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Home My WebLink About2006/2007 Comprehensive Annual Financial Report - CAFR - wit CITY OF HUNTINGTON BEACH INTER-DEPARTMENTAL COMMUNICATION FINANCE DEPARTMENT TO: Honorable Mayor and City Council Members VIA: Paul Emery, Interim City Administrator FROM: Dan T. Villella, CPA, Finance Director DATE: March 10, 2008 SUBJECT: COMPREHENSIVE ANNUAL FINANCIAL REPORT 2006-07 We are submitting to you the City's Comprehensive Annual Financial Report (CAFR) for the fiscal year 2006/07. The City received an unqualified or "clean" opinion from Diehl, Evans and Company, CPAs. This is the highest opinion possible. The CAFR shows the City's financial operations for all funds and entity's under the control of the City Council. We will be discussing the CAFR at the study session of May 5, 2008. If you have questions concerning this, please do not hesitate to contact me. DTV/cg Cc: Executive Team 1 1 _ . i�✓ --t�' 1 , eit* 1 = = Comprehensive Annual Financial Report ,U i I 1 � For the Year Ended .o. September 30, 2007 1 la 1 1 CITY OF HUNTINGTON BEACH, CALIFORNIA 1 o,: A _ 1 1 COMPREHENSIVE ANNUAL FINANCIAL REPORT 1 1 FOR THE YEAR ENDED SEPTEMBER 30, 2007 1 WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS i 1 Prepared by the Finance Department 1 1 1 � INTRODUCTORY SECTION 1 1 1 i 1 TABLE OF CONTENTS INTRODUCTORY SECTION Tableof Contents.....................................................................................................................................i-ii Letter of Transmittal CityOfficials............................................................ OrganizationalChart................................................................................................................................... ix Certificate of Achievement in Excellence in Financial Reporting...................................................................x FINANCIAL SECTION Independent Auditor's Report...................................................................................................................... 1-2 Management Discussion and Analysis........................................................................................................ 3-13 Basic Financial Statements: Government-wide Financial Statements: Statementof Net Assets.................................................................................................................... 15 Statement of Activities and Changes in Net Assets........................................................................... 16 Fund Financial Statements: Balance Sheet—Governmental Funds.............................................................................................. 17 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets........... 18 Statement of Revenues, Expenditures and Changes in Fund Balances—Governmental Funds ...... 19-20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities........................................................................21 Statement of Net Assets— Proprietary Funds....................................................................................22 1 Statement of Revenues, Expenses and Changes in Fund Net Assets—Proprietary Funds..............23 Statement of Cash Flows— Proprietary Funds................................................................................... 24 Statement of Fiduciary Fund Net Assets............................................................................................25 Statement of Changes in Fiduciary Fund Net Assets—Trust Funds.................................................. 25 Notes to Financial Statements..............................................................................................................26-67 Required Supplemental Information: BudgetaryInformation,,,..................................................................................................................... 70 Schedule of Revenues, Expenditures and Changes in Fund Balances—Budget AndActual—General Fund................................................................................................................ 71 Schedule of Revenues, Expenditures and Changes in Fund Balances—Budget 1 And Actual—Grants Fund...............................................................................................................72 Schedule of Funding Progress (Normal and Supplemental Retirement Plans)..................................73 Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet—Other Governmental Funds ..................................................................69-80 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Governmental Funds ............................................................................................................ 81-84 Schedule of Revenues, Expenditures, and Changes in Fund Balances— Budget and Actual—Other Governmental Funds ........................................................................... 85-93 Schedule of Revenues, Expenditures and Changes in Fund Balances— Budget And Actual—Redevelopment Agency Capital Projects and Debt Service...................................... 94 1 Schedule of Revenues, Expenditures and Changes in Fund Balances— Budget And Actual—Low Income Housing Fund........................................................................................95 Combining Statement of Net Assets—Other Enterprise Funds.........................................................98 Combining Statement of Revenues, Expenses, and Changes in Net Assets— OtherEnterprise Funds................................................................................................................... 99 Combining Statement of Cash Flows—Other Enterprise Funds........................................................ 100 Combining Statement of Fiduciary Fund Net Assets.......................................................................... 103 Statement of Changes in Fiduciary Assets and Liabilities.................................................................. 104-105 i STATISTICAL SECTION Net Assets by Component—Last Six Fiscal Years..................................................................................... 107 Change in Net Assets- Last Six Fiscal Years.............................................................................................. 107-108 Fund Balances—Governmental Funds— Last Ten Fiscal Years ................................................................ 109 Changes in Fund Balances— Last Ten Fiscal Years................................................................................... 111-112 Assessed and Actual Valuation of All Taxable Property (Excluding Redevelopment Agency)- LastTen Fiscal Years .............................................................................................................................. 113 Property Tax Rates—All Direct and Overlapping Government Tax Rate 04-001 Largest Area in City— Last Ten Fiscal Years........................................................................................... 113 Property Tax Levies and Collections— Last Ten Fiscal Years .................................................................... 114 Ratios of Outstanding Debt by Type—Last Ten Fiscal Years..................................................................... 115 Top Ten Property Tax Payers—Current Year and Six Years Ago.............................................................. 116 Legal Debt Margin— Last Ten Fiscal Years ................................................................................................ 117 Principal and Private Employers—Current Year and Two Years Ago......................................................... 117 Full-Time Budgeted City Employees by Program/Function— Last Six Fiscal Years.................................... 118 Operating Indicators by Function/Activity— Last Three Fiscal Years .......................................................... 119 Capital Assets Statistics by Function/Activity.............................................................................................. 119 Statement of Direct and Overlapping Bonded Debt .................................................................................... 120 i 1 1 1 1 1 I 1 _Ru CITY OF HUNTINGTON BEACH February 26, 2008 To the Honorable Mayor and City Council City of Huntington Beach 1 Huntington Beach, California The Charter of the City of Huntington Beach requires that the City's financial statements be audited each year by an independent accounting firm. This report fulfills that requirement for the fiscal year ending September 30, 2007. Management assumes full responsibility for the completeness and reliability of the information in this report, based upon a comprehensive framework of internal control established for this purpose. Because the cost of any control should not exceed the anticipated benefits, management's objective is to provide reasonable, but not absolute, assurance that the financial statements are free of any material misstatements. Diehl, Evans & Company, LLP, a firm of licensed independent certified public accountants, has audited the City's financial statements for the year ending September 30, 2007. The auditors' report is located at the front of the financial statement. The City received an unqualified (clean) opinion. The goal of the audit is to provide reasonable assurance that the financial statements of the City of Huntington Beach are free of material misstatement. This independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management. The independent auditor concluded that there was a reasonable basis for rendering an unqualified opinion that the financial statements of the City of Huntington Beach for the fiscal year ending September 30, 2007 are presented fairly in accordance with generally accepted accounting principles. The opinion is presented as the first component of the financial section of this report. This audit was part of a broader, federally mandated "Single Audit" designed to meet the needs of federal granting agencies. The standards governing these engagements require the auditor to report not only on the fair presentation of the financial statements, but also on the City's internal controls and compliance with legal issues, especially concerning federal awards. These reports are available from the City's Finance Department. Management's Discussion and Analysis (MD & A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the financial statements. MD & A complement this letter and should be read in conjunction with it. ABOUT THE CITY OF HUNTINGTON BEACH The City of Huntington Beach is located along the Southern California coast in Orange County, 35 miles south of Los Angeles and 90 miles north of San Diego. With a population of approximately 200,000 residents, it is known as Surf City due to its abundance of beaches; sunny, warm Mediterranean climate; and casual lifestyle. Huntington Beach covers 28 square miles of land, 26 square miles of water, and is the one of the 20 largest iii cities in California. With 8.5 miles of uninterrupted beach along the Pacific Ocean, the city also plays host to an annual visitor population of over 11 million people, especially during the summer, special events and weekends. Listed among the nation's safest cities for decades, Huntington Beach has often been ranked among the Top Ten Safest Cities by City Crime Rankings. Founded in the late 1880s, Huntington Beach was incorporated as a Charter City in 1909. Huntington Beach has a City Council/City Administrator form of government. The City Council has seven members, each of whom is elected to four-year terms. City Council Members are limited to two consecutive terms. There are three elected department heads, the City Attorney, City Clerk and City Treasurer. The position of Mayor is filled on a rotating basis. The City of Huntington Beach is a full service city. Its departments include the City Administrator's Office, Building and Safety, City Attorney, City Clerk, City Treasurer, Community Services, Economic Development, Finance, Fire, Human Resources, Information Services, Library Services, Planning, Police, and Public Works. This report includes the financial activity of separate legal entities whose activities the City controls. These entities are: • Redevelopment Agency of the City of Huntington Beach • Huntington Beach Public Financing Authority • Various community facilities districts A component unit report (stand-alone report) is available for the Redevelopment Agency. The City operates on a fiscal year basis, beginning October 1 st and ending September 30th. The budget is prepared under the supervision of the City Administrator and transmitted to the City Council for deliberation sixty days prior to the end of the fiscal year. The City Council adopts the annual budget by September 30th of the prior fiscal year and may amend it or revise it at any time at a properly noticed meeting. Budgetary control is at the department level within each fund. A Department Head, with the Finance Director's approval, may transfer funds within like categories (salaries and benefits, operating, and capital expenditures) of the same department. LOCAL ECONOMY The City of Huntington Beach is one of the leading commercial and industrial centers in Southern California. The City works diligently to maintain its business friendly atmosphere, working closely with the Huntington Beach Chamber of Commerce and the Huntington Beach Conference and Visitors Bureau. The City seeks to attract new businesses and support existing business through retention and expansion efforts. Benefits from tourism and continued modest economic growth should allow for sustainable revenue growth for the City. As the third largest city in Orange County, more than 121,100 people are currently employed by over 14,400 businesses and governmental entities in the City. Huntington Beach residents represent nearly 8% of the entire Orange County working population. Huntington Beach businesses include aerospace and high technology; petroleum and petroleum support; manufacturing; computer hardware and software; financial and business services; iv automobile services; machine shop services, precision instruments, retailers and surf apparel, just to name a few. LONG-TERM FINANCIAL PLANNING In November 2004 California voters approved Proposition 1A, which will help stabilize the flow of revenues to municipalities and end future State raids on City finances. This will allow for better forecasting of City revenues and, along with modest economic growth, should allow for future sustainable revenue growth. The City has recently adopted a long-term strategic plan. MAJOR INITIATIVES Through its Strategic Plan,the Huntington Beach City Council seeks to assure a high quality of life endures and improves as the City ages. The Strategic Plan was first created in July 2001 as a way to help the City Council assess the effects of today's decisions on the City's future quality of life. As a blueprint for the City's future, the Strategic Plan defines the City Council's goals and objectives. The following are the City Council's strategic goals set forth in the City's development of the annual budget: • Public Safety - Maintain a healthy and safe community • Fiscal Integrity - Establish a sound financial foundation for the City's finances • Infrastructure and Transportation - Assure the long-term adequacy of the City's infrastructure, facilities, and transportation network. • Economic Development - Achieve development that maintains and improves the city's fiscal viability and reflects economic demands while maintaining and improving quality of life for current and future residents • Organizational Development and Technology - Maintain and continually improve organizational effectiveness. • Community Livability and Sustainability—Build and maintain a sense of place and an exceptional quality of life within a sustainable urban environment. • Enrichment, Communication and Involvement- Ensure that Huntington Beach's local government is open, accessible, responsive, nurturing, and respectful to all the citizens it serves. • Environment and Natural Resources - Enhance the community's environmental quality and its unique natural resources. CASH MANAGEMENT POLICES AND PRACTICES The elected City Treasurer invests surplus cash in authorized investments allowed by the government code and City policy. The City adopts an annual Investment Policy intended to 1 provide guidelines for the prudent investment of the city's cash balances, and outlines the policies to assist in maximizing the efficiency of the city's cash management system while meeting the daily cash flow demands of the city. Both the Investment Advisory Board and the City Council approved the City's Investment Policy. The investment practices and policies of the City of Huntington Beach are based upon state law and prudent money management. The primary goals of these practices are: • To assure compliance with all Federal, State, and local laws governing the investment of public funds under the control of the City Treasurer. • To protect the principal moneys entrusted to the City Treasurer. v ® Achieve a reasonable rate of return within the parameters of prudent risk management while minimizing the potential for capital losses arising from market changes or issuer default. The City forecasts revenues and expenditures to meet current obligations and to earn a market rate of return on its investments. The City Treasurer earned a return of 4.74%for the year. The California Government Code requires the City Treasurer to prepare an annual statement of investment policy. The City Treasurer complied with this law. Note 2 to the Basic Financial Statements shows further information on the City's cash and investments. PENSION AND OTHER POSTEMPLOYMENT BENEFITS The City of Huntington Beach is a member of the California Public Employees' Retirement System (CaIPERS) that provides benefits to all permanent employees. The City also maintains a retirement supplemental plan to employees hired before January 1, 1998. There are also certain post-retirement medical benefits available to retirees. This information is detailed in notes 5, 6, and 7 of the accompanying financial statements. Below is summary information: Percent Funded Unfunded Liability (in millions) Retirement - Normal Plan 95% $71.5 Retirement - Supplemental 40% $30.6 Post-Employment Benefits 33% $14.9 The City has adopted actuarially sound funding plans to pay off the unfunded liabilities according to studies conducted by CaIPERS and independent actuaries. The City will implement Government Accounting Standards Board Statement 45(Other Post-Employment Benefits)for the fiscal year ending September 30, 2008. The City has made contributions to this plan since its inception in 1991, but GASB 45 will require that the City contribute additional amounts than have been contributed in past years. The 2007-08 budget includes amounts to fully fund these benefits. RISK MANAGEMENT The City is self-insured for workers compensation and liability. These programs are recorded in the general fund. The City is a member of the Big Independent Cities Excess Insurance Pool (BICEP) to handle large claims. Further information on the City's risk management issues can be found in note 8 of the financial statements. AWARDS AND ACKNOWLEDGEMENTS The Governmental Finance Officers Association (GFOA) of the United States and Canada awarded the Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report ended September 30, 2006. This was the nineteenth consecutive year the City has received this prestigious award. To qualify for the Certificate of Achievement, the government entity must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, the contents of which conform to program standards. Such report must satisfy both generally accepted accounting principles as well as all legal requirements. vi The Certificate of Achievement is valid for one year only. The City believes that this Comprehensive Annual Financial Report continues to conform to the Certificate of Achievement Program requirements and will be submitted to GFOA to determine its eligibility for another certificate. We wish to thank the City Council and the City Departments for responsibility conducting the ' fiscal affairs of the City of Huntington Beach. We would also like to thank Robert Sedlak, Valaya Chitchakkol, Dahle Bulosan, Josh Brooks, and Carrie Gonzales of the Finance Department who prepared this report. Dan T. Villella, CPA Finance Director vii City of Huntington Beach City Council 2006/2007 Debbie Cook, Mayor Keith Bohr, Mayor Pro Tem Joe Carchio, Councilmember Gil Coerper, Councilmember Cathy Green, Councilmember Don Hansen, Councilmember Jill Hardy, Councilmember Executive Team Paul Emery, Interim City Administrator Robert Hall, Deputy City Administrator Laurie E. Payne, Community Relations Officer Department Directors Ross D. Cranmer, Building & Safety Jim B. Engle, Community Services Joan L. Flynn, City Clerk Shari L. Freidenrich, City Treasurer Ron Hayden, Library Services Scott Hess, Planning Jack Marshall, Information Services Jennifer M. McGrath, City Attorney Chief Duane S. Olson, Fire Stanley Smalewitz, Economic Development Chief Kenneth W. Small, Police Dan T. Villella, Finance Travis Hopkins, Public Works Michele Carr, Human Resources viii CITY OF HUNTINGTON BEACH THE PEOPLE ' CITY CLERK CITY COUNCIL CITY CITY Mayor TREASURER ATTORNEY Administration Mayor Pro Tern Administration 1 Litigation Public Support City Council Members Investments Cashiering 1 Advisory Collections CITY ADMINISTRATOR FIRE POLICE Fire Uniform Administration Division Fire Investigation Prevention Division Emergency Administrative Response Operations DEPUTY CITY DEPUTY CITY ADMINISTRATOR ADMINISTRATOR BUILDING& ECONOMIC PLANNING PUBLIC COMMUNITY FINANCE HUMAN INFORMATION LIBRARY" SAFETY DEVELOPMENT WORKS SERVICES RESOURCES SERVICES SERVICES 1 Permit& Accounting Risk Children's 1 Plan Check Redevelopment Planning Engineering Beach Operations Services Management Systems Branch 1 Media Services Real Estate Code Enforcement Ins ection Bud et& Aduft/Technical Services Services Neighborhood Utilities Marine Safety Research Labor Communications Services &Housing Prevention Maintenance Recreation, BenefRs& Human& Central Services 0 erations Operations Training Cultural Services Facilities, Recruitment& Transportation Concessions& Fiscal Services Retention Development General Services 1X Certificate of I Achievement for Excellence 1 In Financial 1 Deporting Presented to City �of Huntington Beach California For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30,2006 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports(CAFRs)achieve the highest standards in government accounting and financial reporting. �U6 0FFj4 AND President 4IkAG0 Executive Director 1 x 1 � FINANCIAL SECTION r DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS&CONSULTANTS MICHAEL R.LUDIN,CPA A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W.SPRAKER,CPA NITIN P.PATEL,CPA ROBERTIiCALLANAN,CPA 2121 ALTON PARKWAY,SUITE 100 .PHILIP H.HOLTKAMP,CPA "THOMAS M.PERLOWSKI,CPA IRVINE,CALIFORNIA 92606-4956 *HARVEY J.SCHROEDER,CPA (949)399-0600•FAX(949)399-0610 KENNETH R A.MES.CPA www.diehleyansxom *A PROFESSIONAL CORPORATION February 20, 2008 INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of City Council City of Huntington Beach Huntington, California We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Huntington Beach, as of and for the year ended September 30, 2007, which collectively comprise the City's basic financial statements as listed in the table of contents. The financial statements are the responsibility of the City of Huntington Beach's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above resent fairly, in all material respects, the P A Y� respective financial position of the governmental activities, the business-type activities, each major r fund, and the aggregate remaining fund information of the City of Huntington Beach, as of September 30, 2007 and the respective changes 1n financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. 1 - 1 - OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W.VALLEY PARKWAY,SUITE 330 CARLSBAD,CALIFORNIA 92008-2389 ESCONDIDO,CALIFORNIA 92025-2598 (760)729-2343•FAX(760)729-2234 (760)741-3141•FAX(760)741-9890 In accordance with Government Auditing Standards, we have also issued our report dated February 20, 2008 on our consideration of the City of Huntington Beach's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management's discussion and analysis and the other required supplementary information identified in the accompanying table of contents are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures to the management's discussion and analysis and the California Public Employees Retirement System's Schedule of Funding Progress, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this required supplementary information. However, we did not audit the management's discussion and analysis and the California Public Employees Retirement System's Schedule of Funding Progress and express no opinions on them. The budgetary comparison schedules and related note have been subjected to the auditing procedures applied in the audit of the basic financial statement and, in our opinion are fairly stated in all material respects in relation to the basic financial statements taken as a whole Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Huntington Beach's basic financial statements. The introductory section, combining and individual other fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual other fund financial statements and capital assets schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. - 2 - City of Huntington Beach Management's Discussion and Analysis For the Year Ended September 30, 2007 As management of the City of Huntington Beach, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City of Huntington Beach for the fiscal year ended September 30, 2007. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iii-vii of this report. Financial Highlights Below is a summary of the City's government-wide financial information (in thousands): Total Governmental and Business Activities Amount Percent September 30, September 30, Increase Increase 2007 1 2006 Decrease Decrease Assets $ 1,030,304 $ 998,588 $ 31,716 3.2% Liabilities 202,787 205,278 (2,491) -1.2% Total Net Assets 827,517 793,310 34,207 4.3% Unrestricted Net Assets 113,655 87,289 26,366 30.2% Long-Term Obligations 146,490 152,352 (5,862) -3.8% Program Revenues 115,215 108,620 6,595 6.1% Taxes 145,232 127,442 17,790 14.0% Other General Revenues 29,879 33,788 (3,909) -11.6% Expenses 256,119 244,244 11,875 4.9% • The total assets of the City of Huntington Beach exceeded its liabilities at the close of the most recent fiscal year by $827,517,000. Of this amount, $113,655,000 may be used to meet the City's ongoing obligations to citizens and creditors. Net assets increased $34,207,000 or 4.3%. This increase is due to in large part to investments in capitalized infrastructure. Unrestricted net assets increased by $26,366,000 or 30.2%. • Long-term liabilities decreased by ($5,862,000) or (3.8%). • Program revenues increased by$6,595,000 or 6.1% due to developer contributions in the current fiscal year. Taxes increased $17,790,000 or 14.0%. Expenses increased $11,875,000 or 4.9% Overview of the Financial Statements This discussion and analysis serve as an introduction to the City of Huntington Beach basic financial statements. The City of Huntington Beach's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains certain other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City's financial condition and are prepared similarly to those in the private sector. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, continued increases or decreases in net assets may indicate whether the City's financial condition is improving or deteriorating. See Independent Auditors'Report and Notes to the Financial Statements 3 City of Huntington Beach _ - (Management's Discussion and Analysis For the Year Ended September 30, 2007 The statement of activities presents information on how the City's net assets changed during the most recent fiscal year. These changes are reported on the accrual basis (when the economic event occurs), not when the cash is received or paid. The government-wide financial statements separate functions that are primarily supported by taxes and intergovernmental revenues (governmental activities) from functions that are supported by user fees (business activities). Governmental activities include public safety, public works, general government, and community-related activities. Business activities include the Water, Sewer, Refuse, Emerald Cove Housing, Emergency Fire Medical, Hazmat Service, and Ocean View Estates. The government-wide financial statements include the City and all of its component units that are legally separate but whose activities entirely support the City of Huntington Beach. These entities are, the Redevelopment Agency of the City of Huntington Beach, the Huntington Beach Public Financing Authority, and various assessment districts described in Note 1 to the financial statements. The government-wide financial statements can be found on pages 15-16 of this report. Fund Financial Statements The City separates financial activities into funds to maintain control over resources that have been legally separated. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds Governmental funds are used to account for the same functions reported in governmental activities in the government-wide financial statements. However, the focus in the governmental fund section of these financial statements is on near-term resource inflows and outflows available for spending, as well as balances of resources available for spending at the end of the fiscal year. It is useful to compare information presented for the governmental funds to information presented for governmental activities in the government-wide financial statements. The reconciliation indicates to the reader the differences in financial reporting between the governmental activities section and the governmental funds section. The City maintains 22 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenue, expenditures, and changes in fund balances for the General Fund, Grants Fund, Redevelopment Agency Debt Service Fund, Redevelopment Agency Capital Projects Fund, and Low-Income Housing Capital Projects Fund all of which are considered to be major funds. Data from the other 17 funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in a combining statement elsewhere in this report. See Independent Auditors'Report and(Votes to the Financial Statements 4 a , City of Huntington Beach Management's Discussion and Analysis ° For the Year Ended September 30, 2007 The City provides an annual appropriated budget for its governmental funds. Budgetary comparison schedules on pages 71-72 and 85-95 demonstrate compliance. The basic governmental fund financial statements can be found on pages 17-20 of this report. Proprietary Funds Proprietary funds or enterprise funds are used to account for the same activities as the business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Water, Sewer, Refuse, Emerald Cove Housing, Emergency Fire Medical, Hazmat Service, and Ocean View Estates activities. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statement provides information for Water, Sewer Service, and Refuse Funds, which are considered to be major funds of the City. The remaining proprietary funds noted above are combined into a single, aggregated presentation. The basic proprietary fund financial statements can be found on pages 22-24 of this report. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City of Huntington Beach's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on page 25 of this report. Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 26-67 of this report. Other information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits to its employees and General Fund budget to actual comparisons. Required supplementary information can be found on pages 69-73 of this report. The combining statements referred to earlier in connection with other governmental funds is presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on page 77-84 of this report. See Independent Auditors'Report and Notes to the Financial Statements 5 City of Huntington Beach Management's Discussion and Analysis For the Year Ended September 30, 2007 Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. Below is a summary schedule of the City's net assets at September 30, 2007 (in thousands): Amount ercen September 30, September 30, Increase Increase Governmental Activities 2007 2006 (Decrease) (Decrease) Current and Other Assets $ 181,577 $ 164,117 $ 17,460 10.6% Capital Assets 633,421 631,756 1,665 0.3% Total Assets 814,998 795,873 19,125 2.4% Current Liabilities 50,301 46,859 3,442 7.3% Long-Term Liabilities 145,422 151,484 (6,062) -4.0% Total Liabilities 195,723 198,343 (2,620) -1.3% Net Assets: Invested in Capital Assets, Net of Related Debt 486,901 494,880 (7,979) -1.6% Restricted 73,541 68,381 5,160 7.5% Unrestricted 58,833 34,269 24,564 71.7% Total Net Assets $ 619,275 $ 597,530 $ 21,745 3.6% Amount ercen September 30, September 30, Increase Increase Business Activities 2007 2006 (Decrease) (Decrease) Current and Other Assets $ 95,420 $ 91,024 $ 4,396 4.8% Capital Assets 119,886 111,691 8,195 7.3% Total Assets 215,306 202,715 12,591 6.2% Current Liabilities 5,996 6,067 (71) -1.2% Long-Term Obligations 1,068 868 200 23.0% Total Liabilities 7,064 6,935 129 1.9% Net Assets: Invested in Capital Assets, Net of Related Debt 119,874 111,651 8,223 7.4% Restricted 33,546 31,109 2,437 7.8% Unrestricted 54,822 53,020 1,802 3.4% Total Net Assets $ 208,242 $ 195,780 $ 12,462 6.4% The largest portion of the City's net assets reflects investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure); less any related debt used to acquire those assets that is still outstanding. The City uses 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,the resources needed to repay this debt must be provided from other sources, since capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net assets is subject ® to external (legally imposed or statutory) restrictions ($73,541,000 for governmental activities, and $33,546,000 for business activities). These amounts represent 11.9% and 16.1% of net assets for governmental activities and business activities respectively, The unrestricted assets ($58,833,000 for governmental activities and $54,822,000 for business activities) represent 9.5% and 26.3% of net assets for governmental activities and business activities respectively. A condensed summary of governmental activities (in thousands) follows: See Independent Auditors'Report and Notes to the Financial Statements 6 City of Huntington Beach Management's Discussion and Analysis For the Year Ended September 30, 2007 Governmental Activities Amount Percent September 30, September 30, Increase Increase Revenues: 2007 2006 Decrease Decrease Program Revenues: Charges for Current Services $ 44,672 $ 37,139 $ 7,533 20.3% Operating Grants and Contributions 1,996 917 1,079 117.7% Capital Grants and Contributions 5,154 6,893 (1,739) -25.2% Total Program Revenues 51,822 44,949 6,873 15.3% ! General Revenues: Property Taxes 79,369 66,598 12,771 19.2% Sales Taxes 30,608 26,448 4,160 15.7% Utility Taxes 21,479 21,170 309 1.5% Other Taxes 13,776 13,226 550 4.2% Use of Money and Property 7,895 4,310 3,585 83.2% From Other Agencies 12,689 10,390 2,299 22.1% Participation Payments 1,564 6,221 (4,657) -74.9% Other 2,696 9,278 (6,582) -70.9% Total General Revenues 170,076 157,641 12,435 7.9% Total Revenues 221,898 202,590 19,308 9.5% Expenses: City Council 287 271 16 5.9% City Administrator 1,442 5,540 (4,098) -74.0% City Treasurer 1,088 1,479 (391) -26.4% City Attorney 2,534 2,317 217 9.4% City Clerk 950 756 194 25.7% Finance 4,454 3,306 1,148 34.7% ! Human Resources 4,202 - 4,202 0% Planning 3,098 2,813 285 10.1% Building 4,899 3,930 969 24.7% Fire 27,247 24,787 2,460 9.9% Information Systems 6,591 7,361 (770) -10.5% Police 56,988 50,877 6,111 12.0% Economic Development 9,209 4,977 4,232 85.0% Community Services 16,482 15,777 705 4.5% Library Services 5,586 4,829 757 15.7% Public Works 34,581 49,654 (15,073) -30.4% Non-Departmental 15,131 11,263 3,868 34.3% Interest on Long-Term Debt 5,875 5,575 300 5.4% Total Expenses 200,644 195,512 5,132 2.6% Increase in Net Assets Before Transfers 21,254 7,078 Transfers 491 464 Net Assets - Beginning of Year As Restated 597,530 589,988 Net Assets -End of Year $ 619,275 $ 597,530 The cost of all governmental activities this year was $200,644,000. However, as shown in ! the Statement of Activities, the amount that the taxpayers ultimately financed for these activities was only $148,822,000, because costs of $44,672,000 were paid by those who directly benefited from the programs, or by other governments and organizations that subsidized certain programs with operating grants and contributions of $1,996,000, and capital grants and contributions of $5,154,000. Overall, the City's governmental program ! revenues were $51,822,000. The City paid for the remaining "public benefit" portion of governmental activities with $170,076,000 in taxes and general revenue (some of which could only be used for certain programs) and with other revenues, such as interest and general entitlements. Capital Grants and Contributions have decreased by $1,739,000 or 25.2% due to a decrease in state grants in the current fiscal year. Total resources available during the year to finance governmental operations were ! $827,517,000 consisting of net assets at October 1, 2006 of $597,530,000, program revenues of $51,822,000, general revenues of $170,076,000, and transfers of $491,000. Total expenses for governmental activities during the year were $200,644,000, thus, net See Independent Auditors'Report and Notes to the Financial Statements ! 7 City of Huntington Beach Management's Discussion and Analysis For the Year Ended September 30, 2007 assets were increased by $21,745,000, to $619,275,000. A condensed summary of business activities (in thousands) follows: Business Activities Amount Percent September 30, September 30, Increase Increase 2007 2006 Decrease Decrease Program Revenues: Charges for Current Services $ 56,294 $ 56,525 $ (231) -0.4% Capital Grants and Contributions 7,099 7,146 (47) -0.7% Total Program Revenues 63,393 63,671 (278) -0.4% Use of Money and Property 5,035 3,589 1,446 40.3% Total Revenues 68,428 67,260 1,168 1.7% Expenses: Water Utility 32,606 28,117 4,489 16.0% Emerald Cove Housing 936 551 385 69.9% Emergency Fire Medical 5,347 5,637 (290) -5.1% Refuse Collection 10,542 10,289 253 2.5% Sewer Service 5,766 3,855 1,911 49.6% Hazmat Service 194 163 31 19.0% Ocean View Estates 84 120 (36) -30.0% Total Expenses 55,475 48,732 6,743 13.8% Increase in Net Assets Before Transfers 12,953 18,528 Transfers (491) (464) Net Assets-Beginning of Year 195,780 177,716 Net Assets-End of Year $ 208,242 $ 195,780 The City's net assets from business activities increased by $12,953,000 before transfers. The largest reasons for this increase was operating income of $819,000, capital contributions for the Water Master Plan of$7,099,000 and interest income of$5,035,000. The cost of all Proprietary(Business Type) activities this year was $55,475,000. As shown in the Statement of Activities and Changes in Net Assets, the amount paid by users of the systems was$56,294,000, capital grants and contributions were$7,099,000, other revenue was $5,035,000, and transfers were $491,000. Beginning net assets were $195,780,000 and ending net assets were$208,242,000. Of the ending net asset amount, $119,874,000, or 57.6%, was invested in capital assets, $33,546,000 or 16.1% was restricted for expenditures for the Water Master Plan, and $54,822,000, or 26.3% was unrestricted. The City's programs for governmental activities include General Government, Fire, Police, Public Works, Redevelopment, Community Services and Library. Business type activities include the Water, Sewer, Refuse, FireMed, Hazmat Service, and Ocean View Estates. A listing of each program's revenues and expenses for the current year is presented below(in thousands): See Independent Auditors'Report and Notes to the Financial Statements 8 City of Huntington Beach _-- Management's Discussion and Analysis For the Year Ended September 30 - N , 2007 2006-2007 2005-2006 un e y Funded y Taxes and Other Taxes and Less Program General Other General Governmental Activities: I Expenses Revenues Revenues Revenues City Council $ 287 $ (99) $ 188 $ 181 City Administrator 1,442 (392) 1,050 3,928 City Treasurer 1,088 (698) 390 147 City Attorney 2,534 (46) 2,488 2,274 City Clerk 950 (210) 740 661 Finance 4,454 (1,312) 3,142 2,981 Human Resources 4,202 (1,347) 2,855 - Planning 3,098 (4,223) (1,125) 1,988 Building 4,899 (5,450) (551) (929) Fire 27,247 (1,807) 25,440 23,588 Information Systems 6,591 (675) 5,916 6,720 Police 56,988 (5,012) 51,976 45,390 Economic Development 9,209 (4,018) 5,191 4,100 Community Services 16,482 (16,424) 58 (293) Library Services 5,586 (1,090) 4,496 3,820 Public Works 34,581 (8,787) 25,794 39,398 Non-Departmental 15,131 (232) 14,899 11,034 Interest on Long-Term Debt 5,875 - 5,875 5,575 Total Governmental Activities $ 200,644 $ (51,822) $ 148,822 $ 150,563 Business Activities Water Utility 32,606 (37,962) (5,356) (9,829) Emerald Cove Housing 936 (1,037) (101) (409) Emergency Fire Medical 5,347 (6,068) (721) (508) Refuse Collection 10,542 (10,550) (8) (3) Sewer Service 5,766 (7,242) (1,476) (4,018) Hazmat Service 194 (210) (16) (19) Ocean View Estates 84 (324) (240) (153) Total Business Activities $ 55,475 $ (63,393) $ (7,918) $ (14,939) Financial Analysis of the City's Major Governmental Funds Below is an analysis of the City's major governmental fund activities for the year (in thousands): GOVERNMENTAL FUNDS Amount Percent September 30, September 30, Increase Increase 2007 2006 (Decrease) (Decrease) Total Fund Equity: General Fund $ 43,696 $ 40,586 $ 3,110 7.7% Redevelopment Agency Capital Projects 21,757 20,265 1,492 7.4% Redevelopment Agency Debt Service 1,380 1,225 155 12.7% Low-Income Housing Fund 12,666 10,502 2,164 20.6% Grants 7,387 7,062 325 4.6% Total Fund Equity $ 79,499 $ 79,640 $ 6,921 -0.2% Unreserved Fund Equity: General Fund $ 33,017 33,204 $ (187) -0.6% Redevelopment Agency Capital Projects 14,505 4,608 9,897 214.8% Redevelopment Agency Debt Service 1,380 6,325 (4,945) -78.2% Total Unreserved Fund Equity $ 48,902 $ 44,137 $ 4,765 10.8% The General fund balance increased by $3,110,000. Key factors in this growth were See Independent Auditors'Report and Notes to the Financial Statements 9 1 City of Huntington Beach Management's Discussion and Analysis For the Year Ended September 30, 2007 increased property tax revenue as a result of increases in the assessed value of real estate and increased sales tax revenue as a result of increasing economic activity. The Redevelopment Agency Debt Service fund balance increased by $155,000 primarily due to increased property tax revenue as a result of increases in assessed real estate values. The Grants fund balance increased by$325,000 primarily due to transfers from other funds and increased grant activity. Financial Analysis of the City's Major Proprietary Funds Below is an analysis of the fund equity of the City's proprietary funds (in thousands): Enterprise Funds Amount Percent September 30, September 30, Increase Increase 2007 2006 Decrease Decrease 1 Net Assets: Water Fund $ 150,023 $ 140,613 $ 9,410 6.7% Sewer Fund 42,279 40,205 2,074 5.2% Refuse Fund 232 164 68 41.5% Total Net Assets $ 192,534 $ 180,982 $ 11,552 6.4% Unrestricted Net Assets: Water Fund $ 38,810 $ 33,105 $ 5,705 17.2% Sewer Fund 8,044 12,366 (4,322) -35.0% Refuse Fund 232 164 68 41.5% Total Unrestricted Net Assets $ 47,086 $ 45,635 $ 1,451 3.2% The Water Fund net assets increased by$9,410,000 and unrestricted net assets increased by$5,705,000. Key factors in this growth were capital improvement fees of$7,099,000 and net operating loss of$1,743,000. The Sewer Fund net assets increased by$2,074,000 and unrestricted net assets decreased by$4,322,000. The key factor in this decline was an increase in investment in capital assets net of related debt of$6,396,000. See Independent Auditors'Report and Notes to the Financial Statements 10 City of Huntington Beach Management's Discussion and Analysis For the Year Ended September 30, 2007 Debt Administration Below is a schedule of the changes to the City's long-term debt (in thousands). Balance Balance September 30, Governmental Activities: October 1,2006 Additions Retirements 2007 Certificates of Participation $ 14,885 $ $ (670) $ 14,215 Revenue Bonds 55,120 - (3,005) 52,115 Tax Allocation Bonds 26,065 - (1,180) 24,885 Judgement Obigation Bonds 11,525 - (730) 10,795 Special District Bonds - - - - Claims 3,956 2,772 (2,056) 4,672 Compensated Absences 9,630 3,810 (2,372) 11,068 Pension Obligation 6,548 - (1,773) 4,775 Loans 30,432 2,558 (4,139) 28,851 Property Tax Claims - - - - Leases Payable 2,975 35 (729) 2,281 Total Long-Term Obligations-Governmental Activities 161,136 9,175 (16,654) 153,657 Business Activities: Compensated Absences 868 418 (227) 1,059 Leases 40 14 (42) 12 Business Activities 908 432 (269) 1,071 Total Long-Term Obligations $ 162,044 $ 9,607 $ (16,923) $ 154,728 Additional information on the City's long-term debt is shown in note 11 to the financial statements. The City of Huntington Beach is legally restricted to issuing general obligation bonds to 15% of its assessed valuation. Since the City has no general obligation bonds outstanding,the limit does not apply. This is shown on page 117 of the financial statements. The City's total debt decreased ($7,316,000) or(4.5%)from its beginning amount primarily due to debt repayment. The City continues to maintain excellent credit ratings on all of its debt issues. The following are the latest ratings as determined by Moody's Investors Service and Standard and Poor's. Debt Instrument Moody S&P 1998 Tax Allocation Refunding Bonds Aaa Not Available 2000 Lease Revenue Bonds, Series A Al AAA 2001 Lease Revenue Bonds, Series A Al AAA 2001 Lease Revenue Bonds, Series B Al AAA 2002 Tax Allocation Refunding Bonds Aaa Not Available 2004 Judgment Obligation Bonds Aa3 AA- Capital Assets The capital assets of the City are those assets, which are used in the performance of the City's functions including infrastructure assets. The City has elected to use the "Basic Approach" as defined by GASB statement 34 for infrastructure reporting. The following infrastructure networks are recorded as capital assets in the government-wide financial statements: See Independent Auditors'Report and Notes to the Financial Statements 11 City of Huntington Beach Management's Discussion and Analysis For the Year Ended September 30, 2007 ® Storm drain system including pump stations, drainage system and manholes. • Streets, (including land underneath streets) traffic signals, curbs, gutters, and sidewalks. Below is a schedule of the City's capital assets, net of accumulated depreciation (in ' thousands): Amount Percent September 30, September 30, Increase Increase Governmental Activities: 2007 1 2006 (Decrease) (Decrease) Land $ 360,971 $ 360,971 $ 0.0% Buildings 105,288 108,507 (3,219) -3.0% Machinery and Equipment 19,895 19,945 (50) -0.3% Construction in Progress 3,929 2,448 1,481 60.5% Joint Venture 1,498 1,284 214 16.7% Infrastructure 141,840 138,601 3,239 2.3% Total Governmental Activities 633,421 631,756 1,665 0.3% Business Activities: Land $ 7,840 $ 7,840 $ 0.0% Buildings 36,654 38,210 (1,556) -4.1% Machinery and Equipment 6,282 5,515 767 13.9% Construction in Progress 10,786 4,143 6,643 160.3% Infrastructure 58,324 55,983 2,341 4.2% Total Business Activities 119,886 111,691 8,195 7.3% Total Capital Assets $ 753,307 $ 743,447 $ 9,860 1.3% Capital assets from governmental activities increased $1,665,000 (0.3%)and capital assets from business activities increased $8,195,000 (7.3%). These increases were largely due to infrastructure additions. Further information on the City's capital assets can be found in note 12 of the financial statements. General Fund Budgetary Highlights Comparing the fiscal year 2006/2007 original budget (or adopted) General Fund (expenditures and transfers) amount of $172,960,000 to the final budgeted amount of $179,605,000 shows a net increase of$6,645,000 (3.8)%. General Fund expenditures were $14,149,000 less than the final budget. The favorable budget variance is due to lower than expected claims, capital outlay, operating, and professional services expenditures. Economic Factors And Next Year's Budgets And Rates 1 The key assumptions in the General Fund revenue forecast for fiscal year 2007/2008 are: ® Moderate to slowing growth in secured property tax revenue, most prevalent slowing evident in supplemental revenue and real estate transfer taxes. • Moderating growth in sales tax revenue due to slowing economy. ® Conduct a comprehensive fee study and update of the cost allocation plan. • Slowing growth of development related revenues due to downturn in housing market as well as fewer large development projects. See Independent Auditors'Report and Notes to the Financial Statements 12 City of Huntington Beach Management's Discussion and Analysis t For the Year Ended September 30, 2007 • Increased growth in transient occupancy tax (TOT) late in summer 2008 with opening of new hotel downtown with anticipation of greater TOT growth in 2009 as second major hotel opens. ® Continued growth in lease and concession revenue, especially with several new cellular service site leases going into effect. Contacting the City's Financial Management This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report, separate reports of the City's component units or need any additional financial information, contact the Finance Department at 2000 Main Street, Huntington Beach, California, 92648-2702, phone (714) 536-5907 or e-mail rsedlak@surfcity-hb.org. t See Independent Auditors'Report and Notes to the Financial Statements 13 � BASIC FINANCIAL STATEMENTS t 1 1 1 1 CITY OF HUNTINGTON BEACH STATEMENT OF NET ASSETS SEPTEMBER 30, 2007 (In Thousands) Governmental Business-Type ASSETS Activities Activities Total Cash and Investments $ 28,853 $ 52,935 $ 81,788 Receivables 30,402 7,674 38,076 Inventories - 1,262 1,262 Other Assets 12,429 - 12,429 Subtotal 71,684 61,871 133,555 Restricted Assets: Cash and Investments 65,032 33,549 98,581 Cash with Fiscal Agent 12,136 - 12,136 Receivables 30,043 - 30,043 Land Held for Resale 2,682 - 2,682 Total Restricted Assets 109,893 33,549 143,442 Capital Assets Non-Depreciable 366,398 18,626 385,024 Depreciable 267,023 101,260 368,283 Total Capital Assets 633,421 119,886 753,307 Total Assets 814,998 215,306 1,030,304 LIABILITIES Accounts Payable 3,971 4,224 8,195 Accrued Payroll 2,630 237 2,867 Deposits 1,824 1,532 3,356 Claims Payable 5,524 - 5,524 Current Liabilities 13,949 5,993 19,942 Current Liabilities Payable from Restricted Assets: Accounts Payable 3,890 - 3,890 Accrued Interest Payable 996 996 Unearned Revenue 21,635 21,635 Deposits 1,596 - 1,596 Long-Term Obligations Due Within One Year 8,235 3 8,238 Total Current Liabilities Payable from Restricted Assets 36,352 3 36,355 Long-Term Obligations: Long-Term Obligations Due in More than One Year 145,422 1,068 146,490 Total Liabilities 195,723 7,064 202,787 NET ASSETS Investment in Capital Assets, Net of Related Debt 486,901 119,874 606,775 Restricted for: Debt Service 12,549 - 12,549 Capital Projects 33,366 33,546 66,912 Specific Projects and Programs 27,626 - 27,626 Total Restricted Net Assets 73,541 33,546 107,087 Unrestricted 58,833 54,822 113,655 Total Net Assets $ 619,275 $ 208,242 $ 827,517 See Independent Auditors'Report and Notes to the Financial Statement 15 CITY OF HUNTINGTON BEACH STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED SEPTEMBER 30,2007 (In Thousands) Net(Expense)Revenue and Changes in Program Revenues Net Assets Charges for Operating Capital Grants Business- Current Grants and and Governmental Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities: City Council $ 287 $ 99 $ $ _ $ (188) $ _ $ (188) City Administrator 1,442 392 (1,050) (1,050) City Treasurer 1,088 698 (390) (390) City Attorney 2,534 46 (2,488) (2,488) ' City Clerk 950 210 (740) _ (740) Finance 4,454 1,312 (3,142) (3,142) Human Resources 4,202 1,347 (2,855) (2,855) Planning 3,098 4,223 1,125 1,125 Building 4,899 5,450 = 551 = 551 Fire 27,247 1,267 540 (25,440) (25,440) Information Systems 6,591 675 (5,916) (5,916) Police 56,988 4,890 122 (51,976) (51,976) Economic Development 9,209 2,944 1,074 (5,191) i (5,191) Community Services 16,482 15,036 5 1,383 (58) (58) Library Services 5,586 835 255 (4,496) (4,496) Public Works 34,581 5,016 - 3,771 (25,794) (25,794) Non-Departmental 15,131 232 - (14,899) (14,899) Interest on Long-Term Debt 5,875 - - - (5,875) _ (5,875) Total Governmental Activities 200,644 44,672 1,996 5,154 (148,822) (148,822) Business-type Activities: Water Utility 32,606 30,863 - 7,099 5,356 5,356 Sewer Service 5,766 7,242 _ = 1,476 1,476 Refuse Collection 10,542 10,550 8 8 Emerald Cove Housing 936 1,037 101 101 Emergency Fire Medical 5,347 6,068 721 721 Hazmat Service 194 210 = 16 16 Ocean View Estates 84 324 240 240 Total Business Type Activities 55,475 56,294 7,099 7,918 7,918 Total Business and Government Type Activities $ 256,119 $ 100,966 $ 1,996 $ 12,253 (148,822) 7,918 (140,904) General Revenues: Taxes: Property Taxes 79,369 - 79,369 Sales Taxes 30,608 30,608 Utility Taxes 21,479 21,479 Other Taxes 13,776 13,776 Total Taxes 145,232 - 145,232 Other: Use of Money and Property 7,895 5,035 12,930 From Other Agencies 12,689 - 12,689 Participation Payments 1,564 1,564 Other 2,696 - 2,696 Total Other General Revenue 170,076 5,035 175,111 Transfers 491 (491) Total General Revenues and Transfers 170,567 4,544 175,111 Change in Net Assets 21,745 12,462 34,207 Net Assets-Beginning of Year 575,022 195,780 770,802 Prior Period Adjustment 22,508 22,508 Net Assets-Beginning of Year as restated 597,530 195,780 793,310 Net Assets-End of Year $ 619,275 $ 208,242 $ 827,517 See Independent Auditors'Report and Notes to the Financial Statement 16 CITY OF HUNTINGTON BEACH BALANCE SHEET GOVERNMENTALFUNDS SEPTEMBER 30,2007 (In Thousands) Other Major Govemmental Funds ow-ncome Redevelopment Redevelopment Housing Total Major Other Grants Special Agency Debt Agency Capital Capital Governmental Governmental ASSETS General Fund Revenue Service Projects Projects Funds Funds Total Cash and Investments $ 28,853 $ 7,576 $ 1,121 $ 17,017 $ 10,471 $ 65,038 $ 28,847 $ 93,885 Cash and Investments with Fiscal Agent 157 2,463 - - 2,620 9,516 12,136 Taxes Receivable 26,355 4,064 - - 30,419 - 30,419 Other Receivables 4,047 10,417 9 1,168 11,554 27,195 2,831 30,026 Due from Other Funds 3,023 3,023 734 3,757 Advances to Other Funds 1,620 302 2,094 4,016 4,016 Land Held for Resale - 2,682 - 2,682 2,682 Other Assets - 1,266 1,266 Prepaids 11,163 - 11,163 11,163 TOTAL ASSETS $ 72,195 $ 17,993 $ 7,657 $ 24,192 $ 24,119 $ 146,156 $ 43,194 $ 189,350 LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable $ 3,971 $ 350 $ $ 192 $ 14 $ 4,527 $ 3,334 $ 7,861 Accrued Payroll 2,548 20 19 4 2,591 39 2,630 Due to Other Funds - 3,023 - - 3,023 734 3,757 Advances from Other Funds 302 2,094 2,396 1,620 4,016 Deposits Payable 1,824 92 130 - 2,046 1,374 3,420 Deferred Revenue 14,632 10,144 2,952 - 11,435 39,163 39,163 Claims Payable 5,524 5,524 - 5,524 Total Liabilities 28,499 10,606 6,277 2,435 11,453 59,270 7,101 66,371 Fund Balances: Reserved for: Encumbrances 6,202 2,442 3,342 437 12,423 7,643 20,066 Long-Term Receivables 1,620 1,228 2,094 4,942 4,942 Debt Service - - 7,065 7,065 Capital Projects 4,945 10,135 15,080 15,080 Land Held for Resale 2,682 - 2,682 2,682 Prepaid Insurance 2,857 - 2,857 2,857 Total Reserved Fund Balance 10,679 7,387 7,252 12,666 37,984 14,708 52,692 Unreserved,Designated: Designated for Future Expenditure(Reported in): Special Revenue Funds - - 4,711 4,711 Debt Service Funds 1,380 1,380 20 1,400 Capital Projects Funds - 60 60 1,025 1,085 Other Designations: Equipment Replacement 4,602 4,602 4,602 Capital Projects 3,483 3,483 3,483 Council Projects 890 890 890 Second Tier 8,427 8,427 8,427 Insurance Economic Uncertainties 12,953 12,953 12,953 Unreserved,Undesignated(Reported in): General Fund 2,662 2,662 2,662 Special Revenue Funds - - 8,789 8,789 Debt Service Funds - 4,084 4,084 Capital Projects Funds - 14,445 - 14,445 2,756 17,201 Total Unreserved 33,017 1,380 14,505 48,902 21,385 70,287 TOTAL FUND BALANCE 43,696 7,387 1,380 21,757 12,666 86,886 36,093 122,979 TOTAL LIABILITES AND FUND BALANCE $ 72,195 $ 17,993 $ 7,657 $ 24,192 $ 24,119 $ 146,156 $ 43,194 $ 189,350 See Independent Auditors'Report and Notes to the Financial Statement 17 CITY OF HUNTINGTON BEACH RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE ' STATEMENT OF NET ASSETS SEPTEMBER 30, 2007 (In Thousands) Amounts reported for governmental activities in the statement of net assets are different because: Total Fund Balances Governmental Funds $ 122,979 Net capital assets used in governmental activities are not current financial resources and, therefore,are not reported in the governmental funds Capital Assets 866,472 Accumulated Depreciation (233,051) Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the governmental funds Accrued Property Taxes Receivable 17,528 Other long-term liabilities are not due in the current period and, therefore, are not recorded in the governmental funds. Accrued Interest Payable (996) ' Long-term Liabilities, including bonds and certificates of participation payable, are not due and payable in the current period and therefore are not reported in the governmental funds. Long-Term Obligations Due in One Year (8,235) Long-Term Obligations Due in More than One Year (145,422) Net Assets of Governmental Activities $ 619,275 See Independent Auditors'Report and Notes to the Financial Statement 18 CITY OF HUNTINGTON BEACH STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30,2007 (In Thousands) Other Major Governmental Funds Redevelopment Redevelopment Low-Income Grants Special Agency Debt Agency Capital Housing Capital REVENUES General Fund Revenue Service Projects Projects Property Taxes $60,606 $ $ 15,310 $ $ Sales Taxes 23,724 - Utility Taxes 21,479 Other Taxes 13,776 Licenses and Permits 10,026 Fines and Forfeitures 4,165 - - From Use of Money and Property 14,032 423 232 1,808 641 Intergovernmental 6,140 6,628 - - - Charges for Current Service 15,695 - - Other 2,252 - - 1,573 - Total Revenues 171,895 7,051 15,542 3,381 641 EXPENDITURES Current: City Council 287 - - - - City Administrator 1,490 City Treasurer 1,060 - City Attorney 2,438 88 City Clerk 932 - Finance 4,400 - Human Resources 4,202 Planning 2,949 143 Building 4,193 477 Fire 25,935 503 Information Services 6,437 - Police 54,973 407 - - - Economic Development 1,538 2,369 2,048 1,211 679 Community Services 13,258 207 - - - Library Services 4,145 60 - Public Works 23,488 157 - 179 - Non-Departmental 12,873 - 87 - 2 Capital Outlay - 2,265 - 390 857 Debt Service: Principal 729 105 5,214 - - Interest 129 224 1,540 Total Expenditures 165,456 6,917 8,889 1,868 1,538 Excess(Deficiency)Of Revenues Over (Under)Expenditures 6,439 134 6,653 1,513 (897) OTHER FINANCING SOURCES(USES) Transfers In 4,632 191 - - 3,061 Issuance of Long Term Debt(Capital Leases) 35 - - - - Transfers Out (7,996) (6,500) (20) - Total Other Financing Sources(Uses) (3,329) 191 (6,500) (20) 3,061 Net Change In Fund Balances 3,110 325 153 1,493 2,164 Fund Balance-Beginning Of Year 40,586 7,062 1,227 20,264 10,502 Fund Balance-End Of Year $ 43,696 $ 7,387 $ 1,380 $ 21,757 $ 12,666 See Independent Auditors'Report and Notes to the Financial Statement , 19 CITY OF HUNTINGTON BEACH STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2007 (In Thousands) (continued) Total Major Other Governmental Governmental Funds Funds Total $ 75,916 $ - $ 75,916 23,724 2,547 26,271 21,479 - 21,479 13,776 - 13,776 10,026 105 10,131 4,165 4,165 17,136 2,660 19,796 ' 12,768 6,536 19,304 15,695 3,359 19,054 3,825 391 4,216 198,510 15,598 214,108 287 - 287 1, 0 _ 1, 0 1,06060 1,06060 2,526 2,526 932 932 4, 0 e 4, 0 4,202 4,202 3,092 3,092 4,670 4,670 26,438 26,438 6,437 6,437 55,380 81 55,461 7,845 447 8,292 13,465 1,279 14,744 4,205 892 5,097 23,824 1,424 25,248 12,962 15 12,977 3,512 12,630 16,142 6,048 4,405 10,453 1,893 3,621 5,514 184,668 24,794 209,462 13,842 (9,196) 4,646 7,884 8,429 16,313 35 35 (14,516) (1,306) (15,822) (6,597) 7,123 526 7,245 (2,073) 5,172 79,641 38,166 117,807 $ 86,886 $ 36,093 $ 122,979 See Independent Auditors'Report and Notes to the Financial Statement 20 CITY OF HUNTINGTON BEACH RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) Amounts reported for governmental activities in the Statement of Activities are different because: Net Changes in Fund Balances-Total Governmental funds $ 5,172 Capital Expenditures- Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of these assets is allocated over their estimated useful lives and reported as depreciation expense. Depreciable Assets Purchased 13,268 Non-Depreciable Assets Purchased 2,085 Captial Asset Dispositions (203) Captial Asset Depreciation (13,485) Accrual of Revenues - Certain revenues in the Statement of Activities do not meet the "availability" criteria for revenue recognition in the governmental funds and are not reported in the governmental funds as revenue. Current Year Property Tax Accrual 17,528 Prior Year Property Tax Accrual (9,738) Liabilities not Liquidated with Current Resources-Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Current Year Interest Accrual (996) Prior Year Interest Accrual 635 Long-Term Debt Proceeds-Issuances and changes in long-term debt(bonds, leases, certificates of participation, compensated absences, etc)provide current financial resources to governmental funds,while repayments of this debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, etc.when debt is first issued. These amounts are deferred and amortized in the Statement of Activities. (9,175) Payments of Long-Term Debt-Principal payments on long-term debt are recorded as an expenditure in the governmental funds and a reduction of liability in the government-wide statements. 16,654 Change in Net Assets of Governmental Activities $ 21,745 See Independent Auditors'Report and Notes to the Financial Statement 21 CITY OF HUNTINGTON BEACH STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30,2007 (In Thousands) Total Major Non-Major Sewer Service Enterprise Enterprise Water Fund Fund Refuse Fund Funds Funds Total ASSETS Current Assets: Cash and Investments $ 36,765 $ 9,176 $ 59 $ 46,000 $ 6,935 $ 52,935 Restricted Cash 33,549 - - 33,549 - 33,549 Other Receivables 2,873 460 496 3,829 1,214 5,043 Inventories 1,262 - - 1,262 - 1,262 Unbilled Receivable 1,797 331 503 2,631 2,631 Total Current Assets 76,246 9,967 1,058 87,271 8,149 95,420 Capital Assets: Land 3,907 3,907 3,933 7,840 Buildings and Improvements 39,743 3,709 - 43,452 4,662 48,114 Machinery and Equipment 9,785 768 - 10,553 1,997 12,550 Infrastructure 73,396 39,704 - 113,100 - 113,100 Construction in Progress 10 10,776 10,786 10,786 Less Accumulated Depreciation (49,162) (20,722) - (69,884) 2,620 72,504 Total Capital Assets 77,679 34,235 - 111,914 7,972 119,886 Total Assets 153,925 44,202 1,058 199,185 16,121 215,306 LIABILITIES Current Liabilities: Accounts Payable 1,614 1,615 812 4,041 183 4,224 Accrued Payroll 127 39 5 171 66 237 Deposits Payable 1,459 1 2 1,462 70 1,532 Current Portion of Claims and Leases 3 - - 3 - 3 Total Current Liabilities 3,203 1,655 819 5,677 319 5,996 Non-Current Liabilities: Compensated Absences 690 268 7 965 94 1,059 Capital Leases 9 9 9 Total Non-Current Liabilities 699 268 7 974 94 1,068 Total Liabilities 3,902 1,923 826 6,651 413 7,064 NET ASSETS Invested in Capital Assets,Net of Related Debt 77,667 34,235 - 111,902 7,972 119,874 Restricted for: Capital Projects 33,546 - - 33,546 - 33,546 Unrestricted 38,810 8,044 232 47,086 7,736 54,822 Total Net Assets $ 150,023 $ 42,279 $ 232 $ 192,534 $ 15,708 $ 208,242 See Independent Auditors'Report and Notes to the Financial Statement 22 CITY OF HUNTINGTON BEACH STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) Total Major Non-Major Sewer Service Enterprise Enterprise Water Fund Fund Refuse Fund Funds Funds Total OPERATING REVENUES Sales $ 30,587 $ - $ $ 30,587 $ - $ 30,587 Rentals - - - 1,361 1,361 Fees for Service - 7,008 10,496 17,504 6,005 23,509 Other 276 234 54 564 273 837 Total Operating Revenues 30,863 7,242 10,550 48,655 7,639 56,294 OPERATING EXPENSES Water Purchases 10,323 - - 10,323 - 10,323 Supplies and Operations 6,407 4,815 10,542 21,764 6,238 28,002 Engineering 470 470 - 470 Production and Distribution 6,624 - - 6,624 - 6,624 Maintenance 3,065 - 3,065 - 3,065 Water Meters 1,567 - 1,567 - 1,567 Water Quality 460 - 460 - 460 Depreciation 3,690 951 - 4,641 323 4,964 Total Operating Expenses 32,606 5,766 10,542 48,914 6,561 55,475 Operating Income(Loss) (1,743) 1,476 8 (259) 1,078 819 NON-OPERATING REVENUES(EXPENSES) Interest Income 4,054 598 - 4,652 383 5,035 Capital Improvement Fees 7,099 - - 7,099 - 7,099 Total Non-Operating Revenues(Expenses) 11,153 598 - 11,751 383 12,134 Change In Net Assets Before Transfers 9,410 2,074 8 11,492 1,461 12,953 TRANSFERS Transfers In - - 60 60 - 60 Transfers Out - - 551 (551) Total Transfers - - 60 60 551 491 Total Change In Net Assets 9,410 2,074 68 11,552 910 12,462 Net Assets-Beginning Of Year 140,613 40,205 164 180,982 14,798 195,780 Net Assets-End Of Year $ 150,023 $ 42,279 $ 232 $ 192,534 $ 15,708 $ 208,242 See Independent Auditors'Report and Notes to the Financial Statement 23 i CITY OF HUNTINGTON BEACH STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) Total Major Non-Major Sewer Service Enterprise Enterprise Water Fund Fund Refuse Fund Funds Funds I Total CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers and Users $ 30,723 $ 7,414 $ 10,584 $ 4B,721 $ 7,554 $ 56,275 Cash Paid to Employees for Services (3,698) (1,058) (85) (4,841) (1,723) (6,564) Cash Paid to Suppliers of Goods and Services (25,653) (3,303) (10,464} (39,420) 4,495 43,915 Net Cash Provided(Used)by Operating Items 1,372 3,053 35 4,460 1,336 5,796 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers In 60 60 60 Transfers Out - - - (551) (551) Cash Received(Paid)to Other Funds 36 (36) - Net Cash Provided(Used)by Non Capital - Financing Activities 36 24 60 551 491 i CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of Plant,Property,and Equipment (4,928) (7,367) (12,295) (882) (13,177) Capital Surcharge 7,099 - - 7,099 7,099 Net Cash Provided(Used)by Capital and Related Financing Activities 2,171 (7,367) (5,196) 882 6,078 CASH FLOWS FROM INVESTING ACTIVITIES Investments Earnings Received 4,054 598 - 4,652 383 5,035 Net Increase(Decrease)in Cash and Cash Equivalents 7,633 (3,716) 59 3,976 286 4,262 Cash and Cash Equivalents- Beginning of Year 62,681 12,892 75,573 6,649 82,222 Cash and Cash Equivalents-End of Year $ 70,314 $ 9,176 $ 59 $ 79,549 $ 6,935 $ 86,484 i RECONCILIATION OF OPERATING INCOME(LOSS)TO NET CASH PROVIDED (USED)BY OPERATING ACTIVITIES Operating Income(Loss) $ (1,743) $ 1,476 $ 8 $ (259) $ 1,078 $ 819 Adjustments to Reconcile Operating income to Net Cash Provided(Used) by Operating Activities Depreciation 3,690 951 - 4,641 323 4,964 Decrease(Increase)in Accounts Receivable 78 220 105 403 (85) 318 Decrease(Increase)in Unbilled Receivables (218) (49) (71) (338) (338) Decrease(Increase)in Inventory (114) - - (114) - (114) Increase(Decrease)in Accounts Payable (599) 407 (14) (206) 3 (203) Increase(Decrease)in Accrued Payroll 17 7 2 26 16 42 Increase(Decrease)in Claims Payable (31) - - (31) - (31) Increase(Decrease)in Deposits 130 1 - 131 17 148 Increase(Decrease)in Compensated Absences 162 40 5 207 16 191 Net Cash Provided(Used)by Operating Activities $ 1,372 $ 3,053 $ 35 $ 4,460 $ 1,336 $ 5,796 i See Independent Auditors'Report and Notes to the Financial Statement 1 24 CITY OF HUNTINGTON BEACH STATEMENT OF FIDUCIARY FUND NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2007 (In Thousands) Trust Fund- Retirement ASSETS Total Agency Funds Supplemental Fund Cash and Investments-Local Agency Investment Fund $ 10,983 $ 20,235 Cash with Fiscal Agent 4,264 - Accounts Receivable, Net 243 228 Total Assets $ 15,490 $ 20,463 LIABILITIES Accounts Payable $ 27 $ 18 Due to Bondholders 5,682 - Held for Others 9,781 - Net Pension/Benefit Obligation - 4,775 Total Liabilities 15,490 4,793 NET ASSETS Held in Trust For Pension Benefits and Other Purposes $ - $ 15,670 CITY OF HUNTINGTON BEACH STATEMENT OF CHANGES IN FIDUCIARY FUND NET ASSETS TRUST FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) Trust Fund- Retirement ADDITIONS Supplemental Fund Employer Contributions $ 4,442 Other Income 1,773 Interest Income 1,028 Total Additions $ 7,243 DEDUCTIONS Benefits 1,846 Total Deductions 1,846 Change in Net Assets 5,397 Net Assets-Beginning of Year 10,273 Net Assets-End of Year $ 15,670 See Independent Auditors'Report and Notes to the Financial Statement 25 City of Huntington Beach Notes to Financial Statements ix Esc,: For the Year Ended September 30, 2007 (VOTES TO FINANCIAL STATEMENTS Footnote Number Description Page 1. Summary of Significant Accounting Policies..........__.27-35 2. Cash and Investments .....................................................35-39 3. Other Receivable...............................................................39-40 4. Deferred Compensation...................................................40 5. Deferred Revenue.............................................................41 6. Retirement Plan — Normal ...............................................41-43 7. Retirement Plan — Supplemental ...................................43-45 8. Post-Employment Medical Insurance ...........................45-46 9. Risk Management..................................................... 46-47 10. Interfund Transactions,................._...................................__48-49 11. Long-term Debt Obligations............................................50-61 12. Capital Assets....................................................................62-64 13. Commitments and Contingencies..................................64-66 14. Other Information ..............................................................67 15. Prior Period Adjustment...................................................67 i 26 y,. City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Reporting Entity The City of Huntington Beach is the primary government. It was incorporated in 1909, is a charter, full-service city. The form of government is Council-Manager. Component units are legally separate organizations for which the City Council is financially accountable, or organizations that if excluded from the accompanying financial statements, would make them misleading. The component units described below are blended (presented as if they are part of the primary government)with the primary government for financial reporting purposes because either the component units have governing bodies identical to the City's (the City Council) or provide services exclusively to the City. Financial accountability means the appointment of a voting majority of the component unit's board and either the ability to impose will by the City or the possibility that the component unit will provide a financial benefit or impose a financial burden on the City. • Redevelopment Agency of the City of Huntington Beach (the Redevelopment Agency)—This entity was formed in 1967 to renovate older areas in the City. The City Council serves as its governing body and adopts its annual budget. The Redevelopment Agency is financially dependent on the City for all of its operations. Separately prepared financial statements are available for the Redevelopment Agency from the Finance Department. • Huntington Beach Public Financing Authority (Public Financing Authority) — This Corporation was formed in March 1988 to issue debt to finance public improvements and other capital purchases for the City and Redevelopment Agency. The Public Financing Authority's governing body is the City Council, which also adopts the annual budget. The Public Financing Authority is financially dependent on the City. There are no prepared financial statements available for the Public Financing Authority. ® The City of Huntington Beach Community Facilities Districts 1990-1,2000-1, 2002-1, and 2003-1 (Community Facilities Districts), were formed to construct public improvements within the City boundaries. The governing board of these districts is the City Council. The proceeds of debt issued and the expenditures for the public improvements are recorded in capital projects funds. The Community Facilities Districts' debt is not an obligation of the City. There are no separate financial statements prepared for these entities. b. Government-Wide Financial Statements The Government-Wide Financial Statements include a Statement of Net Assets, a Statement of Activities, and Changes in Net Assets. These statements present 27 City of Huntington Beach _ - Notes to Financial Statements For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) summaries of Governmental and Business-Type Activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The statement of activities demonstrates the degree with which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expenses are allocated to the various functions based on a proportionate use of services. The types of transactions reported as program revenues for the City are reported in three categories: 1)charges for current services, 2)operating grants and contributions, and 3) capital grants and contributions. Taxes and other items not properly included among program revenues are reported as general revenues. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. Government-wide financial statements do not provide information by fund or account group. They simply distinguish between governmental and business activities. The 1 City's statement of net assets includes both current and non-current assets and liabilities. Financial Statement Classification In the Government-Wide financial statements net assets are classified in the following categories: Invested In Capital Assets Net of Related Debt—This category groups all capital p 9 rY 9 p P assets, including infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category. jRestricted Net Assets —This category presents restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. This category presents restrictions placed on the categories of Capital Projects, Debt Service, and Specific Projects and Programs as established by the City Council. 28 t City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Unrestricted Net Assets—represent the net assets of the City, not restricted for any project or other purpose. c. Fund Financial Statements Separate fund financial statements are prepared for governmental funds, proprietary funds, and fiduciary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. The City pp Pp applies all applicable Governmental Accounting Standards Board (GASB) pronouncements (including all National council on Governmental Accounting NCGA Statements and Interpretations currently in effect) as well as the following pronouncements issued on or before November 30, 1989, to the business type activities, unless those pronouncements conflict with or contradict GASB pronouncements, Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the committee on Accounting Procedure. The City applies all applicable FASB Statements and Interpretations issued after November 30, 1989, except those that conflict with or contradict GASB pronouncements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Only current assets and current liabilities are included on the Balance Sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources)and decreases (expenditures and other financing uses) in net current assets. Under modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred. In the Fund financial statements, reserves and designations segregate portions of fund balance that are either not available or have been earmarked for specific purposes. The various reserves and designations are established by actions of the City Council and Management and can be increased, reduced or eliminated by similar actions. 29 City of Huntington Beach Notes to Financial Statements 7 = ; For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental Fund Financial Statements Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net assets as presented in these statements to the net assets presented in the Government-Wide Financial Statements. The City presents all major funds that met those qualifications. Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Fund Net Assets, and a Statement of Cash Flows for each major proprietary fund and non-major funds aggregated. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or non-current) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Fund Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. 1 Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non- operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. Fiduciary Fund Financial Statements Fiduciary Fund Financial Statements include a Statement of Net Assets and a Statement of Changes in Net Assets for Trust Funds. The City's Fiduciary funds represent Agency Funds, which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The Agency funds are accounted for on the accrual basis of accounting. The Retirement trust fund accounts for the activities of the supplemental retirement plan for all employees hired prior to 1997, which accumulates resources for pension benefits to qualified employee. Contributions made are funded by a percentage of payroll and are recognized when the payroll is incurred. Fiduciary funds are not presented in the government-wide financial statements because these funds do not represent net assets available to the City. 30 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The City reports the following major funds: Governmental Funds • General Fund - accounts for activity not required to be accounted for in another fund. • Grant Special Revenue - accounts for revenues and expenditures of grant related activity. • Redevelopment Agency Debt Service - accounts for the related debt service activity for certain projects in the City's Redevelopment project areas. • Redevelopment Agency Capital Projects - accounts for acquisition and construction of capital assets for certain projects in the City's Redevelopment project areas. • Low Income Housing Capital Projects - accounts for the activity related to low income housing. Proprietary Funds p ry • Water Fund - used to account for water sales to customers • Sewer Service Fund - accounts for user fees charged to residents and businesses for sewer service. • Refuse Fund - used to account for the activities of the City's refuse program. The City's fund structure also includes the following fund types: The Special Revenue Funds are used to account for proceeds of specific revenue i sources that are legally restricted or otherwise designated for specific purposes. The Debt Service Funds are used to account for the receipts for and payment of general long-term debt. The Capital Projects Funds are used to account for the acquisition and construction of capital assets other than those financed by proprietary fund types. Fiduciary Funds • General Deposit Fund -accounts for the deposit of general monies held by the City for private individuals and businesses. • Community Facilities Districts Funds-accounts for the debt service activity of the City's community facilities district. • Huntington Beach Auto Business Improvement District Fund - accounts for the activities of the City's business improvement district. • Central Net Fund - accounts for the activity of the Central Net Operations Authority. • Retiree Medical Insurance Fund - accounts for the City's medical retirement program. 31 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Reconciliations of Financial Statements Reconciliation of the Fund financial statements to the Government-Wide financial statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. d. Cash and Investments The City records investments at fair value. The City pools cash resources of its various funds to facilitate cash management. Cash in excess of current requirements is invested and reported as investments. It is the City's intent to hold investments until maturity. However, the City may, in response to market conditions, sell investments prior to maturity in order to improve the quality, liquidity or yield of the portfolio. Interest earnings are apportioned among funds based on ending accounting period cash and investment balances. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and highly liquid investments with original maturities of three months or less at the time of acquisition. In accordance with GASB Statement No. 31,Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used ' as fair value for those securities for which market quotations are readily available. The City participates in the Local Agency Investment Fund (LAIF), an investment pool managed by the State of California. LAIF has invested a portion of the pool funds in Structured Notes and Asset-Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these Structured Notes and Asset- Backed Securities are subject to market risk as a result of changes in interest rates. The City early-implemented GASB Statement 40 (Deposit and Investment Risk Disclosures). The City's investment policy is further discussed in note 2 on page 35. The City pools all non-restricted cash for investment purchases and allocates interest income based on month-end cash balances. Funds that have restricted cash record interest income in the respective fund. 1 e. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets have an acquisition cost of $10,000 or greater($50,000 for infrastructure)and a useful life of two years or more. 32 City of Huntington Beach - :-_ Notes to Financial Statements For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The City records all purchased capital assets at historical cost (where historical records are available) and at estimated historical cost where no historical records exist. Capital assets acquired from gifts or contributions are recorded at fair market value at the time received, or in the case of infrastructure assets, at City Council acceptance date. In the Government-Wide and proprietary fund financial statements, depreciation is recorded on the straight-line method over the estimated useful lives of the assets shown below and charged to the respective fund. No depreciation is recorded in the governmental funds of the fund financial statements. Production, pumping transmission and distribution plant 10 to 15 years General Plant 20 to 50 years Transportation Equipment 5 to 30 years Infrastructure 50 Years Interest is capitalized on proprietary fund assets acquired with tax-exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense incurred from the date of borrowing until completion of the project with interest earned on the invested proceeds over the same period. f. Inventories Proprietary inventories are valued at weighted-average cost. There are no inventories in governmental funds. g. Interfund Transactions As a general rule, interfund transactions have been eliminated from the government- wide financial statements. Exceptions to this rule are payments in-lieu or charges for current service between the City's enterprise activity and the City's General Fund. Elimination of these transactions would distort the direct costs and program revenues for the various functions. Certain eliminations have been made regarding interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. Numerous transactions occur between funds of the City resulting in transfers, t amounts due to or from other funds. Amounts due to or from are the current (due within one year) portion of moneys that are to be paid or to be received from other funds. 33 : City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) h. Long-Term Obligations In the government-wide and proprietary fund financial statements, long-term obligations are recorded as liabilities in the applicable governmental activities, business type activities, or proprietary fund-type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the debt. In the governmental fund financial statements, bond discounts and premiums are recognized as other financing source or use. Issuance costs are recorded a current year expenditure. I. Employee Compensated Absences The City records the cost of all accumulated and unused leave time (vacation, sick, comp)as a liability when earned in the government-wide financial statements. In the fund financial statements these amounts are recorded as expenditures in the years paid since it is the City's policy to pay these from future financial resources, rather than available, spendable resources. j. Property Tax Revenue Property tax in California is levied according to Article 13-A of the California Constitution. The basic levy is a countywide-levy of one percent of total assessed valuation and is allocated to county governments, school districts, cities and special districts. Additional levies require two-thirds approval by voters and are allocated directly to the specific government. In the government-wide financial statements, property tax is recorded when earned, regardless of when levied, due, or received. In the fund financial statements, property tax revenue is recognized in the fiscal year levied provided that revenue is collected in time to pay current year liabilities. Deferred property tax revenue represents property taxes related to the current fiscal year that are collected more than 60 days after the fiscal year end. Since the City's fiscal year differs from the County's property tax year, there is a difference between the property tax revenue recorded on the fund financial statements and the government-wide financial statements which is noted as a reconciling item in both the Reconciliation of the Statements of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities and the Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets. 34 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The County acts as a collection agent for property tax for all of the local governmental units. Property taxes are normally collected twice per year. The property tax calendar is as follows. • Lien Date-January 1 - Prior Fiscal Year • Levy Date-July 1 - Prior Fiscal Year • Due Date, First Installment - November 1 • Due Date, Second Installment - February 1 • Delinquent Date, First Installment - December 10 • Delinquent Date, Second Installment - April 10 The taxes are paid to the local governments periodically during the year. Below are the dates of the payments from the County: �1 • Payments of First Installment November to December • Balance of First Installment February 1 • Payments of Second Installment March to April • Balance of Second Installment July 26 I. Cash Flow Statements For purposes of the Statement of Cash Flows, the Proprietary Fund types consider all cash and investments to be cash equivalents, as these funds participate in the citywide cash and investment pool. r m. Estimates The accompanying financial statements require management to make estimates and assumptions that effect certain report amounts and disclosures.Actual results could differ from those estimates. 2. CASH AND INVESTMENTS 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 (or the City's investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City's investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. 35 ' City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 2. CASH AND INVESTMENTS (Continued) Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity of Portfolio in One Issuer United States (U.S.) Treasury Obligations 5 years No Limit No Limit U.S. Government Sponsored Enterprise Securities 5 years No Limit 50% Banker's Acceptances 180 days 25%/40%** 10% Time Certificate of Deposits 3 years 50% 10% Negotiable Certificates of Deposit 3/5 years*** 30% 10% Repurchase Agreements 3 months 50% 10% ® Reverse-Repurchase Agreements ***** 92 days 50% 10% A Local Agency Investment Fund (LAIF) N/A No Limit $60,000,000 Commercial Paper 270 days 25% 10% Municipal Bonds from Any State 5 years 50% 10% Money Market Funds N/A 15% 10% Medium Term Notes 5 years 20%/30%**** 10% N/A- Not Applicable ** -40% only with City Council approval *** -5 years only with City Council approval **** - 30% with City Council approval ***** - Only with City Council approval Investments Authorized by Debt Agreements: Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by a bond trustee, but bond indentures do allow for other forms of investments if approved in writing by the bond insurer that are not identified below. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk 36 City of Huntington Beach Notes to Financial Statements Rr For the Year Ended September 30, 2007 2. CASH AND INVESTMENTS (Continued) Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity of Portfolio in One Issuer United States (U.S.) Treasury Obligations Life of Bond No Limit No Limit U.S. Government Sponsored Enterprise Securities Life of Bond No Limit No Limit Banker's Acceptances 180 days No Limit No Limit Time Certificate of Deposits 360 days No Limit No Limit �! Negotiable Certificates of Deposit 360 days No Limit No Limit LAIF N/A No Limit No Limit Commercial Paper 270 days No Limit No Limit Municipal Bonds from Any State Life of Bond No Limit No Limit Money Market Funds N/A No Limit No Limit Investment Agreements Life of bond No Limit No Limit Forward Purchase/Delivery Agreements Life of bond No Limit No Limit N/A- Not Applicable Cash and investments were recorded in the government-wide statements as follows (in thousands): Investment Maturities(In Years) DEPOSITS: Fair Value Less than 1 1 to 3 3 to 5 more than 5 Total Demand Accounts $ 3,327 $ 3,327 $ - $ - $ - $ 3,327 INVESTMENTS: US Treasuries 26,048 19,980 6,068 - - 26,048 US Agencies 106,873 46,616 31,995 28,262 - 106,873 Guaranteed Investment Contracts 8,238 - - - 8,238 8,238 Corrrnerdal Paper 31,720 31,720 - - - 31,720 Money Market Funds 2,868 2,868 - - - 2,868 Medium Term Notes 3,939 1,987 - 1,952 - 3,939 Local Agency Investment Fund 44,974 44,974 - - - 44,974 Subtotal of Investments 224,660 148,145 38,063 30,214 8,238 224,660 Total Deposits and Investments $ 227,987 $ 151,472 $ 38,063 $ 30,214 $ 8,238 $ 227,987 37 City of Huntington Beach - = Notes to Financial Statements For the Year Ended September 30, 2007 2, CASH AND INVESTMENTS (Continued) At Year end the City had the following investments and maturities (amounts in thousands): Statement of Net Assets: Cash and Investments $ 81,788 Restricted Assets(Cash and Cash Equivalents) 98,581 Cash with Fiscal Agent-Restricted 12,136 Total Per Statement of Net Assets 192,505 Fiduciary Funds: Cash and Investments 31,218 Cash with Fiscal Agent-Restricted 4,264 Total Fiduciary Funds 35,482 Total Cash and Investments $ 227,987 Interest Rate Risk—As a means of limiting exposure to fair value losses arising from interest rates, the City's investment policy limits investments over three years to be 30% or less. Credit Risk-State law allows investment in United States Government sponsored enterprise (GSE) obligations noted above as US Agencies. As of Year-end, the Standard and Poor's and Moody's ratings of the GSE's was AAA. The investments in the Guaranteed Investment Contracts are backed by collateral of either 104% or 105% depending on the type of collateral. The GIC providers are rated by Standard and Poor's and Moody's at AAA and AA and Aaa or Aa respectively. State law limits investments in commercial paper and medium term notes to have at least an "A" rating issued by a nationally recognized statistical rating organization. It is the City's policy to limit its investments in these investment types to the top two ratings issued by these rating organizations. As of Year end, Standard and Poor's and Moody's ratings of the City's investments in commercial paper was Al or better, and P-1 respectively. State law limits investments in Money Market funds to 20% of the portfolio and both Standard and Poor's and Moody's have rated the money market funds in our portfolio as AAA. Standard and Poors and Moody's rated the City's investments in medium-term notes as AAA and AA and Aaa and Aa, respectively. Concentration of Credit Risk— The City's investment policy limits investments in any one issuer, except for U.S. Treasury Securities and U.S. Government Agencies to no more than 10% of the investments. In addition, no more than 50% can be invested in a single security type or with single financial institution and every security type has a specific limit. This is in addition to the limits placed on investments by State Law. Investments in any one issuer that represent 5% or more of total City's investments are as follows: 38 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 2. CASH AND INVESTMENTS (Continued) Par Value Issuer Investment Type Amount Federal Home Loan Mortgage Corporation U.S. Government Sponsored Enterprise Securities $30,000,000 Federal Home Loan Bank U.S. Government Sponsored Enterprise Securities $35,850,000 Federal Farm Credit Bank U.S. Government Sponsored Enterprise Securities $23,000,000 Local Agency Investment Fund — The City holds investments with the Local Agency Investment Fund (LAIF), a State of California investment pool, which at year end also included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities. These investments included the following: Structured Notes are debt securities (other than asset-backed securities)whose cash flow characteristics (coupon rate, redemption amount, or stated maturity)depend on one or more indices and/or that have embedded forwards or options. Asset-Backed Securities the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flow from a pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables. As of September 30, 2007, the City held $66,842,000 in callable securities,which amounted to approximately 32% of investments. The LAIF had invested 4.26% of the pooled investments funds in Structured Notes and Asset-Backed Securities. This external investment pool is not rated. 3. OTHER RECEIVABLE a. Owner Participation Agreement —Abdelmuti In 1991, the Agency agreed to assist a private business in the demolition and the construction of a new building. The Agency agreed to make public improvements totaling $500,000 and to loan the business $3,126,000 for 15 years at 7% interest to make building improvements. At year-end, the balance of the loan was $728,000. The note was refinanced and the City was paid in full for the remaining amount owed in December of 2007. 39 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 3. OTHER RECEIVABLE (Continued) b. Deferred Loans — Developers Loans made to developers to construct or rehabilitate certain facilities under deferred loan agreements total $18,733,000 at year end. These loans are deferred until a future event occurs. Loans made by the Agency total $11,435,000 and loans made under the Home Program total $7,298,000. c. Deferred Loans — Housing Rehabilitation Loans made to qualified homeowners and landlords in the City of Huntington Beach to rehabilitate certain single family homes or multifamily rental housing under deferred loan agreements total $2,846,000 at year end. These loans are deferred until a future event occurs. d. Other Receivable A summary of Other Receivable as of September 30, 2007 is as follows: Descripton Amount OPA-Abdelmuti Receivable $ 728,000 Deferred Loans Receivable 18,733,000 Housing Rehabilitation Loans Receivable 2,846,000 Other Receivables 7,719,000 Total $ 30,026,000 4. DEFERRED COMPENSATION Permanent Cityemployees ma defer a portion of their salary under tax deferred plans as Y p rY permitted under Internal Revenue Code. These plan permits employees to defer a portion of their salary until future years. The compensation is not available to the employees until termination, retirement, or unforeseen emergency. The City has established a trust for the assets of the plans held by third parties. All property and rights purchased with these assets, as well as all income attributable to them are held in trust for the exclusive benefit of the participant and their beneficiary. The amounts are no longer the property of the City and are not subject to the claims of the City's general creditors. Amounts administered by outside organizations in a trustee capacity are no longer reported as assets of the City. The City does not have fiduciary responsibility for these assets. 40 City of Huntington Beach - Notes to Financial Statements For the Year Ended September 30, 2007 5. DEFERRED REVENUE Certain revenues in governmental funds are deferred until received. The property tax amounts are recognized in the year as revenue in the government-wide financial statements, but are recorded as deferred revenue in the fund financial statements. The other amounts are unearned revenue in both the funds and government-wide financial statements. The amounts are as follows (in thousands): Deferred Deferred Loans- Loans- Housing Other Deferred Property Taxes Developers Rehabilitation Revenue Total General Fund $ 14,576 $ - $ - $ 56 $ 14,632 Redevelopment Agency Debt Service 2,952 - - - 2,952 Low Income Housing - 11,435 - - 11,435 Grants - 7,298 2,846 - 10,144 Total $ 17,528 $ 18,733 $ 2,846 $ 56 $ 39,163 Deferred Loans to developers and for housing rehabilitation is discussed in the notes receivable note. 6. RETIREMENT PLAN — NORMAL a. Plan Description The City contributes to the California Public Employees' Retirement System (CalPERS), an agent, which is a multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of- living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of CalPERS annual financial report may be obtained from their executive office: 400 P Street, Sacramento, CA, 95814. b. Employer and Employee Contribution Obligations The City makes two types of contributions for covered employees. The first contribution represents the amount the City is required to make (the employer rate). The second represents an amount, which is made by the employee, but is reimbursed to the employee by the City(the member rate). The member rate is set by contract and normally remains unchanged. 41 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 6. RETIREMENT PLAN — NORMAL (Continued) The employer rate is an actuarially established rate, is set by CaIPERS, and changes from year to year. The employer rates for the fiscal year ending Year end are: October 1, 2006 to July 1, 2007 to June 30, 2007 Yearend Local Miscellaneous 7.849% 8.212% Local Safety 28.556% 28.261% c. Employer and Employee Contribution Obligations The member rates are as follows: Rate Local Miscellaneous 7.000% Local Safety 9.000% d. Annual Pension Cost The City's annual pension cost of$12,422,000 was equal to the City's required and actual contributions. The required contribution was determined as part of a June 30, 2006 actuarial valuation using the entry age normal actuarial cost method. CalPERS conducted an actuarial valuation using the entry-age actuarial cost method using a level percent of payroll to determine the City's net pension obligation as of June 30, 2007. Significant assumptions were: • Average a amortization remaining period -18 Years as of the Valuation Date — closed end • Asset valuation method - 3 years smoothed market • Investment Rate of Return -7.75% • Projected salary increases - 3.25% to 13.15% (safety) and 3.25% to 14.45% (miscellaneous) depending on age, service, and type of employment • Inflation - 3.00% 1 • Payroll growth -3.25% • Individual salary growth - A merit scale varying by duration of employment coupled with an assumed annual inflation component of 3.0% and an annual production growth of .25% r S42 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 6. RETIREMENT PLAN — NORMAL (Continued) Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into CaIPERS. Subsequent plan amendments are amortized as a level percent of pay over a closed 20-year period. Gains and losses that occur in the operation of the plan are amortized over a rolling period, which results in an amortization of 10% of the unamortized gains and losses each year. If the plan's accrued liability exceeds the actuarial value of the assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30-year amortization period. e. Trend Information Annual Pension Cost Percentage of Net Pension Fiscal Year in thousands APC Funded Obligation 9/30/2005 $8,729 100% $0 9/30/2006 $11,739 100% $0 9/30/2007 $12,422 100% $0 7. RETIREMENT PLAN — SUPPLEMENTAL a. Plan Description The City provides a supplemental retirement plan for all employees hired prior to 1997 (exact dates are different for various associations). It is a single-employer CalPERS. It is a defined benefit plan and will pay the retiree an additional amount to his or her normal amount for life. The City's contracts with employee bargaining associations establish the plan. These associations must agree to any changes to the plan. The amount will cease upon the employee's death. The amount that is computed as a factor of an employee's normal retirement allowance is computed at retirement and remains constant for his or her life. Of the 1,134 active employees reported on the September 30, 2007 data, only 546 were eligible for plan benefits. No separately prepared financial statements are prepared for this plan and it is not included in the financial report of any other pension plan. The assets used to pay these liabilities have not yet been set up in a legal trust. b. Employer Obligations and Funding Status and Progress The City annually transfers amounts from the various City funds to a pension trust fund. The City is required to contribute the actuarially determined rate of 4.53% of total payroll for all permanent employees. Administrative costs of this plan are financed through investment earnings. 43 , k City of Huntington Beach - Notes to Financial Statements -=; For the Year Ended September 30, 2007 n,uu 7. RETIREMENT PLAN — SUPPLEMENTAL (Continued) c. Annual Pension Cost and Net Pension Obligation The City's annual pension cost and net pension obligation for this plan at June 30, 2007 were (in thousands): Annual required contribution $ 2,850 Interest on net pension obligation 360 Adjustment to annual required contribution (519) Annual pension cost 2,691 Contributions made (4,464) Increase (decrease) in net pension obligation (1,773) Net Pension Obligation — Beginning of Year 6,548 Net Pension Obligation — End of Year $ 4,775 The annual required contribution was determined as part of an independent actuarial valuation using the Entry Age Normal Actuarial Cost Method which is a projected benefit full-cost method which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions used were: • Rate of return on present and future assets - 5.5% per annum • Projected salary increases for covered employees due to inflation - 3.0% per annum 1 • Projected salary increases due to merit - 0% • Inflation rate - 3.0% • Post employment benefit increases - 0% • Amortization of unfunded liability-level percentage of pay ending in 2027(closed) • Actuarial value of assets - market value d. Trend Information Below is the required three-year trend information (dollar amounts in thousands): Annual Pension Percentage of Net Pension Fiscal Year Cost APC Funded Obligation 6/30/05 $2,900 127% $7,640 6/30/06 $2,851 138% $6,548 6/30/07 $2,691 166% $4,775 44 i City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 7. RETIREMENT PLAN — SUPPLEMENTAL (Continued) Below is other required trend information (dollar amounts in thousands): i Fiscal Year Annual Percentage Ending June Required of ARC 30 Contribution Contributed 2005 3,074 120% 2006 3,022 130% 2007 2,850 157% e. Accounting for Plan Since the City is required to adopt GASB 25 for the supplemental pension plan, the difference between the ARC and the amount of pension cost funded for the years in which there was an actuarial study must be recorded as a liability in the government- wide financial statements. The amount of this liability is $4,775,000. Benefits are recognized when due and payable (see Note 11). 8. POST-EMPLOYMENT MEDICAL INSURANCE a. Plan Description The City agreed via contract with each employee association to provide post- employment medical insurance to retirees. The benefits are based on years of service and are available to all retirees who meet all three of the following criteria: • At the time of retirement the employee is employed by the City i • At the time of retirement the employee has a minimum of ten years of service credit or is granted a service connected disability retirement • Following official separation from the City, CalPERS grants a retirement allowance The City's obligation to provide the benefits to a retiree ceases when either of the following occurs: • During any period the retiree is eligible to receive health insurance at the expense of another employer • The retiree becomes eligible to enroll automatically or voluntarily in Medicare If a retiree dies, the benefits that would be payable for his or her insurance are i provided to the spouse or family for 18 months. Benefits for insurance premiums are payable based on the years of service credit for the retiree. The retiree may use the subsidy for any of the medical insurance plans that the City's active employees may enroll. 45 •:. " City of Huntington Beach _ Notes to Financial Statements "y For the Year Ended September 30, 2007 8. POST-EMPLOYMENT MEDICAL INSURANCE (Continued) The assets used to pay these liabilities have not yet been set up in a legal trust. b. Accounting and Funding The Retiree Medical Insurance Fund is an agency fund. Other funds contribute on a periodic basis. Employees do not contribute. The actuarial assumptions for the plan are identical to the assumptions used for the Retirement Supplement Plan (see Note 7). Below are the required disclosures for this plan (in thousands): Number of active participants 1 1,044 Employer's actuarially required contributions 1 $1,684 Employer's actual contributions 1 $2,634 Below is a summary of the Unfunded Actuarial Accrued Liability for the plan (in thousands) Actuarial accrued liability $22,338 Net assets available for plan benefits $7,401 tUnfunded Actuarial Accrued Liability $14,937 c. Accounting and Funding Under current generally accepted accounting principles, recording of unfunded 9 Y p 9p p 9 liabilities on other post-employment benefits in the financial statements is not required. 9. RISK MANAGEMENT The City is exposed to various risks of losses related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees and natural disasters. The City records all of these claims as expenditures in the General Fund. The liability for these claims is recorded as part of long-term obligations in the Government-Wide financial statements. The City records the amount of claims payable at year-end that is due and payable at year-end in the fund financial statements. The full amount of claims is reported as a liability in the government-wide financial statements. Liabilities include amounts incurred, but not reported. Liability Claims Claims of up to$1,000,000 are paid from the General Fund. The City is also a participant in the Big Independent Cities Excess Pool Joint Powers Authority (BICEP), which shares payments for claims between $1,000,000 and $2,000,000. It also provides general liability 46 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 9. RISK MANAGEMENT (Continued) insurance of$25,000,000 above the City's retention of$1,000,000. BICEP was created by a joint powers agreement between the City of Huntington Beach and four other local entities for the purpose of providing joint insurance coverage and related risk management services or member cities. BICEP allows member entities to finance claims payment pool for certain liability claims in excess of$1,000,000 million to a limit of$27,000,000. BICEP'S governing board has one representative from each city (either a member of the City Council or designate). Current members must approve any changes to the board. Each participating City pays an insurance premium to BICEP that is used to fund the operating and debt service requirements. There were no liability claims in the last three years that exceeded the coverage limit. Workers' Compensation Claims Workers' compensation claims of up to $1,000,000 per claim are paid from the General Fund. The BICEP is a member of CSAC-Excess Insurance Authority for excess workers' compensation coverage. Payments for claims from $1,000,000 to $5,000,000 are shared. Payments for claims between $5,000,000 and $200,000,000 are paid by excess insurance coverage. All funds of the City participate in the program and make payments to these funds based on estimated cost information. Claims activity and liabilities relating to the current and prior year are (in thousands): �6 Workers Liability Compensation Insurance Total Balance September 30,2005 $ 6,793 $ 13,696 $ 20,489 Additions 1,039 767 1,806 Reductions (1,098) (11,441) (12,539) Net Increase(Decrease) (59) (10,674) (10,733) Balance September 30,2006 6,734 3,022 9,756 Additions 1,585 2,772 4,357 Reductions (1,733) (2,184) (3,917) Net Increase(Decrease) (148) 588 440 Balance September 30,2007 $ 6,586 $ 3,610 $ 10,196 Below is a reconciliation of the above schedule of total claims payable to the financial statements(in thousands): Current Claims Payable-Reported on the Balance Sheet of Both the Government-Wide and Fund Statements $ 5,524 Claims Payable-Long-Term (Greater than One Year)-Reported in Government-Wide Statements, but not in Fund Statements 4,672 Total $ 10,196 47 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 r 10.INTERFUND TRANSACTIONS a. Due To/From Other Funds The amounts at Year end were (in thousands): Due from Other Due to Other Funds Funds Governmental Funds Redevelopment Agency Capital Projects $ 3,023 $ - Redevelopment Agency Debt Service - 3,023 Other Governmental Funds Gas Tax 734 - Drainage - 734 Total Due to/from Governmental Funds $ 3,757 $ 3,757 These outstanding balances result mainly from short-term borrowings to cover payments for goods and services. b. Advances to/from Other Funds The amounts at Year end were (in thousands): Advances to Advances from Other Funds Other Funds Governmental Funds General Fund $ 1,620 $ - Redevelopment Agency Capital Projects 302 2,094 Redevelopment Agency Debt Service - 302 Low-Income Housing Capital Projects 2,094 Other Governmental Funds Park Acquisition and Development - 1,620 Total Due to/from Governmental Funds $ 4,016 $ 4,016 There is a $1,620,000 advanced from the General Fund to the Park Acquisition and Development Fund (a non-major governmental fund) for closed school site purchases. The amount will be repaid in within fiscal year ending September 30, 2008. There is a $2,094,000 advanced from the Low-Income Housing Fund to the Redevelopment Agency Capital Projects Fund for Educational Revenue Augmentation Fund payments and Main Pier property acquisitions. There is a $302,000 advanced from the Redevelopment Agency Capital Projects Fund to the Redevelopment Agency Debt Service Fund for the Southeast Coastal Project Area. 48 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 r 10.INTERFUND TRANSACTIONS (Continued) c. Transfers In/Out The amounts at Year end were (in thousands): Transfers Out Other Total Other Capital Debt Service Governmental Governmental Enterprise Total Transfers Transfers In General Fund Projects Fund Fund Funds Funds Funds In General Fund $ - $ 20 $ 3,360 $ 1,058 $ 4,438 $ 194 $ 4,632 Low Income Housing Fund - - 3,061 - 3,061 - 3,061 Grants 191 - - 191 - 191 Other Governmental Funds 7,745 - 79 248 8,072 357 8,429 Total Governmental Funds 7,936 20 6,500 1,306 15,762 551 16,313 Refuse Fund 60 60 60 Total Transfers Out $ 7,996 $ 20 $ 6,500 $ 1,306 $ 15,822 $ 551 $ 16,373 The following is a summary of the significant transfers: • $7,745,000 was transferred from the General Fund to Other Governmental Funds primarily for debt service payments. • $3,360,000 was transferred from the Debt Service Fund to the General Fund to repay the General Fund Loan to the Redevelopment Agency. • $3,061,000 was transferred from the Debt Service Fund to the Low Income Housing Fund to comply with the twenty percent set-aside to Low Income Housing 49 ' : City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 11.LONG-TERM OBLIGATIONS Below is a schedule of changes in long-term governmental obligations for the year (in thousands): October 1, September 30, Accrued Governmental Activities: 2006 Additions Retirements 2007 Interest Due Within One Year Judgment Obligation Bonds $ 11,525 $ $ (730) $ 10,795 $ 259 $ 745 Public Financing Authority: 1997 Leasehold Revenue Bonds 3,690 (665) 3,025 136 80 2000 Certificates of Participation 14,885 (670) 14,215 62 700 2001-a Lease Revenue Bonds 28,400 (650) 27,750 109 675 2001-b Lease Revenue Bonds 23,030 (1,690) 21,340 154 1,745 Total Public Financing Authority 70,005 (3,675) 66,330 461 3,200 Redevelopment Agency: 1999 Tax Allocation Refunding Bonds 8,155 (365) 7,790 61 380 2002 Tax Allocation Refunding Bonds 17,910 (815) 17,095 129 845 Mayer Disposition and Development Agreement 8,197 496 (1,592) 7,101 Bella Terra OPA(Parking) 15,000 2,062 (2,207) 14,855 - - Section 108 Loan/Bowen Court 7,235 (340) 6,895 86 365 Total Redevelopment Agency 56,497 2,558 (5,319) 53,736 276 1,590 Other Long-Term Obligations: Leases Payable 2,975 35 (729) 2,281 - 600 Compensated Absences 9,630 3,810 (2,372) 11,068 2,100 Net Pension Obligation 6,548 (1,773) 4,775 Claims Payable 3,956 2,772 (2,056) 4,672 Total Other Long-Term Obligations 23,109 6,617 (6,930) 22,796 2,700 Total Long-Term Obligations Governmental Activities $ 161,136 $ 9,175 $ (16,654) $ 153,657 $ 996 $ 8,235 Below are reconciliations from amounts in the above table to amounts in the accompanying government-wide financial statements (in thousands): Issuance of Long-Term Debt in Governmental Fund Financial Statements $ 35 Increase in Mayer Disposition and Development Agreement 496 Increase in Bella Terra OPA (Parking) 2,062 Increase in Compensated Absences 3,810 Increase in Claims Payable 2,772 Increases in Above Schedule $ 9,175 Principal Paid in Governmental Fund Financial Statements $ 10,453 Decrease in Compensated Absences 2,372 Decrease in Net Pension Obligation 1,773 Decrease in Claims Payable 2,056 Decreases in Above Schedule $ 16,654 50 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 i 11. LONG-TERM OBLIGATIONS (Continued) a. Judgment Obligation Bonds Year of Issuance 2004 -Type of Debt Judgment Obligation Bonds -Original Principal Amount $12,500,000 Security Council Appropriations Interest Rates 2.00% to 4.20% Interest Payment Dates February 1st and August 1st Principal Payment Dates February 1st i Purpose of Debt Pay claims on court judgment Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total i September 30 2008 745 389 1,134 2009 765 369 1,134 2010 785 346 1,131 2011 810 320 1,130 2012 840 292 1,132 2013-2017 4,695 933 5,628 i 2018-2019 2,155 91 2,246 Total $ 10,795 $ 2,740 $ 13,535 b. Public Financing Authority i (1) 1997 Public Financing Authority Revenue Bonds Year of Issuance 1997 Type of Debt Lease Revenue Bonds Original Principal Amount $8,070,000 Security Lease Agreement with City for Central Libra i Interest Rates 5.00% to 5.50% Interest Payment Dates June 15 and December 15 -Principal Payment Dates December 15 i Purpose of Debt Construct Pier Plaza and Purchase 800 MHZ System 51 i City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 11. LONG-TERM OBLIGATIONS (Continued) Debt service requirements to maturity are (in thousands): Year Ending principal Interest Total September 30 2008 80 163 243 2009 85 159 244 2010 90 154 244 2011 95 149 244 2012 100 144 244 2013-2017 580 632 1,212 2018-2022 760 449 1,209 2023-2027 1,000 208 1,208 2028 235 7 242 Total $ 3,025 $ 2,065 $ 5,090 t (2) 2000 Public Financing Authority Certificates of Participation Year of Issuance 2000 Type of Debt Certificates of Participation Original Principal Amount $18,310,000 Security Lease with City Interest Rates 4.0% to 5.0% Interest Payment Dates September 1 S and March 1 S Principal Payment Dates September 1st Purpose of Debt Capital improvements and defeasance of Emerald Cove Certificates of Participation Debt service requirements to maturity are (in thousands): Year Ending September 30 Principal Interest Total 1 2008 700 744 1,444 2009 730 714 1,444 2010 760 680 1,440 2011 490 645 1,135 2012 510 622 1,132 2013-2017 2,960 2,708 5,668 2018-2022 3,450 1,816 5,266 2023-2027 2,650 994 3,644 2028-2030 1 1,965 218 2,183 1 Total $ 14,215 $ 9,141 $ 23,356 52 City of Huntington Beach - - Notes to Financial Statements t For the Year Ended September 30, 2007 11. LONG-TERM OBLIGATIONS (Continued) (3) 2001(a) Public Financing Authority Lease Revenue Bonds Year of Issuance 2001 -Type of Debt Lease Revenue Bonds -Original Principal Amount $31,360,000 Security Lease Agreement with City for Public Buildings Interest Rates 2.45% to 5.0% Interest Payment Dates March 1 S and September 1 S Principal Payment Dates September 1st Purpose of Debt Construct Sports Complex and South Beach Phase II Improvements Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total September 30 2008 675 1,312 1,987 2009 700 1,288 1,988 2010 725 1,262 1 1,987 2011 750 1,234 1,984 2012 785 1,204 1,989 2013-2017 4,445 5,482 9,927 2018-2022 5,565 4,358 9,923 2023-2027 7,070 2,856 9,926 2028-2031 7,035 900 7,935 Total $ 27,750 $ 19,896 $ 47,646 (4) 2001(b) Public Financing Authority Lease Revenue Bonds Year of Issuance 2001 -Type of Debt Lease Revenue Bonds -Original Principal Amount $31,095,000 -Security Lease on Civic Center Buildings Interest Rates 4.0% to 5.0% Interest Payment Dates August 1, February 1 -Principal Payment Dates August 1 Purpose of Debt Defease Civic Improvement Corporation Certificates 53 <« ' : City of Huntington Beach -� Notes to Financial Statements For the Year Ended September 30, 2007 I 11. LONG-TERM OBLIGATIONS (Continued) 1 Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total September 30 2008 1,745 875 2,620 2009 1,800 818 2,618 2010 1,880 737 2,617 2011 1,955 662 2,617 2012 2,030 589 2,619 2013-2017 9,905 1,649 11,554 2018-2019 2,025 148 2,173 Total $ 21,340 $ 5,478 $ 26,818 c. Redevelopment Agency (1) 1999 Redevelopment Agency Tax Allocation Refunding Bonds Year of Issuance 1999 Type of Debt Tax Allocation Refunding Bonds Original Principal Amount $10,835,000 Security Tax Increment Interest Rates 3.00% to 5.05% Interest Payment Dates February 1 s and August 1 s Principal Payment Dates August 1s' Purpose of Debt Prepay Agency's 1992 Loans to Public Financing Authority Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total September 30 2008 380 365 745 1 2009 390 350 740 2010 410 334 t 744 2011 430 317 1 747 I 2012 450 298 748 20 13-2017 2,575 1,165 3,740 2018-2022 2,370 520 2,890 2023-2024 1 785 1 57 842 Total $ 7,790 1 $ 3,406 $ 11,196 54 City of Huntington Beach Notes to Financial Statements ^•.,; ,,,,off; For the Year Ended September 30, 2007 11. LONG-TERM OBLIGATIONS (Continued) (2) 2002 Redevelopment Agency Tax Allocation Refunding Bonds t Year of Issuance 2002 Type of Debt Tax Allocation Refunding Bonds Original Principal Amount $20,900,000 Security Tax Increment Interest Rates 2.00% to 5.00% Interest Payment Dates February 1stand August 1s' Principal Payment Dates August 1s' Purpose of Debt Prepay Agency's 1992 Loans to Public Financing Authority and fully defease 1992 Public 1 Financing Authority bonds Debt service requirements to maturity are (in thousands): Year Ending principal Interest Total September 30 2008 845 772 1,617 2009 870 742 1,612 2010 910 712 1,622 2011 945 677 1,622 2012 995 641 1,636 2013-2017 5,650 2,540 8,190 2018-2022 5,180 1,134 6,314 2023-2024 1,700 124 1,824 Total $ 17,095 $ 7,342 1 $ 24,437 (3) Mayer Disposition and Development Agreement In fiscal year 1996-97, the Agency entered into a disposition and development agreement with Robert Mayer Corporation (Corporation) concerning additional development adjacent to the Waterfront Hotel. Under the agreement, the Corporation would advance payments for the project costs with the Agency reimbursing up to$16,750,000 of the costs. As of year end, the Agency obligation under the agreement amounted to $7,101,000. Project-generated revenues as available will repay these amounts over the time needed to fully amortize the advance. (4) Bella Terra Parking Structure In fiscal year 2005-06, the agency entered into an owner participation agreement with Bella Terra Associates, LLC (formerly Huntington Center Associates, LLC). Under the agreement the Corporation would construct various public improvements, including a parking structure, which would then be deeded to the 55 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 11. LONG-TERM OBLIGATIONS (Continued) City. The Agency would reimburse $15,000,000 of the costs of the public improvements. As of year end, the Agency obligation under the agreement amounted to $14,855,000. Project-generated revenues as available will repay these amounts over the time needed to fully amortize the advance (5) Section 108 Loan Year of Issuance 2000 Type of Debt Loan from Federal Government Original Principal Amount $8,570,000 Security Loan Agreement with Federal Government Interest Rates 7.7% Interest Payment Dates February 1 st and August 1S Principal Payment Dates August 1s' Purpose of Debt I Capital Improvements Debt service requirements to maturity are (in thousands): Year Ending principal Interest Total September 30 2008 365 493 858 2009 390 467 857 2010 415 439 854 2011 445 408 853 2012 970 375 1,345 2013-2017 2,870 1,278 4,148 2018-2019 1,440 173 1,613 Total $ 6,895 $ 3,633 $ 10,528 d. Other Long-Term Obligations (1) Leases Payable The City entered into capita leases for various items: IYear of Insurance 2001 through 2007 Type of Debt —Capital Leases Original Principal Amount Various $10,000 to $1,800,000 Security Lease A reement Interest Rates 4.2% to 6.9% 1 Interest Payment Dates Monthly, Quarterly, Semi-Annuall Principal Payment Dates Monthly, Quarterly, Semi-Annuall Purpose of Debt Equipment Financing 56 City of Huntington Beach _ - Notes to Financial Statements For the Year Ended September 30, 2007 t 11. LONG-TERM OBLIGATIONS (Continued) Future minimum lease payments to maturity are (in thousands): Year Ending Principal Interest Total September 30 2008 600 96 696 2009 520 68 588 2010 304 47 351 2011 285 34 319 2012 282 21 303 2013 290 8 298 Total $ 2,281 $ 274 $ 2,555 (2) Compensated Absences There is no repayment schedule to pay the compensated absences amount of $11,068,000 relating to governmental operations. The General Fund typically liquidates the vacation and sick leave liability. (3) Net Pension Obligation There is no fixed repayment schedule to fund the actuarial liability for the unfunded net pension obligation totaling $4,775,000 for the City's Retirement Supplement Plan described in Note 7. The amount will be funded through a contribution rate determined by an independent actuarial study. (4) Claims Payable There is no repayment schedule for the claims payable of$4,672,000 described t in note 9. The City pays the claims upon final settlement. e. Long-Term Obligations — Business Activities Below is a schedule of the long-term obligations of business activities(in thousands): October 1, September Due Within Long-Term Obligations-Business Activities: 2006 Additions Retirements 30,2007 One Year Compensated Absences $ 868 $ 418 $ (227) $ 1,059 $ - Leases Payable 40 14 (42) 12 3 Total Long-Term Obligations- Business Activities $ 908 $ 432 $ (269) $ 1,071 $ 3 57 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 11. LONG-TERM OBLIGATIONS (Continued) 1) Compensated Absences lThere is no repayment schedule for the compensated absences amount of $1,059,000 relating to business activities. t (2) Leases Payable The City entered into capital leases for various items: Year of Issuance 2005 ' Type of Debt Capital Lease Original Principal Amount $15,268 Security Lease Agreement Interest Rates 6.9% Interest Payment Dates Monthly Principal Payment Dates Monthly Purpose of Debt Equipment Financing Future minimum lease payments to maturity are (in thousands): Year Ending principal Interest Total September 30 2008 3 1 4 2009 3 1 4 2010 3 - 3 2011 3 1 - 3 Total $ 12 1 $ 2 $ 14 f. Long-Term Obligations for which City is not Liable in any (Wanner Community Facilities Districts: (in October 1, September thousands) 2006 Additions Retirements 30,2007 Community Facilities District No. 1990-1 Special Tax Refunding Bonds $ 1,745 $ - $ (90) $ 1,655 Community Facilities District 2000-1 Special Assessment Tax Bonds 15,235 - (280) 14,955 Community Facilities District NO.2002-1 Special Assessment Tax Bonds 4,885 (15) 4,870 Community Facilities District NO.2003-1 1 Special Assessment Tax Bonds 24,560 (450) 24,110 Total Community Facilities Districts 46,425 (835) 45,590 Residential Redevelopment Bonds 25,500 - - 25,500 Total Obligations Not Recorded in Financial Statements $ 71,925 $ - $ (835) $ 71,090 58 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 11. LONG-TERM OBLIGATIONS (Continued) (1) Community Facilities District 1990-1 2001 Special Tax Refunding Bonds Year of Issuance 2001 Type of Debt Community Facilities District Assessment Bonds -Original Principal Amount $2,155,000 Security Special Tax Levies Interest Rates 4.00% to 5.40% Interest Payment Dates Aril 1 st and October 1 st -Principal Payment Dates October 1 S Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total September 30 2008 95 84 179 2009 100 80 180 2010 100 75 175 2011 110 70 1 180 2012 110 65 175 2013-2017 655 224 879 2018-2021 485 41 526 Total $ 1,655 1 $ 639 $ 2,294 (2) Community Facilities District 2000-1 2001 Special Tax Bonds Year of Issuance 2001 Type of Debt Community Facilities District Assessment Bonds -Original Principal Amount $16,000,000 -Security Special Tax Levies Interest Rates 3.80% to 6.40% Interest Payment Dates September 1 S and March 1 s -Principal Payment Dates September 1st i Purpose of Debt Public Improvements for Grand Coast Resort 59 R City of Huntington Beach ( - (Votes to Financial Statements For the Year Ended September 30, 2007 11. LONG-TERM OBLIGATIONS (Continued) Debt service requirements to maturity are (in thousands): Year Ending principal Interest Total September 30 2008 295 943 1,238 2009 305 928 1,233 2010 325 912 1,237 2011 340 895 1,235 2012 360 876 1,236 2013-2017 2,155 4,026 6,181 2018-2022 2,930 3,248 6,178 2023-2027 4,010 2,174 6,184 2028-2031 4,235 704 4,939 Total $ 14,955 $ 14,706 $ 29,661 (3) Community Facilities District 2002-1 Special Tax Bonds Year of Issuance 2002 Type of Debt Community Facilities District Assessment Bonds Original Principal Amount $4,900,000 Security Special Tax Levies Interest Rates 3.80% to 6.20% Interest Payment Dates March 1S and September 1S Principal Payment Dates September 1s' Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total September 30 2008 25 298 323 2009 30 296 326 2010 40 295 335 2011 50 293 343 2012 55 290 345 2013-2017 450 1,396 1,846 2018-2022 815 1,228 2,043 2023-2027 1,335 918 2,253 2028-2032 2,070 412 2,482 Total $ 4,870 $ 5,426 $ 10,296 60 1 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 11. LONG-TERM OBLIGATIONS (Continued) (4) Community Facilities District 2003-1 Special Tax Bonds t Year of Issuance 2003 Type of Debt Community Facilities District Assessment Bonds Original Principal Amount $25,000,000 I Security Special Tax Levies Interest Rates 2.65% to 5.85% Interest Payment Dates March 1 S and Se tember 1 S Principal Payment Dates September 1s' Debt service requirements to maturity are (in thousands): Year Ending principal Interest Total September 30 2008 465 1,340 1,805 2009 485 1,323 1,808 2010 500 1,305 1,805 2011 520 1,284 1,804 2012 545 1,263 1,808 2013-2017 3,145 5,887 9,032 2018-2022 4,095 4,936 9,031 2023-2027 5,430 3,598 9,028 2028-2032 7,220 1,813 9,033 2033 1,705 100 1,805 Total $ 24,110 $ 22,849 $ 46,959 (5) Residential Development Bonds t The City is involved in various bond issues where the City or Redevelopment Agency issued bonds to assist in the financing of residential developments. A trustee holds all funds and payment cannot be made from any other source than the mortgages received. These bond issues are in thousands): Outstanding Original Issue Bond Issue Yearend Amount Five Points Senior Project Multi-Family Housing $9,500 $9,500 Revenue Bonds - Series A- 1991 Huntington Breakers Mortgage Revenue Bonds $16,000 $16,000 Refunding Issue - 1996 Series A Total $25,500 $25,500 61 /- City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 1 12. CAPITAL ASSETS 1 a. Changes in Capital Assets i. j.; Capital asset activity for the year was (in thousands): i October 1, 2006(as September 30, Governmental Activitites restated) Additions Dispositions 2007 Capital Assets, Not Depreciated: Land $ 360,971 - - $ 360,971 Construction in Progress 2,448 1,871 (390) 3,929 Joint Ventures 1,284 214 1,498 Total Capital Assets-Not Depreciated 364,703 2,085 (390) 366,398 Capital Assets Being Depreciated Buildings 138,765 - 138,765 Machinery and Equipment 57,840 4,428 (1,790) 60,478 Infrastructure 292,539 9,230 (938) 300,831 Total Capital Assets Being Depeciated 489,144 13,658 (2,728) 500,074 Less Accumulated Depreciation: Buildings (30,258) (3,219) - (33,477) Machinery and Equipment (37,895) (4,263) 11575 (40,583) Infrastructure (153,938) (6,003) 950 (158,991) Total Accumulated Depreciation (222,091) (13,485) 2,525 (233,051) Total Depreciated-Net 267,053 173 (203) 267,023 Total Capital Assets 853,847 15,743 (3,118) 866,472 Total Accumulated Depreciation (222,091) (13,485) 2,525 (233,051) Capital Assets of Governmental Activitites -Net $ 631,756 $ 2,258 $ (593) $ 633,421 October 1, 2006(as 1 ` September 30, Business Activities: restated) Additions Dispositions 2007 Capital Assets, Not Depreciated: ! Land $ 7,840 - $ 7,840 Construction in Progress 4,143 6,643 - 10,786 Total Capital Assets-Not Depreciated 11,983 6,643 - 18,626 Capital Assets Being Depreciated Buildings 48,113 1 I 48,114 Machinery and Equipment 10,582 2,125 (157) 12,550 Infrastructure 108,883 4,443 (226) 113,100 Total Capital Assets Being Depeciated 167,578 6,569 (383) 173,764 Less Accumulated Depreciation: Buildings (9,903) (1,557) - (11,460) Machinery and Equipment (5,067) (1,306) '105 (6,268) Infrastructure (52,900) (2,101) '225 (54,776) Total Accumulated Depreciation (67,870) (4,964) '330 (72,504) Total Depreciated-Net 99,708 1,605 (53) 101,260 Total Capital Assets 179,561 13,212 (383) 192,390 Total Accumulated Depreciation (67,870) (4,964) 330 (72,504) Capital Assets of Governmental Activitites-Net $ 111,691 $ 8,248 $ (53) $ 119,886 62 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 12. CAPITAL ASSETS (Continued) b. Depreciation Expense Depreciation in governmental activities was charged to the following functions/programs in the Statement of Activities (in thousands) Department: City Administrator $ 40 City Treasurer 27 City Attorney 8 City Clerk 18 Finance 54 Planning 6 Building and Safety 219 Fire 595 Information Services 269 Police 776 Economic Development 1 Community Services 1,603 Library Services 392 Public Works 7,895 Non-Departmental 1,582 Total $ 13,485 Depreciation in business activities was charged to the following functions/programs in the Statement of Activities (in thousands): Fund: Water $ 3,690 Sewer Service 951 Emerald Cove 82 Fire Medical Program 230 Ocean View Estates 11 Total $ 4,964 1 63 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 1 12. CAPITAL ASSETS (Continued) c. Capital Assets Acquired via Capital Leases At year-end the City's assets acquired through outstanding capital leases (see note 11) were (in thousands): Governmental Business-Type Activities Activities Machinery and Equipment $ 2,188 $ -15 Buildings 3,449 Less: Accumulated Depreciation (554) (3) Total $ 5,083 $ 12 13. COMMITMENTS AND CONTINGENCIES a. Legal Actions There are legal actions pending against the City resulting from normal operations. In the opinion of management and the City Attorney, the financial resolution of these actions should not have a significant impact on these financial statements. 1 b. Sales Tax Sharing Agreements 1 City Council agreed to provide sales tax rebates to various companies. The sales tax rebates serve to attract and retain various companies in the City of Huntington Beach. City Council also agreed to pay increased sales tax revenues relating to the development of a new commercial site by Home Depot to the Huntington Beach Union High School District. The City of Huntington Beach has sales tax agreements that extend until 2017. Sales tax rebates total $193,000 in fiscal year ending September 30, 2007. 64 City of Huntington Beach _ Notes to Financial Statements For the Year Ended September 30, 2007 13. COMMITMENTS AND CONTINGENCIES (Continued) c. Disposition and Development and Owner Participation Agreements In June 1999, the Redevelopment Agency entered into a disposition and development agreement with the CIM Group, LLC to allow development of a hotel, retail and restaurant improvements and a public parking facility. The project costs are to be paid initially by the developer with the Agency reimbursing the developer a maximum of$7.9 million pursuant to a Third Implementation Agreement approved on October 21, 2002. The Fourth Implementation Agreement provided a maximum Agency cost for additional parking spaces $1,500,000. The Fifth Implementation Agreement, dated July 19, 2004, clarified certain provisions in the DDA relating to the Agency Participation Payment,Acquisition costs and indemnification obligations. A Sixth Implementation Agreement and the 33433 Report are scheduled to be presented to the Redevelopment Agency in spring 2008. On September 2, 2003 the Redevelopment Agency Approved a Cooperation Agreement Regarding Capital Improvements in the Southeast Coastal Redevelopment Project with the City. This agreement commits the Redevelopment Agency to reimburse the City for a number of capital improvement projects to be undertaken as part of the Five Year Capital Improvement Program in the Southeast Redevelopment project area starting in FY 2003/04 as they are undertaken. On October 16, 2006 the Redevelopment Agency approved an Owner Participation Agreement with Makallon Atlanta Huntington Beach, LLC (also know as Makar) to develop a 31-acre site in the Main-Pier sub-area of the Huntington Beach Redevelopment Project (Pacific City). Makar will advance $5,500,000 to the Redevelopment Agency to fund the Agency's obligation for the Regional Urban Runoff Treatment System and the Pacific View Drive Extension. The advance will be repaid over 20 years from tax increment generated from the site. As of September 30, 2007, the City has no outstanding obligations related to the disposition and development and owner participation agreements discussed above. d. Redevelopment Agency Debt to City The City has advanced money to the Redevelopment Agency for capital improvements and operations. There is no fixed repayment schedule for these advances and the Council/Agency has no requirement for the timing of any repayment. Accordingly, the City has not recorded the advances in the accompanying financial statements. These advances have been made since 1984 and include direct advances of cash, overhead charges, deferred development fees, deferred land sales, and interest. Below is a schedule of the activity for the year (in thousands): 65 City of Huntington Beach Notes to Financial Statements For the Year Ended September 30, 2007 13. COMMITMENTS AND CONTINGENCIES (Continued) Amount @ Amount @ 10/1/06 Additions Reductions 9/30/07 General Fund Direct Advances $ 4,035 $ 4,035 Overhead Charges 6,567 6,567 Land Sales 32,833 32,833 Interest 31,761 3,205 (3,360) 31,606 Total General Fund 75,196 3,205 (3,360) 75,041 Sewer Fund Direct Advances 131 131 Deferred Development Fees 38 38 Interest 203 16 219 Total Sewer Fund 372 16 - 388 Drainage Fund Direct Advances 250 250 Deferred Development Fees 54 54 Interest 400 30 - 430 Total Drainage Fund 704 30 734 Park Acquisition and Development Fund Direct Advances 1,742 1,742 Deferred Development Fees 247 247 Interest 2,894 208 3,102 Total Park Acquisition and Development Fund 4,883 208 - 5,091 Capital Improvement Fund Direct Advances 200 200 Interest 328 22 350 Total Capital Improvement Fund 528 22 - 550 Water Fund Direct Advances 1,138 1,138 Interest 2,282 145 2,427 Total Water Fund 3,420 145 - 3,565 Total All Funds $ 85,103 $ 3,626 $ (3,360) $ 85,369 The cash repayments are recorded as transfers from the Redevelopment Agency to the fund receiving the repayment. 66 City of Huntington Beach Notes to Financial Statements t 'h�n nynr ; For the Year Ended September 30, 2007 14. OTHER INFORMATION a. Expenditures Exceeding Appropriations Expenditures exceeded appropriations at the departmental level in the funds shown (in thousands): Major Funds Redevelopment Agency Debt Service - Economic Development $ 557 Redevelopment Agency Debt Service - Non-Departmental 87 Redevelopment Agency Low Income Housing - Non-Departmental 2 Other Non-Major Funds Sewer Development- Public Works 50 b. Fund and Accumulated Deficits The Drainage Fund had a total fund deficit of$734,000 at year end. The deficit will be eliminated through monitoring of expenditures. c. Participation Payments The revenue from participation payments are received in-lieu of having to pay certain fees or for acquiring land. 15. PRIOR PERIOD ADJUSTMENT The City determined that the value of land reported under Governmental Activities was understated by $22,508,000 as of October 1, 2006. Government-Wide Financial Statements (in thousands) Beginning Net Assets- Governmental Activities $ 575,022 Prior Period Adjustment 22,508 Beginning Net Assets- Governmental Activities (Restated) $ 597,530 67 1 1 N1VVI8 1:131 All`dNOIlId31Nl 30Vd SIHl � 1 1 1 REQUIRED SUPPLEMENTARY INFORMQ►TION ' 1 1 1 1 1 1 City of Huntington Beach Required Supplementary Information Yearend Budgetary Information The City Council must annually adopt a budget by September 30 of the prior fiscal year. The budgeted expenditures become the appropriations to the various departments. The budget includes estimates for revenue that, along with the appropriations, compute the budgetary fund balance. The appropriated budget covers substantially all governmental fund expenditures with the exception of capital improvement projects (capital projects funds) carried forward from prior years, which constitute a legally authorized non-appropriated budget. The City Council may amend the budget at any time. The City Administrator may transfer funds from between object purposes (personal services, operating expenditures or capital outlay expenditures)within the same department without changing the total departmental budget. Department heads may transfer funds from like object categories of the same department. The City Council must approve any changes to departmental budgets. Expenditures may not exceed appropriations at the departmental level. All unused appropriations lapse at year-end. During the year the City Council made several supplemental appropriations with included carryovers of prior year encumbrances all of which were within available fund balance and estimated revenue amounts. The City Council adopts governmental fund budgets consistent with generally accepted principles as legally required. There are no significant non-budgeted financial activities. Revenues for special revenue funds are budgeted by entitlements, grants and estimates of future development and economic growth. Expenditures and transfers are budgeted based upon available financial resources. On or before May 31 of each ear, each department submits data to the City Administrator for budget Y Y � p Y 9 preparation. Staff prepares the budget by fund,function and activity. The budget includes information on past years, current year estimates and requested appropriations for the next fiscal year. Before August 1, the City Council receives the proposed budget. The City Council holds public hearings and may amend the budget by a majority vote. Changes to the budget must be within the available revenues and reserves. These financial statements show budgetary data for the General, Special Revenue, Capital Projects and Debt Service Funds. The original budget, revised budget, actual expenditures, and variance amounts are shown. The City uses an encumbrance system as an aid in controlling expenditures. When the City issues a purchase order for goods or services, it records an encumbrance until the vendor delivers the goods or performs the service. At year-end, the City reports all outstanding encumbrances as reservations of fund balance in governmental fund types. The City reappropriates these encumbrances into the new fiscal year. Below is a schedule of a budget to actual comparison of the General and Grant Fund's Revenues, and Expenditures (in thousands): 70 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) General Fund Variance with Final Budget Positive REVENUES Original Budget Final Budget Actual (Negative) Property Taxes $59,587 $59,587 $60,606 $ 1,019 Sales Taxes 24,833 24,833 23,724 (1,109) Utility Taxes 22,750 22,750 21,479 (1,271) Other Taxes 13,885 13,729 13,776 47 Licenses and Permits 8,241 8,670 10,026 1,356 Fines,Forfeitures and Penalties 4,468 4,468 4,165 (303) From Use of Money and Property 11,882 11,882 14,032 2,150 From Other Agencies 5,964 5,964 6,140 176 Charges for Current Service 14,476 14,477 15,695 1,218 Other 723 723 2,252 1,529 Total Revenues 166,809 167,083 171,895 4,812 EXPENDITURES Current: City Council 289 289 287 2 City Administrator 1,472 1,582 1,490 92 City Treasurer 1,040 1,072 1,060 12 City Attorney 2,628 2,658 2,438 220 City Clerk 973 1,065 932 133 Finance 4,403 4,605 4,400 205 Human Resources 6,054 5,990 4,202 1,788 Planning 3,266 4,347 2,949 1,398 Building 4,222 4,643 4,193 450 Fire 25,794 25,951 25,935 16 Information Services 6,634 6,908 6,437 471 Police 55,238 55,444 54,973 471 Economic Development 1,876 1,984 1,538 446 Community Services 13,130 13,613 13,258 355 Library Services 3,885 4,354 4,145 209 Public Works 24,658 27,860 23,488 4,372 Non-Departmental 16,631 16,382 12,873 3,509 Debt Service: Principal 642 729 729 - Interest 125 129 129 - Total Expenditures 172,960 179,605 165,456 14,149 Excess(Deficiency)Of Revenues Over(Under)Expenditures (6,151) (12,522) 6,439 18,961 OTHER FINANCING SOURCES(USES) Transfers In 4,654 4,722 4,632 (90) Capital Leases 35 35 Transfers Out (8,137) (9,026) (7,996) 1,030 Total Other Financing Sources(Uses) (3,483) (4,304) (3,329) 975 Excess Of Revenues And Other Souces Over(Under)Expenditures And Other Uses (9,634) (16,826) 3,110 19,936 Fund Balance-Beginning Of Year 40,586 40,586 40,586 - Fund Balance-End Of Year $ 30,952 $ 23,760 $ 43,696 $ 19,936 71 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMIBER 30, 2007 (In Thousands) Grants Variance with Final Budget Positive REVENUES Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 312 $ 320 $ 423 $ 103 From Other Agencies 5,657 14,669 6,628 (8,041) Total Revenues 5,969 14,989 7,051 (7,938) EXPENDITURES Current: Planning - 174 143 31 Building 866 866 477 389 Fire 467 1,009 503 506 Police 136 603 407 196 Economic Development 3,190 3,876 2,369 1,507 Community Services 112 316 207 109 Library Services - 112 60 52 1 Public Works 50 375 157 218 Capital Outlay 14,419 17,999 2,265 15,734 Debt Service: Principal 260 260 105 155 Interest 69 224 (155) Total Expenditures 19,500 25,659 6,917 18,742 Excess Of Revenues Over(Under) Expenditures (13,531) (10,670) 134 10,804 OTHER FINANCING SOURCES(USES) Transfers In 3,000 191 191 Total Other Financing Sources(Uses) 3,000 191 191 - Excess Of Revenues And Other Sources Over(Under)Expenditures And Other Uses (10,531) (10,479) 325 10,804 Fund Balance-Beginning of Year 7,062 7,062 7,062 - Fund Balance-End Of Year $ (3,469) $ (3,417) $ 7,387 $ 10,804 1 i 72 CITY OF HUNTINGTON BEACH REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 2007 SCHEDULE OF FUNDING PROGRESS RETIREMENT PLAN-NORMAL (In Thousands) Entry Age Normal Excess Assets Excess Assets as a Actuarial Actuarial Accrued Actuarial Value of (Unfunded Percentage of Valuation Date Liability(AAL) Assets Liability) Funded Ratio Covered Payroll Covered Payroll 2002 Safety S 299,052 S 272,367 S (26,685) 91.1% S 23,270 -114.7% Non Safety 191,997 223,364 31,367 116.3% 37,811 83.0% Total $ 491,049 $ 495,731 $ 4,682 101.0% $ 61,081 7.7% 2003 Safety S 320,670 $ 270,538 S (50,132) 84.4% $ 28,919 -173.4% Non Safety 222,221 225,689 3,468 101.6% 36,918 9.4% Total $ 542,891 $ 496,227 $ (46,664) 91.4% $ 65,837 -70.9% 2004 Safety S 339,301 S 280,745 S (58,556) 82.7% $ 27,412 -213.6% Non Safety 234,602 236,189 1,587 100.7% 36,143 4.4% Total $ 573,903 $ 516,934 $ (56,969) 90.1% $ 63,555 -89.6% 2005 Safety $ 356,782 S 296,477 S (60,305) 83.1% S 29,081 -207.4% Non Safety 253,268 249,443 (3,825) 98.5% 37,343 -10.2% Total $ 610,050 $ 545,920 $ (64,130) 89.5% $ 66,424 -96.5% 2006 Safety $ 382,934 S 316,038 S (66,896) 82.5% $ 32,149 -208.1% Non Safety 271,254 266,642 (4,612) 98.3% 41,263 -11.2% Total $ 654,188 $ 582,680 $ (71,508) 89.1% $ 73,412 -97.4% CITY OF HUNTINGTON BEACH REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 2007 SCHEDULE OF FUNDING PROGRESS RETIREMENT PLAN-SUPPLEMENTAL (In Thousands) Actuarial Entry Age Normal Actuarial Value of Unfunded AAL UAAL as a%of Valuation Date Accrued Liability Assets (UAAL) Funded Ratio Covered Payroll Covered Payroll 6/30/96 Actual S 16,071 $ 120 $ 16,191 -0.7% $ 54,368 -29.8% 6/30/1997 Actual 25,342 2,334 (23,008 9.2% 49,881 -46.1% 6/30/98 Update 26,493 3,251 (23,242) 12.3% 48,585 -47.8% 6/30/99 Actual 28,601 4,162 (24,439) 14.6% 50,723 -48.2% 6/30/2000 Update 28,844 5,077 23,767 17.6% 57,674 -41.2% 6/30/2001 Actual 36,453 6,678 29,775 18.3% 63,345 -47.0% 6/30/2002 Update 35,52 8,775 (26,742) 24.7% 65,137 -41.1% 6/30/2003 Actual 40,436 10,474 29,962 25.9% 65,227 -45.9% 6/30/2004 Update 40,978 11,936. 29 042 29.1% 63,538 -45.7% 6/30/2005 Acutal 40,873 14,2271 (26,646)1 34.8% 65,843 -40.5% 9/30/2006 Update 43,06 16,8211 (26,245)1 39.1% 72,186 -36.4% 9/30/2007 51028 20,452 30,576 40.1% 73,380 -41.7% 73 i 1 1 � THIS PAGE INTENTIONALLY LEFT BLANK 0 1 1 SUPPLEMENTARY INFORMATION � 1 1 Other Governmental Funds Special Revenue Funds account for revenues and expenditures legally restricted to a specific purpose. p P 9 Y p p p • The Gas Tax Fund accounts for moneys allocated under the Streets and Highways Code of California.Expenditures may be made for any street-related purpose allowed under the code. • The Drainage Fund accounts for fees received from developers to construct and maintain the City's drainage system. • The Narcotics Forfeiture Fund accounts for moneys received from the State of California for special law enforcement expenditures. • The Transportation Fund accounts for moneys received from the countywide'/cent sales tax and other specific sources to be spent on transportation-related expenditures. • The Air Quality Fund accounts for revenues from the local agencies used to improve local air quality. • The Traffic Impact Fee Fund accounts for moneys received from the traffic impact fee levied on new developments in the City. • The Fourth of July Parade Fund accounts for the activities of the City's annual parade. • The Special Library Fund accounts for revenues and expenditures related to the expanded Central Library including some construction. • The Cultural Affairs Fund accounts revenues and expenditures associated with the City's Art Center. • The Park Acquisition and Development Fund accounts for fees received from developers to develop and maintain the City's park system. Debt Service Funds account for the receipts for and payment of general long-term debt. • The Property Tax Refund Fund records the payment of claims for repayment of the Judgment Obligation Bonds. • The Public Financing Authority accounts for the activity of the Huntington Beach Public Financing Authority. Capital Projects Funds account for the acquisition and construction of capital assets other than those financed by proprietary fund types. • The Holly Seacliff Fund accounts for capital improvements made to the Holly Seacliff area. • The Parking in-lieu Fund records construction activity from developers who pay fees in-lieu of directly providing parking facilities to the City. • The Sewer Development Fund accounts for fees received from developers to construct and maintain sewer facilities. • The Bella Terra Parking Structure Fund accounts for the fees paid by the developer for expenses related to the Bella Terra Parking Structure. • The Infrastructure Fund records activity for certain designate infrastructure related expenditures. 76 CITY OF HUNTINGTON BEACH BALANCE SHEET OTHER GOVERNMENTAL FUNDS SEPTEMBER 30, 2007 (In Thousands) SPECIAL REVENUE FUNDS Narcotics ASSETS I Gas Tax Drainage Forfeiture Transportation Cash and Investments $ 5,630 $ - $ 490 $ 3,371 Cash and Investments with Fiscal Agent - - - - Other Receivables 2,029 - 30 455 Due from Other Funds 734 - - - Other Assets - - - - Total Assets $ 8,393 $ - $ 520 $ 3,826 LIABILITIES Accounts Payable $ 3,000 $ - $ - $ 80 t Accrued Payroll 14 - - 6 Due to Other Funds - 734 - - Advances from Other Funds - - - - Deposits Payable - - 62 - Total Liabilities 3,014 734 62 86 FUND BALANCES Reserved for: Encumbrances 5,379 - 64 169 Debt Service - - - - Total Reserved Fund Balances 5,379 - 64 169 Unreserved Fund Balances Unreserved, Designated for Future Expenditures - - 335 1,683 U ndesignated - (734) 59 1,888 Total Unreserved Fund Balance - (734) 394 3,571 Total Fund Balances 5,379 (734) 458 3,740 Total Liabilites and Fund Balances $ 8,393 $ $ 520 $ 3,826 77 CITY OF HUNTINGTON BEACH BALANCE SHEET OTHER GOVERNMENTAL FUNDS SEPTEMBER 30, 2007 (In Thousands) (continued) SPECIAL REVENUE FUNDS Park Acquisition and Total Special Air Quality Traffic Impact Fourth of July Special Library I Cultural Affairs Development Revenue Funds $ 965 $ 6,691 $ 126 $ 365 $ 167 $ 5,634 $ 23,439 11 75 1 12 10 63 2,686 - - - - - - 734 - - - - - 1,266 1,266 $ 976 $ 6,766 $ 127 $ 377 $ 177 $ 6,963 $ 28,125 $ - $ 47 $ 4 $ 99 $ 11 $ 85 $ 3,326 1 2 7 5 3 38 - - - - - - 734 - - - - - 1,620 1,620 1 1,266 1,329 1 49 4 107 16 2,974 7,047 88 1,300 20 79 1 478 7,578 88 1,300 20 79 1 478 7,578 169 - - 10 16 2,498 4,711 718 5,417 103 181 144 1,013 8,789 887 5,417 103 191 160 3,511 13,500 975 6,717 123 270 161 3,989 21,078 $ 976 $ 6,766 $ 127 $ 377 $ 177 $ 6,963 $ 28,125 7 CITY OF HUNTINGTON BEACH BALANCE SHEET OTHER GOVERNMENTAL FUNDS SEPTEMBER 30, 2007 (In Thousands) (continued) Capital Projects Debt Service Fund Funds Property Tax Public Financing Total Debt ASSETS Refund Authority Service Fund Holly Seacliff Cash and Investments $ 1,601 $ - $ 1,601 $ 12 Cash and Investments with Fiscal Agent 2,509 7,007 9,516 - Other Receivables 19 83 102 - Due from Other Funds - - - Other Assets - - - Total Assets $ 4,129 $ 7,090 $ 11,219 $ 12 LIABILITIES Accounts Payable $ - $ 5 $ 5 $ - Accrued Payroll - - - - Due to Other Funds - - - - Advances from Other Funds - - - - Deposits Payable 45 - 45 - Total Liabilities 45 5 50 - FUND BALANCES Reserved for: Encumbrances - - - 10 Debt Service - 7,065 7,065 - Total Reserved Fund Balances - 7,065 7,065 10 Unreserved Fund Balances Unreserved, Designated for Future Expenditures - 20 20 - Undesignated 4,084 - 4,084 2 Total Unreserved Fund Balance 4,084 20 4,104 2 Total Fund Balances 4,084 7,085 11,169 12 Total Liabilites and Fund Balances $ 4,129 $ 7,090 $ 11,219 $ 12 79 CITY OF HUNTINGTON BEACH ! BALANCE SHEET OTHER GOVERNMENTAL FUNDS SEPTEMBER 30, 2007 ! (in Thousands) (continued) s Capital Projects Funds Total Other Sewer Bella Terra Total Capital Governmental Parking in-lieu Development Parking Structure Infrastructure Projects Funds Funds $ 980 $ 786 $ 9 $ 2,020 $ 3,807 $ 28,847 - 11 9 23 43 2,831 - - - - - 734 ! - - - - - 1,266 $ 991 $ 795 $ 9 $ 2,043 $ 3,850 $ 43,194 $ - $ 3 $ - $ - $ 3 $ 3,334 1 - - 1 39 - - - - 734 = - = - = 1,620 1,374 4 - - 4 7,101 - 55 = - 65 7,643 7,065 55 - - 65 14,708 - 172 - 853 1,025 5,756 991 564 9 1,190 2,756 15,629 991 736 9 2,043 3,781 21,385 991 791 9 2,043 3,846 36,093 $ 991 $ 795 $ 9 $ 2,043 $ 3,850 $ 43,194 ! 80 l CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) Special Revenue Funds Narcotics REVENUES Gas Tax Drainage Forfeiture Transportation Sales Taxes $ - $ - $ - $ 2,544 Licenses and Permits - - - - From Use of Money and Property 455 - 27 188 Intergovernmental 5,652 - 37 65 Charges for Current Service - 43 - - Other 2 - - - Total Revenues 6,109 43 64 2,797 EXPENDITURES Current: Police - - 81 - Economic Development - - - - Community Services - - - - Library Services - - - - Public Works 828 - - 301 Non-Departmental - - - - Capital Outlay 8,248 - 95 2,140 Debt Service: Principal - - - - Interest - - - - Total Expenditures 9,076 - 176 2,441 Excess Of Revenues Over (Under) Expenditures (2,967) 43 (112) 356 Other Financing Sources (Uses): Transfers In - - - - Transfers Out (900) - - - Total Other Financing Sources Sources (Uses) (900) - - - Net Change in Fund Balances (3,867) 43 (112) 356 Fund Balance-Beginning Of Year 9,246 (777) 570 3,384 Fund Balance- End Of Year $ 5,379 $ (734) $ 458 $ 3,740 81 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Sp ecial Revenue Funds Park Acquisiton Total Special Special Cultural and Revenue 1 Air Quality Traffic Impact Fourth of July Library Affairs Development Funds $ 3 $ - $ - $ - $ - $ - $ 2,547 - 12 - 1 - - 13 53 402 39 379 16 299 1,858 243 2 82 6,081 - 460 134 563 173 1,825 3,198 - 6 126 33 62 162 391 299 882 381 976 251 2,286 14,088 I - - - - - - 81 - _ 361 - 339 579 1,279 892 892 65 165 - - - - 1,359 165 1,480 - 87 - 178 12,393 230 1,645 361 979 339 757 16,004 69 (763) 20 (3) (88) 1,529 (1,916) 1 - - - - 82 = 82 (406) (1,306) - - - (406) 82 - (1,224) 69 (763) 20 (409) (6) 1,529 (3,140) 906 7,480 103 679 167 2,460 24,218 $ 975 $ 6,717 $ 123 $ 270 $ 161 $ 3,989 $ 21,078 82 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Capital Projects Debt Service Fund Fund Public i Property Tax Financing Total Debt REVENUES Refund Authority Service Fund Holly Seacliff Sales Taxes $ - $ - $ - $ - Licenses and Permits - - - - From Use of Money and Property 172 442 614 7 Intergovernmental - - - - Charges for Current Service - - - - Other - - - - Total Revenues 172 442 614 7 EXPENDITURES Current: Police - - - - Economic Development - - - - Community Services - - - - Library Services - - - - Public Works - - - - Non-Departmental - 15 15 - Capital Outlay - - - 185 Debt Service: Principal 730 3,675 4,405 - Interest 405 3,216 3,621 - Total Expenditures 1,135 6,906 8,041 185 Excess Of Revenues Over (Under) Expenditures (963) (6,464) (7,427) (178) Other Financing Sources (Uses): Transfers In 1,025 6,429 7,454 - Transfers Out - - - - Total Other Financing Sources Sources (Uses) 1,025 6,429 7,454 - Net Change in Fund Balances 62 (35) 27 (178) Fund Balance- Beginning Of Year 4,022 7,120 11,142 190 Fund Balance - End Of Year $ 4,084 $ 7,085 $ 11,169 $ 12 83 CITY OF HUNTINGTON BEACH j COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Capital Projects Fund Total Other Sewer Bella Terra Total Capital Governmental 1 Parking In-Lieu Development Parking Structure Infrastructure Projects Funds Funds $ - $ - $ - $ - $ - $ 2,547 40 52 - - 92 105 55 40 6 80 188 2,660 12 443 455 6,536 161 - - 161 3,359 - - - - - 391 95 265 449 80 896 15,598 - - - - - 81 - 447 - 447 447 - - - - - 1,279 892 65 - - 65 1,424 15 52 237 12,630 - - - - - 4,405 3,621 117 447 - 749 24,794 95 148 2 80 147 (9,196) - - - 893 893 8,429 (1,306) I - - - 893 893 7,123 9 5 148 2 973 1,040 (2,073) 896 643 7 1,070 2,806 38,166 $ 991 $ 791 $ 9 $ 2,043 $ 3,846 $ 36,093 84 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) Gas Tax Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 300 $ 300 $ 455 $ 155 Intergovernmental 4,600 4,600 5,652 1,052 Other - - 2 2 TOTAL REVENUES 4,900 4,900 6,109 1,209 EXPENDITURES: Current: Public Works 1,223 1,469 828 641 Capital Outlay 12,970 14,533 8,248 6,285 TOTAL EXPENDITURES 14,193 16,002 9,076 6,926 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (9,293) (11,102) (2,967) 8,135 OTHER FINANCING SOURCES(USES): Transfers Out (900) (900) (900) - TOTAL OTHER FINANCING SOURCES(USES) (900) (900) (900) - NET CHANGE IN FUND BALANCE (10,193) (12,002) (3,867) 8,135 FUND BALANCE-BEGINNING OF YEAR 9,246 9,246 9,246 - FUND BALANCE-END OF YEAR $ (947) $ (2,756) $ 5,379 $ 8,135 Drainage Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Charges for Current Service $ 100 $ 100 $ 43 $ (57) FUND BALANCE-BEGINNING OF YEAR (777) (777) (777) - FUND BALANCE-END OF YEAR $ (677) $ (677) $ (734) $ (57) 85 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS 1 FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Narcotics Forfeiture Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 22 $ 22 $ 27 $ 5 Intergovernmental 50 50 37 (13 TOTAL REVENUES 72 72 64 (8) EXPENDITURES: Current: Police 53 203 81 122 Capital Outlay 360 210 95 115 TOTAL EXPENDITURES 413 413 176 237 NET CHANGE IN FUND BALANCE (341) (341) (112) 229 FUND BALANCE,BEGINNING OF YEAR 570 570 570 - FUND BALANCE-END OF YEAR $ 229 $ 229 $ 458 $ 229 Transportation iVariance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Sales Taxes $ 2,200 $ 2,200 $ 2,544 $ 344 From Use of Money and Property 100 100 188 88 I Intergovernmental - - 65 65 TOTAL REVENUES 2,300 2,300 2,797 497 EXPENDITURES: Current: Public Works 320 320 301 19 Capital Outlay 3,915 2,915 2,140 775 1 TOTAL EXPENDITURES 4,235 3,235 2,441 794 NET CHANGE IN FUND BALANCE (1,935) (935) 356 1,291 FUND BALANCE BEGINNING OF YEAR 3,384 3,384 3,384 FUND BALANCE-END OF YEAR $ 1,449 $ 2,449 $ 3,740 $ 1,291 I 1 1 86 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Air Quality Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Sales Taxes $ - $ - $ 3 $ 3 From Use of Money and Property 35 35 53 18 Intergovernmental 240 240 243 3 TOTAL REVENUES 275 275 299 24 EXPENDITURES: Current: Public Works 155 155 65 90 Capital Outlay 307 407 165 242 TOTAL EXPENDITURES 462 562 230 332 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (187) (287) 69 356 OTHER FINANCING SOURCES(USES): Transfers Out (215) (230) - 230 NET CHANGE IN FUND BALANCE (402) (517) 69 586 FUND BALANCE-BEGINNING OF YEAR 906 906 906 - FUND BALANCE-END OF YEAR $ 504 $ 389 $ 975 $ 586 Traffic Impact Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Licenses and Permits $ - $ - $ 12 $ 12 From Use of Money and Property 275 275 402 127 Intergovernmental - - 2 2 Charges for Current Service 750 750 460 (290) Other - - 6 6 TOTAL REVENUES 1,025 1,025 882 (143) EXPENDITURES: Current: Public Works 668 868 165 703 Capital Outlay 7,562 7,412 1,480 5,932 TOTAL EXPENDITURES 8,230 8,280 1,645 6,635 EXCESS OF REVENUES OVER (UNDER EXPENDITURES) (7,205) (7,255) (763) 6,492 OTHER FINANCING SOURCES(USES): Transfers In - 115 - (115) NET CHANGE IN FUND BALANCE (7,205) (7,140) (763) 6,377 FUND BALANCE-BEGINNING OF YEAR 7,480 7,480 7,480 FUND BALANCE-END OF YEAR $ 275 $ 340 $ 6,717 $ 6,377 87 CITY OF HUNTINGTON BEACH 1 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Fourth of July Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 6 $ 6 $ 39 $ 33 Intergovernmental - - 82 82 Charges for Current Service - - 134 134 Other 400 400 126 (274) TOTAL REVENUES 406 406 381 (25) 1 EXPENDITURES: Current: Community Services 406 406 361 45 NET CHANGE IN FUND BALANCE - - 20 20 FUND BALANCE -BEGINNING OF YEAR 103 103 103 FUND BALANCE-END OF YEAR $ 103 $ 103 $ 123 $ 20 tLibrary Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Licenses and Permits $ - $ - $ 1 $ 1 From Use of Money and Property 420 420 379 (41) Charges for Current Service 975 975 563 (412) Other 130 130 33 (97) TOTAL REVENUES 1,525 1,525 976 (549) EXPENDITURES: 1 Current: Library Services 1,325 1,325 892 433 Capital Outlay 100 100 87 13 TOTAL EXPENDITURES 1,425 1,425 979 446 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 100 100 (3) (103) OTHER FINANCING SOURCES(USES): Transfers Out (471) (471) (406) 65 NET CHANGE IN FUND BALANCE (371) (371) (409) (38) FUND BALANCE-BEGINNING OF YEAR 679 679 679 - FUND BALANCE-END OF YEAR $ 308 $ 308 $ 270 $ (38) 88 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Cultural Affairs Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 11 $ 11 $ 16 $ 5 Charges for Current Service 178 178 173 (5) Other 91 91 62 (29) TOTAL REVENUES 280 280 251 (29) EXPENDITURES: Current: Community Services 360 360 339 21 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (80) (80) (88) (8) OTHER FINANCING SOURCES(USES): Transfers In 85 85 82 (3) NET CHANGE IN FUND BALANCE 5 5 (6) (11) FUND BALANCE-BEGINNING OF YEAR 167 167 167 - FUND BALANCE-END OF YEAR $ 172 $ 172 $ 161 $ (11) Park Acquisition and Development Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 125 $ 125 $ 299 $ 174 Intergovernmental 1,245 1,245 - (1,245) Charges for Current Service 1,000 1,000 1,825 825 Other - - 162 162 TOTAL REVENUES 2,370 2,370 2,286 (84) EXPENDITURES: Current: Community Services 1,163 1,163 579 584 Public Works 25 25 - 25 Capital Outlay 2,343 2,343 178 2,165 TOTAL EXPENDITURES 3,531 3,531 757 2,774 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (1,161) (1,161) 1,529 2,690 OTHER FINANCING SOURCES(USES): Transfers Out (67) (67) - 67 NET CHANGE IN FUND BALANCE (1,228) (1,228) 1,529 2,757 FUND BALANCE-BEGINNING OF YEAR 2,460 2,460 2,460 - FUND BALANCE-END OF YEAR $ 1,232 $ 1,232 $ 3,989 $ 2,757 89 t 1 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL ' OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Property Tax Refund Variance with Final Budget 1 Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 62 $ 62 $ 172 $ 110 EXPENDITURES: Debt Service: Principal 351 730 730 - Interest 819 440 405 35 TOTAL EXPENDITURES 1,170 1,170 1,135 35 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (1,108) (1,108) (963) 145 OTHER FINANCING SOURCES(USES): Transfers In 1,300 1,300 1,025 (275) NET CHANGE IN FUND BALANCE 192 192 62 (130) FUND BALANCE-BEGINNING OF YEAR 4,022 4,022 4,022 - FUND BALANCE-END OF YEAR $ 4,214 $ 4,214 $ 4,084 $ (130) Public Finance Authority Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 350 $ 350 $ 442 $ 92 EXPENDITURES: Current: Non-Departmental 65 67 15 52 Debt Service: 1 Principal 5,318 5,318 3,675 1,643 Interest 1,618 2,029 3,216 (1,187) TOTAL EXPENDITURES 7,001 7,414 6,906 508 ' EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (6,651) (7,064) (6,464) 600 OTHER FINANCING SOURCES(USES): Transfers In 6,650 6,650 6,429 (221) NET CHANGE IN FUND BALANCE (1) (414) (35) 379 FUND BALANCE-BEGINNING OF YEAR 7,120 7,120 7,120 - FUND BALANCE,END OF YEAR $ 7,119 $ 6,706 $ 7,085 $ 379 90 1 t CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Holly Seacliff Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 8 $ 8 $ 7 $ (1) EXPENDITURES: Current: Capital Outlay 187 195 185 10 NET CHANGE IN FUND BALANCE (179) (187) (178) 9 FUND BALANCE-BEGINNING OF YEAR 190 190 190 - FUND BALANCE-END OF YEAR $ 11 $ 3 $ 12 $ 9 Parking in-Lieu Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Licenses and Permits $ - $ - $ 40 $ 40 From Use of Money and Property 40 40 55 15 TOTAL REVENUES 40 40 95 55 FUND BALANCE-BEGINNING OF YEAR 896 896 896 - FUND BALANCE-END OF YEAR $ 936 $ 936 $ 991 $ 55 1 91 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Sewer Development tVariance with Final Budget 1 - Positive REVENUES: Original Budget Budget Actual (Negative) Licenses and Permits $ $ $ 52 $ 52 From Use of Money and Property 22 22 40 18 Intergovernmental - - 12 12 Charges for Current Service 200 200 161 (39) TOTAL REVENUES 222 222 265 43 EXPENDITURES: Current: Public Works 5 15 65 (50) Capital Outlay 355 345 52 293 TOTAL EXPENDITURES 360 360 117 243 NET CHANGE IN FUND BALANCE (138) (138) 148 286 FUND BALANCE-BEGINNING OF YEAR 643 643 643 - FUND BALANCE-END OF YEAR $ 505 $ 505 $ 791 $ 286 Bella Terra Parking Structure Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property $ - $ - $ 6 $ 6 Intergovernmental - - 443 443 ' TOTAL REVENUES - - 449 449 EXPENDITURES: Current: Economic Development - 448 447 1 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES - (448) 2 450 OTHER FINANCING SOURCES(USES): - Transfers In 550 550 (550) NET CHANGE IN FUND BALANCE 550 102 2 (100) FUND BALANCE,BEGINNING OF YEAR 7 7 7 - FUND BALANCE-END OF YEAR $ 557 $ 109 $ 9 $ (100) 92 r CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Infrastructure Variance with Final Budget Positive REVENUES: Original Budget Budget Actual (Negative) From Use of Money and Property $ - $ - $ 80 $ 80 EXPENDITURES: Current: - CapitalOutlay 1,056 1,056 - 1,056 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (1,056) (1,056) 80 1,136 OTHER FINANCING SOURCES(USES): Transfers In - 893 893 - NET CHANGE IN FUND BALANCE (1,056) (163) 973 1,136 FUND BALANCE-BEGINNING OF YEAR 1,070 1,070 1,070 - FUND BALANCE-END OF YEAR $ 14 $ 907 $ 2,043 $ 1,136 1 r 1 r r r r r 93 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) Redevelopment Agency Capital Projects Variance with Final Budget Positive REVENUES Original Budget Final Budget Actual (Negative) From Use of Money and Property 1,000 1,000 1,808 808 Other 115 115 1,573 1,458 Total Revenues 1,115 1,115 3,381 2,266 EXPENDITURES Current: City Attorney 165 165 88 77 Economic Development 921 3,481 1,211 2,270 1 Public Works - 962 179 783 Capital Outlay 10,962 9,693 390 9,303 Total Expenditures 12,048 14,301 1,868 12,433 Excess Of Revenues Over(Under) Expenditures (10,933) (13,186) 1,513 14,699 OTHER FINANCING SOURCES(USES): Transfers Out (20) (20) Net Change in Fund Balance (10,933) (13,206) 1,493 14,699 Fund Balance-Beginning Of Year 20,264 20,264 20,264 - Fund Balance-End Of Year $ 9,331 $ 7,058 $ 21,757 $ 14,699 Redevelopment Agency Debt Service Variance with Final Budget Positive REVENUES Original Budget Final Budget Actual (Negative) Property Taxes $ 14,900 $ 14,900 $ 15,310 $ 410 ' From Use of Money and Property 99 99 232 133 Total Revenues 14,999 14,999 15,542 543 1 EXPENDITURES Current: Economic Development 10 1,491 2,048 (557) Non-Departmental 1,481 - 87 (87) Debt Service: Principal 8,948 5,588 5,214 374 Interest 1,641 1,641 1,540 101 Total Expenditures 12,080 8,720 8,889 (169) Excess Of Revenues Over(Under) Expenditures 2,919 6,279 6,653 374 OTHER FINANCING SOURCES(USES): Transfers Out (2,866) (6,226) (6,500) (274) Net Change in Fund Balance 53 53 153 100 Fund Balance-Beginning Of Year 1,227 1,227 1,227 Fund Balance-End Of Year $ 1,280 $ 1,280 $ 1,380 $ 100 94 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2007 (In Thousands) (continued) Low Income Housing Fund Variance with Final Budget Positive REVENUES Original Budget Final Budget Actual (Negative) From Use of Money and Property $ 370 $ 370 $ 641 $ 271 Other 710 710 - (710) Total Revenues 1,080 1,080 641 (439) EXPENDITURES Current: 1 Economic Development 291 1,071 679 392 Non-Departmental - - 2 (2) Capital Outlay 2,750 1,970 857 1,113 Total Expenditures 3,041 3,041 1,538 1,503 Excess Of Revenues Over(Under) Expenditures (1,961) (1,961) (897) 1,064 OTHER FINANCING SOURCES(USES): Transfers In 2,500 2,500 3,061 561 Net Change in Fund Balance 539 539 2,164 1,625 Fund Balance-Beginning Of Year 10,502 10,502 10,502 - Fund Balance-End Of Year $ 11,041 $ 11,041 $ 12,666 $ 1,625 i 1 1 95 Other Enterprise Funds Enterprise Funds account for operations similar to private businesses. The City's intent is to recover the costs to the general public through user charges or where the City wished to periodically determine net income. • The Emerald Cove Housing Fund accounts for the operations of a senior-citizens apartment complex. • The Emergency Fire Medical Fund accounts for the user-fee portion of the City's paramedic service. • The Hazmat Service Fund accounts for user fees charged for City's hazardous material program. • The Ocean View Estates Fund accounts for the operation of the Ocean View Estates Mobile Home Park owned by the City. 1 96 THIS PAGE INTENTIONALLY LEFT BLANK ' 1 1 1 t 1 i CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF NET ASSETS OTHER ENTERPRISE FUNDS SEPTEMBER 30,2007 (In Thousands) Emerald Cove Emergency Fire Ocean View ASSETS Housing Medical Hazmat Service Estates Total CURRENT ASSETS: Cash and Investments $ 2,906 $ 1,877 $ 267 $ 1,885 $ 6,935 Other Receivables 32 1,144 17 21 1,214 TOTAL CURRENT ASSETS 2,938 3,021 284 1,906 8,149 CAPITAL ASSETS: Land 1,289 2,644 3,933 Buildings 4,102 - - 560 4,662 Machinery and Equipment - 1,977 20 - 1,997 Less Accumulated Depreciation (1,805) (706) (20) (89) (2,620) TOTAL CAPITAL ASSETS 3,586 1,271 - 3,115 7,972 TOTAL ASSETS 6,524 4,292 284 5,021 16,121 i LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts Payable 133 48 - 2 183 Accrued Payroll - 62 3 1 66 Deposits Payable 50 1 - 19 70 TOTAL CURRENT LIABILITIES 183 111 3 22 319 NON-CURRENT LIABILITIES: Compensated Absences - 94 - - 94 TOTAL NON-CURRENT LIABILITIES 94 94 TOTAL LIABILITIES 183 205 3 22 413 NET ASSETS: Invested in Capital Assets 3,586 1,271 - 3,115 7,972 Unrestricted 2,755 2,816 281 1,884 7,736 TOTAL NET ASSETS $ 6,341 $ 4,087 $ 281 $ 4,999 $ 15,708 i 1 1 1 i i98 i CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS OTHER ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2007 i (In Thousands) Emerald Cove Emergency Fire Ocean View Housing Medical Hazmat Service Estates Total OPERATING REVENUES: Rentals $ 1,037 $ - $ - $ 324 $ 1,361 Fees for Service - 5,809 196 - 6,005 Other - 259 14 - 273 TOTAL OPERATING REVENUES 1,037 6,068 210 324 7,639 OPERATING EXPENSES: Supplies and Operations 854 5,117 194 73 6,238 Depreciation 82 230 - 11 323 TOTAL OPERATING EXPENSES 936 5,347 194 84 6,561 OPERATING INCOME(LOSS) 101 721 16 240 1,078 NON-OPERATING REVENUES(EXPENSES): Interest Income 166 100 21 96 383 CHANGE IN NET ASSETS BEFORE TRANSFERS 267 821 37 336 1,461 TRANSFERS: Transfers Out (357) (181) (13) - (551) TOTAL CHANGE IN NET ASSETS (90) 640 24 336 910 NET ASSETS-BEGINNING OF YEAR 6,431 3,447 257 4,663 14,798 NET ASSETS-END OF YEAR $ 6,341 $ 4,087 $ 281 $ 4,999 $ 15,708 1 1 99 CITY OF HUNTINGTON BEACH STATEMENT OF CASH FLOWS OTHER ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2007 (In Thousands) Emerald Cove Emergency Fire Ocean View Housing Medical Hazmat Service Estates Total CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Customers and Users $ 1,028 $ 6,003 $ 207 $ 316 $ 7,554 Cash Paid to Employees for Services - (1,548) (126) (49) (1,723) Cash Paid to Suppliers of Goods and Services (764) (3,620) (82} (29) (4,495) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES 264 835 (1) 238 1,336 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers Out (357) (181) (13) (551) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of Plant,Property,and Equipment - (882) - - (882) CASH FLOWS FROM INVESTING ACTIVITIES Investment Earnings Received 166 100 21 96 383 NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 73 (128) 7 334 286 CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR 2,833 2,005 260 1,551 6,649 CASH AND CASH EQUIVALENTS-END OF YEAR $ 2,906 $ 1,877 $ 267 $ 1,885 $ 6,935 RECONCILIATION OF OPERATING INCOME NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES Operating Income $ 101 $ 721 $ 16 $ 240 $ 1,078 ADJUSTMENTS TO RECONCILE OPERATING INCOME TO NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES Depreciation 82 230 - 11 323 Decrease(Increase)in Accounts Receivable (9) (65) (3) (8) (85) Increase(Decrease)in Accounts Payable 83 (78) (2) 3 Increase(Decrease)in Accrued Payroll - 16 - - 16 Increase(Decrease)in Deposits 7 1 - 9 17 Increase(Decrease)in Compensated Absences - 10 (14) (12) (16) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ 264 $ 835 $ (1) $ 238 $ 1,336 100 1 1 THIS PAGE INTENTIONALLY LEFT BLANK i i 1 1 1 1 1 1 1 1 1 1 1 Fiduciary Funds Fiduciary Funds account for assets held by the City as an agent for other organizations or individuals. • The General Deposit Fund accounts for the deposit of general monies held by the City for private individuals and businesses. • The Community Facilities Districts Funds accounts for the debt service activity of the City's community facilities district. • The Huntington Beach Auto Business Improvement District Fund accounts for the activities of the City's business improvement district. ® The Central Net Fund accounts for the activity of the Central Net Operations Authority. • The Retiree Medical Insurance Fund accounts for the City's medical retirement program. 102 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF FIDUCIARY FUND NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30,2007 A enc Funds Community Business Central Net Facilities Improvement Operations Retiree Medical Total Agency Assets: General DepositT Districts Districts Authority Insurance Funds Cash and Investments- Local Agency Investment Fund $ 562 $ 1,272 $ 149 $ 1,680 $ 7,320 $ 10,983 Cash with Fiscal Agent - 4,264 - - - 4,264 Accounts Receivable,Net - 147 14 - 82 243 Total Assets $ 562 $ 5,683 $ 163 $ 1,680 $ 7,402 $ 15,490 Liabilities: Accounts Payable $ - $ 1 $ 11 $ 14 $ 1 $ 27 Due to Bondholders - 5,682 - - - 5,682 Held for others 562 - 152 1,666 7,401 9,781 Total Liabilities $ 562 $ 5,683 $ 163 $ 1,680 $ 7,402 $ 15,490 103 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES ALL AGENCY FUNDS FOR FISCAL YEAR ENDED SEPTEMBER 30, 2007 Balance Balance October 1,2006 Additions Deletions September 30,2007 General Deposit Assets: Cash and Investments $ 739 $ - $ (177) $ 562 Liabilities: Held for others $ 739 $ - $ (177) $ 562 Community Facilities Districts Assets: Cash and Investments $ 1,126 $ 146 $ - $ 1,272 Cash with Fiscal Agent 5,860 - (1,596) 4,264 Accounts Receivable, Net 372 - (225) 147 Total Assets $ 7,358 $ 146 $ (1,821) $ 5,683 Liabilities: Accounts Payable $ - $ 1 $ - $ 1 Due to Bondholders 7,358 - (1,676) 5,682 Total Liabilities $ 7,358 $ 1 $ (1,676) $ 5,683 Business Improvement Districts Assets: Cash and Investments $ 191 $ - $ (42) $ 149 Accounts Receivable, Net 19 - (5) 14 Total Assets $ 210 $ - $ (47) $ 163 Liabilities: Accounts Payable $ 152 $ - $ (141) $ 11 Held for others 58 94 - 152 Total Liabilities $ 210 $ 94 $ (141) $ 163 Central Net Operations Authority Assets: Cash and Investments $ 1,446 $ 234 $ - $ 1,680 Liabilities: Accounts Payable $ 197 $ - $ (183) $ 14 Held for others 1,249 417 - 1,666 Total Liabilities $ 1,446 $ 417 $ (183) $ 1,680 Retiree Medical Insurance Assets: Cash and Investments $ 5,118 $ 2,202 $ - $ 7,320 Accounts Receivable, Net 41 41 - 82 Total Assets $ 5,159 $ 2,243 $ - $ 7,402 Liabilities: Accounts Payable $ 1 $ - $ - $ 1 Held for others 5,158 2,243 - 7,401 Total Liabilities $ 5,159 $ 2,243 $ - $ 7,402 104 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES ALL AGENCY FUNDS FOR FISCAL YEAR ENDED SEPTEMBER 30, 2007 (CONTINUED) Balance Balance October 1,2006 Additions Deletions September 30,2007 Total-All Agency Funds Assets: Cash and Investments $ 8,620 $ 2,582 $ (219) $ 10,983 Cash with Fiscal Agent 5,860 - (1,596) 4,264 Accounts Receivable, Net 432 41 (230) 243 Interest Receivable Total Assets $ 14,912 $ 2,623 $ (2,045) $ 15,490 Liabilities: Accounts Payable $ 350 $ 1 $ (324) $ 27 Due to Bondholders 7,358 - (1,676) 5,682 Held for others 7,204 2,754 (177) 9,781 Total Liabilities $ 14,912 $ 2,755 $ (2,177) $ 15,490 105 Statistical Section This part of the City of Huntington Beach's Comprehensive Annual Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the City's overall financial health. Financial Trends- contain trend information to aid the reader understand how the City's financial performance has changed over time. Revenue Capacity-contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity - present information to assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information-offers information to help the reader understand the environment within which the City's financial activities take place. Operating Information-contains service and infrastructure data to help the reader understand how the City's financial report relates to the services the City provides and the activities it performs. Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB 34 in the 2002 fiscal year; schedules presenting government-wide information include information beginning in that year. 106 City of Huntington Beach Net Assets by Component-Last Six Fiscal Years (In Thousands) Fiscal Year Ending September 30, Governmental Activities 2007 2006 2005 2004 2003 2002 Investment in Capital Assets,Net of Related Debt $ 486,901 $ 472,372 $ 479,897 $ 448,217 $ 446,061 $ 425,967 Restricted 73,541 68,381 39,227 61,051 51,261 42,417 Unrestricted 58,833 34,269 40,226 (9,278) (12,924) (10,745) Total Governmental Activities Net Assets $ 619,275 $ 559,350 $ 559,350 $ 499,990 $ 484,398 $ 457,639 Business-Type Activities Investment in Capital Assets,Net of Related Debt $ 119,874 $ 111,651 $ 102,068 $ 92,890 $ 88,884 $ 79,781 Restricted 33,546 31,109 34,085 32,968 30,946 31,043 Unrestricted 54,822 53,020 41,563 33,664 25,671 23,236 Total Business-Type Activities Net Assets $ 208,242 $ 177,716 $ 177,716 $ 159,522 $ 145,501 $ 134,060 Primary Government Investment in Capital Assets,Net of Related Debt $ 606,775 $ 584,023 $ 581,965 $ 541,107 $ 534,945 $ 505,748 Restricted 107,087 99,490 73,312 94,019 82,207 73,460 Unrestricted 113,655 87,289 81,789 24,386 12,747 12,491 Total Primary Government Net Assets $ 827,517 $ 770,802 $ 737,066 $ 659,512 $ 629,899 $ 591,699 City of Huntington Beach Changes in Net Assets-Last Six Fiscal Years (In Thousands) Expenses: Fiscal Year Ending September 30, Governmental Activities: 2007 2006 2005 2004 2003 2002 City Council $ 287 $ 271 $ 254 $ 280 $ 267 $ 262 City Administrator 1,442 5,540 1,990 1,188 1,587 2,214 City Treasurer 1,088 1,479 1,568 1,541 1,341 1,160 City Attorney 2,534 2,317 2,852 2,775 2,899 3,634 City Clerk 950 756 685 717 559 698 Administrative Services - 5,554 6,348 8,357 7,230 Finance 4,454 3,306 2,501 - - - Human Resources 4,202 - - - - Planning 3,098 2,813 2,559 2,396 3,633 2,658 Building 4,899 3,930 3,321 2,858 3,045 3,101 Fire 27,247 24,787 23,365 20,000 19,490 19,361 Information Systems 6,591 7,361 6,806 6,423 4,401 4,464 Police 56,988 50,877 47,029 40,686 41,104 42,187 Economic Development 9,209 4,977 4,199 19,372 3,830 3,080 Community Services 16,482 15,777 13,693 15,735 9,989 12,440 Library Services 5,586 4,829 4,394 4,138 6,721 4,801 Public Works 34,581 49,654 33,018 30,277 25,386 28,237 Non-Departmental 15,131 11,263 12,024 4,054 25,604 19,725 Interest on Long-Term Debt 5,875 5,575 6,810 6,001 6,199 9,438 Total Governmental Activities 200,644 195,512 172,622 164,789 164,412 164,690 Business-type Activities: Water Utility 32,606 28,117 22,349 24,643 24,943 27,250 Sewer Service 5,766 3,855 5,924 4,042 3,775 2,419 Refuse Collection 10,542 10,289 9,826 9,806 9,681 9,178 Emerald Cove Housing 936 551 399 409 401 405 Emergency Fire Medical 5,347 5,637 5,497 5,605 3,765 3,172 Cultural Affairs - - - 317 Hazmat Service 194 163 141 204 150 143 Ocean View Estates 84 120 118 62 58 11 Total Business Type Activities 55,475 48,732 44,254 44,771 42,773 42,895 Total Business and Government Type Activities $ 256,119 $ 244,244 $ 216,876 $ 209,560 $ 207,185 $ 207,585 107 City of Huntington Beach Changes in Net Assets-Last Six Fiscal Years (In Thousands) (continued) Revenues: Fiscal Year Ending September 30, Governmental Activities: 2007 2006 2005 2004 2003 2002 Charges for Services City Council $ 99 $ 90 $ $ - $ $ City Administrator 392 1,612 33 City Treasurer 698 1,332 v City Attorney 46 43 City Clerk 210 95 111 82 46 Finance 1,312 325 - - Human Resources 1,347 - - - - Planning 4,223 825 1,024 1,403 752 580 Building 5,450 4,859 5,068 4,513 3,067 3,940 Fire 1,267 1,086 1,095 1,183 1,157 500 Information Systems 675 641 - - - - Police 4,890 5,355 5,254 1,605 4,176 4,433 Economic Development 2,944 505 385 5 257 Community Services 15,036 14,644 13,376 12,611 9,433 8,510 Library Services 835 714 714 4,290 673 - Public Works 5,016 4,784 1,781 4,220 3,356 1,103 Non-Departmental 232 229 - 589 5 4,411 Total Charges for Services 44,672 37,139 28,808 30,419 22,958 23,556 Operating Grants 1,996 917 1,657 6,343 1,736 5,063 Capital Grants 5,154 6,893 43,341 7,384 6,955 13,039 Transfers 491 464 4,884 - - (244) Total Governmental Activities Program Revenue 52,313 45,413 78,690 44,146 31,649 41,414 Business-Type Activities Program Revenue Water Utility 37,962 37,946 40,371 40,172 37,943 59,103 Sewer Service 7,242 7,873 8,512 6,373 5,876 4,540 Refuse Collection 10,550 10,292 9,985 10,412 9,123 9,182 Emerald Cove Housing 1,037 960 866 781 746 707 Emergency Fire Medical 6,068 6,145 5,725 5,650 4,103 4,103 Cultural Affairs - - - - - 189 Hazmat Service 210 182 110 187 233 145 Ocean View Estates 324 273 263 258 245 192 Total Business Type Activities 63,393 63,671 65,832 63,833 58,269 78,161 Total Primary Government Program Revenue 115,706 109,084 144,522 107,979 89,918 119,5 55 Net(Expense)Revenue: Governmental Activities: (148,331) (150,099) (93,932) (120,643) (132,763) (123,276) Business-Type Activities 7,918 14,939 21,578 19,062 15,496 35,266 Total Net(Expense)Revenue (140,413) (135,160) (72,354) (101,581) (117,267) (88,010) General Revenue and Other Changes in Net Assets Governmental Activities: Property Taxes 79,369 66,598 61,466 47,405 40,633 38,106 Sales Taxes 30,608 26,448 24,340 28,273 28,011 na Utility Taxes 21,479 21,170 20,004 19,424 18,310 na Other Taxes 13,776 13,226 14,952 11,365 13,337 55,084 Use of Money and Property 7,895 4,310 3,137 3,528 9,923 13,895 From Other Agencies 12,689 10,390 8,186 14,406 16,414 20,359 Participation Payments 1,564 6,221 12,697 na na na Other 2,696 9,278 8,510 7,328 5,491 2,604 Total Governmental General Revenue 170,076 157,641 153,292 131,729 132,119 130,048 Business-Type Activities: Transfers (491) (464) (4,884) 244 Use of Money and Property 5,035 3,589 1,500 1,085 1,482 2,240 Total Business-Type Activities General Revenue 4,544 3,125 (3,384) 1,085 1,482 2,484 Total General Revenue and Transfers 174,620 160,766 149,908 132,814 133,601 132,532 Changes in Net Assets-Governmental Activities 21,745 7,542 59,360 11,086 (644) 6,772 Changes in Net Assets-Business Activities 12,462 18,064 18,194 20,147 16,978 37,750 Net Assets-Beginning of Year(restated) 793,310 745,196 659,512 628,279 613,565 563,111 Net Assets-End of Year $ 827,517 $ 770,802 $ 737,066 $ 659,512 $ 629,899 $ 607,633 108 CITY OF HUNTINGTON BEACH FUND BALANCES-GOVERNMENTAL FUNDS -LAST TEN FISCAL YEARS (In Thousands) (Modified Accrual Basis of Accounting) Fiscal Year Ending September 30, 2007 2006 2005 2004 2003(b) General Fund: Reserved $ 10,679 $ 7,382 $ 5,915 $ 2,113 $ 2,757 Unreserved 33,017 33,204 32,371 24,219 12,217 Total General Fund $ 43,696 $ 40,586 $ 38,286 $ 26,332 $ 14,974 Other Governmental Funds: Reserved $ 42,013 $ 25,472 $ 35,458 $ 30,143 $ 35,470 Unreserved,Reported in: Special Revenue Funds 13,500 20,631 17,833 11,810 10,399 Debt Service Funds 5,484 4,022 3,916 4,434 10,992 Capital Projects Funds 18,286 27,096 16,820 10,242 8,553 Total Other Governmental Funds $ 79,283 $ 77,221 $ 74,027 $ 56,629 $ 65,414 Fiscal Year Ending September 30, 2002(a) 2001 2000 1999 1998 General Fund: Reserved $ 25,773 $ 23,677 $ 26,115 $ 23,628 $ 23,807 Unreserved 15,972 11,741 17,618 19,291 8,998 Total General Fund $ 41,745 $ 35,418 $ 43,733 $ 42,919 $ 32,805 Other Governmental Funds: Reserved $ 45,259 $ 81,465 $ 72,056 $ 61,401 $ 58,634 Unreserved,Reported in: Special Revenue Funds 7,967 21,698 19,073 12,748 8,845 Debt Service Funds (33,364) 12,969 - - 9,567 Capital Projects Funds 8,637 7,898 11,793 4,968 9,933 Total Other Governmental Funds $ 28,499 $ 124,030 $ 102,922 $ 79,117 $ 86,979 Notes: (a)Beginning with fiscal year 2001/2002,the City implemented the new reporting model which changed the way in which interfund advances were reported and resulted in a larger negative fund balance in the Redevelopment Agency Debt Service fund (b)In fiscal year 2002-2003 the City changed accounting for interfund advances and eliminated the advances to/from in each fund. This results in a smaller reserved fund balance in the General Fund and eliminates the deficit in the Redevelopment Agency Debt Service Fund 109 1 1 1 1 � THIS PAGE INTENTIONALLY LEFT BLe4Rl!( 1 1 i 1 1 1 i 1 CITY OF HUNTINGTON BEACH CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS-LAST TEN FISCAL YEARS (In Thousands) (Modified Accrual Basis of Accounting) Fiscal Year Ending September 30, 2007 2006 2005(d) 2004 2003 REVENUES: Property Taxes $ 75,916 $ 69,065 $ 59,716 $ 43,501 $ 38,983 Sales Taxes 26,271 26,448 24,340 28,273 28,011 Utility Taxes 21,479 21,170 20,004 19,424 18,310 Other Taxes 13,776 13,226 13,068 11,365 13,337 Licenses and Permits 10,131 7,432 7,457 7,736 8,045 Fines and Forfeitures 4,165 4,288 4,365 4,342 3,815 From Use of Money and Property 19,796 16,461 12,733 11,856 9,923 From Other Agencies 19,304 16,611 20,179 26,321 25,103 Charges for Current Service/Other Revenue 23,270 27,237 33,950 17,553 14,140 TOTAL REVENUES 214,108 201,938 195,812 170,371 159,667 EXPENDITURES Current: City Council 287 271 254 280 269 City Administrator 1,490 5,508 1,917 1,165 1,559 City Treasurer 1,060 1,446 1,547 1,519 1,377 City Attorney 2,526 2,313 2,848 2,771 2,836 City Clerk 932 828 679 712 555 Administrative Services - - 5,731 6,295 8,323 Finance 4,400 3,283 2,501 - - Human Resources 4,202 Community Development - - - - - Planning 3,092 2,800 2,548 2,382 2,544 Building 4,670 3,729 3,291 2,938 3,043 Fire 26,438 24,334 22,365 19,018 19,021 Information Systems 6,437 6,540 5,726 5,315 3,619 Police 55,461 50,151 45,778 39,414 41,184 Economic Development 8,292 4,172 2,866 5,132 3,616 Community Services 14,744 14,382 12,321 11,718 10,182 Library Services 5,097 4,359 3,969 3,745 4,215 Public Works 25,248 28,448 21,535 16,756 19,832 Non-Departmental 12,977 13,831 13,039 23,809 31,236 Capital Outlay 16,142 30,174 9,065 29,484 24,217 Debt Service: Principal 10,453 9,406 8,474 8,718 7,427 Interest 5,514 6,512 5,999 5,987 6,273 TOTAL EXPENDITURES 209,462 212,487 172,453 187,158 191,328 EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER) EXPENDITURES 4,646 (10,549) 23,359 (16,787) (31,661) OTHER FINANCING SOURCES(USES): Transfers In 16,313 21,531 20,890 30,274 54,463 Proceeds of Bankruptcy Settlements - - - - - Reclassification of Interfund Advances - 16,018 Capital Assets Reclassication for Changes in F (1,743) Payments to Escrow - - - - - Proceeds of Long-Term Debt 35 15,579 1,102 13,236 24,582 Transfers Out (15,822) (20,075) (16,006) (24,148) (57,096) TOTAL OTHER FINANCING SOURCES(USES' 526 17,035 5,986 19,362 36,224 INCREASE(DECREASE)IN FUND BALANCES $ 5,172 $ 6,486 $ 29,345 $ 2,575 $ 4,563 DEBT SERVICE AS A PERCENTAGE OF NON-CAPITAL EXPENDITURES 9.0% 9.6% 9.7% 10.3% 8.9% (c)Community Development was reorganized into two separate departments(Planning and Building). Information Systems was recorded originally in the Non-departmental area and transferred to a new department. 111 Fiscal Year Ending September 30, 2002 2001 2000 1999(c) 1998 $ 33,204 $ 36,860 $ 37,645 $ 34,345 $ 32,477 23,449 28,082 26,268 22,699 21,156 18,014 17,045 15,058 14,936 13,888 13,621 15,096 10,868 11,122 9,851 7,162 6,902 8,538 10,527 8,848 3,797 4,092 4,018 2,744 2,649 13,895 15,812 14,603 10,913 12,614 28,426 31,634 32,021 24,753 21,539 15,201 12,150 15,847 14,071 13,945 156,769 167,673 164,866 146,110 136,967 237 231 277 275 207 2,109 1,776 1,799 1,569 1,092 1,108 916 884 820 805 3,570 2,943 2,227 1,969 2,340 676 559 451 474 434 7,095 3,874 3,559 2,876 3,056 - - - 4,067 3,919 2,585 2,329 2,180 2,991 2,589 2,384 18,024 18,142 17,471 15,639 16,368 3, , 37,990 990 39,081081 36,140 34,343 34,127 3,073 2,816 6,749 3,598 3,452 11,065 11,395 9,815 8,439 7,723 4,350 4,265 3,984 3,510 3,212 21,565 24,870 25,263 18,287 18,686 13,407 15,298 18,572 12,929 14,919 54,356 33,687 18,740 20,739 15,894 5,541 11,884 6,333 12,111 2,313 7,152 16,204 14,965 16,654 9,648 200,394 195,673 171,793 158,299 138,195 (43,625) (28,000) (6,927) (12,189) (1,228) 58,948 21,267 30,529 7,794 12,494 f 3,833 _ _ (52,673) - - (10,001) - 61,514 37,947 30,110 25,684 1,179 (59,818) (21,908) (32,958) (9,053) (12,852) 7,971 37,306 31,514 14,424 821 $ (35,654) $ 9,306 $ 24,587 $ 2,235 $ (407) 9.5% 21.0% 16.2% 26.4% 10.8% 112 CITY OF HUNTINGTON BEACH ASSESSED AND ACTUAL VALUATION OF ALL TAXABLE PROPERTY(EXCLUDING REDEVELOPMENT AGENCY) LAST TEN FISCAL YEARS (In Thousands) Common Total AssessedTotal irec ax Fiscal Year Property Public Utilities Total Secured Unsecured Valuation Rate 1997-1998 12,311,145 1,800 $ 12,312,945 546,050 $ 12,858,995 $ 1.05830 1998-1999 13,376,116 2,705 13,378,821 598,733 13,977,554 1.05840 1999-2000 13,386,740 1,670 13,388,410 581,160 13,969,570 1.05810 2000-2001 15,796,157 2,745 15,798,902 674,719 16,473,621 1.05810 2001-2002 16,081,760 2,449 16,084,209 699,307 16,783,516 1.00770 2002-2003 17,949,445 2,428 17,951,873 820,219 18,772,092 1.01902 2003-2004 17,987,861 2,876 17,990,737 911,027 18,901,764 1.02571 2004-2005 19,532,238 3,524 19,535,762 877,078 20,412,840 1.06575 2005-2006 20,925,190 1,522 20,926,712 790,513 21,717,225 1.06575 2006-2007 22,817,616 1,458 22,819,074 962,198 23,781,272 1.06487 Source:County of Orange Auditor Controller PROPERTY TAX RATES ALL DIRECT AND OVERLAPPING GOVERNMENTS TAX RATE 04-001 LARGEST AREA IN CITY LAST TEN FISCAL YEARS Metro Water Fiscal Year Basic Levy City Orange County School Districts District Others Total 1997-1998 $ 1.00000 $ 0.04930 $ 0.00010 $ $ 0.00890 $ $ 1.05830 1998-1999 1.00000 0.04930 0.00020 0.00890 1.05840 1999-2000 1.00000 0.04930 - 0.00880 1.05810 2000-2001 1.00000 0.04930 0.00880 1.05810 2001-2002 1.00000 - 0.00770 1.00770 2002-2003 1.00000 - 0.01232 0.00670 1.01902 2003-2004 1.00000 0.00696 0.01214 0.00610 0.00051 1.02571 2004-2005 1.00000 0.00696 0,02850 0.00520 0.02509 1.06575 2005-2006 1.00000 0.00696 0.03814 0.00520 0.01545 1.06575 2006-2007 1.00000 0.00700 0.03718 0.00470 0.01599 1.06487 Note: Rates are per$100 of assessed valuation 1 Source:County of Orange Auditor Controller 113 CITY OF HUNTINGTON BEACH PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (In Thousands) Secured Taxes Unsecured Taxes Total Delinquency Delinquency Total Delinquency Delinquency Fiscal Year Total Levy Collections Amount Percent Total Levy Collections Amount Percent 1997-1998 17,630 17,176 272 1.54% 1,247 1,077 40 3.21% 1998-1999 18,341 17,868 262 1.47% 1,243 1,146 35 3.05% 1999-2000 21,001 20,676 284 1.35% 1,321 1,231 29 2.20% 2000-2001 22,724 22,035 629 2.77% 1,348 1,267 33 2.45% 2001-2002 24,581 24,238 343 1.40% 1,419 1,366 53 3.74% 2002-2003 27,634 26,765 507 1.83% 1,467 1,343 42 2.86% 2003-2004 31,024 30,033 441 1.42% 1,507 1,382 34 2.26% 2004-2005 34,403 33,423 570 1.66% 1,606 1,474 40 2.49% 2005-2006 36,556 35,318 795 2.17% 1,590 1,434 42 2.64% 2006-2007 1 39,174 37,194 1,278 3.26% 1 1,842 1,600 150 8.14% Reservoir Hill Community Facilities Districts Total Delinquency Delinquency Total Delinquency Delinquency Fiscal Year Total Levy Collections Amount Percent Total Levy Collections Amount Percent 1997-1998 $ 173 $ 184 $ 9 4.89% $ 264 $ 255 $ 9 3.53% 1998-1999 194 184 9 4.89% 264 255 8 3.14% 1 1999-2000 184 181 3 1.63% 264 259 5 1.89% 2000-2001 184 180 4 2.17% 264 258 5 1.89% 2001-2002 188 184 4 2.13% 264 258 6 2.27% 2002-2003 192 189 3 1.56% 538 534 1 0.19% 2003-2004 191 190 1 0.52% 1,797 1,789 2 0.11% 2004-2005 0.00% 1,731 1,719 7 0.41% 2005-2006 - - - 0.00% 4,085 4,069 11 0.27% 2006-2007 - - - 0.00% 1 4,061 4,041 7 0.17% Source: County of Orange Auditor Controller's Office Note-Delinquency amount does not always equal levy amount minus collections amount since there are always amounts collected from prior years t 1 114 CITY OF HUNTINGTON BEACH 1 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (In Thousands) Fiscal Year Ending September 30, Long-Tenn Indebtedness 1 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 Governmental Activities: Judgement Obligation Bonds $ 10,795 $ 11,525 $ 12,500 $ 12,500 $ S $ $ $ $ Public Financing Authority: - - - - - - 20,460 20,885 21,275 30,860 Revenue and Lease Revenue Bonds 52,115 55,120 58,030 60,840 63,535 66,125 37,940 7,020 7,440 7,840 Certificates of Participation 14,215 14,885 15,525 16,140 16,730 17,295 17,840 18,310 - - Civic Improvement Corporation: Refunding Certificates of Participation - - - - - - 29,750 30,880 31,955 32,980 Assessment Bonds - - - - 360 415 605 815 1,030 1,090 Redevelopment Agency: Tax Allocation Bonds 24,885 26,065 27,205 28,305 29,375 30,370 9,770 10,060 10,340 - DispositionandDevelopmentAgreement 7,101 8,197 10,083 10,730 10,549 11,280 4,756 9,770 10,142 Bella Terra OPA(Parking) 14,855 15,000 - - - - - - Notes Payable - - 116 337 545 1,035 1,272 1,566 759 810 Section 108 Loan 6,895 7,235 7,235 7,850 7,630 7,890 8,130 8,355 - Capital Leases Payable 2,281 2,975 3,461 4,885 6,420 4,107 2,007 155 - - Business Activities: Emerald Cove Certificates of Participation - - - - - - - - 5,105 5,205 Capital Leases 12 40 112 183 250 595 432 1,550 1,633 2,215 $ 133,154 $ 141,042 $ 134,267 $ 141,770 $ 135,394 $139,112 $132,962 $109,366 $ 89,679 $ 81,000 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 Population* 202,250 201,000 200,023 198,996 197,263 194,889 192,446 188,706 187,061 184,044 Debt Per-Capita $ 658 S 702 $ 671 S 712 S 686 $ 714 S 691 S 580 $ 479 S 440 Total Personal Income(In Thousands)** $7,626,443 $7,436,799 S 7,284,238 S 7,246,837 S 7,456,541 Per-Capita Personal Income** $ 37,708 $ 36,999 $ 36,417 $ 36,417 $ 37,800 Unemployment Rate*** 3.40% 2.70% 3.00% 3.20% 3.80% 4.00% 3.40% 2.80% 3.60% Total Employment*** 121,100 121,400 119,600 117,200 114,400 112,600 111,800 110,200 Source: *State of California Department of Finance **Claritas,Inc. ***State of California Employee Development Department NOTE: Information on personal income is not readily avialable for year 2002 and earlier. Until Data is readily available,only available years will be presented. 115 CITY OF HUNTINGTON BEACH TOP TEN PROPERTY TAXPAYERS CURRENT YEAR AND SIX YEARS AGO 2006-2007 Revenue Percent In Thousands of Total Mayer Financial Limited Partnership $ 1,847 3.59% Bella Terra Associates LLC 1,221 2.37% Mc Donnel Douglas Corp/Boeing Corp 408 0.79% Waterfront Construction 1 California LP 387 0.75% Mullrock 1 Beach Pointe LLC 378 0.73% First Huntington Capital Limited Partnership 326 0.63% Essex Huntington Breakers 304 0.59% Pierside Pavillion LLC 277 0.54% Atlanta Huntington Beach LLC 247 0.48% ' CIM Huntington LLC 196 0.38% Total Top Ten 5,591 10.85% All Other Properties 45,919 89.15% City Total $ 51,510 100.00% 2000-2001 Revenue Percent In Thousands of Total Mc Donnel Douglas Corp/Boeing Corp $ 764 2.10% Huntington Center 357 0.98% Waterfront Construction 1 A California 335 0.92% Essex Huntington Breakers 259 0.71% Kyray LLC 214 0.59% Atlanta Huntington Beach LLC 211 0.58% AES Huntington Beach LLC 205 0.56% Liu Corporation 172 0.47% Bentall US Partners 158 0.43% JT Development Company 112 0.31% Total Top Ten 2,787 7.66% All Other Properties 33,609 92.34% City Total $ 36,396 100.00% Source: HdL Coren 8,Cone Note: Information on the top ten property taxpayers is not readily available for fiscal year ending September 2000 and earlier. 116 CITY OF HUNTINGTON BEACH LEGAL DEBT MARGIN LAST TEN FISCAL YEARS (In Thousands) Debt Limit-12% Assessed of Assessed Debt Applicable Legal Debt Valuation Valuation to Limit Margin 1997-1998 $ 12,858,995 $ 1,543,079 $ $ 1,543,079 1998-1999 13,977,554 1,677,306 - 1,677,306 1999-2000 13,969,570 1,676,348 - 1,676,348 2000-2001 16,473,621 1,976,835 - 1,976,835 2001-2002 16,783,516 2,014,022 - 2,014,022 2002-2003 18,772,092 2,252,651 - 2,252,651 2003-2004 18,901,764 2,268,212 - 2,268,212 2004-2005 20,412,840 2,449,541 - 2,449,541 2005-2006 21,717,225 2,606,067 - 2,606,067 2006-2007 23,781,272 2,853,753 - 2,853,753 PRINCIPAL PRIVATE EMPLOYERS CURRENT YEAR AND TWO YEARS AGO 2007 %of total Boeing 7,000 5.783/6 Quiksilver 1,800 1.49% Cambo Manufacturing 750 0.62% Verizon 736 0.61% Hyatt Regency Huntington Beach 670 0.55% Fisher& Paykel 654 0.54% Huntington Beach Hospital 602 0.50% C&D Aerospace 600 0.50% Rainbow Disposal 408 0.34% Home Depot(inicuding Expo) 383 0.32% Total of top 10 13,603 11.23% all others 107,497 88.77% Total employment(public and private) 121,100 100.00% 2005 %of total Boeing 4,282 3.587/6 Quiksilver 1,550 1.30% Cambo Manufacturing 886 0.74% Dynamic Cooking Systems 706 0.59% Triad Financial 637 0.53% Verizon 556 0.46% E-Trade Mortgage 554 0.46% C&D Aerospace 554 0.46% Huntington Beach Hospital 513 0.43% Rainbow Disposal 408 0.34% Total of top 10 10,646 8.90% all others 108,954 91.10% Total employment(public and private) 119,600 100.00% Source-Economic Development Department, City of Huntington Beach Note: Information on the principal private employers in not readily available for fiscal year ending September 2004 and earlier. Until data is readily available,only the available years will be presented. 117 CITY OF HUNTINGTON BEACH FULL-TIME BUDGETED CITY EMPLOYEES BY FUNCTION/PROGRAM LAST SIX FISCAL YEARS General Government: 2007 2006 2005 2004 2003 2002 City Council 1.00 1.00 1.00 1.00 1.00 1.00 City Administrator 8.00 29.00 29.00 7.00 13.00 17.00 City Treasurer 10.00 10.00 16.00 16.00 16.00 16.00 City Attorney 18.00 18.00 17.00 15.00 14.00 16.00 City Clerk 8.00 8.00 7.50 7.50 8.00 8.00 Finance 33.00 31.00 23.00 - - - Human Resources 20.00 - - _ _ _ Administrative Services 47.00 49.00 53.50 Planning 28.00 28.00 27.50 25.00 26.00 28.00 Building 31.50 31.50 30.50 27.50 27.50 27.50 Information Systems 38.00 38.00 36.00 37.00 18.50 18.25 Economic Development 14.00 13.00 14.00 11.00 12.00 15.00 ' Library Services 37.25 37.25 37.25 38.25 40.25 45.75 Fire 184.00 160.00 157.00 156.50 162.00 166.00 Police 376.00 374.00 371.50 366.00 379.00 388.00 Community Services 69.75 69.75 64.50 62.25 67.50 71.50 Public Works 257.00 255.30 240.00 231.00 264.00 270.00 1,133.50 1,103.80 1,071.75 1,048.00 1,097.75 1,141.50 Source: Finance Department, City of Huntington Beach 118 CITY OF HUNTING TON T N BEACH OPERATING INDICATORS BY FUNCTION/ACTIVITY LAST THREE FISCAL YEARS Function/Program 2007 2006 2005 Finance: Water Bills Processed 630,228 626,903 586,000 Business Licenses Issued 20,670 19,746 20,184 Accounts Receivable Billings Processed 21,352 22,453 22,768 City Clerk: Passports Issued 5,755 3,069 3,676 Planning: Entitlements Processed 504 566 523 Plan Reviews 1,456 2,105 2,296 Field Inspection Complaints 5,273 5,926 5,550 Code Violation Cases 2,231 3,580 3,906 Building: #of Permits Issued 4,355 11,210 12,082 #of Inspections Completed 42,181 43,905 49,737 Value of Construction Permits(Thousands of Dollars) 141,277 196,453 169,570 Processed#of Certificate of Occupancies 590 307 683 Automated Information Requests 78,243 77,006 78,868 Fire: Inspections 4,900 4,300 4,100 Responses 12,400 12,100 12,100 Police: Physical Arrests 5,576 6,368 5,282 Parking Violations 123,096 68,712 112,698 Traffic Violations 19,859 22,755 25,902 Community Services: Acreage of Parks 999 999 998 Estimated Beach Visitors 10,363,719 10,085,358 8,727,369 Enrollment in Recreation Classes 34,932 25,447 22,346 Public Works: Water Sold(Acre Feet) 31,128 29,246 29,730 Gallons of Sewage Pumped Per Day 23 million 23 million 23 million Library: Volumes in Collection 431,304 437,472 441,523 Volumes Borrowed 826,921 823,116 931,347 Source:Various departments of the City of Huntington Beach CAPITAL ASSET STATISTICS BY FUNCTION/ACTIVITY SEPTEMBER 30, 2007 Library Services One Main Library and Four Branches Fire: Fire Stations 8 Police: Stations One Main Station and Three Substations Community Services: Acreage of Parks 999 Community Centers 4 Miles of Beach Maintained 3.5 Public Works: Centerline Square Miles of Streets Maintained 523 Miles of Storm Drains Maintained 127 Miles of Sewer Maintained 355 Source:Various departments of the City of Huntington Beach 119 CITY OF HUNTINGTON BEACH STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT SEPTEMBER 30, 2007 2006-07 Assessed Valuation$24,044,875,126(after deducting$1,432,116,928)of incremental redevelopment valuation) Debt Repaid with Property Taxes(Tax and Assessment Debt): Percent Debt Applicable Tax Debt: Applicable to City Orange County Teeter Plan Obligations 7.0590% $ 8,733,748 Metropolitan Water District 1.4770% 5,304,129 Coast Community College District 30.6610% 106,626,346 Huntington Beach Union High School District 77.3890% 180,022,290 Huntington Beach City School District 97.5390% 28,636,438 Los Alamitos Unified School District Comm Facilities Dist. 1990-1 1.2530% 115,527 City of Huntington Beach Community Facilities Districts 100.0000% 45,680,000 Tax and Assessment Debt 375,118,478 Other Debt Other Entities: Orange County General Fund Obligations 38,926,503 Orange County Pension Obligations 5,134,001 Orange County Board of Education Certifictes of Participation 1,392,035 MWDOC Facilities Corporation 1,624,446 Orange County Sanitation District Certificates of Participation 10,211,350 North Orange County Regional Occupation Program Certificates of Participation 12,755 Huntington Beach Union High School District Certificates of Participation 13,140,652 Los Alamitos Unified School District Certificates of Participation 255,267 Fountain Valley School Districts Certificates of Participation 4,352,589 Huntington Beach City School District Certificates of Participation 10,295,241 Ocean View School District Certificates of Participation 8,223,755 Westminster School District Certificates of Participation 6,754,329 City of Huntington Judgement Obligation Bonds 10,795,000 City of Huntington Reporting Entity Beach General Fund Obligations: 66,864,678 Total Gross and Overlapping Bonded Debt Not Repaid by Property Taxes 177,982,601 Less Self Supporting Debt of MWDOC Water Facilities Corporation (1,624,446) Total Net Direct and Overlapping General Fund Obligation Debt 176,358,155 Gross Combined Total Debt $ 551,476,633 Ratios to 2006-2007 Assessed Valuation Total Overlapping Debt and Assessment Debt 1.47% Ratios to Adjusted Assessed Valuations Combined Direct Debt($77,659,678) 0.32% Gross Combined Total Debt 2.30% Net Combined Total Debt 2.29% State School Building Aide Repayable $ - Source: California Municipal Statistics and City of Huntington Beach Finance Department 120