202
Individual Project Details
Operating Projects - CIT
Life-to-
Date
Budget
Life-to-
Date
Balance
FY25-26
Proposed
Budget
FY26-27
Projected
Budget
FY27-28
Projected
Budget
FY28-29
Projected
Budget
FY29-30
Projected
Budget
Accela Continuous Improvement Initatives 50,000 5 0,000 - - - - - AssetWorks Software Implementation 121,000 1 21,000 - - - - - Citywide Facility Reservation System - - 100,000 - - - - Citywide Web Redesign 450,000 3 18,779 70,000 - - - - Electronic Content Management
Enhancement (Laserfiche) 102,861 1 02,861 - - - - - Enterpise Resource Planning System
Replacement - - 620,000 2,000,000 1,000,000 - - Enterprise Cashiering 195,000 1 95,000 - - - - - Fire Modernization - - 300,000 - - - - GIS System Upgrade 135,000 8 2,000 150,000 200,000 25,000 - - New Citizen Engagement for Web & Mobile
(Mobile App Development) 65,000 6 5,000 30,000 - - - - Police IT Remediation 250,000 1 99,816 - - - - - Replacement of RightFax (OpenText) - - 15,000 - - - - Total Expenditures 1,368,861$ 1 ,134,456$ 1,285,000$ 2,200,000$ 1,025,000$ -$ -$ Funding Source(s)
General Fund 1,330,861 1 ,096,456 1,285,000 1,200,000 1,025,000 - - Transit Capital Fund 19,000 1 9,000 - - - - - Fleet Services Capital Fund 19,000 1 9,000 - - - - - Measure SST Fund - - - 1,000,000 - - - Total Expenditures 1,368,861$ 1 ,134,456$ 1,285,000$ 2,200,000$ 1,025,000$ -$ -$ Operating Projects - CIT
Operating Projects - City Manager
Life-to-
Date
Budget
Life-to-
Date
Balance
FY25-26
Proposed
Budget
FY26-27
Projected
Budget
FY27-28
Projected
Budget
FY28-29
Projected
Budget
FY29-30
Projected
Budget
Civic Center Master Plan - - 660,000 200,000 - - - Relocate Tarplant Preserve - - 100,000 - - - - Remediate Soil at RTC Site 46,954 46,954 150,000 - - - - Upgrade Post Production and Asset
Management Systems 355,000 126,800 - - - - - Total Expenditures 401,954$ 173,754$ 910,000$ 200,000$ -$ -$ -$ Funding Source(s)
General Fund 46,954 46,954 910,000 200,000 - - - PEG Fund Capital 355,000 126,800 - - - - - Total Expenditures 401,954$ 173,754$ 910,000$ 200,000$ -$ -$ -$ Operating Projects - City Manager
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Operating Projects - Community
Development
Life-to-
Date
Budget
Life-to-
Date
Balance
FY25-26
Proposed
Budget
FY26-27
Projected
Budget
FY27-28
Projected
Budget
FY28-29
Projected
Budget
FY29-30
Projected
Budget
3D GIS Mapping/Cyclomedia - - 140,000 - - 140,000 - Electronic Plan Submittal and Review 500,000 459,440 - - - - - Land Use/Safety Element 146,012 146,012 100,000 - - - - Public Safety Element Update /
Environmental Justice 245,000 46,776 - - - - - Strategic Plan Survey & Community
Profile/Environmental Scan 200,000 200,000 - - - - - Total Expenditures 1,091,012$ 852,228$ 240,000$ -$ -$ 140,000$ -$ Funding Source(s)
General Fund 1,091,012 852,228 240,000 - - 140,000 - Total Expenditures 1,091,012$ 852,228$ 240,000$ -$ -$ 140,000$ -$ Operating Projects - Community Development
Operating Projects - Community
Services
Life-to-
Date
Budget
Life-to-
Date
Balance
FY25-26
Proposed
Budget
FY26-27
Projected
Budget
FY27-28
Projected
Budget
FY28-29
Projected
Budget
FY29-30
Projected
Budget
Bollard Replacement at Wilson Park - - 105,000 - - - - Citywide Parks Master Plan - - 300,000 - - - - Park Lighting Replacement and Repair 385,862 161,464 - - - - - Refurbish Amenities at Sea-Aire Park 16,424 16,424 (16,424) - - - - Refurbish Amenities at Sur La Brea Park 80,270 59,372 (59,372) - - - - Replace Exercise Equipment at Victor Park 30,000 30,000 (30,000) - - - - Resurface Playing Courts - - 875,000 - - - - Total Expenditures 512,556$ 267,261$ 1,174,204$ -$ -$ -$ -$ Funding Source(s)
General Fund 30,000 30,000 (30,000) - - - - Measure SST Fund - - 1,280,000 - - - - Parks & Rec Open Space Fund 385,862 161,464 - - - - - Park Equipment Replacement Fund 96,694 75,796 (75,796) - - - - Total Expenditures 512,556$ 267,261$ 1,174,204$ -$ -$ -$ -$ Operating Projects - Community Services
Operating Projects - General
Services
Life-to-
Date
Budget
Life-to-
Date
Balance
FY25-26
Proposed
Budget
FY26-27
Projected
Budget
FY27-28
Projected
Budget
FY28-29
Projected
Budget
FY29-30
Projected
Budget
EA Properties Remediation 2,500,000 1,193,191 - - - - - EV Chargers For Park & Library Facilities - - 50,000 - - - - Total Expenditures 2,500,000$ 1,193,191$ 50,000$ -$ -$ -$ -$ Funding Source(s)
Fleet Services Capital Fund - - 50,000 - - - - Airport Capital Project Fund 2,500,000 1,193,191 - - - - - Total Expenditures 2,500,000$ 1,193,191$ 50,000$ -$ -$ -$ -$ Operating Projects - General Services
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Operating Projects - Police
Life-to-
Date
B
udget
Life-to-
Date
B
alance
FY25-26
Proposed
B
udget
FY26-27
Projected
B
udget
FY27-28
Projected
B
udget
FY28-29
Projected
B
udget
FY29-30
Projected
B
udget
Del Amo Fashion Center PCC 100,000 100,000 393,350 - - - - Emergency Operations Center (EOC)
Upgrade 7 5,000 75,000 40,000 - - - - Total Expenditures 175,000$ 175,000$ 433,350$ -$ -$ -$ -$ Funding Source(s)
General Fund 175,000 175,000 433,350 - - - - Total Expenditures 175,000$ 175,000$ 433,350$ -$ -$ -$ -$ Operating Projects - Police
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Other Projects
This section summarizes planned capital
investment in other areas that do not fit the
scope or scale of the other capital investment
categories included in this plan but still
represent a significant investment in our
community. The City is planning to dedicate $3.8
million over the next five years to address these
other areas of needed investment.
Individual Project Details
Project Title Project ID
Life-to-Date
Budget
Life-to-
Date
Balance
FY25-26
Proposed
Budget
FY26-27
Projected
Budget
FY27-28
Projected
Budget
FY28-29
Projected
Budget
FY29-30
Projected
Budget
Airport Pavement Maintenance Program I 126 1,055,917 1,055,917 2,000,000 1,000,000 250,000 250,000 250,000 Design and Construct Gateway Entry Signs OTR0001 74,000 - - - - - - Downtown Parking Structure OTR0001 125,000 125,000 - - - - - Upgrade Downtown Torrance Lights to LED OTR0001 500,000 500,000 - - - - - Total Expenditures 1,754,917$ 1,680,917$ 2,000,000$ 1,000,000$ 250,000$ 250,000$ 250,000$ Downtown Torrance
Life-to-
Date
B
udget
Life-to-
Date
B
alance
FY25-26
Proposed
B
udget
FY26-27
Projected
B
udget
FY27-28
Projected
B
udget
FY28-29
Projected
B
udget
FY29-30
Projected
B
udget
Design and Construct Gateway Entry Signs 74,000 - - - - - - Downtown Parking Structure 125,000 125,000 - - - - - Upgrade Downtown Torrance Lights to LED 500,000 500,000 - - - - - Total Expenditures 699,000$ 625,000$ -$ -$ -$ -$ -$ Funding Source(s)
General Fund 699,000 625,000 - - - - - Total Expenditures 699,000$ 625,000$ -$ -$ -$ -$ -$ Downtown Torrance
Torrance Municipal Airport
Life-to-
Date
Budget
Life-to-
Date
Balance
FY25-26
Proposed
Budget
FY26-27
Projected
Budget
FY27-28
Projected
Budget
FY28-29
Projected
Budget
FY29-30
Projected
Budget
Airport Pavement Maintenance Program 1,055,917 1,055,917 2,000,000 1,000,000 250,000 250,000 250,000 Total Expenditures 1,055,917$ 1,055,917$ 2,000,000$ 1,000,000$ 250,000$ 250,000$ 250,000$ Funding Source(s)
Airport Capital Project Fund 1,055,917 1,055,917 2,000,000 1,000,000 250,000 250,000 250,000 Total Expenditures 1,055,917$ 1,055,917$ 2,000,000$ 1,000,000$ 250,000$ 250,000$ 250,000$ Torrance Municipal Airport
3301 Airport Drive,Torrance, CA 90505 | District 6
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APPENDIX
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Appendix
Classification of Funds
The City follows all Government Finance Officers’ Association (GFOA) best practices and pronouncements as it pertains to its overall fund structure. Below is an explanation of the major fund categories, which includes a description and purpose, along with examples of funds included in each respective group.
Governmental Funds are used to account for activities supported by taxes and intergovernmental revenues. Governmental activities include all the City’s basic services, such as general government, public safety (police and fire), public works, community development, and cult ure and recreation.
Included in this classification are the General Fund-Operating Fund; General Fund-Measure SST Fund; General Fund-Restricted; and General Fund-Assigned Fund.
General Fund-Restricted includes CalPERS California Employers' Pension Prefunding Trust (CEPPT) Fund and Public, Educational, and Governmental (PEG) Fund, while General Fund-Assigned includes the City’s various General Fund Replacement Funds and the City’s Economic Anomaly Reserve Fund.
Nonmajor Governmental Funds are governmental funds which do not meet the fund asset or fund revenue threshold to be considered a major governmental fund for reporting in the ACFR. The City presents the budgets on the fund level for this classification for review by Council and the p ublic.
Included in this classification are the Air Quality Management District, Debt Service, Meadow Park Parking Lot District, Low Mod Fund, Section 8 Housing, Street Lighting , Traffic Safety and Vanpool Funds.
Enterprise Funds are used to account for fee -supported businesses operated by the City. Net earnings of these funds provide working capital for maintenance and betterment of the equipment and fixed assets of the business. Included in this classification are the Airport, S anitation, Sewer, Transit and Water Funds.
Internal Service Funds are used to account for financing of goods and services provided by one city department to other departments of the city and to other governmental units on a cost - reimbursement basis. Included in this classification are the Self-Insurance and Fleet Services Funds.
Fiduciary Funds consist of private -purpose trust funds and custodial funds. The City is the trustee, or fiduciary, for its employees’ pension plans. It is also responsible for other assets that, because of a 222
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trust arrangement, can be used only for trust beneficiaries. Included in this classification are the Area G, Interoperability Network South Bay, and Redevelopment Agency Funds. The City Council is not responsible for appropriating the Area G and Interoperability Network South Bay operating budgets as these have separate Boards responsible for budget appropriation, therefore they are not shown in this budget document.
Employee Compensation and Benefits
Background
The City of Torrance (City) has 11 represented labor unions and 10 unrepresented labor groups. Each labor union has a Memorandum of Understanding (MOU) that is used to outline the compensation and benefits provided to each employee, and each labor group has a resolution that outlines compensation and benefits . The City strives to provide competitive compensation packages in alignment with comparison cities, while balancing other financial demands on the organization.
Below are the various forms of compensat ion and benefits which are provided to employees based on their MOU.
Administrative Leave
Employees in the City of Torrance Executive and Management Employees Resolution, depending on their category, are provided up to eight (8) days of administrative leave per fiscal year.
Annual Leave
Certain employees represented by the Police Officers Association and Police Commanders Association accrue annual leave monthly, with the maximum amount determined by the MOUs, and the accrual rate varies based on the months of service.
Sick Leave
Full-time employees typically accrue sick (6) hours of sick leave per month. For seasonal -recurrent employees the amount of sick leave complies with state law.
Vacation
Employees in the City of Torrance accrue vacation leave on an hour-for-hour basis, with the maximum amount determined by their associated MOU/Resolution.
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Section 125 Plan
The City of Torrance offers a variety of medical, dental, and vision plans to employees. City contribution rates, and any opt-out incentives, are determined in their respective MOU/Resolutions.
Medicare
All newly hired employees contribute a portion of gross salary for Medicare coverage through a dedicated payroll tax, as determined by Federal regulations.
Social Security
All full-time, non-sworn safety employees, at the City of Torrance pay into Social Security through a dedicated payroll tax.
Flexible Spending Account
Employees may sign up for a flexible spending account (FSA) related to medical reimbursement or childcare reimbursement during an open enrollment period. An exception to this would be a change in the family, such as the birth of a child.
Educational Incentive Program/Tuition Reimbursement
City of Torrance employees in certain MOU/Resolutions are eligible for educational incentive pay premiums and/or tuition reimbursements (up to $1,500 per year). Employees who apply for educational incentives and complete the requirement will receive a premium pay based on rates determined in their respective MOU/Resolution.
PARS
PARS is a supplemental retirement plan administered by Public Agency Retirement Services (PARS).
Certain employees in the Engineers and Fiscal Employees Association and Professional and Supervisory Association that meet the requirement defined by the plan are eligible for this additional benefit.
CalPERS
The City participates in CalPERS' agen cy multiple-employer, defined -benefit (DB) pension plan, which guarantees a set retirement benefit based on years of service, highest CalPERS eligible 224
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compensation, and age upon retirement. Employees fall into four tiers based on hire date and employment status:
1. Tier 1 (Classic): In this group, employees are eligible for the Employer Paid Member Contribution (EPMC). The CalPERS benefit is calculated using the highest single year of CalPERS eligible compensation, limited to $350,000 in 2025. If an employee was hired before July 1996 there is no limit on CalPERS eligible compensation limits. a. Miscellaneous Employees: The City contributes 7% for EPMC on behalf of the employees.
b. Safety Employees: The City contributes 9% for EPMC on behalf of the employees.
1. Tier 2 (2010): These employees are part of the Classic benefit structure but were hired after the City amended its MOU/Resolutions to remove the Employer Paid Member Contribution (EPMC) as a benefit. This meant the City would no longer contribute on behalf of the employee and rather the amount would be deducted from employees’ paychecks.
2. Tier 3 (PEPRA): This group was created in January 2013 as a result of Pension Reform legislation at the state level and created an entirely new benefit structure. Employees in this group have a different retirement age, contribute 50% of the normal cost of the pension plan, and have their retirement benefit calculated using the highest three -year period of CalPERS eligible compensation. Further, there are reduced CalPERS eligible compensation limits.
These amounts are typically adjusted annually. Additionally, there are two sub-tiers within the safety plan: 90% Industrial Di sability Retirement (IDR) and 50% Industrial Disability Retirement (IDR). The 90% IDR benefit started 1/1/2013 and then the 50% IDR benefit took over starting 1/1/14.
a. Miscellaneous Employees: For employees participating in social security, the CalPERS eligible compensation limit is set at $ 155,081 in 2025. Rather than contribute a fixed 7%, these employees contribute half of the normal cost of this pension plan, which is currently 8%.
b. Safety Employees: For employees not participating in social security (safety employees), the CalPERS eligible compensation limit is set at $186,096 for 2025. Rather than contribute a fixed 9%, these employees contribute half of the normal cost of this pension plan.
i. For Fire Safety employees in the 90% IDR benefit structure, the employee contributes 12% and for those in the 50% IDR benefit structure, the employee contributes 11.25%.
ii. For Police safety employees in the 90% IDR benefit structure, the employee contributes 15.50% and for those in the 50% IDR benefit structure, the employee contributes 13.00%
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3. Tier 4 (Part-Time/Post-Tax): Reserved for part-time or seasonal workers logging over 1,000 hours annually, their participation and associated liability in the pension plan are comparatively minor and thus not detailed in headcount tables.
Based on the Tier in which an employee falls and the Plan in which they are enrolled, they qualify for one of the below retirement benefit formulas:
When an individual retires, the above table provides a guideline for the amount of benefit they would receive annually if they retired at the plan’s “normal” retirement age. CalPERS has a sliding scale for those that retire earlier/later. An employee would take their CalPERS eligible compensation (either highest 1 - or 3 -year period depending on plan up to the Tier limit) and multiply that against their respective percentage multiplier (i.e. 2%, 3%, 2.7%) and then multiply that against their years of service with CalPERS. As a simple example, this would determine their benefit under the CalPERS system. There are many different considerations that would affect the end result including: service in different cities, exact age, years of service, or death benefit selected.
Plan Tier 1: Classic Tier 2: 2010 Tier 3: PEPRA
Miscellaneous 2% @ 55 2% @ 55 2% @ 62
Fire Safety 3% @ 50 3% @ 50 2.7% @ 57
Police Safety 3% @ 50 3% @ 50 2.7% @ 57
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Fiscal Policies
General Policies
The City will maintain sound financial practices in accordance with all Federal, State, and local laws and direct its financial resources towards meeting the City’s long-term goals.
The City will maintain and further develop programs to assure its long -term ability to pay the costs necessary to provide the level and quality of service required by its citizens.
The City annually adopts a budget for the upcoming fiscal year. Through this budget document, the City Council establishes public policy by setting funding levels for all funds and exercises control over City spending. The budget further serves as a financ ial planning tool to ensure that the inflow of resources (revenues) is adequate to meet both anticipated and unanticipated needs (expenditures).
The City is committed to fiscal sustainability. This is defined as maintaining a long -term view of financial planning that anticipates and proactively addresses risks to preserve and enhance quality of life and service provision as identified and prioritiz ed through community input. The City is committed to:
• Informed Decision -Making – Staff will identify and evaluate immediate and long -term economic, social, and environmental impacts of all issues provided for Council consideration. • Transparency – The City will conduct all business with transparency pursuant to applicable laws and regulations. The City will proactively pursue ways to make financial information publicly available, accessible, and easy to understand. • Pursuing Diversified Revenue Sources – The City will pursue diversified revenue sources that align with community priorities and support expenditures. • Managing Long-Term Liabilities – The City will proactively identify and monitor long -term financial liabilities, including unfunded pension and OPEB obligations, and commits to taking actions to manage these commitments that prioritize the City’s long -term financial sustainability.
• Shared Responsibility – The City recognizes a shared responsibility between the employee and employer to appropriately fund employee benefits to attract and retain high -performing employees while maintaining a long-term sustainable and balanced budget. • Seeking Efficiency and Effectiveness – Staff will continuously explore ways to operate more efficiently while preserving effectiveness.
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Operating Budget
The City will follow a biennial budget process, emphasizing long -range planning and effective program management. The biennial budget process allows staff to plan ahead for future years. In addition to planning a two -year budget, staff will incorporate multi -year projections to ensure the long-term strategy is balanced and achievable.
The City’s use of the biennial budget process complies with Torrance City Charter (Article 11), which includes the following requirements:
• Definition of the fiscal year (July 1-June 30)
• Proposed budget preparation by the City Manager
• Proposed budget submission by City Manager to City Council on or before June 1 • Budget adoption by City Council (at least 4 affirmative votes) by June 30 after completing two public hearings to give an opportunity for community input
In addition to the annual budget process staff will complete two interim budget review reports, a First Quarter and Mid -Year Budget Review Report. These reports will analyze budget status at these two different points, provide an opportunity to adjust reve nue or expenditure budgets as well as the approval of any program modifications.
Budget modifications may occur as necessary at any City Council meeting through staff reports that receive affirmative votes from the members of Council.
Each year, during the budget process, the following will be addressed:
• The City will adopt a balanced budget by June 30.
• The City will make all current, ongoing expenditures with current, ongoing revenues, avoiding procedures that balance current budgets by postponing needed expenditures or accruing future revenues.
• The City will estimate revenues using an objective and analytical process utilizing both past experiences and known variables; in the case of assumption uncertainty, conservative projections will be used.
• The City will maintain a level of expenditure that supports essential services and promotes quality of life for the citizens of Torrance.
• The City will forecast General Fund and other major internal services and enterprise funds for a five-year period and will update the forecast at least annually. The forecast will guide budget recommendations for Council consideration.
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• The City will endeavor to maintain a diversified and stable revenue stream to minimize the impact of short-term fluctuations in any one revenue source. • The City will avoid targeting revenues for specific purposes wherever possible, allowing maximum flexibility in funding decisions on an annual basis. • One-time revenues will not be regularly utilized for recurring expenditures. • The City will endeavor to pay down its unfunded liabilities in the areas of pension, OPEB, and long-term debt. For the purposes of pension and OPEB, the City will utilize trust funds (Section 115 Trust) to assist in managing these long-term liabilities.
Capital Improvement Plan (CIP) Budget
The City will biennially plan for capital improvements for a 5 -year period. The CIP budget will incorporate Council priorities, community objectives, and projects that will improve operational efficiency. The first year of the CIP will be presented along with the Biennial Operating Budget. In the interim year, the CIP budget will be amended as needed and recommended for Council approval.
The operating impacts of any CIP budget item will be incorporated into the operating budget to demonstrate the full cost of implementation. The City will maintain all assets at a sufficient level to protect the City’s capital investment and to minimize future maintenance and replacement costs.
Budgetary Control
The City Council is responsible for adopting an annual budget for all funds of the City. The budgets of the City will be appropriated via two separate resolutions. The first resolution shall address the financial needs of the operating budget including any transfers to fund anticipated CIP needs. The second resolution shall address the financial needs of the CIP budget. The City is a Fiduciary for two funds that are outside of the purview of the City Council, which includes the Interoperability Network South Bay and the Area G Budget. These budgets are adopted by their respective Boards. The City Council also serves as the governing body for the Successor Agency to the Former Redevelopment Agency, the Housing Authority, and the Public Financing Authority, which addresses budgets for the Successor Agency to the Former Redevelopment Agency, Section 8 Housing, and Debt Service Funds.
Beginning in FY22-23, the City separately tracks revenues and expenditures of Measure SST, a ½ cent transactions and use tax, appr oved by Torrance voters in June 2022. This measure included strict accountability requirements with a 7 -member oversight committee being established. This Committee is charged with reviewing the activity of the Measure SST Fund during the year, along with audited financial statements ensuring that funds are spent in accordance with the City Council approved spending plan.
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The budget adoption for both resolutions require a majority vote, which includes at least 4 of 7 Council members. The City Council approves any revisions that increase the total budgeted expenditures or revenues for any funds, as appropriated, in the operating or CIP budgets. The City Council also approves any changes to staffing levels, including budgeted permanent and as -needed full-time equivalent positions. The City Manager is authoriz ed by the City Council to allocate the budget to more detailed levels of control for administrative purposes within each of the respective budgets (operating and CIP). Th is includes changes between major projects, departments (TMC
12.1.8), programs, or object categories (i.e. salaries & benefits versus materials) within a given fund’s appropriation limit for each respective budget (operating and CIP).
The City Manager is also delegated authority for periodic appropriations as outlined in the Torrance Municipal Code (TMC) section 12.1. 8 and further explained in City Council Policy 3. In addition, changes to the budget shall take place during regularly scheduled Council meetings as recommended. Changes to any budget requires a majority vote of the Council (4 of 7 members).
Basis of Budgeting
The City of Torrance’s budget is consistent with the Annual Comprehensive Financial Report (ACFR).
Governmental funds, including general, special revenue and capital project funds, are budgeted on a modified accrual basis with a focus on near -term inflows and outflows of financial resources.
Revenues are recognized when measurable and available, while expenditures are recognized as soon as liabilities are incurred, except for debt service, capital lease obligations, inventories, and prepaid items. Year -end encumbrances are included in the fiscal year’s expenditures (actual, budgetary basis), as they repr esent financial resources committed for goods or services to be delivered in the near future (usually within one or two months). However, many multi -year capital projects are budgeted on a full cost basis which spans multiple years. Budgets for capital pro jects remaining at year-end for active projects are continued to the next fiscal year until the completion of the project.
Proprietary funds, including enterprise funds and internal service funds, are budgeted on an accrual basis similar to private -sector businesses, with a focus on total economic resources. Revenues are recognized when they are earned, while expenses are recognized when the liability is incurred. Year- end encumbrances are excluded from the fiscal year’s expenses, for the transactions that have not occurred. The City budgets for all non-cash related items such as investment adjustments to market value, depreciation, amortization, and bad debt expense. Similar to governmental funds, multi-year capital projects are often budgeted on a full cost basis and the year -end active project budgets are continued to the next fiscal year until the completion of the project.
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Appropriations Limit (Gann Limit)
In November 1979, the voters of the State of California approved Proposition 4, commonly known as the Gann Initiative. Proposition 4 created Article XIIIB of the State Constitution, requiring each local jurisdiction to establish its appropriation limit by resolution each year. The appropriation limit does not apply to the entire City budget or to the City’s entire General Fund, but only to the appropriation of “proceeds of taxes” in the City’s “general government” type funds.
Proposition 4 became effective in FY 1980-81. From FY 1980-81 to 1989-90, each year’s appropriation was based on the previous year’s limit, multiplied by the percentage change in population and the percentage change in the United States Consumer Price Inde x or the change in California per capita income, whichever was less.
In June 1990, the voters approved Proposition 111, which amended Proposition 4, and the factors used in the calculation of each year’s limit. The factors to use are the Population Factor and Price Factor. For the Population Factor, the City can select the annual change in city or county population.
For the Price Factor, the City can select the change in California per capita income or increase in non- residential assessed valuation due to new construction.
The City Council annually adopts a resolution establishing the City’s appropriations limit calculated in accordance with Article XIIIB (Proposition 4) of the Constitution of the State of California, Section 7900 et seq. of the State of California Government Code, and any other voter approved amendments or state legislation that affect the City’s appropriations limit. Under the Gann Limit, a maximum amount is established for tax-funded government services. That amount is to be adjusted each year depending on the city population, changes in non -residential assessed value, and the transfer of financial responsibility for various governmental activities from one level of government to another.
Any significant amount of state tax revenue received above the Gann L imit is to lead to future tax rebates or cuts.
The supporting documentation used in calculating the City’s appropriations limit and projected appropriations subject to the limit will be available for public and Council review at least 15 days before Council consideration of a resolution to adopt an app ropriations limit. The Council will generally consider this resolution in connection with (or as reasonably possible based on information availability from the State) the annual budget.
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Fund and Reserve Policies
General Fund
Following a recommendation from a third-party consultant, Reserve Funds, formerly classified as “Unassigned” will now be classified as “Assigned” to enhance fiscal transparency and improve oversight. As of June 30, 2024, the total reserve balance (formerly referred to as Unassigned) was $78,749,461. Included in this total is the Economic Anomaly Reserve, whose balance was $12,884,270.
As part of this budget cycle, Staff is proposing to set the Economic Anomaly Reserve to $68,906,208 on June 30, 2025.
Going forward, t he City will maintain at the end of each fiscal year a n Economic Anomaly Reserve balance at a level that is equal to at least 20% of the fiscal year’s General Fund -Operating Fund operating budget appropriation, as amended (controlling for one -time expenditures). In a year in which the City falls short, a plan shall be identified to me et the 20% policy. Council approval is required before expending funds from the Economic Anomaly Reserve.
In addition to the Economic Anomaly Reserve policy of 20%, the City shall also maintain its unrestricted fund balance at a minimum of 20% of the fiscal year’s General Fund -Operating Fund operating budget appropriation, as amended (controlling for one -time expenditures), while striving to maintain a 30% ratio.
Internal Service Funds
The City will maintain a Fleet Services Fund to provide centralized funding for the City’s services related to the repair, maintenance, and replacement of city vehicles. The City will maintain at the end of each fiscal year an unrestricted net position at a level that is equal to at least 20% of the fiscal year’s Fleet Services budget appropriation, as amended (controlling for one -time expenditures). To the extent possible, the City will maintain a balance that is equivalent to the amortized replacement cost of each vehicle at a given point in its lifecycle, including anticipated growth in replacement costs. This will ensure the timely replacement of vehicles when they have met their useful life.
The City will maintain a Self-Insurance Fund to provide centralized funding for the City’s workers compensation, litigated/non-litigated claims, and unemployment claims costs. As of June 30, 2024, the Self-Insurance Fund’s unrestricted net position is -$52,056,248. The City has historically operated at a negative net position and in recent years has made significant contributions to reducing this negative balance. The City’s strives to fund 100% of its open liabilities, though this policy is set to 80% for consistency with pension and OPEB goals. To the extent possible, the City will set funds aside in a 232
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manner that will cover the annual costs of the fund as well as the actuarially determined liabilities of the City’s workers’ compensation and liability claims. The City will make additional contributions to the fund, if available, at year-end.
Enterprise Funds
The City will maintain at the end of each fiscal year a n unrestricted net position that is equal to at least 20% of the fiscal year’s operating budget appropriation, as amended (controlling for one -time expenditures). Such position is considered sufficient to cover the operating working capital needs, vehicle replacement requirements, and capital infrastructure investment needs. The levels will ensure that a proper state of good repair is maintained on the overall infrastructure (where applicable) to ensure reliable and dependable service for customers.
Interdepartmental Charges
Cost Allocation Plan/Indirect Cost Rate
The City of Torrance prepares a cost allocation plan annually to identify the General Fund costs associated with providing certain services with proprietary and special revenue fund programs (i.e.
Section 8, Airport, Sanitation, Sewer, Water, Transit, Fleet, Self-Insurance), which are financed by user fees, grant funding, or other internal charges . These indirect charges reimburse the administration and overhead service provided by departments such as Council, City Manager, City Attorney, City Clerk, City T reasurer, Finance, General Services, Human Resources, Civil Service, and Information Technology, which is directly applicable to these operations. These indirect charges are assessed to reflect the true costs of doing business through the City’s indirect cost allocation plan.
Data used in determining the cost allocation is gathered from the year’s most recent audited financial statements and applied to the coming budget year (i.e. FY23-24 audited financials for the FY25-26 budget). This is revised annually by FY25-26 assessing a charge equal to 29.06% of a subset of Salaries & Employee Benefits costs.
Vehicle Replacement/Vehicle Maintenance
In order to equitably assign the full cost of the Fleet Services Fund across all departments, the City of Torrance applies an allocation formula based on the historical cost of services, fuel and parts, by department. The replacement cost of vehicles are also assigned to each department, based on actual purchase price, an assumption of 5% cost increase per year, and useful life (varies by vehicle). This calculation will be refreshed annually, and amounts will fluctuate over the years. These charges are 233
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reflected in the Interdepartmental Charges expense classification of each department, and the Charges for Services revenue classification in the Fleet Services Fund.
Self-Insurance Cost Allocation
In order to equitably assign the full cost of the Self Insurance Fund’s liability program across all departments, the City of Torrance applies an allocation formula that incorporates a combination of the following: 1) Minimum Base (based on department budget), 2) Claims Frequency (based on the department’s 5 -year claim count), and 3) Claims Severity (based on the departments 5 -year claim costs incurred). This calculation will be refreshed annually, and amounts will fluctuate over the years.
These charges ar e reflected in the Interdepartmental Charges expense classification of each department, and the Charges for Services revenue classification in the Self Insurance Fund.
Enterprise Fund Franchise Fees
In August 2020, City Council approved a levy of franchise fees from the General Fund to the City's water, wastewater, and sanitation utilities for the use of the public right -of-way to provide their services to customers. The amount levied to the Public Works Water, Sewer, and Sanitation Funds is equal to 2% of gross revenues charged for utilities (Charges for Services revenue classification). These charges are reflected in the Interdepartmental Charges expense classification of each enterprise fund, and the Licenses, Fees, and Permits revenue classification in the General Fund Operating Fund.
Interfund Rent Allocation
In addition to franchise fees, the General Fund charges rent to the Fleet Services, Water, Sewer, and Sanitation Funds for use of buildings at the City Yard, which were financed, and whose debt service is paid for, by the General Fund Operating Fund. The calculation for rent is based on the square footage that each Fund/department occupies, and comparable commercial and warehouse rental market rates in the city of Torrance. Market rates are re viewed and adjusted annually, as needed. These charges are reflected in the Interdepartmental Charges expense classification of each enterprise fund, and the Use of Money & Property revenue classification in the General Fund Operating Fund.
Debt Policies
Findings
These Debt Management Policies are intended to comply with the Government Code Section 8855(i) and shall govern all debt undertaken by the City.
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The City hereby recognizes that a fiscally prudent debt policy is required to:
• Maintain the City's sound financial position.
• Ensure the City has the flexibility to respond to changes in future service priorities, revenue levels, and operating expenses.
• Protect the City's creditworthiness.
• Ensure that all debt is structured to protect both current and future taxpayers, ratepayers, and constituents of the City.
• Ensure that the City's debt is consistent with the City's planning goals and objectives and capital improvement program or budget, as applicable.
Policies
Purposes for which debt may be issued:
• Long-Term Debt – Long-term debt may be issued to finance the construction, acquisition, and rehabilitation of capital improvements facilities, equipment, and land to be owned and operated by the City.
(a) Long-term debt financings are appropriate when the following conditions exist:
o When the project to be financed provides a community benefit. o When the project to be financed will provide benefit to constituents over multiple years. o When total debt does not constitute an unreasonable burden to the City and its taxpayers and ratepayers.
o When the debt is used to refinance outstanding debt to produce debt service savings or to realize the benefits of a debt restructuring.
b) Long-term debt financings are not appropriate for current operating expenses and routine maintenance expenses.
c) The City may use long-term debt financings subject to the following conditions:
o The project to be financed must be approved by the City Council. o The weighted average maturity of the debt (or the portion of the debt allocated to the project) will not exceed the average useful life of the project. o The City estimates that sufficient revenue will be available to service the debt through its maturity.
o The City determines that the issuance of the debt will comply with the applicable state and federal law.
• Short-Term Debt – Short-term debt may be issued to provide financing for the City's operational cash flows to maintain a steady and even cash flow balance. Short-term debt may also be used to finance short-lived capital projects; for example, the City may undertake lease- purchase financing for equipment.
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• Financing on Behalf of Other Entities – The City may also find it beneficial to issue debt on behalf of other governmental agencies or private third parties to further the public purposes of the City. In such cases, the City shall take reasonable steps to confirm the financial feasibility of the project to be financed and the financial solvency of any borrower and that the issuance of such debt is consistent with the policies set forth herein.
Types of Debt
The following types of debt are allowable under these Debt Management Policies:
• General obligation bonds
• Bond or grant anticipation notes
• Tax and revenue anticipation notes
• Lease revenue bonds, certificates of participation and lease-purchase transactions • Other revenue bonds (including sales tax revenue bonds) and certificates of participation • Pension obligation bonds
• Land-secured financings, such as special tax revenue bonds issued under the Mello -Roos Community Facilities Act of 1982, as amended, and limited obligation bonds issued under applicable assessment statutes
• Tax increment financing to the extent permitted under state law • Conduit financings, such as financings for affordable rental housing and qualified 501(c)(3) organizations
The City may from time to time find that other forms of debt would be beneficial to further its public purposes, and the City Council may approve such debt without an amendment of these Debt Management Policies.
Debt shall be issued as fixed rate debt unless the City makes a specific determination as to why a variable rate issue would be beneficial to the City in specific circumstances.
Relationship of Debt to Operating and Capital Improvement Budgets The City is committed to long -term capital planning. The City intends to issue debt for the purposes stated in this Debt Policy and to implement policy decisions incorporated in the City’s capital budget and the capital improvement plan.
The City shall strive to fund the upkeep and maintenance of its infrastructure and facilities due to normal wear and tear through the expenditure of available operating revenues.
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The City shall integrate its debt issuances with the goals of its capital improvement program by timing the issuance of debt to ensure that projects are available when needed in furtherance of the City’s public purposes.
The City shall seek to avoid the use of debt to fund infrastructure and facilities improvements in circumstances when the sole purpose of such debt financing is to reduce annual budgetary expenditures.
The City shall seek to keep general fund supported debt service at no greater than the less er of 10% of available general fund revenues or expenditures.
Policy Goals Related to Planning Goals and Objectives
The City is committed to long -term financial planning, maintaining appropriate reserves levels, and employing prudent practices in governance, management, and budget administration. The City intends to issue debt for the purposes stated in th is Policy and to implement policy decisions incorporated in the City's operating and capital budgets.
It is a policy goal of the City to protect taxpayers, ratepayers, and constituents by utilizing conservative financing methods and techniques to obtain the highest practical credit ratings (if applicable) and the lowest practical borrowing costs.
The City will comply with applicable state and federal law as it pertains to the maximum term of debt and the procedures for levying and imposing any related taxes, assessments, rates, and charges.
When refinancing debt, it shall be the policy goal of the City to realize, whenever possible, and subject to any overriding non -financial policy considerations, (i) minimum net present value debt service savings equal to or greater than 3.0% of the refunde d principal amount, and (ii) present value debt service savings equal to or greater than 100% of any escrow fund negative arbitrage.
Internal Control Procedures
When issuing debt, in addition to complying with the terms of these Debt Management Policies, the City shall comply with any other applicable policies regarding initial bond disclosure, continuing disclosure, post-issuance compliance, and investment of bond proceeds.
The City will periodically review the requirements of and will remain in compliance with the following:
• any continuing disclosure undertakings under SEC Rule 15c2-12, 237
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• any federal tax compliance requirements, including without limitation arbitrage and rebate compliance, related to any prior bond issues, and
• the City's Investment Policy as they relate to the investment of bond proceeds.
It is the policy of the City to ensure that proceeds of debt are spent only on lawful and intended uses.
Whenever reasonably possible, and for the purpose of ensuring that proceeds of debt will be used for their intended purpose, proceeds of debt will be held by a third-party trustee and the City will submit written requisitions for such proceeds.
Debt Limits
The outstanding principal amount of debt described will not exceed five percent (5%) of the total assessed value of property in the City, and debt service and lease payments incurred for financing purposes that are payable from the City's general fund will not exceed 10% of annual appropriations.
Investment Policy
The Investment Policy is approved annually by Resolution by the City Treasurer. As such, this policy is not included in the City’s budget.
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Debt Financing Information
The City’s debt service costs for the next five years and thereafter are presented in the table above and the details of each debt issuance showing the principal and interest payments are in the following tables.
2016 Certificates of Participation
In 2016, the City of Torrance, with the Public Property Financing Corporation of California, issued $22.1 million of refunding certificates of participation to refinance the 2009 Certificates of Participation issued by the Torrance Public Financing Authority to finance the acquisition of approximately 15 acres of real property for the Regional Transit Center and other City uses. A portion ($6.1 million) of the 2016 Refunding Certificates of Participation was set aside for the construction of capital improvements selected by the City. The refunding certificates of participation debt is considered to be capital related.
Opus Bank Loan
In 2017, the City of Torrance entered into an installment sale agreement with the Public Property Financing Corporation of California, for the purpose of financing the drilling and construction of a new water well, the North Torrance Well Field Project. The proceeds from the agreement were $5.8 million for construction of the project. The installment sale agreement debt is considered to be capital related.
2018 Tax Allocation Refunding Bonds (Downtown Redevelopment Project) In October 2018, the Former Redevelopment Agency issued $3,665,000 Tax Allocation Refunding Bonds. Proceeds of the Bonds were used to refund the Agency’s outstanding Downtown Redevelopment Project Tax Allocation Refunding Bonds, 1998 Series A, to fund a re serve for the Debt Issuance Date Issued FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Thereafter 2016 Certificate of Participation 11/15/2016 1,256,844 1,255,244 1,259,744 1,259,994 1, 258,743 21,381,277 Opus Bank Loan 10/1/2017 644,517 644,516 446,197 - - - 2018 Tax Allocation Refunding Bonds
(Downtown Redevelopment Project) 10/25/2018 458,125 453,500 457,875 456,125 - - 2018 Tax Allocation Refunding Bonds
(Torrance Industrial Redevelopment Project) 10/25/2018 1,434,125 1,432,375 1,427,625 1,424,750 - - Lease Revenue Bonds Series 2020 10/22/2020 19,862,722 20,397,834 20,949,950 21,511,699 22,092,492 342,471,476 Lease Revenue Bonds Series 2021 4/15/2021 2,506,186 2,501,488 2,500,953 2,506,951 2,507,944 35,051,565 State Revolving Fund Loan 4/21/2025 850,181 850,181 850,181 850,181 850,181 11,902,536 Total 27,012,700$ 27,535,138$ 27,892,525$ 28,009,700$ 26,709,360$ 410,806,854$ 239
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Bonds, to pay premium of the 2018 Insurance Policy, and to pay the costs of issuing the Bonds.
Starting from September 2019 and continuing through 2028, the principal on the term bonds matures at variable amounts ranging from $310,000 to $445,000. Interest is payable on March 1 and September 1 of each year with rates ranging from 3.0% to 5.0%. Principal and interest are to be repaid directly from the tax increments accruing to the Agency.
2018 Tax Allocation Refunding Bonds (Torrance Industrial Redevelopment Project)
In October 2018, the Former Redevelopment Agency issued $11,505,000 Tax Allocation Refunding Bonds. Proceeds of the Bonds were used to refund the Agency’s outstanding Industrial Redevelopment Project Tax Allocation Refunding Bonds, 1998 Series A and B, and 1999 Series C, to fund a reserve for the Bonds, to pay premium of the 2018 Insurance Policy, and to pay the costs of issuing the Bonds. Starting from September 2019 and continuing through 2028, the principal on the term bonds matures at variable amounts ranging from $960,000 to $1,390,000. Interest is payable on March 1 and September 1 of each year with rates ranging from 3.0% to 5.0%. Principal and interest are to be repaid directly from the tax increments accruing to the Agency.
Lease Revenue Bonds Series 2020
In July 2020, as one component of the City's budget revisions for FY20 -21, the City refinanced a portion of the Unfunded Accrued Liability ("UAL") of the City's Miscellaneous, Fire Safety, and Police Safety pension plans with CalPERS. The City refinancing would accomplish three goals: to generate cash flow savings to the City and taxpayers through historically low interest rates relative to the CalPERS discount rate assumption; create a repayment schedule for the City's pension liabilities that increases more gradually; and set aside 20% of the savings into a Trust to mitigate future pension cost increases. The refinancing was achieved through the issuance of $349.5 million of lease revenue bonds by the Torrance Joint Powers Financing Authority, which are expected to have an all-in cost of financing between 3.0% and 4.0% (versus 6.8% CalPERS charges the City on the outstanding UAL debt) based on anticipated market conditions. The City makes lease payments from its General Fund under a lease/leaseback of certain real property consisting of most of the City's streets.
Lease Revenue Bonds Series 2021
In March 2021, as one component of the City's ongoing efforts to reduce near -term expenditures in response to the COVID-19 pandemic, the City restructured and refinanced its outstanding Certificates of Participation (Refunding and Capital Projects), Series 2014 ("2014 COPs"). The City's primary goal 240
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for the financing was to reduce principal lease payments related to the 2014 COPs in FYs 2020-21 and 2021-22, but the City also reduced financing costs using lower interest rates available. The financing was achieved through the issuance of $39.7 million o f lease revenue bonds by the Torrance Joint Powers Financing Authority. The City makes lease payments from its General Fund under a lease/leaseback of certain real property consisting of the City Yard and Transit Facility.
State Revolving Fund
The Drinking Water State Revolving Fund (DWSRF) program assists public water systems in financing the cost of drinking water infrastructure projects needed to achieve or maintain compliance with Safe Drinking Water Act (SDWA) requirements. On April 2 2, 2025, the City received $14.3 million of loan proceeds from the DWSRF to fund the City’s Van Ness Ave Water Wells & Transmission Main Water Infrastructure project. The DWSRF loan will be repaid over a period of 20 years with a discounted interest rate of 1.4%
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Credit Ratings
Below is an excerpt from the November 18, 2022, Standard & Poors (S&P) Rating Report. This report is updated when the City of Torrance has new borrowing s and remains the same “AA/Stable” rating as of April 2025.
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Debt Service Schedules
2016 Certificate of Participation
Date Principal Interest Rate Interest Total Debt Service 5/1/2017 398,535$ 398,535$
11/1/2017 395,000 2.000% 432,147 827,147 5/1/2018 428,197 428,197
11/1/2018 405,000 3.000% 428,197 833,197 5/1/2019 422,122 422,122
11/1/2019 420,000 3.000% 422,122 842,122 5/1/2020 415,822 415,822
11/1/2020 435,000 4.000% 415,822 850,822 5/1/2021 407,122 407,122
11/1/2021 450,000 4.000% 407,122 857,122 5/1/2022 398,122 398,122
11/1/2022 470,000 4.000% 398,122 868,122 5/1/2023 388,722 388,722
11/1/2023 490,000 4.000% 388,722 878,722 5/1/2024 378,922 378,922
11/1/2024 510,000 4.000% 378,922 888,922 5/1/2025 368,722 368,722
11/1/2025 530,000 4.000% 368,722 898,722 5/1/2026 358,122 358,122
11/1/2026 550,000 4.000% 358,122 908,122 5/1/2027 347,122 347,122
11/1/2027 580,000 5.000% 347,122 927,122 5/1/2028 332,622 332,622
11/1/2028 610,000 5.000% 332,622 942,622 5/1/2029 317,372 317,372
11/1/2029 640,000 5.000% 317,372 957,372 5/1/2030 301,372 301,372
11/1/2030 670,000 5.000% 301,372 971,372 5/1/2031 284,622 284,622
11/1/2031 705,000 5.000% 284,622 989,622 5/1/2032 266,997 266,997
11/1/2032 735,000 3.000% 266,997 1,001,997 5/1/2033 255,972 255,972
11/1/2033 755,000 3.000% 255,972 1,010,972 5/1/2034 244,647 244,647
11/1/2034 780,000 3.000% 244,647 1,024,647 5/1/2035 232,947 232,947
11/1/2035 805,000 3.125% 232,947 1,037,947 5/1/2036 220,369 220,369
11/1/2036 830,000 3.125% 220,369 1,050,369 5/1/2037 207,400 207,400
11/1/2037 860,000 4.000% 207,400 1,067,400 5/1/2038 190,200 190,200
11/1/2038 895,000 4.000% 190,200 1,085,200 5/1/2039 172,300 172,300
11/1/2039 930,000 4.000% 172,300 1,102,300 5/1/2040 153,700 153,700
11/1/2040 970,000 4.000% 153,700 1,123,700 5/1/2041 134,300 134,300
11/1/2041 1,010,000 4.000% 134,300 1,144,300 5/1/2042 114,100 114,100
11/1/2042 1,050,000 4.000% 114,100 1,164,100 5/1/2043 93,100 93,100
11/1/2043 1,095,000 4.000% 93,100 1,188,100 5/1/2044 71,200 71,200
11/1/2044 1,140,000 4.000% 71,200 1,211,200 5/1/2045 48,400 48,400
11/1/2045 1,185,000 1.000% 48,400 1,233,400 5/1/2046 24,700 24,700
11/1/2046 1,235,000 4.000% 24,700 1,259,700 Total 22,135,000$ 15,989,308$ 38,124,308$ 243
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Opus Bank Loan – Water Fund
Date Principal I nterest Rate Interest Debt Service
5/1/2018 195,000$ 2.360% 6,064$ 201,064$ 11/1/2018 256,716 2.360% 3,599 260,315 5/1/2019 259,745 2.360% 10,400 270,145 11/1/2019 262,810 2.360% 62,596 325,406 5/1/2020 265,911 2.360% 56,347 322,258 11/1/2020 269,049 2.360% 53,209 322,258 5/1/2021 272,224 2.360% 50,034 322,258 11/1/2021 275,436 2.360% 46,822 322,259 5/1/2022 278,686 2.360% 43,572 322,258 11/1/2022 281,975 2.360% 40,283 322,258 5/1/2023 285,302 2.360% 36,956 322,258 11/1/2023 288,669 2.360% 33,590 322,259 5/1/2024 292,075 2.360% 30,183 322,258 11/1/2024 295,521 2.360% 26,737 322,258 5/1/2025 299,008 2.360% 23,250 322,258 11/1/2025 302,537 2.360% 19,721 322,258 5/1/2026 306,107 2.360% 16,151 322,258 11/1/2026 309,719 2.360% 12,539 322,258 5/1/2027 313,373 2.360% 8,885 322,258 11/1/2027 317,071 2.360% 5,187 322,258 5/1/2028 122,494 2.360% 1,445 123,939 Total 5,749,428$ 587,571$ 6,336,999$ 244
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2018 Tax Allocation Refunding Bonds (Downtown Redevelopment Project)
Date Principal Coupon Interest Debt Service Annual Debt Service 3/1/2019 59,552.50$ 59,552.50$ 59,552.50$ 9/1/2019 3 40,000.00$ 3.0% 85,075.00$ 425,075.00$ 3/1/2020 79,975.00$ 79,975.00$ 505,050.00$ 9/1/2020 310,000.00$ 4.0% 79,975.00$ 389,975.00$ 3/1/2021 73,775.00$ 73,775.00$ 463,750.00$ 9/1/2021 320,000.00$ 4.0% 73,775.00$ 393,775.00$ 3/1/2022 67,375.00$ 67,375.00$ 461,150.00$ 9/1/2022 330,000.00$ 5.0% 67,375.00$ 397,375.00$ 3/1/2023 59,125.00$ 59,125.00$ 456,500.00$ 9/1/2023 345,000.00$ 5.0% 59,125.00$ 404,125.00$ 3/1/2024 50,500.00$ 50,500.00$ 454,625.00$ 9/1/2024 365,000.00$ 5.0% 50,500.00$ 415,500.00$ 3/1/2025 41,375.00$ 41,375.00$ 456,875.00$ 9/1/2025 385,000.00$ 5.0% 41,375.00$ 426,375.00$ 3/1/2026 31,750.00$ 31,750.00$ 458,125.00$ 9/1/2026 400,000.00$ 5.0% 31,750.00$ 431,750.00$ 3/1/2027 21,750.00$ 21,750.00$ 453,500.00$ 9/1/2027 425,000.00$ 5.0% 21,750.00$ 446,750.00$ 3/1/2028 11,125.00$ 11,125.00$ 457,875.00$ 9/1/2028 445,000.00$ 5.0% 11,125.00$ 456,125.00$ 456,125.00$ Total 3,665,000.00$ 1,018,127.50$ 4,683,127.50$ 4,683,127.50$ 245
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2018 Tax Allocation Refunding Bonds (Torrance Industrial Redevelopment Project)
Date Principal Coupon Interest Debt Service
Annual Debt
Service
3/1/2019 186,917.50$ 186,917.50$ 186,917.50$ 9/1/2019 1,080,000.00$ 3.0% 267,025.00$ 1,347,025.00$ 3/1/2020 250,825.00$ 250,825.00$ 1,597,850.00$ 9/1/2020 960,000.00$ 4.0% 250,825.00$ 1,210,825.00$ 3/1/2021 231,625.00$ 231,625.00$ 1,442,450.00$ 9/1/2021 1,000,000.00$ 4.0% 231,625.00$ 1,231,625.00$ 3/1/2022 211,625.00$ 211,625.00$ 1,443,250.00$ 9/1/2022 1,040,000.00$ 5.0% 211,625.00$ 1,251,625.00$ 3/1/2023 185,625.00$ 185,625.00$ 1,437,250.00$ 9/1/2023 1,090,000.00$ 5.0% 185,625.00$ 1,275,625.00$ 3/1/2024 158,375.00$ 158,375.00$ 1,434,000.00$ 9/1/2024 1,150,000.00$ 5.0% 158,375.00$ 1,308,375.00$ 3/1/2025 129,625.00$ 129,625.00$ 1,438,000.00$ 9/1/2025 1,205,000.00$ 5.0% 129,625.00$ 1,334,625.00$ 3/1/2026 99,500.00$ 99,500.00$ 1,434,125.00$ 9/1/2026 1,265,000.00$ 5.0% 99,500.00$ 1,364,500.00$ 3/1/2027 67,875.00$ 67,875.00$ 1,432,375.00$ 9/1/2027 1,325,000.00$ 5.0% 67,875.00$ 1,392,875.00$ 3/1/2028 34,750.00$ 34,750.00$ 1,427,625.00$ 9/1/2028 1,390,000.00$ 5.0% 34,750.00$ 1,424,750.00$ 1,424,750.00$ Total 11,505,000.00$ 3,193,592.50$ 14,698,592.50$ 14,698,592.50$ 246
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Lease Revenue Bonds Series 2020
Date Principal Interest Rate I nterest Debt Service
10/1/2021 2,015,000$ 1 .239% 10,354,094$ 12,369,094$ 4/1/2022 5,485,266 5 ,485,266
10/1/2022 7,415,000 1 .289% 5,485,266 12,900,266 4/1/2023 5,437,477 5 ,437,477
10/1/2023 8,015,000 1 .427% 5,437,477 13,452,477 4/1/2024 5,380,290 5 ,380,290
10/1/2024 8,650,000 1 .604% 5,380,290 14,030,290 4/1/2025 5,310,917 5 ,310,917
10/1/2025 9,325,000 1 .804% 5,310,917 14,635,917 4/1/2026 5,226,805 5 ,226,805
10/1/2026 10,050,000 2 .105% 5,226,805 15,276,805 4/1/2027 5,121,029 5 ,121,029
10/1/2027 10,830,000 2 .255% 5,121,029 15,951,029 4/1/2028 4,998,921 4 ,998,921
10/1/2028 11,655,000 2 .422% 4,998,921 16,653,921 4/1/2029 4,857,779 4 ,857,779
10/1/2029 12,535,000 2 .522% 4,857,779 17,392,779 4/1/2030 4,699,712 4 ,699,712
10/1/2030 13,470,000 2 .622% 4,699,712 18,169,712 4/1/2031 4,523,121 4 ,523,121
10/1/2031 14,460,000 2 .772% 4,523,121 18,983,121 4/1/2032 4,322,705 4 ,322,705
10/1/2032 15,510,000 2 .872% 4,322,705 19,832,705 4/1/2033 4,099,981 4 ,099,981
10/1/2033 16,625,000 2 .972% 4,099,981 20,724,981 4/1/2034 3,852,934 3 ,852,934
10/1/2034 17,810,000 3 .072% 3,852,934 21,662,934 4/1/2035 3,579,372 3 ,579,372
10/1/2035 19,120,000 3 .703% 3,579,372 22,699,372 4/1/2036 3,225,365 3 ,225,365
10/1/2036 20,555,000 3 .703% 3,225,365 23,780,365 4/1/2037 2,844,790 2 ,844,790
10/1/2037 22,060,000 3 .703% 2,844,790 24,904,790 4/1/2038 2,436,349 2 ,436,349
10/1/2038 23,645,000 3 .703% 2,436,349 26,081,349 4/1/2039 1,998,562 1 ,998,562
10/1/2039 25,310,000 3 .703% 1,998,562 27,308,562 4/1/2040 1,529,947 1 ,529,947
10/1/2040 26,590,000 3 .803% 1,529,947 28,119,947 4/1/2041 1,024,338 1 ,024,338
10/1/2041 19,535,000 3 .803% 1,024,338 20,559,338 4/1/2042 652,880 6 52,880
10/1/2042 19,450,000 3 .803% 652,880 20,102,880 4/1/2043 283,038 2 83,038
10/1/2043 14,885,000 3 .803% 283,038 15,168,038 Total 349,515,000$ 1 72,137,247$ 521,652,247$ 247
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Lease Revenue Bonds Series 2021
Date Principal Interest Rate Interest Debt Service
12/1/2021 664,606$ 664,606$
6/1/2022 529,332 529,332
12/1/2022 529,332 529,332
6/1/2023 1,445,000 0.408% 529,332 1,974,332 12/1/2023 526,384 526,384
6/1/2024 1,450,000 0.640% 526,384 1,976,384 12/1/2024 521,744 521,744
6/1/2025 1,465,000 1.181% 521,744 1,986,744 12/1/2025 513,093 513,093
6/1/2026 1,480,000 1.331% 513,093 1,993,093 12/1/2026 503,244 503,244
6/1/2027 1,495,000 1.708% 503,244 1,998,244 12/1/2027 490,477 490,477
6/1/2028 1,520,000 1.908% 490,477 2,010,477 12/1/2028 475,976 475,976
6/1/2029 1,555,000 2.187% 475,976 2,030,976 12/1/2029 458,972 458,972
6/1/2030 1,590,000 2.287% 458,972 2,048,972 12/1/2030 440,790 440,790
6/1/2031 1,625,000 2.487% 440,790 2,065,790 12/1/2031 420,583 420,583
6/1/2032 1,665,000 2.637% 420,583 2,085,583 12/1/2032 398,630 398,630
6/1/2033 1,705,000 2.837% 398,630 2,103,630 12/1/2033 374,445 374,445
6/1/2034 1,755,000 2.837% 374,445 2,129,445 12/1/2034 349,550 349,550
6/1/2035 1,805,000 3.279% 349,550 2,154,550 12/1/2035 319,957 319,957
6/1/2036 1,865,000 3.279% 319,957 2,184,957 12/1/2036 289,380 289,380
6/1/2037 1,925,000 3.279% 289,380 2,214,380 12/1/2037 257,820 257,820
6/1/2038 1,990,000 3.279% 257,820 2,247,820 12/1/2038 225,194 225,194
6/1/2039 2,060,000 3.279% 225,194 2,285,194 12/1/2039 191,420 191,420
6/1/2040 2,115,000 3.379% 191,420 2,306,420 12/1/2040 155,687 155,687
6/1/2041 2,190,000 3.379% 155,687 2,345,687 12/1/2041 118,687 118,687
6/1/2042 2,270,000 3.379% 118,687 2,388,687 12/1/2042 80,336 80,336
6/1/2043 2,340,000 3.379% 80,336 2,420,336 12/1/2043 40,801 40,801
6/1/2044 2,415,000 3.379% 40,801 2,455,801 Total 39,725,000$ 16,558,944$ 56,283,944$ 248
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State Revolving Fund
Date Principal Interest Rate Interest Debt Service
6/30/2025 162,549 1.400% 49,996 212,545 6/30/2026 655,911 1.400% 194,270 850,181 6/30/2027 665,153 1.400% 185,028 850,181 6/30/2028 674,525 1.400% 175,656 850,181 6/30/2029 684,029 1.400% 166,152 850,181 6/30/2030 693,668 1.400% 156,514 850,181 6/30/2031 703,441 1.400% 146,740 850,181 6/30/2032 713,353 1.400% 136,828 850,181 6/30/2033 723,404 1.400% 126,777 850,181 6/30/2034 733,597 1.400% 116,584 850,181 6/30/2035 743,934 1.400% 106,247 850,181 6/30/2036 754,416 1.400% 95,765 850,181 6/30/2037 765,046 1.400% 85,135 850,181 6/30/2038 775,825 1.400% 74,356 850,181 6/30/2039 786,757 1.400% 63,424 850,181 6/30/2040 797,843 1.400% 52,339 850,181 6/30/2041 809,084 1.400% 41,097 850,181 6/30/2042 820,484 1.400% 29,697 850,181 6/30/2043 832,045 1.400% 18,136 850,181 6/30/2044 843,769 1.400% 6,412 850,181 Total 14,338,835$ 2,027,152$ 16,365,987$ 249
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Glossary
Asset Contra Account – This account is used to offset expenses that are capitalized and thus treated as fixed assets in the City’s balance sheet. As such, this classification is an offset to expense for capital acquisitions and results in a net zero effect on operating activities.
Bad Debts and Other Losses – This classification represents the noncash costs of writing off a receivable (asset) from the balance sheet and the noncash value lost below the book value (typically purchase price) for the sale of fixed assets or investments.
Balanced Budget – a balanced budget as a budget in which all sources meet or exceed the adopted appropriations resolution. In a given year, a planned use of fund balance (source) may be identified as a balancing measure though is not a preferred long -term solution over multiple years and should be avoided for a recurring expenditure.
Capital Acquisitions – This classification represents the asset purchases which are capitalized to the balance sheet but are budgeted for purchase requisition purposes and are offset by the corresponding contra classification to have a net zero effect on operating activities ( refer to Asset Contra Account). The expense is recognized in the depreciation and amortization classification when placed in use.
Capital Asset Condition – Financial measure calculating the annual change in net asset value.
Charges for Services – This classification represents cash receipts from business -type activities.
Included in this classification are revenue from the Enterprise Funds, planning and zoning fees, inspection fees and internal service fees charged to city departments.
Debt Burden Ratio – Financial measure calculating long -term liabilities (excluding pension obligation) as a percentage of revenues.
Debt Service – This classification represents the costs to issue debt, the principal and interest payments made on the borrowings and capital lease payments.
Debt Service Reimbursements – This classification is an offset to debt services costs to show a net zero effect on the statement of operations.
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Depreciation and Amortization – This classification represents the noncash costs of fixed or intangible assets (buildings, utility, machinery and equipment, furniture and fixtures, vehicles, and infrastructure improvements) over its useful life.
Extraordinary Gain – This classification represents monetary value received greater than the book value (typically purchase price) for the sale of an asset or group of assets and is considered infrequent and unusual.
Extraordinary Loss – This classification represents noncash value lost below the book value (typically purchase price) for the sale of an asset or group of assets and is considered infrequent and unusual.
Fines, Forfeitures and Penalties – This classification represents cash receipts from general fines, parking citations, and traffic fines.
Fund Balance – This is defined as the balance for a given fund of all assets minus all liabilities. Within fund balance the balance is broken into main categories such as Non -Spendable, Restricted, Assigned, and Unassigned. When examining proprietary funds (i.e. intern al service funds and enterprise funds) this is often referred to as net position. This can serve as a source in a year when expenditures would exceed budgeted revenues to balance the budget.
General Fund Reserve Ratio – Financial measure calculating the unassigned portion of the fund balance as a percentage of budgeted expenditures.
Interdepartmental Charges – This classification represents internal expense allocations across various funds and General Fund programs. This includes charges from the Self -Insurance Fund for worker’s compensation related administrative and insurance costs, from various General Fund programs to the Enterprise Funds for administrative costs (indirect costs) and from the Enterprise Funds to the General Fund for right-of-way franchise fees.
Intergovernmental – This classification represents cash funding received from state, federal and other municipalities.
Liabilities, Settlements & Insurance – This classification represents the costs of litigation, settlements, worker’s compensation and insurance premiums and deductibles.
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Licenses, Fees, and Permits – This classification represents cash receipts from construction permits, building permits, animal licenses and fire permits.
Liquidity Ratio – Financial measure calculating the cash and investments as a percentage of liabilities.
Materials Reimbursements – This classification represents an offset to Materials, Supplies & Maintenance expense classification for a department or fund’s non -wage resources used by or transferred to another department or fund. The City has changed to directly charging departments and has discontinued the use of reimbursements in most departments.
Materials, Supplies & Maintenance – This classification represents non-wage costs for department operations and includes office supplies, construction materials, recreation program supplies, building maintenance, Fleet warehouse and labor charges and vehicle parts and replacement charges.
Net Operating Activity – The excess or deficit of sources (revenues) less uses (expenditures).
Operating Transfers In – This classification represents contributions/transfers from other funds within the city.
Other Expenditures – This classification represents costs which are not classified under other areas and considered one-time in nature.
Other Financing Sources – This classification represents proceeds from bonds and tax revenue anticipation notes.
Other Operating Transfers Out – This classification represents contributions/transfers to other funds within the city.
Other Post-Employment Benefits (OPEB) Funded Status – Financial measure calculating the total plan assets as a percentage of plan liabilities.
Other Revenues – This classification represents cash receipts or funding which are not classified under other areas and considered one-time in nature (donations).
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Parts, Fuel & Lubricants Contra – This account is used to offset expenses that are treated as inventory assets in the City’s balance sheet. As such, this classification is an offset to expense for Fleet warehouse parts and vehicle fuel and result in a net zero effect on operating activities.
Parts, Fuel & Lubricants Inventory Purchases – This classification represents Fleet warehouse parts, vehicle fuel and lubricant costs which are classified as inventory assets on the balance sheet but are budgeted for purchase requisition purposes and are offset by the corresponding contra classification to have a net zero effect on operating activities (refer to Parts, Fuel & Lubricants Contra).
The expense is incurred upon use of the inventory and recognized in the statement of operations.
Pension Funded Status – Financial measure calculating the total plan assets as a percentage of plan liabilities.
Pension Obligation Ratio – Financial measure calculating net pension liability and pension related debt as a percentage of revenues.
Professional/Contract Services & Utilities – This classification represents costs for third -party services and utilities. Included in this classification are software licenses, electricity, gas, and water.
Reimbursements-Indirect Costs – This classification represents the reimbursement received as a result of the indirect costs charged by the General Fund to various funds receiving benefits that proportionately offset administrative costs.
Salaries and Benefits Reimbursements – This classification represents an offset to expense for an employee’s resources used by another department or fund. The City has changed to directly charging funds and has discontinued the use of reimbursements in most departments.
Salaries and Employee Benefits – This classification represents costs from base wages, overtime, pension costs and employee benefits.
Self-Insurance Funded Status – Financial measure calculating the fund assets as a percentage of liabilities.
Stored Water Rights Contra – This account is used to offset expenses that are treated as inventory assets in the City’s balance sheet. As such, this classification is an offset to expense for payment of the replenishment assessment to convert or bank unused groundwater pumping right s to carryover storage.
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Stored Water Rights Inventory Purchases – This classification represents costs for converting or banking unused groundwater pumping rights to carryover storage. This is treated as an inventory asset of the City but is budgeted for purchase requisition purposes and is offset by the corresponding contra classification to have a net zero effect on operating activities (refer to Stored Water Rights Contra).
Structurally Balanced Budget –The City defines a structurally balanced budget as one where recurring revenue meet or exceed recurring expenditure appropriation levels.
Taxes – This classification represents cash receipts from levied taxes and includes sales tax, property tax, business license tax, utility users’ tax and franchise fees.
Training, Travel & Membership Dues – This classification relates to costs incurred from employee training, tuition reimbursement, continuing education, out of town travel and professional membership dues.
Use of Money and Property – This classification represents cash receipts from rental income on city property, change in market value from investments and accrued interest.
Unfunded Accrued Liability – In a defined benefit pension plan, unfunded accrued liability (UAL) is the difference between the actuarially determined estimated cost of future benefit and the assets that have been set aside to pay for those benefits.
Water Supply Costs –This classification represents costs for water supply (i.e. groundwater and desalinated water) provided by the West Basin Municipal Water District, the Metropolitan Water District, and the Water Replenishment District.
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Acronyms
Air Quality Management District (AQMD) – The California Air Resources Board’s regional partners that are responsible for regional air quality planning, monitoring, and stationary source and facility permitting.
Annual Comprehensive Financial Report (ACFR) – An annual set of financial statements that reports the financial condition of the City in accordance with Generally Accepted Accounting Principles as set forth in pronouncements of the Governmental Accounting Standards Board.
Americans with Disabilities Act (ADA) – A federal civil rights law that prohibits discrimination against people with disabilities in everyday activities.
Basic Life Support (BLS) – Generally refers to the type of care that first -responders, healthcare providers and public safety professionals provide to anyone who is experiencing cardiac arrest, respiratory distress or an obstructed airway.
Business Improvement District (BID) – A unique funding tool which allows property owners in a specific boundary to pool their financial resources by assessing themselves to pay for certain district- wide activities and improvements that are above and beyond what the city pays for. These improvements are decided on and managed by a non-profit board made up of a majority of property owners within the district.
California Air Resources Board (CARB) – The lead agency for climate change programs and oversees all air pollution control efforts in California to attain and maintain health-based air quality standards.
California Employers’ Pension Prefunding Trust (CEPPT) – A multiple employer tax exempt Trust organized under Section 115 of the Internal Revenue Code dedicated to prefunding employer contributions to defined benefit pension systems for eligible California public agencies.
California Employers ’ Retiree Benefit Trust (CERBT) – A multiple employer tax exempt Trust organized under Section 115 of the Internal Revenue Code dedicated to prefunding Other Post - Employment Benefits for all eligible California public agencies.
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California Society of Municipal Finance Officers (CSMFO) – A statewide organization serving all California local government finance professionals through innovation, collaboration, continuing education and professional development.
Capital Improvement Plan (CIP) – A financial plan for the acquisition, expansion or rehabilitation of land, buildings, and other major infrastructure.
Certificate of Participation (COP) – A type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues.
Community Development Department (CDD) – The City of Torrance’s Community Development Department.
Consumer Confidence Index (CCI) – Measures consumer sentiment about the current conditions of the economy as well as how they feel about where it is headed based on surveys conducted by the Conference Board.
Consumer Price Index (CPI) – A measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
Defined-Benefit (DB) – Refers to a retirement plan that provides a fixed, pre -established benefit for employees at retirement.
Del Amo Fashion Center (DAFC) – The South Bay’s premier retail destination (and one of the largest shopping malls in America) with three levels of luxury shopping, more than 200 stores and numerous dining options.
Emergency Medical Services (EMS) – A system that responds to emergencies in need of highly skilled pre-hospital clinicians.
Employer Paid Member Contribution (EPMC) – The share of an employee’s contribution toward a retirement plan that an employer pays on the employee’s behalf.
Fiscal Year (FY) – A consecutive 12 -month period that an organization uses for accounting, budgeting, and financial reporting purposes. The City of Torrance’s fiscal year begins July 1 and ends the following June 30. For example, FY 2025 -26 or FY 25-26 is the time period beginning July 1, 2025, and ending June 30, 2026.
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Full-Time Equivalent Employee (FTE) – The total hours of service for which the employer pays wages to an employee during the year (but not more than 2,080 hours) divided by 2,080 hours.
Gross Domestic Product (GDP) – The value of all goods and services produced by an economy each year (not controlling for inflation).
Ground Emergency Medical Transportation (GEMT) – Provides public providers with supplemental payments for providing ground emergency medical transport services.
Government Finance Officers Association (GFOA) – A professional association of approximately 19,000 state, provincial, and local government finance officers in the United States and Canada.
Geographic Information Systems (GIS) - A computer-based tool used to collect, store, analyze, and display spatial data.
Information Technology (IT) – The City of Torrance’s Information Technology Department.
Memorandum of Understanding (MOU) –Formal, but non-binding, agreement between two or more parties that outlines their intentions, goals, and roles in a cooperative effort.
Other Post Employment Benefits (OPEB) – Refers to benefits, other than pensions, that an employer provides to its employees after they retire. These benefits can include retiree health insurance, life insurance, and other healthcare benefits,
Public Agency Retirement Services (PARS) – A retirement plan for public employees, often offered as an alternative to traditional social security.
Public Education Grant (PEG) – Access channels, local cable TV channels that are made available to the community through a percentage of revenue from local cable providers.
California Public Employees’ Pension Reform Act (PEPRA) – A law passed in 2013 that changed how public employee pensions are calculated and administered in California.
California Public Employees’ Retirements Systems ( CalPERS or PERS) – A state-level retirement plan for public employees and the nation’s largest public pension fund.
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Recognized Obligation Payment Schedule (ROPS) – Used in California redevelopment agencies to outline enforceable obligations and their payment sources.
Regional Transit Center (RTC) – Multi-modal transportation hub.
Torrance Municipal Code (TMC) – The City of Torrance’s Municipal Code.
Torrance Police Department (TPD) – The City of Torrance’s Police Department.
Utility Users’ Tax (UUT) – A usage tax on communication, electric, and gas charges billed to a billing or service address.
Vehicle License Fee (VLF) – A fee on the ownership of a registered vehicle in California, in place of taxing vehicles as personal property.
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ITEM 9A – ATTACHMENT 2
MATERIALS AVAILABLE
ITEM WILL BE POSTED PRIOR TO CITY COUNCIL MEETING
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