 354,221 60,890,913 Cash and investments 731,456 36,794,612 8,353,903 1,006,055 3,440,477 354,221 50,680,724 Restricted cash and investments — 1,278,418 286,555 8,518,827 126,389 — 10,210,189 Total cash and cash equivalents 731,456 38,073,030 8,640,458 9,524,882 3,566,866 354,221 60,890,913 (Continued)
CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Cash Flows
Nonmajor Enterprise Funds
For the fiscal year ended June 30, 2023
Business-Type Activities - Enterprise Funds
136
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CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Cash Flows
Nonmajor Enterprise Funds
For the fiscal year ended June 30, 2023
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) 1,260,890 $ 4,241,776 347,830 895,379 337,922 (55,174) 7,028,623 Adjustments to reconcile operating income
(loss) to net cash provided by (used in)
operating activities:
Add depreciation and amortization 185,077 294,670 474,641 378,368 41,535 16,263 1,390,554 Add allowance for doubtful accounts — — (141,368) — — — (141,368) Other revenue received — 1,194,299 282,965 2,010,888 87,126 — 3,575,278 Changes in assets and liabilities and deferred outflows and inflows of resources:
(Increase) decrease in accounts receivable (467,689) 201,015 182,326 41,870 66,381 — 23,903 (Increase) in taxes receivable — — — (23,453) — — (23,453) Decrease in prepaids — 27 — — — — 27
Increase (decrease) in accounts payable (123,394) (843,117) (377,995) 75,104 20,122 — (1,249,280) Increase (decrease) in accrued liabilities 2,704 (40,830) (35,518) — (14,847) — (88,491) Increase (decrease) in contracts payable 8,983 43,134 (231,760) 3,429 — — (176,214) (Decrease) in deposits payable from restricted assets — (42,839) — — — — (42,839) Increase in compensated absences payable 8,239 14,827 10,724 — 1,754 — 35,544 Net OPEB liability and related changes in deferred
outflows and inflows of resources (9,039) (13,269) (37,217) — (17,937) — (77,462) Net pension liability and related changes in deferred
outflows and inflows of resources 14,927 (23,486) (71,511) — (255,227) — (335,297) Total adjustments (418,605) 822,844 55,287 2,486,206 (71,093) 16,263 2,890,902 Net cash provided by (used in)
operating activities 842,285 $ 5,064,620 403,117 3,381,585 266,829 (38,911) 9,919,525 Schedule of non-cash capital and related financing activities:
Capital assets acquired through accounts payable — — 7,268 — — — 7,268 137
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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. 138
5.A.a
Packet Pg. 336 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Net Position
Internal Service Funds
June 30, 2023
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) $ 35,709,287 534,748 17,228,764 7,057,996 2,409,083 62,768,065 125,707,943 Receivables:
Accounts 11,872 - 11,741 - 5,966 - 29,579
Interest 116,934 4,865 43,819 22,253 207 265,993 454,071 Inventory 2,555 - - - - - 2,555
Total current assets 35,840,648 539,613 17,284,324 7,080,249 2,415,256 63,034,058 126,194,148 Noncurrent assets:
Capital assets:
Construction in progress - - - - 60,300 - 60,300
Subscription asset 190,129 - 101,169 101,169 - 128,782 521,249 Machinery and equipment 44,751,125 1,749,231 - - - 5,792 46,506,148 Less: accumulated depreciation and amortization (32,076,739) (1,540,995) (67,446) (67,446) - (91,646) (33,844,272) Net capital assets 12,864,515 208,236 33,723 33,723 60,300 42,928 13,243,425 Total assets 48,705,163 747,849 17,318,047 7,113,972 2,475,556 63,076,986 139,437,573
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflows from pensions 1,770,254 - - - 1,061,955 - 2,832,209 Deferred outflows from OPEB 48,942 - - - 22,001 - 70,943 TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,819,196 - - - 1,083,956 - 2,903,152 Liabilities
Current liabilities:
1,703,709 136,932 1,571,040 70,349 8,657 236,057 3,726,744 199,615 - - - 128,033 - 327,648
- - - 1,500,000 - - 1,500,000
17,486 - 38,570 38,570 - 38,568 133,194
- 5,735 2,908 - - - 8,643
121,014 - - - 72,157 - 193,171
Accounts payable
Accrued liabilities
Due to other funds (note 18)
Subscription liability due within one year
Contracts payable (retained percentage)
Compensated absences due within one year (note 8)
Claims payable due within one year (note 9) - - 13,051,401 2,114,644 - 9,856,917 25,022,962 Total current liabilities 2,041,824 142,667 14,663,919 3,723,563 208,847 10,131,542 30,912,362 Long-term liabilities:
Accrued liabilities 101,070 - - - 67,626 - 168,696
Compensated absences due in more than one year (note 8) 94,013 - - - 101,573 - 195,586 Subscription liability due in more than one year 115,454 - - - - - 115,454 Claims payable due in more than one year (note 9) - - 11,224,658 3,790,165 - 38,521,075 53,535,898 Net OPEB liability due in more than one year (note 12) 112,728 - - - 50,675 - 163,403 Net pension liability due in more than one year (note 12) 3,713,594 - - - 2,227,742 - 5,941,336 Total long-term liabilities 4,136,859 - 11,224,658 3,790,165 2,447,616 38,521,075 60,120,373 Total liabilties 6,178,683 142,667 25,888,577 7,513,728 2,656,463 48,652,617 91,032,735
DEFERRED INFLOWS OF RESOURCES
Deferred inflows from pensions 496,289 - - - 297,718 - 794,007 Deferred inflows from OPEB 64,818 - - - 29,138 - 93,956 TOTAL DEFERRED INFLOWS OF RESOURCES 561,107 - - - 326,856 - 887,963 Net position
Net investment in capital assets 11,633,627 208,236 (4,847) (4,847) 60,300 4,360 11,896,829 Unrestricted 32,150,942 396,946 (8,565,683) (394,909) 515,893 14,420,009 38,523,198 Total net position $ 43,784,569 605,182 (8,570,530) (399,756) 576,193 14,424,369 50,420,027 139
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ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report
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, 2023
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 $ 18,271,667 2,328,222 137,428,146 5,200,000 5,357,547 15,687,328 184,272,910 Total operating revenues 18,271,667 2,328,222 137,428,146 5,200,000 5,357,547 15,687,328 184,272,910 Operating expenses
Personnel services 3,054,676 - - - 1,740,032 - 4,794,708 Administrative indirect 978,967 - - - 615,880 - 1,594,847 Contractual services 304,840 - 8,966 9,391 91,915 845,584 1,260,696 Repairs and maintenance 2,374,324 - 1,969 1,969 7,507 3,373 2,389,142 Materials and supplies 1,045,033 2,914,897 - - 38,754 500 3,999,184 Utilities 92,384 - - - 664 - 93,048
Casualty property and liability costs 265,197 - - - 36,915 - 302,112 Claims expense net of claims reserve adjustment - - 132,125,948 5,082,036 - 5,053,206 142,261,190 Insurance and bonds - - 3,048,470 3,039,271 5,299,479 686,255 12,073,475 Miscellaneous fees and costs - - 2,772,446 393,438 - 938,675 4,104,559 Depreciation and amortization 4,067,178 23,137 33,723 33,723 - 42,927 4,200,688 Other 314,550 - - - 375 2,630 317,555
Total operating expenses 12,497,149 2,938,034 137,991,522 8,559,828 7,831,521 7,573,150 177,391,204 Operating income (loss) 5,774,518 (609,812) (563,376) (3,359,828) (2,473,974) 8,114,178 6,881,706 Nonoperating revenues
Investment income (78,141) 45,518 (29,884) 10,895 (406) 159,439 107,421 Interest expense (6,658) - (2,039) (2,039) - (2,033) (12,769) Gain on disposal of capital assets 132,024 - - - - - 132,024 Other nonoperating revenues 4,308 - - - - 15,914 20,222 Total nonoperating revenues 51,533 45,518 (31,923) 8,856 (406) 173,320 246,898 Income (loss) before transfers 5,826,051 (564,294) (595,299) (3,350,972) (2,474,380) 8,287,498 7,128,604 Transfers in (note 18) - - - - 2,556,186 - 2,556,186
Transfers out (note 18) - - (584,306) (405,224) - (8,222,199) (9,211,729) Change in net position 5,826,051 (564,294) (1,179,605) (3,756,196) 81,806 65,299 473,061 Net position at beginning of year, as restated (note 20) 37,958,518 1,169,476 (7,390,925) 3,356,440 494,387 14,359,070 49,946,966 Net position at end of year $ 43,784,569 605,182 (8,570,530) (399,756) 576,193 14,424,369 50,420,027 140
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ment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report 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 18,536,992 $ 2,328,222 137,428,146 5,200,000 5,373,577 15,687,328 184,554,265 Cash payments for materials and services (5,211,700) (2,955,229) (4,706,028) (3,394,740) (6,087,472) (2,461,365) (24,816,534) Cash payments to employees for services (3,347,646) — — — (1,835,775) — (5,183,421) Cash payments for claims and related expenses — — (128,830,950) (3,496,699) — (9,751,928) (142,079,577) Other revenue received — — — — — 15,914 15,914
Net cash provided by (used in)
operating activities 9,977,646 (627,007) 3,891,168 (1,691,439) (2,549,670) 3,489,949 12,490,647 Cash flows from noncapital financing activities:
Due to Other Funds — — — 1,500,000 — — 1,500,000
Transfers in — — — — 2,556,186 — 2,556,186
Transfers out — — (584,306) (405,224) — (8,222,199) (9,211,729) Net cash provided by (used in) noncapital financing activities — — (584,306) 1,094,776 2,556,186 (8,222,199) (5,155,543) Cash flows from capital and related financing activities:
Acquisition and construction of capital assets (927,204) (231,374) — — — — (1,158,578) Proceeds from sale of capital assets 146,899 — — — — — 146,899 Payments on SBITA liability (15,961) — (37,029) (37,029) — (35,631) (125,650) Interest on SBITA liability (2,350) — (2,039) (2,039) — (2,033) (8,461) Net cash used in capital and related financing activities (798,616) (231,374) (39,068) (39,068) — (37,664) (1,145,790) Cash flows from investing activities – investment income 1,453,998 112,344 544,799 303,892 1,593,914 3,669,107 7,678,054 Net increase (decrease) in cash and
cash equivalents 10,633,028 (746,037) 3,812,593 (331,839) 1,600,430 (1,100,807) 13,867,368 Cash and cash equivalents at beginning of year 26,670,668 1,347,119 14,013,651 7,693,250 2,403,062 67,495,714 119,623,464 Effect of unrealized loss (1,594,409) (66,334) (597,480) (303,415) (1,594,409) (3,626,842) (7,782,889) Cash and cash equivalents at end of year 35,709,287 534,748 17,228,764 7,057,996 2,409,083 62,768,065 125,707,943 Reconciliation of operating income (loss) to net cash
provided by (used in) operating income (loss):
Operating income (loss) 5,774,518 $ (609,812) (563,376) (3,359,828) (2,473,974) 8,114,178 6,881,706 Adjustments to reconcile operating income (loss) to
net cash provided by (used in) operating activities:
Add depreciation and amortization 4,067,178 23,137 33,723 33,723 — 42,927 4,200,688 Other non-oper revenue (expense) — — — — — 15,914 15,914 Changes in assets and liabilities and deferred outflows and inflows of resources:
(Increase) decrease in accounts receivable 265,325 — (11,031) — 16,030 275,467 545,791 Decrease in inventory 10,418 — — — — — 10,418
Increase (decrease) in accounts payable 153,177 (40,456) 1,122,937 49,333 4,017 15,661 1,304,669 (Decrease) in accrued liabilities (104,887) — (22) (4) (29,511) (9) (134,433) Increase in compensated absences payable 20,184 — — — 8,507 — 28,691 Increase (decrease) in claims payable — — 3,306,029 1,585,337 — (4,974,189) (82,823) Increase in contracts payable — 124 2,908 — — — 3,032
Net OPEB liability and related changes in deferred
outflows and inflows of resources (34,300) — — — (15,418) — (49,718) Net pension liability and related changes in deferred
outflows and inflows of resources (173,967) — — — (59,321) — (233,288) Total adjustments 4,203,128 (17,195) 4,454,544 1,668,389 (75,696) (4,624,229) 5,608,941 Net cash provided by (used in) operating activities 9,977,646 $ (627,007) 3,891,168 (1,691,439) (2,549,670) 3,489,949 12,490,647 Schedule of non-cash capital and related financing activities:
Capital assets acquired through accounts payable 1,097,948 — — — — — 1,097,948 Gain on disposal of capital assets 132,024 — — — — — 132,024
CITY OF SANTA MONICA, CALIFORNIA
Combining Statement of Cash Flows
Internal Service Funds
For the fiscal year ended June 30, 2023
141
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Notes Receivable
Supplementary Information
For the fiscal year ended June 30, 2023
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, 2023, $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, 2023, $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, 2023, $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, 2023, $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, 2023, $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, 2023, $19,400,000 had been disbursed to the borrower.
142
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Notes Receivable
Supplementary Information
For the fiscal year ended June 30, 2023
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, 2023, $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, 2023, $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, 2023, $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, 2023, $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, 2023, $10,643,109 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, 2023, $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, 2023, $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 143
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CITY OF SANTA MONICA, CALIFORNIA
Notes Receivable
Supplementary Information
For the fiscal year ended June 30, 2023
Corporation of Santa Monica for an affordable housing project located at 1819 Pico Boulevard et al. This 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, 2023, $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, 2023, $20,650,000 had been disbursed to the borrower.
p. A promissory note dated June 1, 2022 in the amount of $11,742,234 was executed with Laurel EAH NC, LLC for the acquisition, predevelopment, and construction expenses for an affordable housing project located at 1413 Michigan Avenue. This is a 3% interest loan with a fifty-five-year term. Payments will be made from residual receipts, if any. The loan is due and payable at the end of the loan term. As of June 30, 2023, $5,087,439 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 fifty-four (54) months from the date of the Note, unless further extended. This is a 0% interest loan. As of June 30, 2023, $14,360,237 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, 2023, 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, 2023, $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 144
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CITY OF SANTA MONICA, CALIFORNIA
Notes Receivable
Supplementary Information
For the fiscal year ended June 30, 2023
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, 2023, 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, 2023, $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, 2023, $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, 2023, $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, 2023, $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, 2023, $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. 145
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CITY OF SANTA MONICA, CALIFORNIA
Notes Receivable
Supplementary Information
For the fiscal year ended June 30, 2023
As of June 30, 2023, $5,870,000 had been disbursed to the borrower. This was disbursed from the Low 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, 2023, 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, 2023, $685,738 had been disbursed to the borrower.
cc. A promissory note dated June 1, 2022 in the amount of $11,742,234 was executed with Laurel EAH NC, LLC for the acquisition, predevelopment, and construction expenses for an affordable housing project located at 1413 Michigan Avenue. This is a 3% interest loan with a fifty-five-year term. Payments will be made from residual receipts, if any. The loan is due and payable at the end of the loan term. As of June 30, 2023, $6,654,795 had been disbursed to the borrower. A part of this balance was transferred from the Special Revenue Source Fund. See item "p" above.
Nonmajor Governmental Funds
dd. 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 upon resale, transfer or default. As of June 30, 2023, the outstanding balances of such loans total $663,506. ee. 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, 2023, $400,000 had been disbursed to the borrower. This was disbursed from the TORCA Fund. See item “kk” below for the amount disbursed from the Miscellaneous Grants Fund.
ff. 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 146
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CITY OF SANTA MONICA, CALIFORNIA
Notes Receivable
Supplementary Information
For the fiscal year ended June 30, 2023
February 8, 2061, 55-years from February 8, 2006. As of June 30, 2023, $6,345,807 had been disbursed to the borrower. This was disbursed from the TORCA Fund. gg. 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, 2023, $841,600 had been disbursed to the borrower. This was disbursed from the CDBG Fund. hh. 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, 2023, $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.
ii. 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, 2023, the outstanding balance is $669,456. jj. 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, 2023, the CDBG Program Emergency Supplemental Fund outstanding balance is $5,506,997. See item “mm” below for the amount disbursed from the Miscellaneous Grants Fund.
kk. 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, 2023, $800,000 had been disbursed to the borrower. This was disbursed from the Miscellaneous Grants Fund. See item “ee” above for the amount disbursed from the TORCA Fund.
ll. Two promissory notes dated February 13, 2007, one in the amount of $5,870,000 and one for $1,300,000 147
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CITY OF SANTA MONICA, CALIFORNIA
Notes Receivable
Supplementary Information
For the fiscal year ended June 30, 2023
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, 2023, $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.
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, 2023, the Miscellaneous Grants Fund outstanding balance is $3,874,108. See item “jj” above for the amount disbursed from the CDBG fund. 148
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Packet Pg. 346 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report City of Santa Monica, California
Year Ended June 30, 202
STATISTICAL SECTION
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Packet Pg. 347 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report Table
Financial Trends Information
These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. 1 Net Position by Component - Last Ten Fiscal Years
2 Changes in Net Position - Last Ten Fiscal Years
3 Fund Balance of Governmental Funds - Last Ten Fiscal Years 4 Changes in Fund Balance of Governmental Funds - Last Ten Fiscal Years Revenue Capacity Information
These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax.
5 General Fund Tax Revenues by Source - Last Ten Fiscal Years 6 Assessed Value and Actual Value of Taxable Property - Last Ten Fiscal Years 7 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years 8 Principal Property Taxpayers - Current Fiscal Year and Nine Years Ago 9 Property Tax Levies and Collections - Last Ten Fiscal Years 10 Taxable Transactions by Type of Business - Last Ten Calendar Years Debt Capacity Information
These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and government's ability to issue additional debt in the future. 11 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 12 Ratios of General Bonded Debt - Last Ten Fiscal Years 13 Direct and Overlapping Governmental Activities Debt
14 Computation of Legal Debt Margin - Last Ten Fiscal Years 15 Wastewater Enterprise Revenue Bonds Coverage - Last Ten Fiscal Years
CITY OF SANTA MONICA, CALIFORNIA
For the fiscal year ended June 30, 2023
STATISTICAL SECTION (unaudited)
149
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Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. 16 Demographic and Economic Statistics - Last Ten Calendar Years 17 Principal Employers - Current Year and Nine Years Ago Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and activities it performs.
18 Full-Time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years
19 Operating Indicators by Function/Program - Last Ten Fiscal Years 20 Capital Assets Statistics by Function/Program - Last Ten Fiscal Years STATISTICAL SECTION (unaudited), continued
CITY OF SANTA MONICA, CALIFORNIA
For the fiscal year ended June 30, 2023
150
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Packet Pg. 349 Attachment: Attachment A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report TABLE 1
2022-23 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 (1) 2013-14 Governmental activities
Net investment in capital assets $ 699,711,314 703,702,731 764,429,080 756,311,492 730,135,331 720,769,829 731,842,870 728,041,792 705,144,194 698,223,620 Restricted 246,970,883 249,522,456 238,658,192 228,300,303 226,867,281 209,428,190 198,720,012 196,524,874 178,624,757 136,510,661 Unrestricted (67,454,550) (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 Total governmental activities net position 879,227,647 934,446,584 859,355,964 927,940,863 971,718,905 984,598,912 975,239,500 944,523,342 908,061,476 1,211,717,977 Business-type activities
Net investment in capital assets 448,201,794 449,639,654 442,507,176 454,015,095 453,239,103 437,613,109 445,314,626 440,369,455 447,257,495 472,808,694 Restricted 11,400,071 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 Unrestricted 111,923,217 108,593,242 71,173,841 118,563,055 157,216,757 136,350,263 127,841,169 130,752,666 50,488,321 115,636,742 Total business-type activities net position 571,525,082 570,701,524 526,711,056 589,623,918 630,380,888 597,372,456 591,991,292 583,919,691 512,848,296 600,110,889 Primary government
Net investment in capital assets 1,147,913,108 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 Restricted 258,370,954 261,991,084 251,688,231 245,346,071 246,792,309 232,837,274 217,555,509 209,322,444 193,727,237 148,176,114 Unrestricted 44,468,667 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 Total primary government net position $ 1,450,752,729 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) 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)
151
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nt A - Annual Comprehensive Financial Report [Revision 1] (6251 : Present Annual Comprehensive Financial Report TABLE 2
2022-23 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 Expenses
Governmental activities:
General government $ 74,357,887 184,667,357 131,655,331 83,627,840 87,251,208 94,164,749 69,476,662 56,728,329 74,025,357 73,188,788 Public safety 168,661,471 128,036,677 168,577,199 171,485,637 160,531,648 152,313,163 133,497,286 128,149,081 112,278,370 113,899,354 General services 101,306,682 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 Community services (3) 96,338,256 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 Library 11,128,065 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 Community development (4) 38,792,026 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 Interest on long-term debt 3,915,676 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 Total governmental activities 604,809,533 415,910,953 502,296,824 513,419,067 488,114,435 483,467,835 414,924,268 404,123,086 381,937,086 381,919,995 Business-type activities:
Water 32,762,823 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 Resource recovery and recycling 30,249,175 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 Community broadband 1,966,747 2,318,193 3,215,379 3,065,926 2,519,298 1,926,149 1,907,535 — — — Pier 8,445,424 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 Wastewater 19,815,970 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 Airport 13,026,450 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 Storm water management 484,618 361,328 363,288 1,206,606 380,752 359,488 347,197 2,447,698 2,172,116 651,361 Cemetery 2,152,201 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 Big Blue Bus 93,269,045 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 Parking authority 55,174 73,733 1,724,894 27,937 422,090 216,253 16,178 17,742 403,822 369,367 Total business-type activities 202,227,627 166,424,034 217,506,466 196,524,534 195,321,051 191,471,570 181,408,631 172,647,352 162,551,237 163,410,323 Total primary governmental activities expenses $ 582,334,987 807,037,160 719,803,290 709,943,601 683,435,486 674,939,405 596,332,899 576,770,438 544,488,323 545,330,318 Program revenues
Governmental activities:
Charges for services:
General government $ 18,739,301 24,151,280 19,883,077 20,087,674 19,645,270 19,860,025 18,447,588 19,279,411 56,875,636 55,834,348 Public safety 17,802,681 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 General services 42,059,670 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 Community services (3) 12,687,121 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 Library 70,858 22,037 23,764 260,503 437,269 390,306 388,273 487,809 601,618 614,715 Community development (4) 38,863,317 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 Operating grants and contributions 53,759,943 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 Capital grants and contributions 16,841,083 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 Total governmental activities program revenues 206,235,953 189,439,421 165,523,429 169,124,385 174,883,185 174,307,669 174,413,613 195,977,990 162,255,917 161,503,522 (continues next page)