HomeMy WebLinkAboutSINGLE AUDITS OF FEDERAL GRANTS 6/30/89 - 6/30/91 • r
V
PUBLIC NOTICE G) 0
The City of Huntington Beach has completed its Single Audit
Report for the fiscal year ending June 30 , 19p' The Single
Audit Report is a special report required by the Single Audit Act
of 1984 , All. proar. ams , revenues and expenditures from federal
funds received directly or passed through other agencies are
subjected to special audit procedures . The report ishvailabl.e
for public inspection between the hours of Bam and 5pm at the
City Clerk ' s office at 2000 Main St . Huntington Beach , CA 92648 .
I Dated: ,
CONNIE BROCKWAY
CITY CLERK
CITY OF HUNTINGTON BEACH
CITY OF HUNTINGTON BEACH •
COMBINED STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES
For the year ended June 30, 1990
(expressed in thousands)
General •
REVENUES:
Property Taxes (Note 1) $26,061
Other Taxes 32,378
Licenses and Permits 2,962
Fines, Forfeitures and Penalties 2,256
From Use of Money and Property 4,032 •
From Other Agencies 8,979
Charges for Current Services 7,028
Other 351
Contributions from Property Owners -
TOTAL REVENUES 84,047
EXPENDITURES:
Current:
City Council 78
City Administrator 491
City Treasurer 414
City Attorney 744
City Clerk 275
Administrative Services 3,375
Community Development 2,515
Fire 14, 148
Police 26,346
Economic Development 607
Community Services 8,168
Public Works 18, 102
Non-Departmental 7,491
Capital Outlay 750
Debt Service:
Principal -
Interest 112 •
TOTAL EXPENDITURES 83,616
EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 431
OTHER FINANCING SOURCES (USES) :
Operating Transfers In (Note 10b) 1,525
Advances from Other Funds (Note 12g) -
Proceeds of Long-Term Debt - •
Operating Transfers Out (Note 10b) (2,602)
Inventory Increase 21
TOTAL OTHER FINANCING SOURCES (USES) (1 ,056)
EXCESS OF REVENUES AND OTHER SOURCES OVER
EXPENDITURES AND OTHER USES (625)
•
FUND BALANCE - BEGINNING OF YEAR 29,543
Prior Period Adjustment (Note 20) 1 ,377
FUND BALANCE AS RESTATED - BEGINNING OF YEAR (Note 20) 30,920
Residual Equity Transfers In (Note 10c) 425
Residual Equity Transfers Out (Note 10c) (6,573)
•
FUND BALANCE - END OF YEAR lZi.J47
See independent auditors' report and notes to financial statements.
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•
• SCHEDULE A-2
Totals
Special Debt Capital (Memorandum Only)
• Revenue Service Projects 1990 1989
$ - $ 3,625 $ 774 $ 30,460 S 26,970
301 - - 32,679 32, 113
982 - - 3,944 5,773
- - - 2,256 2,458
2,198 3,269 4,641 14, 140 13,884
6,232 - - 15,211 21,721
239 - - 7,267 5,886
28 - 640 1,019 1 ,077
- - 1,654
9,980 6,894 6,055 106,976 111,536
•
- - 137 215 156
- - 362 853 1,304
- - 24 438 322
- - 564 1,308 1 ,042
• - - 55 330 293
- - 460 3,835 3,409
- - 118 2,633 3,645
- - - 14, 148 12,722
23 - - 26,369 23,565
1,390 - 774 2,771 748
139 - - 8,307 7,595
- - 326 18,428 16,893
- 94 370 7,955 7,088
8,230 - 11,642 20,622 42,462
- 2,942 54 2,996 6,399
- 7,085 433 7,630 8,778
9,782 10, 121 15,319 118,838 136,421
198 (3,227) (9,264) (11 ,862) (24,885)
10 2,593 113 4,241 3,464
- - 15,848 15,848 46,033
- - 16,226 16,226 4, 194
(1,526) - (466) (4,594) (3,464)
- - - 21 7,441
(1,516) 2,593 31,721 31,742 57,668
(1,318) (634) 22,457 19,880 32,783
• 19,621 34,146 53,736 137,046 105, 171
- - (1,442) 65) -
19,621 34, 146 52,294 136,981 105, 171
1,848 1,414 7, 142 10,829 4,992
1 013) - (3,768) (11 ,354) (5,965)
19 138 JIL926 UR,125 ILa,336 136 981
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•
CITY OF HUNTINGTON BEACH •
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUND TYPES
For the year ended June 30, 1990
(expressed in thousands)
General Fund •
Variance -
Favorable
Budget Actual (Unfavorable)
REVENUES:
Property Taxes $23,595 $26,061 $2,466
Other Taxes 32,066 32,378 312 •
Licenses and Permits 3,402 2,962 (440)
Fines, Forfeitures and Penalties 2,342 2,256 (86)
From Use of Money and Property 5,358 4,032 (1,326)
From Other Agencies 9,177 8,979 (198)
Charges for Current Services 8,279 7,028 (1,251)
Other 441 351 (90) •
TOTAL REVENUES 84,660 84,047 613)
EXPENDITURES:
Current:
City Council 86 78 8
City Administrator 420 491 (71)
City Treasurer 387 414 (27) •
City Attorney 742 744 (2)
City Clerk 295 275 20
Administrative Services 3,391 3,375 16
Community Development 2,788 2,515 273
Fire 13,053 14, 148 (1,095) .
Police 25,523 26,346 (823) •
Economic Development 676 607 69
Community Services 8, 159 8, 168 (9)
Public Works 20,289 18, 102 2, 187
Non-Departmental 9,973 7,491 2,482
Capital Outlay 1,046 750 296
Debt Service: •
Principal - - -
Interest 112 112 -
TOTAL EXPENDITURES 86,940 83,616 3,324
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 2 280) 431 2,711 •
OTHER FINANCING SOURCES (USES) :
Operating Transfers In 1,706 1,525 (181)
Operating Transfers Out (2,602) (2,602) -
Inventory Increase - 21 21
TOTAL OTHER FINANCING
SOURCES (USES) 896) (1,056) 160)
EXCESS OF REVENUES AND OTHER SOURCES OVER •
(UNDER) EXPENDITURES AND OTHER USES (3, 176) (625) 2,551
FUND BALANCE - BEGINNING OF YEAR 29,543 29,543 -
Prior Period Adjustment 1,377 1,377 -
FUND BALANCE AS RESTATED - BEGINNING OF YEAR 30,920 30,920 -
Residual Equity Transfers In 425 425 - •
Residual Equity Transfers Out (6,573) (6,573) -
FUND BALANCE - END OF YEAR 21 596 2$ 4, 147 $2,551
See independent auditors' report and notes to financial statements.
•
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• SCHEDULE A-3
• Special Revenue Funds Debt Service Funds
Variance - Variance -
Favorable Favorable
Budget Actual (Unfavorable) Budget Actual (Unfavorable)
$ - $ - $ - $ 3,184 $ 3,625 $ 441
• 200 301 101 - - -
2,910 982 (1,928) - -
1,720 2,198 478 2,878 3,269 391
8,724 6,232 (2,492) - - -
1,531 239 (1,292) - - -
• 12 28 16 - - -
15,097 9,980 (5,117) 6,062 6,899 832
• 24 23 1 - - -
3,453 1,390 2,063 - - -
149 139 10 - - -
- - - - 94 (94)
20,461 8,230 12,231 - - -
•
- - - 3,632 2,942 690
- - 4,820 7,085 (2,263)
24,087 9,782 14,305 8,452 10,121 (1,669)
(8,990) 198 9, 188 (2,390) (3,227) (8837)
•
10 10 - 2,593 2,593 -
(1,586) (1,526) 60 - - -
(1,576) (1,516) 60 2,593 2,593 -
•
(10,566) (1,318) 9,248 203 634) 837)
19,621 19,621 - 34, 146 34, 146 -
19,621 19,621 - 34,146 34, 146 -
• 1,848 1,848 - 1,414 1,414(1,013) (1,013) - - -L3,890 19 138 9 248 35 763 3$ 4,926 )
• -7-
CITY OF HUNTINGTON BEACH Schedule A-3 •
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (CONTINUED)
TOTAL GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUND TYPES
For the year ended June 30, 1990
(expressed in thousands)
Totals (Memorandum Only) •
Variance -
Favorable
Budget Actual (Unfavorable)
REVENUES:
Property Taxes $26,779 $29,686 $2,907
Other Taxes 32,266 32,679 413 •
Licenses and Permits 6,312 3,944 (2,368)
Fines, Forfeitures and Penalties 2,342 2,256 (86)
From Use of Money and Property 9,956 9,499 (457)
From Other Agencies 17,901 15,211 (2,690)
Charges for Current Services 9,810 7,267 (2,543)
Other 453 379 74) •
TOTAL REVENUES 105,819 100,921 (4,898)
EXPENDITURES: -
Current:
City Council 86 78 8
City Administrator 420 491 (71)
City Treasurer 387 414 (27) •
City Attorney 742 744 (2)
City Clerk 295 275 20
Administrative Services 3,391 3,375 16
Community Development 2,788 2,515 273
Fire 13,053 14,148 (1,095)
Police 25,547 26,369 (822) •
Economic Development - 4,129 1,997 2,132
Community Services 8,308 8,307 1
Public Works 20,289 18, 102 2, 187
Non-Departmental 9,973 7,585 2,388
Capital Outlay 21,507 8,980 12,527
Debt Service: •
Principal 3,632 2,942 690
Interest 4,932 7, 197 (2,265)
TOTAL EXPENDITURES 119,479 103,519 15,960
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (13,660) (2,598) 11 ,062
OTHER FINANCING SOURCES (USES) : •
Operating Transfers In 4,309 4, 128 (181)
Operating Transfers Out (4, 188) (4, 128) 60
Inventory Increase - 21 21
TOTAL OTHER FINANCING
SOURCES (USES) 121 21 100)
EXCESS OF REVENUES AND OTHER SOURCES OVER •
(UNDER) EXPENDITURES AND OTHER USES (13,539) (2,577) 10,962
FUND BALANCES - BEGINNING OF YEAR 83,310 83,310 -
Prior Period Adjustment 1,377 1 ,377 -
FUND BALANCES AS RESTATED - BEGINNING OF YEAR 84,687 84,687 -
Residual Equity Transfers In 3,687 3,687 - •
Residual Equity Transfers Out 7 586) (7,586) -
FUND BALANCE - END OF YEAR LIB,211 $10,962
See independent auditors' report and notes to financial statements.
•
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� CITY OF HUNTINGTON BEACH SCHEDULE A-4
COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES
AND SIMILAR TRUST FUNDS
For the year ended June 30, 1990
(expressed in thousands)
Proprietary Fund Types Fiduciary Fund Totals
Internal Types-Pension (Memorandum Only)
Enterprise Service Trust 1990 1989
OPERATING REVENUES:
Sales $13,379 $9,696 $ - $23,075 $21,303
Rentals 899 - - 899 887
Membership Fees 148 - - 148 -
Other 459 - 185 644 1,019
TOTAL OPERATING
REVENUES 14,885 9,696 185 24,766 23,209
OPERATING EXPENSES
Water Purchases 4,185 - - 4,185 2,807
Administration 1,091 2,754 - 3,845 4,381
Engineering 1,239 - - 1,239 1,282
Production 2,221 - - 2,221 2,490
Maintenance 1,082 - - 1,082 1 ,003
Water Meters 895 - - 895 520
Water Quality 197 - - . 197
Contribution to General
Fund in Lieu of taxes 1,899 - - 1,899 1,829
Employee Medical Claims - 2,602 - 2,602 2,095
Liability Claims - 870 - 870 1 , 127
Workers Compensation Claims - 1,018 - 1 ,018 1,491
Pension Payments - - 167 167 -
Depreciation (Note If) 1,362 2,638 - 4,000 3, 133
TOTAL OPERATING EXPENSES 14,171 9,882 167 24,220 22, 158
OPERATING INCOME (LOSS) 714 (186) 18 546 1,051
NON-OPERATING REVENUES
(EXPENSES) :
Interest Income 1 ,266 1,516 - 2,782 2,312
Interest Expense (595) (404) - (999) (601)
Joint Venture - 90 - 90 184
TOTAL NON-OPERATING
REVENUES (EXPENSES) 671 1,202 - 1 ,873 1,895
INCOME BEFORE
OPERATING TRANSFERS 1 ,385 1 ,016 - 2,419 2,946
OPERATING TRANSFERS IN 45 421 - 466 147
OPERATING TRANSFERS OUT 113 - - 113) -
NET OPERATING TRANSFERS
IN (OUT) 68) 421 - 353 147
NET INCOME 1,317 1,437 18 2,772 3,093
RETAINED EARNINGS -
BEGINNING OF YEAR 3,054 1,408 - 4,462 1,516
Prior Period Adjustment (Note 20) 147 - - 147 -
RETAINED EARNINGS AS RESTATED -
BEGINNING OF YEAR 3,201 1,408 - 4,609 1,516
RETAINED EARNINGS - END OF YEAR 4,518 IL845 18 $ 7,381 $ 4,609
See independent auditors' report and notes to financial statements.
-9-
Peat Marwick
Certified Public Accountants
CITY OF HUNTINGTON BEACH, CALIFORNIA
Single Audit Reports
Year ended June 30, 1991
CITY OF HUNTINGTON BEACH, CALIFORNIA
Single Audit Reports
June 30, 1991
Table of Contents
410
Page
Independent Auditors' Report on Schedule of
Federal Financial Assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Schedule of Federal Financial Assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Notes to Schedule of Federal Financial Assistance. . . . . . . . . . . . . . . . . . 3
Independent Auditors' Report on:
• Compliance with General Requirements . . . . . . . . . . . . . . . . . . . . . . 4
• Compliance at the General Purpose Financial
Statement Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
• Compliance with Specific Major Program Requirements . . . . . . . 6
• Internal Controls at the General Purpose
Financial Statement Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
• Internal Control Structure Used in Administering
Federal Financial Assistance Programs . . . . . . . . . . . . . . . . . . . 10
Schedule of Findings and Questioned Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 13
i'
Q
Peat Marwick
Certified Public Accountants
Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
INDEPENDENT AUDITORS' REPORT ON SCHEDULE OF
FEDERAL FINANCIAL ASSISTANCE
The Honorable Members of City Council
City of Huntington Beach, California:
We have audited the general purpose financial statements of the City of
Huntington Beach, California (the "City") , as of and for the year ended June
30, 1991, and have issued our report thereon dated October 18, 1991. These
• general purpose financial statements are the responsibility of the management
of the City. Our responsibility is to express an opinion on these general
purpose financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards and 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 general purpose
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 opinion.
Our audit was made for the purpose of forming an opinion on the general
purpose financial statements of the City taken as a whole. The accompanying
schedule of federal financial assistance is presented for purposes of
additional analysis and is not a required part of the general purpose
financial statements. The information in that schedule has been subjected to
• the auditing procedures applied in the audit of the general purpose financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the general purpose financial statements taken as a whole.
October 18, 1991
- 1 -
logo Member Firm of
Klynveld Pear Marwick Goerdeler
CITY OF HUNTINGTON BEACH, CALIFORNIA
Schedule of Federal Financial Assistance
Year ended June 30, 1991
Program
Federal or Award
Program Ti le CFDA Number Grant Number Amount Revenues Expenditures
Department of Housing and Urban Development:
Community Development Block Grant 14.218* B-90-MC-06-0506 $ 1,257,000 1,324,242 1,126,282
Department of Transportation:
Federal Aid Urban 20.205* HES-OOOS(257) 189,000 189,000 149,260
Federal Aid Urban 20.205* HES-OOOS(302) 36,000 36,000 45,675
Federal Aid Urban 20.205* HES-MO19(006) 796,112 - 12,884
Federal Aid Urban 20.205* HES-MO19(009) 1,087,070 440,771 832,255
Federal Aid Urban 20.205* HES-M032(005) 85,500 85,000 8,384
Federal Aid Urban 20.205* HES-MO19(8) 364,890 39,779 24.773
Total Department of Transportation 1,471,302 790.550 1,073,231
Department of Education R167A90110 18,684 4,305 3,468
Department of Education R167A90110 25,000 16,033 16,082
Department of Education R167A90110 15,617 15,617 15,614
Total Department of Education 59,301 35,955 35,164
Federal Emergency Management Agency 24,253 24.253 93.422
Total $ 2,811,856 2,175,000 2,328,099
* Major program
See accompanying independent auditors' report on Schedule of Federal Financial Assistance and Notes to Schedule of Federal Financial Assistance.
- 2 -
CITY OF HUNTINGTON BEACH, CALIFORNIA
Notes to Schedule of Federal Financial Assistance
Year ended June 30, 1991
. (1) General
The accompanying Schedule of Federal Financial Assistance presents the
activity of all federal financial assistance programs of the City of
Huntington Beach, California (the "City") . Federal financial assistance
received directly from Federal agencies as well as Federal financial
assistance passed through the State of California are included in the
schedule. The City's reporting entity is defined in note 1 to the City's
general purpose financial statements.
(2) Basis of Accounting
The accompanying Schedule of Federal Financial Assistance is presented
using the modified accrual basis of accounting which is described in the
footnotes to the City's general purpose financial statements.
(3) Relationship to General Purpose Financial Statements and Federal
Financial Reports
Information reported in the accompanying Schedule of Federal Financial
Assistance agrees with the information reported in the related Federal
financial reports for all major Federal programs. Revenues from Federal
financial assistance programs are reported as intergovernmental revenues
in the general purpose financial statements.
3 -
Peat Marwick
Certified Public Accountants
i Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
INDEPENDENT AUDITORS' REPORT
ON COMPLIANCE WITH GENERAL REQUIREMENTS
The Honorable Members of City Council
City of Huntington Beach, California:
We have audited the general purpose financial statements of the City of
Huntington Beach, California (the "City") as of and for the year ended June
30, 1991 and have issued our report thereon dated October 18, 1991.
We have also applied procedures to test the City's compliance with the
following requirements applicable to each of its major federal financial
' assistance programs, which are identified in the schedule of federal financial
assistance for the year ended June 30, 1991:
• Political activity
• Davis-Bacon Act
• Civil rights
• Cash management
• Relocation assistance and real property acquisition
• Federal financial reports
• Allowable costs/cost principles
• Drug-free Workplace Act
• Administrative requirements
Our procedures were limited to the applicable procedures described in the
Office of Management and Budget's Compliance Supplement for Single Audits of
State and Local Governments. Our procedures were substantially less in scope
than an audit, the objective of which is the expression of an opinion on the
City's compliance with the requirements listed in the preceding paragraph.
Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no
material instances of noncompliance with the requirements listed in the second
paragraph of this report. With respect to items not tested, nothing came to
our attention that caused us to believe that the City had not complied, in all
material respects, with those requirements. However, the results of our
procedures disclosed immaterial instances of noncompliance with those
requirements which are described in the accompanying Schedule of Findings and
Questioned Costs.
This report is intended for the information of the City's management, the
State Controller's Office and other federal agencies. This restriction is not
intended to limit the distribution of this report which, upon acceptance by
the City, is a matter of public record.
October 18, 1991
- 4 -
• loss
Member Firm of
Klynveld Peat Marwick Goerdeler
Peat Marwick
Certified Public Accountants
. Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
AT THE GENERAL PURPOSE FINANCIAL STATEMENT LEVEL
The Honorable Members of City Council
City of Huntington Beach, California:
We have audited the general purpose financial statements of the City of
Huntington Beach, California (the "City") , as of and for the year ended June
30, 1991, and have issued our report thereon dated October 18, 1991.
We conducted our audit in accordance with generally accepted auditing
standards and 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 general purpose
financial statements are free of material misstatement.
A Compliance with laws, regulations, contracts and grants applicable to the City
is the responsibility of the City's management. As part of obtaining
reasonable assurance about whether the general purpose financial statements
are free of material misstatement, we performed tests of the City's compliance
with certain provisions of laws, regulations, contracts and grants. However,
our objective was not to provide an opinion on overall compliance with such
• provisions. Accordingly, we do not express such an opinion.
The results of our tests indicate that, with respect to the items tested, the
City complied, in all material respects, with the provisions referred to in
the preceding paragraph. With respect to items not tested, nothing came to
our attention that caused us to believe that the City had not complied, in all
material respects, with those provisions.
This report is intended for the information of the City's management, the
State Controller's Office and other federal agencies. This restriction is not
intended to limit the distribution of this report which, upon acceptance by
the City, is a matter of public record.
October 18, 1991 '
K,v rr1,d
5 -
• loss Member Firm of
Klynveld Peat Marwick Goerdeier
Peat Marwick
Certified Public Accountants
Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
a
INDEPENDENT AUDITORS' REPORT
. ON COMPLIANCE WITH SPECIFIC
MAJOR PRO RAM REQUIREMENTS
The Honorable Members of City Council
City of Huntington Beach, California:
We have audited the general purpose financial statements of the City of
Huntington Beach, California (the "City") , as of and for the year ended June
30, 1991 and have issued our report thereon dated October 18, 1991.
We have also audited the City's compliance with the requirements governing
types of services allowed or unallowed; matching, level of effort or
earmarking; reporting; environmental reviews; monitoring subrecipients; and
claims for advances and reimbursements that are applicable to each of its
major federal financial assistance programs, which are identified in the
accompanying schedule of federal financial assistance, for the year ended June
30, 1991. The management of the City is responsible for the City's compliance
with those requirements. Our responsibility is to express an opinion on
compliance with those requirements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General of
the United States, and OMB Circular A-128, Audits of State and Local
Governments. Those standards and OMB Circular A-128 require that we plan and
perform the audit to obtain reasonable assurance about whether material
noncompliance with the requirements referred to above occurred. An audit
includes examining, on a test basis, evidence about the City's compliance with
those requirements. We believe that our audit provides a reasonable basis for
our opinion.
The results of our audit procedures disclosed immaterial instances of
• noncompliance with the requirements referred to above, which are described in
the accompanying schedule of findings and questioned costs. We considered
these instances of noncompliance in forming our opinion on compliance, which
is expressed in the following paragraph.
6 -
• Member Firm of
_�.. Klynveld Peat Marwick Goerdeler
The Honorable Members of City Council
City of Huntington Beach, California
Page 2
In our opinion, the City complied, in all material respects, with the
requirements governing types of services allowed or unallowed; matching, level
. of effort or earmarking; reporting; environmental reviews; monitoring
subrecipients; and claims for advances and reimbursements; and reporting that
are applicable to each of its major federal financial assistance programs for
the year ended June 30, 1991.
This report is intended for the information of the City's management, the
State Controller's Office and other federal agencies. This restriction is not
intended to limit the distribution of this report which, upon acceptance by
the City, is a matter of public record.
k �W/g
• Orange County, California
October 18, 1991
7 -
Peat Marwick
Certified Public Accountants
Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLS
AT THE GENERAL PURPOSE FINANCIAL STATEMENT LEVEL
The Honorable Members of City Council
City of Huntington Beach, California:
We have audited the general purpose financial statements of the City of
Huntington Beach, California (the "City") , as of and for the year ended June
• 30, 1991 and have issued our report thereon dated October 18, 1991.
We conducted our audit in accordance with generally accepted auditing
standards and 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 general purpose
financial statements are free of material misstatement.
In planning and performing our audit of the general purpose financial
statements of the City for the year ended June 30, 1991, we considered its
internal control structure in order to determine our auditing procedures for
the purpose of expressing our opinion on the general purpose financial
statements and not to provide assurance on the internal control structure.
The management of the City is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. The
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition, and that transactions are executed
in accordance with management's authorization and recorded properly to permit
the preparation of general purpose financial statements in accordance with
generally accepted accounting principles. Because of inherent limitations in
any internal control structure, errors or irregularities may nevertheless
occur and not be detected. Also, projection of any evaluation of the
structure to future periods is subject to the risk that procedures may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation of policies and procedures may deteriorate.
- 8 -
Ross
Member Firm of
Klynveld Peat Marwick Goerdeier
The Honorable Members of City Council
City of Huntington Beach, California
Page 2
For the purpose of this report, we have classified the significant internal
control structure policies and procedures in the following categories:
Accounting Controls
• Revenue/receipts
• Purchases/disbursements
• Payroll
• Administration of Federal programs
For all of the internal control structure categories listed above, we obtained
an understanding of the design of relevant policies and procedures and whether
they have been placed in operation, and we assessed control risk.
Our consideration of the internal control structure would not necessarily
• disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of one or more of the specific internal control structure elements
does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the general
purpose financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their
assigned functions. We noted no matters involving the internal control
structure and its operation that we consider to be material weaknesses as
defined above.
However, we noted certain matters involving the internal control structure and
• its operation that we have reported to the management of the City in a
separate letter dated October 18, 1991.
This report is intended for the information of the City's management, the
State Controller's Office and other federal agencies. This restriction is not
intended to limit the distribution of this report which, upon acceptance by
the City, is a matter of public record.
Orange County, California
October 18, 1991
9 -
OWN Peat Marwick
Certified Public Accountants
Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
INDEPENDENT AUDITORS' REPORT ON THE INTERNAL
CONTROL STRUCTURE USED IN ADMINISTERING
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
The Honorable Members of City Council
City of Huntington Beach, California:
We have audited the general purpose financial statements of the City of
Huntington Beach, California, as of and for the year ended June 30, 1991, and
• have issued our report thereon dated October 18, 1991 . We have also audited
the City's compliance with requirements applicable to major Federal financial
assistance programs and have issued our report thereon dated October 18, 1991.
We conducted our audits in accordance with generally accepted auditing
standards; Government Auditing Standards, issued by the Comptroller General of
the United States; and Office of Management and Budget ("OMB") Circular A-128,
Audits of State and Local Governments. Those standards and OMB Circular A-128
require that we plan and perform the audit to obtain reasonable assurance
about whether the general purpose financial statements are free of material
misstatement and about whether the City complied with laws and regulations,
noncompliance with which would be material to a major Federal financial
assistance program.
In planning and performing our audits for the year ended June 30, 1991, we
considered the City's internal control structure in order to determine our
auditing procedures for the purpose of expressing our opinions on the City's
general purpose financial statements and on its compliance with requirements
applicable to major programs and not to provide assurance on the internal
control structure. This report addresses our consideration of internal
control structure policies and procedures relevant to compliance with
requirements applicable to Federal financial assistance programs. We have
addressed policies and procedures relevant to our audit of the general purpose
financial statements in a separate report dated October 18, 1991.
The management of the City is responsible for establishing and maintaining an
• internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. The
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition, that transactions are executed in
accordance with management's authorization and recorded properly to permit the
preparation of general purpose financial statements in accordance with
generally accepted accounting principles, and that Federal financial
- 10 -
• loss
Member Firm of
Klynveld Peat Marwick Goerdeler
The Honorable Members of City Council
City of Huntington Beach, California
Page 2
assistance programs are managed in compliance with applicable laws and
regulations . Because of inherent limitations in any internal control
• structure, errors, irregularities, or instances of noncompliance may
nevertheless occur and not be detected. Also, projection of any evaluation of
the structure to future periods is subject to the risk that procedures may
become inadequate because of the changes in conditions or that the
effectiveness of the design and operation of policies and procedures may
deteriorate,
For the purpose of this report, we have classified the significant internal
control structure policies and procedures used in administering Federal
financial assistance programs in the following categories:
Accounting Controls
• Revenue/receipts
• Purchases/disbursements
• Payroll
Administrative Controls--General Requirements
• Political activity
• Davis-Bacon Act
• Civil rights
• Cash management
• Relocation assistance and real property management
• Federal financial reports
• Allowable costs/cost principles
• Drug-Free Workplace Act
• Administrative requirements
Administrative Controls--Special Requirements
• Types of services
. • Matching level of effect, or earmarking
• Reporting
• Environmental reviews
• Monitoring subrecipients
• Claims for advances and reimbursements
For all of the internal control structure categories listed above, we obtained
an understanding of the design of relevant policies and procedures and
determined whether they have been placed in operation, and we assessed control
risk.
During the year ended June 30, 1991, the City expended 94.5% of its total
Federal financial assistance under major Federal financial assistance
. programs.
r
The Honorable Members of City Council
City of Huntington Beach, California
Page 3
We performed tests of controls, as required by OMB Circular A-128, to evaluate
the effectiveness of the design and operation of internal control structure
policies and procedures that we considered relevant to preventing or detecting
material noncompliance with specific requirements, general requirements, and
requirements governing claims for advances and reimbursements, and amounts
claimed or used for matching that are applicable to each of the City's major
Federal financial assistance programs, which are identified in the
accompanying schedule of Federal financial assistance. Our procedures were
less in scope than would be necessary to render an opinion on these internal
control structure policies and procedures. Accordingly, we do not express
such an opinion.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
• Public Accountants. A material weakness is a reportable condition in which
the design or operation of one or more of the internal control structure
elements does not reduce to a relatively low level the risk that noncompliance
with laws and regulations that would be material in relation to a Federal
financial assistance program may occur and not be detected within a timely
period by employees in the normal course of performing their assigned
functions. We noted no matters involving the internal control structure and
its operation that we consider to be material weaknesses as defined above.
We noted other matters involving the internal control structure and its
operation that we have reported to the management of the City in a separate
letter dated October 18, 1991.
• This report is intended for the information of the City's management, the
State Controller's Office and other Federal agencies. This restriction is not
intended to limit the distribution of this report which, upon acceptance by
the City, is a matter of public record.
October 18, 1991
- 12 -
CITY OF HUNTINGTON BEACH, CALIFORNIA
Schedule of Findings and Questioned Costs
Year ended June 30, 1991
• Findi.na No. 1
During the review of Community Development Block Grant subgrantee files, we
noted that an annual audit report had not been completed for a subrecipient
who had received over $25, 000 in grant funds. The City should identify those
subrecipients which have been allocated Federal funds amounting to $25, 000 or
more for the fiscal year. These subrecipients should then be notified that
they will be expected to submit an annual report which evidences an audit was
completed in accordance with the specific program requirements or the
applicable Office of Management and Budget Circular (i.e. , either A-128 or
A-133) .
City Response
• The City agrees with this finding and will implement a program to monitor its
subrecipients' compliance with the audit requirements.
Finding No. 2
During our review of the Community Development Block Grant subgrantee files,
we noted that two of the annual audit reports filed by subrecipients receiving
more than $25, 000 of grant funds did not include either single audit or
program audit reports. Upon receipt of the annual audit report from
subgrantees who receive more than $25, 000, the City should review the report
to ensure it contains all necessary elements.
City RespQn=
The City agrees with this finding and will implement a program to monitor its
subrecipients' compliance with the audit requirements.
13 -
CITY OF HUNTINGTON BEACH, CALIFORNIA
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 1991
• Finding No. 3
During our testwork of Community Development Block Grant expenditures, we
noted that funds requested and received during the fourth quarter exceeded
expenditures due to a misposting during consolidation of the previous grant
year awards. Any entry made to consolidate grant year awards should be
highlighted and thoroughly reviewed by another individual in the accounting
department familiar with Community Development Block Grant to ensure proper
allocation of program expenditures.
City Res c�P
The City agrees with this finding and will emphasize its existing review
policies to its accounting staff.
14 -
Cn of
Hunhngton Beach,
caffovnua
Mh gW Qu d'Rs d
Fov the flsca� yeav
ended June 30, 1989
CITY OF MACH
SINGE AUDIT OF FFTERALLY
ASSIMM CRAM PImQiAM
JUNE 30, 1989
CITY OF HUNI'INGPON BEACH
TABLE OF CONTENTS
June 30, 1989
Page
N�mtber
General Purpose Financial Statements:
Independent Auditors' Report on General Purpose Financial Statements 1
Ccaabined Balance Sheet - All Fund Types and Account Groups 2 - 3
combined Statement of Revenues, Eq3enditures and Changes
in Fund Balances - All GoveTzex tal Fund Types 4 - 5
Combined Statement of Revenues, Expenditures and Charges
in Fund Balances - Budget and Actual- General,
Special Revenue and Debt Servioe Fund Types 6 - 8
Combined Statement of Revenues, Expenses and Changes
in Retained Earnings - All Proprietary Fund Types 9
Cxanbined Statement of Changes in Financial Position All Proprietary Fund Types 10
Notes to Financial Statements 11 - 71
Supplementary Information - Federally Assisted Programs:
Independent Auditors' Report and Schedule of Federal
Financial Assistance
Independent Auditors' Report on Schedule of Federal
Financial Assistance 72
Schedule of Federal Financial Assistance 73 - 74
Independent Auditors' Reports on Compliance and Schedule of
Findings and Questioned Costs
Independent Auditors' Report on C7ouplianoe Related to
the General Purpose Financial Statements 75
Independent Auditors' Report on Compliance with laws and
Regulations Related to Federal Financial Assistance Programs 76 - 77
Schedule of .Findings and Questioned Costs 78 - 79
Independent Auditors' Reports on Internal A000untinv Controls
Independent Auditors' Report on the Internal Control Stricture
in Accordance with Government Auditing Standards 80 - 81
Independent Auditors' Report on Internal Controls (Accounting and
Acbm=strative) - Based on a Study and Evaluation Made as Part
of an Examination of the General Purpose Financial Statements
and the Additional Tests Required by the Single Audit Act 82 - 84
•
•
• GENERAL PURPOSE FINANCIAL SrA'ENIS
I
•
•
DIEHL,EVANS
&COMPAl`I 1 OTHER OFFICES AT:
CERTIFIED PUBLIC ACCOUNTANTS 2965 ROOSEVELT ST.
CARLSBAD.CA 92008-2389
. APARTNERSHIPINCLUDMGACCOUNTANCYCORPORATIONS (619) 7 29-2343
18401 VON KARMAN,SUITE 200 120 WEST WOODWARD AVE.
IRVINE • CALIFORNIA 92715-1542 ESCONDIDO.CA 92025-9990
PHONE(714) 757-7700 September 14, 1989 (619) 741-3141
FAX(714) 757-2707
INuumcm AUDIZc ' REPCW ON
GENERAL PURPM FIIO24MAL STATEMENTS
•
City Council
City of Huntington Beach
Huntington Beach, California
We have audited the general purpose financial statements of the City of
Huntington Beach; California as of and for the year ended June 30, 1989, as
listed in the table of contents. These financial statements are the
responsibility of the City's management. our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the general purpose 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 general.purpose financial
statement presentation. we believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the general purpose financial statements referred to above
present fairly, in all material respects, the financial position of the City of
'Huntington Beach as of June 30, 1989, and the results of its operations and the
changes in financial position of its proprietary fund types for the year then
• ended in conformity with generally accepted accounting principles.
z
-1-
•
r
•
CITY OF HUNTINGION BEACH
COINED BALANCE SHEET - ALL FUND 'TYPES AND ACCOUNT GROUPS
June 30, 1989
(expressed in thousands) •
Governmental Fund Types
Special Debt Capital
ASSETS General Revenue, Service Projects
Cash and investments (Notes le and 3) $ 21,279 $ 16,901 $ 3,894 $ 24,238
Cash with fiscal agent (Note 3) 224 - 9,069 864
Taxes receivable (Note lc) 2,164 - 48 8 •
Other receivables 697 1,717 156 2,464
Unbilled receivables (Note lb) - - -
Inventory (Note lg) 263- - - -
Due frcnn other funds 505 - - -
Advances to other funds (Note 10) 48,402 5,300 21,340 7,425
Deposits and other assets (Note 20) 13 - - -
Land held for resale (Note lf) - - - 19,549
Property, plant and equipment,
net (Notes if and 15) - - - -
Amount available for debt service funds - - - -
Amount to be provided for payment
of long-term debt - - - -
TOTAL ASSETS 73,547 L.2 918 34 507 54 548
LIABILITIES AND FUND EQUITY
LIABILITIES:
Accounts payable $ 1,528 $ 390 $ - $ 129
Accrued liabilities 1,614 10 - 8
Deposits 701 14 - -
Tax and revenue anticipation note
payable (Note 19) 5,000 - - -
Due to other funds - 505 - -
Advances from other funds (Notes 10 and 12) - - - -
Deferred motion (Note 4) - - - -
Claims payable (Note 9) - - - -
Deferred revenue (Note 5) 35,161 3,378 361 675
Current portion of long-tern debt - - - -
Long-term debt (Notes 12 and 13) - - - -
Cmpensated absences payable •
(Notes lj, 12 and 13) - - - -
TOTAL LIABILITIES 44,004 4,297 361 812
FUND EQUITY:
Contributed capital (Note 10) - - -
Investment in general fixed assets - - - •
Retained earnings - - - -
Fund Balances:
Reserved (Note 16) 27,043 5,051 34,146 53,736
Unreserved:
Designated (Note 16). 486 3,550 - -
Undesignated 2,014 11,020 - - •
TOTAL FUND EQUITY 29,543 19,621 34,146 53,736
TOTAL LIABILITIES AND FUND EQUITY 73,547 L.2 918 34 507 54 548
See independent auditors' report and notes to financial statements.
-2-
SCNEDJI£ A-1
J
Account Grohs
Propriety Rnxi Types Fiduciary General General
Internal Fund Type Fixed Ic M-Tezm Total olswrarxitun Only)
Enterprise Service Agency Assets Debt 1989 1988
$ 9,783 $ 11,653 $ 573 $ - $ - $ 88,321 $ 75,432
• 936 4,822 10,172 _ _ 26,087 26,197
2,220 2,243
1,204 109 3,255 - - 9,602 . 4,450
1,373 - - - - 1,373 1,218
- - - - - 263 208
505 -
1,417 - - _ _ 83,884 38,002
184 29 226 28
- - - - 19,549 4,854
36,654 10,902 - 69,442 - 116,998 114,410
- - - 12,806 12,806 17,638
- - - - 132,774 132,774 77,938
$ 51,367 $ 27,670 14,029 $ 69,442 $ 145,580 $ 494,608 $ 362,618
$ 1,321 $ 179 $ - $ - $ - $ 3,547 $ 2,701
120 161 - - - 1,913 4,040
1,109 - - - - 1,824 2,630
- - - - - 5,000 -
- - - - - 505 -
944 - - - 82,940 83,884 38,002
- 13,429 - - 13,429 11,126
7,422 573 - - 7,995 7,336
- - - - - 39,575 7,946
270 73 - - - 343 818
6,835 5,773 27 - 58,333 70,968 62,354
128 - - - 41307 4,435 3,941
10,727 13,608 14,029 - 145,580 233,418 140,894
37,586 12,654 - - - 50,240 49,362
- - 69,442 - .69,442 65,675
3,054 1,408 - - - 4,462 1,516
119,976 88,415
4,036 6,469
- - - - - 13,034 10,287
40,640 14,062 - 69,442 - 261,190 221,724
$ 51,367 $ 27,670 $ 14,029 $ 69,442 $ 145,580 $ 494,608 $ . 362,618
-3-
CITY OF HUN INGItON BEACH
CaID STATEMENT OF REVENUES, Ems" MMURFS
AND CHANGES IN FUND BALANCES
ALL GOVEME24TAL FUND TYPES
For the year ended June 30, 1989 •
(expressed in thousands)
General
REVENUES:
Property taxes (Note li) $ 23,072
Other taxes 30,519
Licenses and permits 3,650
Fines, forfeitures and penalties 2,458
Fran use of money and property 6,530
Fran other agencies 8,542
Charges for current services 5,886
Other 1,077
Contributions from property owners (Note 14) -
TOTAL REVENUES 81,734
EXPENDITURES:
Current:
City Council 113
City Achninistrator 782. •
City Treasurer 320
City Attorney 415
City Clerk 170
Administrative Services 2,956
CommLmity Development 2,110
Fire 12,722 •
Police 23,556
Economic Development -
Community Services 7,472
Public Works 16,505
Non-departmental 7,012
Capital outlay 1,026 •
Debt Service:
Principal -
Interest 228
TOTAL EXPENDITURES 75,387
EXCESS OF REVENUES OVER (UNDER) E)MMI'IURFS 6,347 •
OTHER FINANCING SOURCES (USES)
Operating transfers in 1,291
Advances from other funds (Note 12g) -
Proceeds of long-term debt -
Operating transfers out (2,170)
Other (Note 20) 6,191
TOTAL OTHER FINANCING SOURCES (USES) 5,312
EXCESS OF REVENUES AND OTHER SOURCES OVER
F)MENDITURFS AND OTHER USES 11,659
FUND BAIMCE - BEGINNING OF YEAR 22,349 •
Residual equity transfers in (Note lob) 346
Residual equity transfers out (Note lob) (4,811)
FUND BALANCE - END OF YEAR $ 29,543
See independent auditors' report and notes to financial statements. �.
-4-
SCHE:= A-2
Totals
Special Debt Capital (Memorandm Only)
Revemie Service Pro?ects 1989 1988
$ - $ 3,298 $ 600 $ 26,970 $ 24,275
217 - - 30,736 30,207
2,123 - - 5,773 4,348
- - - 2,458 2,338
2,449 3,192 1,713 13,884 8,003
13,179 - - 21,721 15,492
5,886 3,208
- - - 1,077 1,410
1,654 1,654 -
17,968 6,490 3,967 110,159 89,281
- - 43 156 130
198 - 324 1,304 1,106
- - 2 322 290
- - 627 1,042 973
- - 123 293 245
- - 453 3,409 3,287
- - 1,535 3,645 4,187
- - - 12,722 11,840
9 - - 23,565 22,370
748 - - 748 -
123 - - 7,595 6,954
- - 388 16,893 16,205
4 55 17 7,088 7,153
10,810 - 31,453 43,289 9,786
1,362 5,037 6,399 975
- 5,799 2,751 8,778 4,268
11,892 7,216 42,753 137,248 89,769
6,076 (726) (38,786) (27,082) (488)
- 2,000 173 3,464 3,154
- 46,033 46,033 21,108
6,463 6,463 26,313
(1,291) (3) - (3,464) (3,607)
- .1,250 7,441 727
(1,291.) 1,997 53,919 59,937 47,695
4,785 1,271 15,133 32,848 47,207
14,848 32,875 35,099 105,171 57,964
782 - 3,864 4,992 1,350
(794) - (360) (5,965) (1,350)
$ 19,621 $$ 34,146. $ 53,736 $ 137,046 $ 105,171
-5-
•
CITY OF HUNTINGION BEACH
CXHBINED S-BUMMfr OF REVENUES, E XPE NDIZURES AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
GENm2AL, SPECIAL REVENUE AND DEBT SERVICE FUND TYPES
For the year ended June 30, 1989 •
(expressed in thousands)
General. Fund
Variance -
Favorable
Budget Actual (Unfavorable) •
REVENUES:
Property taxes $ 22,440 $ 23,072 $ 632
Other taxes 31,978 30,519 (1,459)
Licenses and permits 3,366 3,650 . 284
Fines, forfeitures and penalties 2,570 2,458 (112)
From use of money and property 6,875 6,530 (345) •
From other agencies 8,894 8,542 (352)
Charges for current services 5,197 5,886 689
Other 596 1,077 481
TOTAL REVENUES 81,916 81,734 (182)
EXPENDITURES:
Current:
City Council 98 113 (15)
City Administrator 772 782 (10)
City Treasurer 319 320 (1)
City Attorney 398 415 (17)
City Clerk 199 170 29
Administrative Services 3,215 2,956 259
Ccm wnity Development 2,219 2,110 109
Fire 12,701 12,722 (21)
Police 23,373 23,556 (183)
c mmwnity Services 7,386 7,472 (86)
Public Works 18,558 16,505 2,053 •
Non-departmental 7,086 7,012 74
Capital outlay 1,915 1,026 889
Debt Service:
Principal - - -
Interest 228 228 -
TOTAL EXPENDITURES 78,467 75,387 3,080 •
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 3,449 6,347 2,898
OTHER FINANCING SOURCES (USES) :
Operating transfers in 1,300 1,291 (9)
Operating transfers out (2,044) (2,170) (126)
Other 6,191 6,191 - •
TOTAL OTHER FINANCING
SOURCES (USES) 5,447 5,312 (135)
EXCESS OF REVENUES AND CYPHER SOURCES OVER
(UNDER) EXPENDITURES AND OTHER USES 8,896 11,659 2,763
FUND BALANCES - BDGINNING OF THE YEAR 22,349 22,349
Residual equity transfers in 346 346 - •
Residual equity transfers out (4,811) (4,811) -
FUND BALANCES - END OF YEAR $ 26,780 $ 29,543 $ 2,763
See independent auditors' report and notes to financial statements.
-6- •
SCHEDULE A-3
Special Revenue Funds Debt Service Funds
Variance - Variance -
Favorable Favorable
Budget Actual (Unfavorable) Budget Actual (Unfavorable)
$ - $ - $ - $ 2,221 $ 3,298. $ 1,077
209 217 8 - - -
1,720 2,123 403 - -
1,567 2,449 882 3,268 3,192 (76)
9,438 13,179 3,741 - - -
12,934 17,968 5,034 5,489 6,490 1,001
189 198 (9) - - -
437 748 (311) - -
10 9 1 - -
189 123 66 - - -
4 4 - 55 55
22,909 10,810 12,099 - -
- - - 1,362 1,362 -
- - - 6,490 5,799 691
23,738 11,892 11,846 7,907 7,216 691
(10,804) 6,076 16,880 (2,418) (726) 1,692
2,099 2,000 (99)
(1,300) (1,291) 9 - (3) (3)
(1,300) (1,291) 9 2,099 1,997 102)
(12,104) 4,785 16,889 (319) 1,271 1,590
14,848 14,848 - 32,875 32,875 -
782 782 - - - -
(794) (794) - - - -
$ 2,732 $ 19,621 $ 16,889 $ 32,556 $ 34,146 $ 1,590
(401�INCJID)
-7-
•
CITY OF HUNrINGION BEACH SCHED= A-3
CMBIlNED STATEMENT OF REVENUES, FAQ" NDI'iURFS AND
C2WGES IN FUND BALANCES - BUDGET AND ACTUAL ( )
G04ERAL, SPECIAL REVENUE AND DEBT SERVICE FUND TYPES
For the year ended June 30, 1989
(expressed in thousands)
Totals (Memrandum Only)
Variance -
Favorable
REVENUES: Budget Actual (Unfavorable) •
Property taxes $ 24,661 $ 261370 $ 1,709
Other taxes 32,187 30,736 (1,751)
Licenses and permits 5,086 5,773 687
Fines, forfeitures and penalties 2,570 2,458 (112)
Fran use of money and property 11,710 12,171 461
From other agencies 18,332 21,721 3,389 •
Changes for current services .5,197 5,886 689
Other 596 1,077 481
TOTAL REVENUES 100,339 106,192 5,853
EXPENDITURES:
Current:
City Council 98 113 (15)
City Administrator 961 980 (19)
City Treasurer 319 320 (1)
City Attorney 398 415 (17)
City Clerk 199 170 29
Administrative Services 3,215 2,956 259
Ca munity Develgm-ent 2,656 2,858 (202) •
Fire 12,701 12,722 (21)
Police 23,383 23,565 (182)
cammulity Services 7,575 7,595 (20)
Public Works 18,558 16,505 2,053
Non-departmental 7,145 7,071 74
Capital outlay 24,824 11,836 12,988 •
Debt Service:
Principal 1,362 1,362 -
Interest 6,718 6,027 691
TONAL EXPENDITURES 110,112 94,495 15,617
EXCESS OF REVENUES OVER •
EXPENDITURES (9,773) 11,697 21,470
OTHER FINANCING SOURCES (USES) :
Operating transfers in 3,399 3,291 (108)
Operating transfers out (3,344) (3,464) (120)
Other 6,191 6,191 -
'POTAL OM ER FINANCING •
SOURCES (USES) 6,246 6,018 (228)
EXCESS OF REVENUES AND OTHER SOURCES OVER
(UNDER) EXPENDITURES AND OTHER USES (3,527) 17,715 21,242
FUND BALANCES - BEGINNING OF THE YEAR 70,072 70,072 -
Residual equity transfers in 1,128 1,128 - •
Residual equity transfers out (5,605) (5,605)
FUND BALANCES - END OF YEAR $ 62,068 $ 83,310 $ 21,242
See independent auditors' report and notes to financial statements.
-8-
•
SCHEDULE A-4
CITY OF HUNIrDCR3N BEACH
OCMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN RETAINED FAIUD2M - ALL PROPRIETARY FUND TYPES
For the year ended June 30, 1989
(expressed in thousands)
Totals
Internal (Memorandum Only)
Enterprise Service 1989 1988
OPERATING REVENUES:
Sales $ 12,467 $ 8,836 $ 21,303 $ 9,698
Rentals 887 - 887 9,388
Other 1,019 - 1,019 449
TC TAL OPERATING
REVENUES 14,373 8,836 23,209 19,535
OPERATING EXPENSES:
Water purchases 2,807 2,807 2,988 _
Administration 1,104 3,277 4,381 2,901
Engineering 1,282 - 1,282 827
Production 2,490 - 2,490 2,123
Maintenance 1,003 - 1,003 1,167
Water Meters 520 - 520 595
Contribution to General
Fund in lieu of taxes 1,829 - 1,829 1,390
Employee medical claims - 2,095 2,095 1,834
Liability claims - 1,127 1,127 914
Workers motion claims - 1,491 1,491 2,245
Depreciation (Note lf) 1,392 11,741 3,133 3,215
TOTAL OPERATING EXPENSES 12,427 9,731 22,158 20,199
OPERATING INCOME (ID6.S) 1,946 (895) 1,051 (664)
NON-OPERATING REVENUES
(EXPENSES) :
Interest income 1,080 1,232 2,312 1,588
Interest expense (601) - (601) (612)
Joint venture - 184 184 -
TOTAL NON-OPERATING
REVENUES (EXPENSES) 479 1,416 1,895 976
NET INCOME 2,425 521 2,946 312
RETADM EARNINGS -
BBGINNING OF YEAR 629 887 1,516 1,204
RETAINED EIARNINGS -
END OF YEAR $ 3,054 $ 1,408 $ 4,462 $ 1,516
See independent auditors' report and notes to financial statements.
-9-
•
CITY OF HUNTINGTON BEACH SCVEDULE A-5
C CMBINED STATEMENT OF CIS IN MANCIAL POSITION -
ALL PROPRIETARY FUND TYPES
For the year ended June 30, 1989
(expressed in thousands) •
Totals
Internal (Memorandum Only)
Enterprise Service 1989 1988
SOURCES OF WORKING CAPITAL:
Operations:
Net income $ 2,425 $ 521 $ 2,946 $ 312 •
Lass on sale of plant, property
and equipment 9 15 24 92
Depreciation 1,392 1,741 3,133 3,215
Working capital provided by
operations 3,826 2,277 6,103 3,619
Increase in self-insurance claims •
payable - 86 86 163
Increase in coupensated absences 9 - 9 -
contributions received 438 819 1,257 2,915
Increase in Certificates
of Participation 13 5,510 5,523 13
Decrease in restricted assets 512 - 512 71 •
Increase in note payable - - - 336
Sale of property, plant and equipment - 60 60 102
TOTAL SOURCES OF WORKING CAPITAL 4,798 8,752 13,550 7,219
USES OF WORKING CAPITAL:
Increase in investment in joint venture - 184 184 -
Increase in plant, property and
equipment 459 1,580 2,039 5,.019
Increase in restricted assets - 4,822 4,822 34
Decrease in long-term notes 93 73 166 79
Decrease in long-term bonds 166 - 166 -
Increase in advances from other funds 128 - 128 1,118
Disposition of fixed assets acquired
with contributed capital - 379 379 -
Decrease in cmpensated absences - - - 6
TOTAL USES OF WORKING CAPITAL 846 7,038 7,884 6,256
NET INCREASE IN WORKING CAPITAL $ 3,952 1 714 15 666 g 963
•
EI M?M OF NET INCREASE (DECREASE)
IN WORKING CAPITAL:
Cash and investments $ 3,261 $ 1,736 $ 4,997 $ 1,185
Interest receivable 18 53 71 21
Accounts receivable 674 4 678 (25)
Unbilled receivable, 155 - 155 289 •
Accounts payable (507) 39 (468) 159
Due to other funds 59 - 59 -
Interest payable (5) (125) (130) 6
Deposits 307 - 307 (593)
CU rent portion of long-term debt (10) - (10) (3)
Accrued payroll - 7 7 76) •
NET INCREASE IN
WORKING CAPITAL $ 3,952 1 714 5 666 1 963
See independent auditors' report and notes to financial statennents.
-10- •
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• JUNE 30, 1989
1. S@vtY OF SIGNIFICANT AC00UNTI IM POLICIL'S:
a. Description of Land Types and Account Groups:
The City of EluntingLon Beach (City) accounts for its financial position and
operations in accordance with generally accepted accounting principles for
governmental units prescribed by the Government Accounting Standards Board
(GASB) . The City uses various funds and account groups to record its
financial activity. A fund or account group is an accounting entity with a
self-balancing set of accounts established to record the financial position
and results of operations of a specific governmental activity. The City
. maintains the following fund types and account groups:
Governmental Land Types:
The General rand is used to account for all financial activity that is not
required to be accounted for in another fund.
Special.Revenue tends are used to account for the receipt and expenditure of
monies legally restricted to a specific use.
Debt Service Funds are used to account for the receipt and disbursement of
monies used for the payment of general and redevelopment long-term principal
and interest.
Capital Projects Pands are used to account for monies used for the acquisition
and construction of major capital facilities.
Proprietary U'und Types:
Enterprise Lands are used to account for City operations that are financed in
a manner similar to private businesses. Enterprise funds are used when the
City wishes to recover the cost of a particular service furnished to the
public on a cost (expenses including depreciation) reimbursement basis or when
the City wishes to make periodic determinations of net income.
Internal Service lands are used to account for goods and services provided by
one department of the City to another on a cost-reimbursement -basis.
riduciai—Clind Type:
Acienc`LAuids are used to account for assets held by the .City as an agent for
ind!i ideals or private organizations.
See independent auditor ' s report -11
•
CITY OF HUNTINGTON BEACH
NOTES TO CINANCIAL STATEMENTS
(continued)
.TUNE 30, 1989 •
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
•
a. Description of Fund Types and Account Groups:
Account Groups:
The General Fixed Assets Account Group is used to record and control capital •
assets owned by the City other than those owned by proprietary fund types.
The General Long Term Debt Account Group is used to account for the unmatured
long-teni liabilities that will be financed from governmental funds.
b. Basis of Accounting: •
Governmental and agency fund types use a modified accrual basis of
accounting. Revenues are recognized when they are susceptible to accrual.
This means that they must be measurable and available to finance current
period expenditures. Revenues susceptible to accrual are received within 60
days after year-end and include property taxes, sales tax, federal and state
grants and subventions, interest and certain charges for current service.
Revenues which are not susceptible to accrual include certain licenses,
permits, fines and forfeiture and other miscellaneous revenue. Expenditures,
other than principal and interest on long-term debt are recorded when
incurred. Proprietary fund types are accounted for on the accrual basis.
Accounting for these fund types normally follows accounting for private
businesses. Revenues are recognized when earned, regardless of the date -of
receipt. Expenditures are recognized when incurred. Unbilled water revenue
is accrued when earned.
c. Measurement Focus:
The Ci.ty's g(-wernment.Il funds are accounted for on a spending or "financial
flew" meas-urFnnent focus. This means that generally only current assets ,and •
current liabilities are included on their balance sheets. Staterients of
revenue, exFv:-nd1tures and changes in fund balance for governmental funds
generally present increases (revenues and other financing sources) and
decreases (expenditures and other financing uses) in net current assets. All
proprietary funds are accounted for on a cost of services or "capital
maintenance" measurement focus. The fund equity amount represents total net •
assets. Proprietary funds are accounted for on a capital maintenance
SF'(- i-ndepen(lont. and i.t,-ir ' s report_ -12- •
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
•
1. S[1kIARY OF SIGNIFICANT ACODUNTING POLI= ((OWERM:
C. Measurement Focus:
measurement focus. This means that all assets and liabilities, whether
current or noncurrent, are shown on the balance sheets. Their reported fund
equity represents total net assets. Proprietary fund operating statements
present increases (revenues) and decreases (expenses) in total net assets.
d. Budgets and Budgetary Accounting:
The City Council annually adopts a budget by June 30th of the prior fiscal
year for all governmental fund types. The budgeted expenditures become the
appropriations to the various departments. Estimates are also made for
• revenue which, along with the appropriations, are used to compute the
budgetary fund balance. This appropriated budget, as defined by GASB Code
Section 2400.109, covers substantially all governmental fund type
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 one object purpose
(personal services, operating expenditures or capital outlay expenditures) to
another within the same department without changing the total budget of a
department. A department head may transfer funds from like object categories
of the same department. Any changes to a total departmental budget must be
approved by the City Council. Expenditures may not exceed appropriations at
• the departmental level. All unused appropriations lapse at year-end.
Budgets for governmental fund types are adopted on a basis substantially
consistent with generally accepted accounting 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 develoFrrent and economic growth. Expenditures and transfers are
budgeted based upon available financial resources.
On or before February 28th of each year, each Department submits data to the
City Administrator so that a budget may be prepared. This budget is
prepared by fund, function and activity and includes information on past
• years, current year estimates and requested appropriations for the next
fiscal near. 13cfore May 1st, the proposed budget is presented to the City
Council. The City COUncil holds public hearings and may amend the budget by
See independent auditor ' s report -13-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
1. SUM MY OF SIGNIFICANT ACCOUNTING POLICIES (C(M rINUM):
•
d. Budgets and Budgetary Accounting:
a majority vote. Any changes to the budget must be within the revenues and
reserves estimated as available.
Budgetary data is presented for the General, special revenue and debt service
Elands. Budgetary information is not presented for the capital projects funds
since these are budgeted on a long-term project by project basis.
The City utilizes an encumbrance system as an aid in controlling
expenditures. Encumbrances represent amounts committed for goods or services
for which a purchase order has been issued and the goods have not been
received or the services have not been rendered. At year-end, all
outstanding encumbrances are reported as reservations of fund balance in
governmental fund types. These outstanding encumbrances are then
reprogrammed into the new fiscal year.
The budgetary information presented for estimated revenue and appropriations
represent the original budget adjusted for changes made by action of the City
Council, City Administrator or Department Head. All changes to the original,
adopted appropriations (expenditures plus other financing uses) are
summarized below (in thousands) . Elands with no changes are not shown: •
Fund Original Revised
General $79,672 $85,322
Special Revenue Funds:
Gas Tax 8,161 10,513
Sewer 525 736
Planned Local Drainage 1,795 2,133
Public Communications 219 220
Grants 1,930 6,490
Park Acquisition 2,326 4,858 •
and Development
Narcotics rorfeiture 100 198
•
•
See independent auditor ' s report -14-
•
CITY OF HUNTINGTON BEAC❑
NOTES TO FINANCIAL STATEMENTS
(continued)
• JDNE 30, 1989
1. SUMMAM OF SIGNIFICANT A000ONTING POLICIM (00 NTL'NOED):.
•
e. Investments:
Investments are stated at cost, which is less than market. If market
• values decline below cost, no loss is recorded if such declines are
considered permanent. The assets of the Employee Deferred Compensation
Fund (an Agency Fund) are reported at market value rather than cost, in
accordance with GASB Statement 2.
f. Property and Equipment:
•
Acquisitions of property and equipment are generally recorded as
expenditures in governmental fund types at the time of purchase and are
capitalized at cost in the General Fixed Assets Account Group. Land held
by the Redevelopment Agency for resale is capitalized at the lower of cost
or market in the Redevelopment Agency Capital Projects Fund. Expenditures
for infrastructure (roads, curbs, sidewalks, sewers, etc. ) are not
capitalized as such assets are immovable and generally of value only to the
City. No depreciation is provided for any asset capitalized inkthe General
Fixed Assets. Account Group..
• Property and equipment acquired by proprietary fund types are capitalized'
at cost at the time of purchase in the fund making the purchase. Both
proprietary and general fixed assets- acquired from gifts. or contributions
are capitalized"• at fair market value at the time received`, or in the case
of water fixed assets at City Council acceptance. date. Depreciation for
both donated and acquired assets is calculated on the straight-line- method
over the estimated useful lives of the assets shown below and charged to
the operations of the respective fund
Production, putrping,. trans►nission
and distribution plant - 10 to 50 years
General plant- 20 to 50 years
• Transportation equipment- 5 to 30 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 form the date of borrowing- until completion of
the project with interest earned on the invested proceeds over the same
period. The City has capitalized $185,000 of interest on the construction
of the Dnerald Cove apartment complex.
• Set- independent auditor ' s report -15-
CITY OF nUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JDNE 30, 1989 i� •
1. SUMMARY OF SIGNIFICANT AO00UN`r G POLICIES (CONTINUED)
•
g. Inventories:
Inventories are accounted for in governmental funds by the consumption
method, whereby inventories are capitalized and recorded as expenditures •
when used. Inventories of materials and supplies totalled $262,662 at June
30, 1989 and are valued using the weighted average cost method. This
amount is offset with an appropriate reservation of fund balance.
h. Interfund Transactions:
•
During the course of normal operations, numerous transactions between
funds. These result in operating transfers, residual equity trc:1".7fers,
balances due to or due from other funds and balances advanced to ar from
other funds. Residual equity transfers represent nonrecurring or non- •
routine transfers of equity between funds. Operating transfers represent
transfers between funds that are normal and recurring. Amounts that are
due to or due from other funds represent the current (due within one year)
portion of monies that are to be paid to or received from other funds.
Amounts that are classified as advances from other funds represent the
long-term portion of monies which will be repaid to other funds. Amounts
that are classified as advances to other funds represent the long-term
portion of amounts that will be received from other funds. In governmental
funds amounts that are advanced to other funds are also offset equally by a
fund balance reserve account, which indicates that they do not constitute
expendable, available financial resources and therefore are not available
for appropriation. In proprietary funds there is no reservation of fund
equity.
Quasi-external transactions are interfund transactions that would be
treated as revenues, expenditures or expenses if they had involved
organizations external to the City. The City has recorded all quasi-
external transactions as revenues, expenditures or expenses. Transactions
that constitute reimbursement to a fund for expenditures or expenses
initially made from it that are properly applicable to another fund, are
recorded as expenditures/expenses in the fund that it is reimbursed. all
other interfund transactions are reported as operating transfers.
•
See Ltidependent auditor ' s report -16- •
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1989
1. SUMMARY OF SIGNIFICANT ACODUNTING POUCIES (OONT NUM):
•
i. Long-Term Obligations:
Governmental fund long-term debt (principal, interest and fiscal charges)
• is recognized as an expenditure when due regardless of when the expenditure
is incurred. Obligations that are expected to be financed from spendable,
available financial resources are reported as a fund liability. The
remainder of the obligation is reported in the General Long-Term Debt
Account Group. Bond discounts and issuance costs are recognized in the
period that the debt is issued.
•
Proprietary fund long-term debt is accounted for in the respective funds.
Interest on the debt is recorded when incurred. Principal that is due
within one year is classified as a current liability. The remainder is
classified as a long-term liability. Bond discounts are recorded as a
• reduction of outstanding debt and are deferred and amortized over the term
of the debt.
j. Enployee Compensated Absences:
•
The City records the cost of vacation and sick leave when paid in the
governmental fund types and when incurred in the proprietary fund types.
At June 30, 1989, the unfunded liability for vacation and sick leave
accumulated by the City's governmental funds totalled $4,307,025 (note
12f) . The City has recorded this amount in the General Long-Term Debt
Account Group with the assumption that these amounts will be paid with
future financial resources rather than currently available spendable
resources. In the proprietary fund types the liability of $128,085 has
been recorded. These amounts represent the "cash surrender value" of all
accumulated vacation and sick leave which is the amount that would be paid
to employees if they teminate. Vacation is paid at 1000 of the accrued
amount, while sick leave is paid at varying amounts depending on the
employee's contract.
•
•
See independent auditor ' s report -17-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989 •
1. SUMMARY OF SIGNIFICANT ACODUN 19M PGLI= (CONTI UED):
•
k. Fund Dquity:
The various types of fund equity recorded on the balance sheet are
described below:
Governmental Fund Types
Reserved Fund Balance represents that portion of fund balance that is not
appropriable for expenditure or that is legally segregated for a specific
future use.
•
Unreserved/Designated Fund Balance represents that portion of fund balance
that has been tentatively set aside by the City Council.
Unreserved/Undesignated Fund. Balance represents the portion of fund balance
that is available to be appropriated and spent by the City Council.
Proprietary Fund Types
Retained Earnings represents the accumulated earnings of an enterprise or
internal service fund.
Contributed Capital represents the pennanent fund capital of a proprietary •
fund which is created when a general fixed asset is transferred to a
proprietary fund or a residual equity or certain types of operating
transfers are made to a proprietary fund. A description of the changes in
these amounts is shown in note 11(b) .
•
Account Groups
Investment in General Fixed Assets represents the City's monetary
investment in general fixed assets at cost.
•
1. Property Tax Revenue:
Pr(-)perty tax in California is levied in accordance with article 13-A of the
California constitution. The basic levy is a countywide-levy of one �
Percent of total assessed valuation. This basic levy is allocated to
See independent ai-iditor ' -s report -18- �
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
.TUNE 30, 1989
1. S1*14ARY OF SIGNIFICANT AOCIOUNTPING POLICIES (OKKl'I WM):
•
1. Property Tax Revenue:
county government, school districts, cities and special districts.
Additional levies require two-thirds approval by voters and are allocated
directly to the specific government unit. Property tax revenue is
recognized. in the fiscal year levied provided that the revenue is collected
during the year or within 60 days of year-end.
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- March 1st of prior fiscal year
Levy Date- July 1st
Due Date, First Installment- November loth
• Due Date, Second Installment- February loth
Delinquent Date, First Installment- December 11th
Delinquent Date, Second Installment- February 11th
The taxes are remitted to the local governments periodically during the
year. Below are shown the dates and percentages from the County (dates and
• percentages vary slightly from year to year)
November 30th- 50
December 19th- 20e
December 28th- 20a
February 1st- Balance of First Installment
• March 28th- 50
April 26th- 340
July 26th of next fiscal year- Balance of Second Installment
m. Allocation of Interest Income Among Funds:
•
The City Fools .all non-restricted cash for investment purchases. Interest
inccxme is all(xcated monthly to the various funds based on the month-end
dash halanc•es. Interest income from restricted cash is recorded directly_
in they fund (.3rning the income.
•
• See independent auditor ' s report -19-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE. 30, 1989
1. S@TMY OF SIGNIFICANT AC00UM'1W POLICIES (ODWINUED):
•
n. Equipment Replacement Land:
All machinery and equipment which is not owned by proprietary funds is
owned by the Equipment Replacement Fund, an internal service fund. The •
machinery and equipment is leased to user departments. All machinery and
equipment which does not replace existing equipment is purchased by the
respective fund and transferred to the Equipment Replacement Fund. This is
recorded as a residual equity transfer out in the purchasing fund and
contributed capital in the Equipment Replacement Fund.
•
o. Emerald Cove Housing Fund Transfer:
The City operates the Emerald Cove Senior Citizens Apartment Complex and
records the activity in the Emerald Cove Housing Fund, an enterprise fund. •
The City annually transfers funds from the Low-Income Housing Fund to
subsidize operations. These transfers are recorded as a residual equity
transfer in the Low-Income Housing Fund and contributed capital in the
Emerald Cove Housing Fund since the City desires annual determinations of
net income.
•
p. Total Columns and Comparative Data on Combined Financial Statements:
The combined financial statements include total columns which aggregate the
financial statements of the various fund types and account groups. The •
columns are designated "memorandum only" because the totals are not
comparable to a consolidation since interfund transactions (with the
exception of certain leases between the oversight unit and component units
described in note 2) are not. eliminated.
Com}par.mtive tuta] data for the prior year have been presented in the •
arr.cAnpi-inying financial stater:,*-_-nt.s in order to provide an understanding of
changes In the iit.y's financial position and operations. However,
comparative data for .individual funds have not been presented in all
statements }.x,�cause their inclusion would make certain statements unduly
complex and difficult to understand.
•
;oe rident auditor ' s roport -20- •
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
1. NARY OF SIGNIFICANT A000U.NTTNG POLICIES (OURrINUED):
•
q. Joint Ventures:
The City is involved in one joint venture which isrecorded in a
proprietary fund type. It is recorded using the equity method of .
accounting. The net increase in the city's equity position is recorded as
a non--operating revenue or expense.
2. WgCRIPTION OF THE REIMrING ENTITY:
•
This report incorporates GASB Code Section 2100, "Defining the Governmental
Reporting Entity," which outlines criteria to determine whether a separate
legal entity's financial information should be included. in the City's
financial statements. Based upon the statement's guidelines, certain
separate legal entities have been included in this report. The criteria
used in evaluating the different entities were oversight responsibility,
financial dependency, ability to influence operations, designation of
management, budget adoption, significant influence over operations,
financing deficits or entitlement to surpluses, location within the City's
geographic boundaries and benefit and general availability to the citizens.
• of Huntington Beach, Below is a description of each of these entities and
how their financial activity has been evaluated and incorporated into this
report:
Huntington Beach Public Facilities Corporation (Public Facilities
Corporation)- This entity was formed in 1970 to issue. bonds to construct
• the civic center and library complexes. The City leases the facilities
from the Public Facilities Corporation. The lease is a capital lease
because title to the facilities passes to the City upon termination of the
lease. The Public Facilities Corporation's original governing body was
appointed by the City Council. However, the governing board itself appoints
any successors. The City Council adopts an annual budget for the Public
• Cacilities Corporation which cannot terminate its lease with the City if
the City meets the terms of the lease. At the termination of the lease,
the Public fac.ili.tios Corporation will dissolve and its assets will revert
to the City. The :assets and related revenue and expenditures that are used
for repayment of the bonds are recorded as a debt service fund. Assets
used to':construct capital' improvements are recorded as a capital projects
• fund. . The capital projects fund normally receives no revenue other than
interest. If additional. funds are required for capital projects, they will
See independent auditor ' s report -21
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
2. DES RIPPICN OF THE- RMRTING RITTTY:
•
be transferred from the Public Facilities Corporation Debt Service Fund.
Since the Public Facilities Corporation is a part of the City's reporting
entity, the capital lease between the City and the Public Facilities
Corporation has been eliminated.
Parking Authority of the City of Huntington Beach (Parking Authority)-
This entity was formed in 1967 to issue bonds to construct off-street
parking facilities. The City leases the facilities from the Parking
Authority. The lease is a capital lease because the City Council may, by
resolution, dissolve the Parking Authority and deed the assets to the City.
The Parking Authority's governing body is the City Council which annually
adopts a budget for the Parking Authority. The Parking Authority is
financially dependent on the City for all its operations. At any time
during the term of the lease the lease payment may be forgiven by
resolution of the City Council if there is sufficient cash in the Parking
Authority to meet the debt service requirements. The assets and related
revenue and expenditures that are used for repayment of the bonds are
recorded in a debt service fund. Assets.used to construct capital
improvements are recorded in a capital projects fund. The capital projects
fund normally receives no revenue. If additional funds are required, they
will be transferred from the Parking Authority Debt Service Fund. Since
the Parking Authority is a part of the City's reporting entity, the lease
has been eliminated.
Redevelopment Agency of the City of Hunting Lon Beach (Redevelopment
Agency)- This entity was formed in 1967 to facilitate the renovation -of
older areas in the City limits. The City Council serves as governing body
of and adopts an annual budget for the Redevelopment Agency. The Agency
is financially dependent on the City for all of its operations. The tax
increment revenue received by the Agency which can only be used to repay
Agency debt is recorded in a debt service fund and the capital improvements
made are recorded in a capital projects fund. Long-term advances from the
City to the agency have been recorded as a long-tenn advance on the
respective fund's balance sheet with a corresponding reservation of fund
equity. The Agency's debt is recorded in the General Long-Term Debt •
Account Group since these amounts will be paid from future financial
resources.,
11untingLon Mach Civic Improvement Corporation (Civic Improvement
Corporation)- This corporation was formed to provide for the defeasance of
the Huntington Beach Public Facilities Corporation Leasehold Mortgage
Bonds- 1st Issue as described in Note 12. The Civic Improvement
See independent auditor ' s report -22-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL -STATEMENTS
(continued)
JUNE 30, 1989
2. DESMIPTION OF THE REPORTING MQTITY:
•
Corporation issued $20,000,000 of certificates of participation to provide
for this defeasance. The governing board of the Civic Improvement
Corporation is the City Council which also adopts its annual budget. The
Civic Improvement Corporation is dependent upon the City for all of its
• operations. The Civic Improvement Corporation has title to the Civic
Center complex and leases it to the City. It is a capital lease because
title to the Civic Center complex reverts to the City at the end of the
lease. The lease cannot be terminated if the City meets all its financial
obligations. The assets pledged for repayment of the certificates of
participation and the related revenues and expenditures are recorded in the
Civic Improvement Corporation Debt Service Fund. The lease has been
eliminated.
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 Authority's governing body is the City Council which also
adopts the annual budget. The Authority is totally financially dependent
on the City. The Authority's activity is recorded as both a debt service
fund and as a poit ion of the activity in the Equipment Replacement Fund (a
proprietary fund type) .
There are many other governmental agencies, including the County of Orange,
various elementary school districts, the Coast Community College District,
the EiuntingLon Beach Union High School District and various special
districts which provide services within the City. These entities have
independently elected governing boards and are not a component unit of the
City of Huntington Beach and their financial information is not included in
this report.
3. CASH AND LVJES'I1— T :
Cash and investments at June 30, 1989 totalled $114,408,057 and are
classified in the accompanying combined balance sheet as follows (in
thousands) :
cash and Investments $ 88,321
Cash with Fiscal :agent 26,087
• Total $114,408
See independent at-iditor ' s report -23-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JDNE 30, 1989
3. CASH AM INVES DINM (aWrINQID):
•
The following disclosures are made in accordance with GASB Statement
Number 3.
Collateral for Deposits
Under provisions of the California Government Code, California banks and
savings and loan associations are required to secure a City's deposits by
pledging government securities with a value of 1100 of a City's deposit.
California law also allows financial institutions to secure City deposits
by pledging first trust deed mortgage notes having a value of 1500 of a
City's total deposits. •
The collateral for deposits in Federal and state chartered banks is held in
safekeeping by an authorized Agent of Depository recognized by the State of
California Department of Banking. The collateral for deposits with savings
and loan associations is generally held in safekeeping by the Federal Home
Loan Bank in San Francisco, California as a third-party trustee. These
securities are physically held in an undivided pool for all California
public agency depositors. The trustees keep- detailed records of the
security pool.
The City Treasurer, at his discretion, may waive the collateral requirement
for deposits which are fully insured up to $100,000 by the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance
Corporation. It is the City's policy to waive the collateral requirement
if there is a higher interest yield on the investments.
Authorized Investments
•
The City of I-IuntingLon Beach operates its pooled cash investments under the
"Prudent Ian Rule" (California Civil Code sections.2261 et seq. ) . This
allows a broad spectrum of invesianents as long as the investment is deemed
prudent and allowable under legislation of the State of California
(Government Code Section 53600 et seq. ) . •
Under the provisions of the City's .investment policy and in accordance
with Section 53601 of the California Government Code, the City may invest
in the following types of instruments:
•
See independent auditor ' s report -24-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
3. CAM AND INVES'ff4& PS (00tMMED):
•
a. Bankers acceptances
b. Negotiable certificates of deposit
c. Commercial paper
d. Bonds issued by the City
e. Obligations of the United States Treasury
f. Federal Agency Obligations of:
Federal Intermediate Credit Bank (FICBs)
Federal Land Bank (FLBs)
• Federal Home Loan Bank (FHLBs)
Federal National Mortgage Association (FNMAs)
Small Business Administration (SBAs)
Government National Mortgage Association (GNMAs)
Tennessee Valley Authorities (TVAs)
Student Loan Association Notes (Sallie Mae's)
•
g. Obligations of the State of California or of any local agency within the
State of California:
The Local Agency Investment Fund (LAIF) is a special fund of the
California State Treasury through which any local government may pool
investments. Each agency may invest up to $10,000,000 in this fund.
Investments in IAIF are highly liquid and may be converted to cash
within 24 hours. Investments with LAIF are secured by the full faith
and credit of the State of California.
h. Repurchase Agreements:
Throughout the year ending June 30, 1989, the City utilized overnight
repurchase agreements for temporary investment of idle cash. Such
agreeirtents were used on average of 20 to 22 times per month and
generally dial not exceed 100 of the City's investment portfolio.
• i. Reverso-Rc-EAirchase AgrPements:
Alt hough the CJ ty's investment �,o.l ic,y does not- PI-F A LIde the use uC
Reverse-RetxircL-Ase agreements, the City did not borrow throilgh the use
of reverse repurchase agreements at any time during the year.
• j. Mediwn-Term Corporate Notes
See independent auditor' s report -25-
•
•
CITY OF IIUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
3. CAM AND INVE.SIMEbM (OXM[NUM:
k. rtitual Funds
Safekeeping Arrangements for Investments
Under Sections 53651 to 53653 of the California Government Code, as •
amended, the collateral underlying an agency's investments must be
delivered to the City. If U.S. Federal obligations are used as the
underlying collateral, the delivery may be made by "book-entry" only.
For all other collateral, the security must be physically delivered to
the City or a third-party custodial agent.
Under California Senate Bill number 2115, passed in 1986, a bank is •
permitted to maintain the underlying securities in its Trust or
Safekeeping Department when acting as a third-party custodial agent.
GASB Statement 3 requires the City's bank balance of deposits and
investments be categorized as follows: •
Deposits
Category 1- Deposits which are insured by FDIC, FSLIC, a state
depository insurance fund or a multiple-financial institution collateral
pool, or deposits which are collateralized with securities held by the •
City or the City's agent in the City's name.
Category 2- Deposits which are collateralized with securities held-by
the pledging financial institutions trust department in the City's name.
Category 3- Deposits which are uncollateralized, or collateralized but •
the pledged securities are not held in the City's name.
Investments
Category 1- Investment which are insured by SIPC, or where the •
securities are held by the City or the City's agent in the City's name.
Category 2- Investments which are uninsured, where the securities are
held by the purchasing financial institution's trust department or agent
in the City's name.
•
See independent auditor ' s report -26-
•
•
CITY OF HUNTINGTON BEACH
NOTRS TO FINANCIAL STATEMENTS
(continued)
3 UNE 30, 1989
J. am AND nana1Mmm (OmrI m):
•
Category. 3= Investments which are uninsured, where the securities are
field by the purchasing financial institution's trust department or.
agent; but not in the City's name.
Category Market
1 2 3 Cost Value
be 70� sits
Demand Accounts $ - $ 1,853 $ - $ 1,853 $ 1,853
Certificates 7;144 45,596 - 52,740 52,740
• of t)6posit
Cash with Viscal - - 15,915 15,915 15,915
Agent
Deferred - - 10,172 10,172 10,172
Cot q*hsation
Subtotal __.7,144 47,449 26,087 80,680 80,680
Iiivestioents
Corporate Notes $ 2,936 $ 778 $ - 3,714 3,672
Hankers 13,'025 497 - $13,522 13,547
Acceptances
• rederal 1,444 - - 1,444 1,477
Obligations
Mutual rands - - 7,712 7,712 7,768
Repurchase ' - - 11900 11900 11900
Agreements
• Subtotal $ 17.,405 $1,275 9$ ,612 2$ 8,292 2$� 8,364
Investment in LAIF 10,000 10,000
Petty Cash 49 49
Savings
• Total Bank Deposits 119,021 119,093
and Investments
Less Demand �Warrants (4,613) (4,613)
Outstanding
Total Cash and $114,408 $114,480
• Investments
See independent auditor ' s report -27-
•
CITY OF HUNTINGTON BOAC❑
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
4. DCFEINUM COMPENSATION:
•
Permanent City employees have the option of deferring a portion of their
salary under Section 457 of the Internal Revenue Code. These amounts are
invested in savings accounts, certificates of deposit and other prudent
investments. The City retains title to these funds until withdrawn by the
employee, which may take place at termination or any later date. The
assets of the plan remain subject to the general claims of creditors of the
City. The amount of deferred compensation payable at June 30, 1989 was
$13,429,000 which represents the market value of the investments.
Since the Citv has a fiduciary responsibility to administer the plan, the
assets are recorded in an agency fund in the City's financial statements.
The assets of the plan are subject to the claims of the City's general •
creditors and must remain the property of the City until paid or made
available to the participants. The City believes that it is unlikely that
it will use the assets to satisfy the claims of general creditors now or in
the future. The City offers two different investment mediums for
participants. The choice of investment is made by the participants. •
5. DEL-Ud ED REVENUE:
Certain revenues in governmental funds due from the Redevelopment Agency
have been deferred until received from the Agency. Interest on these •
amounts accrues at 10% per annum with the exception of interest on loans
from the Public financing Authority which accrues interest at varying
rates. They are detailed below (in thousands) :
GMMMAL FUND: •
Development fees deferred in 1984 and 1985 $ 173
Land sales from the City to the
Redevelopment Agency from 1982,183 to 30,636
1988/89
Interest on above amounts and on general 4,352 •
fund advances from 1978/79 to 1987/88
Total c',enera l LAind 35,161
•
See independent auditor ' s report -28-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
DUNE 30, 1989
5. DUTMED REVENW. t CONTINUM:
•
SPECIAL REVENWE FUNDS:
Park Acquisition and Development Fund:
• Sale of Emerald Cove site to Redevelopment 1,741
Agency
Development fees deferred in 1985 248
Land sale proceeds paid to Emerald Cove 832
Interest on above amounts 289
Total Park Acquisition and Development Fund 3,110
•
Sewer rand:
Development fees deferred in 1985 43
Interest on above ammunts 19
Total Sewer Fund 62
•
Gas. Tax rund
Interest on advances from 1988/89 50
Planned Local Drainage:
•
Development fees deferred in 1985 72
Interest on above amounts and on advances 84
from 1987/88
Total Drainage Fund 156
Total Special Revenue rands 3,378
•
DEDT SERVICE rLNDS:
Public rinancing Authority:
Interest on advances from 1988/89 361
•
CAPITAL PROJECTS FUNDS
Parking Structure
Interest on above advances fro►n 1988/89 675
• Total Deferred Revenue 3 9,575
• See Lndr!pPndF,nt auditor ' s report -29-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
6. RLTIItEN9E PLAN - bKXWL:
•
a. Plan Description:
The City contributes to the California Public Employees Retirement System
(PERS) , an agent, multiple employer retirement system that acts as a common •
investment and administrative agent for participating public entities in
California. Generally only an employee's base salary (excluding overtime)
is subject to retirement benefits. The total payroll for the year ending
June 30, 1989 was $46,537,456. The payroll subject to retirement benefits
was $38,113,271.
•
The plan covers all permanent City employees and temporary employees who
work more than 1000 hours in a twelve month period. Benefits vest after
five years of service. Benefits for employees vary based upon such factors
as final yearly compensation, safety or non-safety status and age at
retirement. There are two groups of covered employees:
•
Safety employees- include sworn police, fire and marine safety employees
Miscellaneous eirployees- all other covered employees
b. ERployee and Employer Contribution Obligations: •
The City makes two types of contributions on behalf of covered employees.
The first contribution represents the amount required to be made by the
City (the employer rate) . The second represents an amount which is
normally paid 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.
I
The einployer rare is set by PERS and changes from year to year. The
employer rates for the fiscal year ending June 30, .1989 are shown below: •
•
See independent auditor ' s report -30-
'ROM
Iva
• � v
CLTY OF BEACH
SINGLE AID1T OF FECERAILY
ASSMM GRAHr PAS
JQNE 30, 1990
• CITY OF HL ING ION BEACH
TABLE OF CONTENTS
June 30, 1990
•
Page
Number
General Purpose Financial Statements:
• Independent Auditors' Report on General Purpose
Financial Statements 1
Coembined Balance Sheet - All Fund Types and Account Groups 2 - 3
Combined Statement of Revenues, Expenditures and Changes
in Fund Balances - All Governmental Fund Types 4 - 5
•
Combined Statement of Revenues, Expenditures and Changes
in Fund Balances - Budget and Actual - General and
Special Revenue and Debt Service Fund Types 6 - 8
Combined Statement of Revenues, Expenses and Changes
• in Retained Earnings - All Proprietary Fund Types 9
Combined Statement of Cash Flows - All Proprietary Fund Types 10 - 11
Notes to Financial Statements 12 - 75
• Supplementary Information - Federally Assisted Programs:
Independent Auditors' Retort and Schedule of Federal
Financial Assistance
• Independent Auditors' Report on Schedule of Federal
Financial Assistance 76
Schedule of Federal Financial Assistance 77
Independent Auditors' Reports on Compliance and
• Schedule of Findings and Questioned Costs
Independent Auditors' Report on Compliance Related to
the General Purpose Financial Statements 78
Independent Auditors' Report on Compliance with Laws and
• Regulations Related to Major Federal Financial
Assistance Programs 79 - 80
Independent Auditors' Report on Compliance with Laws and
Regulations Related to Non-major Federal Financial
Assistance Programs 81
Schedule of Findings and Questioned Costs 82
•
CITY OF HLNrING'W BEACH •
TABU: OF CONTENTS
(OONrnium)
June 30, 1990 •
Page
Nwnber
Independent Auditors' Reports on Internal Accounting Controls
Independent Auditors' Report on the Internal Control Structure �•
in Accordance with Goverment Auditing Standards 83 - 85
Independent Auditors' Report on Internal Controls (Accounting and
1ministrative) - Based on a Study and Evaluation Made as Part
of an audit of the General Purpose Financial Statements
and the Additional Tests Required by the Single Audit Act 86 - 88 •
•
•
•
•
•
GENERAL P@WOBB FnQJRMM SMEMEd15
•
DIEHL,DJANS
&CON A V 1 RALPH K-TKM-XLMcDANIEL,CPA
A41PH H.W'EQ�fiR�LB,CPA
CERTIFIED PUBLIC ACCOUNTANTS MICK-0-R.U'DIN.CPA
A P'ARMERSHIP INLUFDNC ACLXXJ.V ALY CORPORAMM ROBERT R.W9NI:.CIA
• PHILIP H.HOLTKAMP,CB4
18401 VON KARMAN,SUITE 200 THOMAS M.PERLaWSIG,CPA
IRVINE • CALIFORNIA 92715.1542 HAWU I SCHROEDER,CPA
PHONE(714)757-7700 September 21, 1990
FAX(714)757-2707
•
INDEPE R4T AUDIMPSI REPORT ON GENERAL
PURPOSE FINANCIAL STATEMENTS
•
City Council
City of Huntington Beach
Huntington Beach, California
We have audited the general purpose financial statements of the City of
Huntington Beach, California as of and for the year ended June 30, 1990, as
listed in the table of contents. These financial statements are the
responsibility of the City's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
• We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the general purpose 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 general purpose financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the general purpose financial statements referred to above
present fairly, in all material respects, the financial position of the City of
• Huntington Beach at June 30, 1990, and the results of its operations and the
cash flows of its proprietary fund types for the year then ended in conformity
with generally accepted accounting principles.
•
•
MI ER OFFICES AT: 2965 ROOSEVELT ST 613 W.VALLEY PKWY.,SUITE 330
CARLSBAD.CA 92008.2389 ESCONDI DO.CA 92025.2552
(619)729-2343 (619)741-3141
(619)729-2234 FAX (619)741.9890 FAX
•
CITY OF HUNTINGTON BEACH
COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS
June 30, 1990
(expressed in thousands)
Governmental Fund Types
Special Debt Capital
ASSETS AND OTHER DEBITS General Revenue Service Projects
Cash and Investments (Notes le and 3) $ 7,743 $16,816 $ 3,325 $38,772
Cash With Fiscal Agent (Note 3) - - 7,370 227
Taxes Receivable (Note 1) 2,985 - 317 70
Other Receivables 1,518 1 ,251 150 545
Unbilled Receivables (Note lb) - - - -
Inventory (Note lg) 284 - - - M
Due from Other Funds 97 - - -
Advances to Other Funds (Note 10) 57, 140 5,707 24, 122 17,264
Deposits and Other Assets 7,519 - - -
Land Held for Resale (Note If) - - - 24,597
Property, Plant and Equipment,
Net (Notes if and 15) - - - -
Amount Available for Debt Service Funds (Note lb) - - - -
Amount to be Provided for Payment
of Long-Term Debt - - -
TOTAL ASSETS AND OTHER DEBITS IIZ,286 23 774 115,284 JaL,475
LIABILITIES, EQUITY AND OTHER CREDITS
LIABILITIES:
Accounts Payable $ 2,046 $ 905 $ - $ 1 ,013
Accrued Liabilities 1,255 10 - 8
Deposits 346 14 - 34
Tax and Revenue Anticipation Notes - - - -
Due to Other Funds - 47 - 50
Advances from Other Funds (Notes 10 and 12) - - - -
Deferred Compensation (Note 4) - - - -
Claims Payable (Note 9) - - - -
Deferred Revenue (Note 5) 49,492 3,660 358 2,245
Current Portion of Long-Term Debt - - - -
Long-Term Debt (Notes 12 and 13) - - -
Compensated Absences (Notes lj, 12 and 13) - - - -
TOTAL LIABILITIES 53, 139 4,636 358 3,350
EQUITY AND OTHER CREDITS: •
Contributed Capital (Note 11b) - -
Investment in General Fixed Assets - - - -
Retained Earnings - - -
Fund Balances:
Reserved (Note 16) 22,959 6,567 34,926 78, 125
Designated (Note 16) - 3,946 - -
Undesignated 1 , 188 8,625 - -
TOTAL EQUITY AND OTHER
CREDITS 24, 147 19, 138 34,926 78,125
TOTAL LIABILITIES, EQUITY •
AND OTHER CREDITS 7$ 1,286 23 774 35 284 81 475
See independent auditors' report and notes to financial statements.
-2-
•
• SCHEDULE A-1
Fiduciary Account Groups
Propriety Fund Types Fund Type General General
Internal Trust and Fixed Long-Term Totals (Memorandum Only-)
• Enterprise Service Agency Assets Debt 1.990 1989
$12,747 $13,673 $ 2,713 $ - $ - $ 95,789 5 88,321
900 2,049 13,379 - - 23,925 26,087
- - - - - 3,372 3,597
931 212 2,484 - - 7,091 7,333
1,216 - - - - 1,216 1,373
• - - - - - 284 263
- - - - - 97 505
1,560 - - - 105,793 83,884
- 274 29 - - 7,822 226
- - - - 24,597 20,37-6
• 36,394 14,193 - 94,790 - 145,377 132,025
- - - - 11.,162 11,162 12,806
- - 167,772 167,772 130,432
53 748 30 401 118,605 121,790 $178,934 59$ 4,297 50$ 7,228
•
$ 814 $ 416 $ - $ - $ $ 5, 194 $ 3,547
135 188 - - - 1,596 1,913
1,345 - 992 - - 2,731 1,.824
• - - - - - - 5,000
- . - - - - 97 505
944 - - - 104,849 105,793 83,884
- - 15,795 - - 15,795 13,42.9
- 6,962 1,773 - - 8,735 7,995
- - - - - 55,.755 39,5T5
! 273 81 - - - 354 343
6,734 5,688 27 - 69.,764 82,2.13 68,626
161 - - - 4,321 4,482 4,435
10,406 13,335 18,587 0, 178.,934 282,745 231,016
•
38,824 14,221 - - - 53,045 50,093
- - - 94,790 - 94,790 84,469
4,518 2,845 - - - 7,363 4,609
- - 18 - - 142,.595 118,534
• - - - - - 3,946 4,036
- - - - - 9,813 14,.41.1
43,342 17,066 18 94,790 0 311 ,552 276, 152
53 748 110,401 $18,605 $94,790 178 934 59� 4,297 50$ 7,228
-3-
•
CITY OF HUNTINGTON BEACH
COMBINED STATEMENT OF CASH FLOWS
ALL PROPRIETARY FUND TYPES AND SIMILAR TRUST FUNDS
For the Year Ended June 30, 1990
(expressed in thousands)
Proprietary Fund Types
Internal
Enterprise Service
CASH FLOWS FROM OPERATING ACTIVITIES:
Operating Income (Loss) : $ 714 $ (186)
Adjustment to reconcile operating income to net cash •
provided by operating activities
Depreciation 1,374 2,638
Change in Assets and Liabilities:
Decrease (Increase) in Accounts Receivable 382 4 •
Decrease (Increase) in Interest Receivable (107) (107)
Decrease in Unbilled Receivable 157 - -
Decrease (Increase) in Advance to Other Funds (143) -
Increase (Decrease) in Accounts Payable (507) 96
Increase (Decrease) in Claims Payable - (460)
Increase (Decrease) in Accrued Payroll 17 (12) •
Increase in Accrued Interest - 164
Increase (Decrease) in Deposits 236
Increase in Compensated Absences 33 -
Total Adjustments 1,442 2,323
Net Cash Provided by Operating Activities 2, 156 2, 137 •
CASH FLOW .FROM NON-CAPITAL FINANCING ACTIVITY
Operating Transfer In (Out) to Other Funds 68) 421
CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES:
•
Interest Expense (595) (404)
Acquisition and Construction of Capital Assets (1,102) (5,913)
Capital Contributed 1,385 1,567
Principal Paid on Bonds (26) -
Principal Paid on Note Payable 88) 77)
•
Total Cash Used for Capital
and Related Financing Activity 426) (4,827)
CASH FLOWS FROM INVESTING ACTIVITY
Interest on Investment 1,266 1 ,516
NET INCREASE (DECREASE) IN CASH EQUIVALENTS 2,928 (753) •
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 10,719 16,475
CASH AND CASH EQUIVALENTS, END OF YEAR 1$ 3,647 $15,722
See independent auditor's report and notes to financial statements. •
-10-
•
• SCHEDULE A-5
• Fiduciary Totals
Fund Type (Memorandum Only)
Pension Trust 1990 1989
$18 $ 546 $ 1,051
•
4,012 3,133
• - 386 (678)
(214) (71)
157 (155)
(143) (128)
(411) 467
(460) 86
• - 5 79
164 130
236 (307)
33 9
3,765 2,565
• = 4,311 3,616
353 -
•
(999) (601)
- (7,015) (2,086)
- 2,952 878
- (26) (166)
165) 5,510
•
(5,253) 3,379
2,782 2,312
•
18 2, 193 9,307
- 27,194 17,887
29 387 JZL 194
• -11-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1990
•
1. Sf*RY OF SIM;IFICANr ACMU RrM POLICIES:
a. Description of Fund Types and Account Groups: •
The City of Huntington Beach (City) accounts for its financial position and
operations according to generally accepted accounting principles for
governmental units prescribed by the Government Accounting Standards Board
(GASB) . The City uses various funds and account groups to record its •
financial activity. A fund or account group is an accounting entity with a
self-balancing set of accounts to record the financial position and results of operations of a specific governmental activity. The City maintains the
following fund types and account groups:
Goverrmiental Fluid Types: •
The General Fund accounts for all financial activity that is not required
to be accounted for in another fund.
Special Revenue Fluids account for the receipt and expenditure of monies
legally restricted to a specific use. •
Debt Service Funds account for the receipt and disbursement of monies used
for the payment of general and redevelopment long-term principal and
interest.
Capital Projects Fluids account for monies used for the acquisition and •
construction of major capital facilities.
Proprietary Fund Types:
Enterprise Funds account for City operations that are financed in a manner
similar to private businesses and are are used when the City wishes to
recover the cost of a particular service furnished to the public on a cost
(expenses including depreciation) reimbursement basis or when the City
wishes to periodically determine net income.
Internal Service Funds account for goods and services provided by one
department of the City to another on a cost-reimbursement basis. •
Fiduciary Fund Type:
Agency Funds account for assets held by the City as an agent for
individuals or private organizations.
•
See Independent Auditor's Report 12
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1990
1. SUMMARY OF SIGNIFICANT' ADMU11TIM POLICIES:
a. Description of Fund Types and Account Groups:
Pension Trust Funds account for contributions made and retirement benefits
paid.
Account Groups:
The General Fixed Assets Account Group records and controls the City's
capital assets not owned by proprietary funds.
The General Long Term Debt Account Group accounts for the unmatured long-
• term liabilities financed from governmental funds.
b. Basis of Accounting:
• Governmental and agency funds use a modified accrual basis of accounting.
Revenues are recognized when they are susceptible to accrual. This means
that they must be measurable and available to finance current period
expenditures and received within 60 days after year-end. They include
property taxes, sales tax, federal and state grants and subventions,
interest and certain charges for current service. Revenues which are not
• susceptible to accrual include certain licenses, permits, fines and
forfeiture and other miscellaneous revenue. Expenditures are recognized
when the rerelated fund liability is incurred, if measurable, except for
u matured interest on long-term debt which is recognized when due.
Proprietary fund types are accounted for on the accrual basis. Accounting
• for these fund types normally follows accounting for private businesses.
Revenues are recognized when earned, regardless of the date of receipt and
expenditures are recognized when the related fund liability is incurred.
Unbilled water revenue is accrued when earned.
Pension trust funds are accounted for on the flaw of economic resources.
• All assets and liabilities, both current and long-term are presented on the
balance sheet. The operating statement presents increases (revenues) and
decreases (expenses) in total net assets.
•
See Independent Auditor's Report 13
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1990
•
1. SUMMARY OF SIGNIFICANT' A000@TTING POLICIES (OONrINUM)
c. Measurement Focus: i
The City's governmental funds are accounted for on" a spending or "financial
flow" measurement focus where generally only current assets and current
liabilities are included on balance sheets. Statements of revenue,
expenditures and changes in fund balance for governmental funds generally •
present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets.
Proprietary funds are accounted for on a capital maintenance
measurement focus. Assets and liabilities, whether current or noncurrent,
are shown on the balance sheets. Reported fund equity represents total net •
assets. Proprietary fund operating statements present increases (revenues) _
and decreases (expenses) in total net assets.
d. Budgets and Budgetary Accounting:
•
The City Council annually adopts a budget by June 30th of the prior fiscal
year for all governmental fund types. The budgeted expenditures become the
appropriations to the various departments. Estimates are also made for
revenue which, along with the appropriations, are used to compute the
budgetary fund balance. The appropriated budget covers substantially all •
governmental fund type 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 one object purpose (personal services, operating
expenditures or capital outlay expenditures) to another within the same •
department without changing the total budget of a department. A department
head may transfer funds from like object categories of the same department.
Any changes to a total departmental budget must be approved by the City
Council. Expenditures may not exceed appropriations at the departmental
level. All unused appropriations lapse at year-end.
•
Budgets for governmental fund types are adopted on a basis substantially
consistent with generally accepted accounting 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. •
See Independent Auditor's Report 14
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
1. SED24MM OF SIGNIFICANT ACOOLNrM POLICIES (cmenmm)
• d. Budgets and Budgetary Accounting:
On or before February 28th of each year, each department submits data to
the City Administrator so that a budget may be prepared. This budget is
prepared by fund, function and activity and includes information on past
years, current year estimates and requested appropriations for the next
fiscal year. Before May 1st, the proposed budget is presented to the City
Council. The City Council holds public hearings and may amend the budget
by a majority vote. Any changes to the budget must be within the revenues
and reserves estimated as available.
• Budgetary data is presented for the General, Special Revenue and Debt
Service Funds. Budgetary information is not presented for the Capital
Projects Funds since these are budgeted on a long-term project by project
basis.
The City uses an encumbrance system as an aid in controlling expenditures.
• Encumbrances are amounts committed for goods or services for which a
purchase order has been issued and the goods have not been received or the
services have not been rendered. At year-end, alloutstanding -encumbrances
are reported as reservations of fund balance in governmental fund types.
These outstanding encumbrances are then reprogranuned into the new fiscal
year.
•
•e. Investments:
Investments are stated at cost, which is greater than market -at June 30,
1990. If market values decline below cost, no loss is recorded unless .such
declines are considered permanent. The assets of the Employee Deferred
Compensation Fund (an agency fund) are reported at market value -rather than
cost.
• f. Property and Equipment:
Acquisitions of property and equipment are generally recorded as
expenditures in governmental fund types at the time of purchase and are
capitalized at historical cost or estimated historical cost in the General
• Fixed Assets Account Group. Land held by the Redevelopment Agency for
See Independent Auditor's Report 15
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
1. SUKKNU OF SIGNIFICANT ACMUNrING POLICIES (CO RMMED) :
f. Property and Equipment: •
resale is capitalized at the lower of cost or market in the Redevelopment
Agency Capital Projects Fund. Expenditures for infrastructure (roads,
curbs, sidewalks, sewers, etc.) are not capitalized as such assets are
immovable and generally of value only to the City. No depreciation is •
provided for any asset capitalized in the General Fixed Assets Account
Group.
All purchased fixed assets acquired by proprietary funds are valued at
historical cost (where historical records are available) and at estimated
historical cost where no historical records exist. Both proprietary and •
general fixed assets acquired from gifts or contributions are capitalized
at fair market value at the time received, or in the case of water fixed
assets, at City Council acceptance date. Depreciation for both donated and
proprietary fund acquired assets is calculated on the straight-line method
over the estimated useful lives of the assets shown below and charged to
the respective fund. •
Production, pumping, transmission
and distribution plant - 10 to 50 years
General plant- 20 to 50 years
Transportation equipment- 5 to 30 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 form the date of borrowing until completion of
the project with interest earned on the invested proceeds over the same
period. The City has capitalized $185,000 of interest on the construction
of the Emerald Cave apartment complex. •
g. Inventories:
Inventories are recorded in governmental funds by the consumption method. •
Inventories are capitalized and recorded as expenditures when used.
Inventories of materials and supplies totalled $284,102 at June 30, 1990
and are valued using the weighted average cost method. This amount is
offset with an reservation of fund balance.
•
See Independent Auditor's Report 16
•
• CITY OF HUNTINGTON BEACH
NOTES TO- FINANCIAL STATEMENTS_
(continued)
JUNE 30, 1990
•
1. SUMMARY OF SIGNIFICANT ACWU1nMV:POLICIES. (CONTINUED)
• h. Interfund Transactions:
During the course of normal operations, numerous transactions.-:occur between
funds. These result in operating transfers, residual equity transfers,
balances due to or due from other funds and balances advanced to or from
• other funds. Residual equity transfers-are nonrecurring or--non-routine
transfers of equity between funds. Operating transfers.are.transfers
between funds that are normal and recurring. Amounts that-are=due-to or.
due from other funds are-the current. (due-_within.one year) portion of
monies that are to be paid to or received fran other funds. Amounts that
are classified as advances from other funds..are the-long-term-portion of.
• monies which will be repaid- to_other_funds. Amounts that are-classified as
advances to other funds..represent.the_-long-term.portion of_amounts that
will be received fran other. funds. In governmental. funds-amounts,that are
advanced to other funds are also offset equally by a fund balance reserve
account, which indicates that they are not.spendable financial resources.
In proprietary funds there is no reservation of_fund equity.
•
Quasi-external transactions are interfund_.transactions that would be-
treated as revenues, expenditures or.. expenses.if-they-had- involved.
organizations external to.:the, City. The: City has:-recorded_all.quasi-
external transactions as revenues; expenditures 7or: expenses. Transactions
that reimburse a fund for expenditures or expenses. initially made from it
• that, are recorded as expenditures/expenses.
All other interfund transactions are reported as operating_ transfers.
i. Long-Perm Obligations:
•
Governmental fund long-term debt (principal, interest and.fiscal. charges)
is recorded as an expenditure when due regardless of when the. expenditure
is incurred. Obligations that are expected to be financed frown spendable,
available financial resources are reported.as a-fund liability. The
• remainder is reported in the General Long-Perm Debt Account Group. Bond
discounts and issuance costs. are recognized in the period that the debt is
issued.
•
See Independent Auditor's Report 17
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
1. Si OOM OF SIGNIF'ICAM ADMUMMM POLICIES (Cm 92MED):
Proprietary fund long-term debt is accounted for in the respective funds. •
Interest on the debt is recorded when incurred. Principal that is due
within one year is shown as a current liability. The remainder is
classified as a long-term liability. Bond discounts are recorded as a
reduction of outstanding debt and are deferred and amortized over the term
of the debt.
•
j. IImployee Cmpensated Absences:
The City records the cost of vacation and sick leave when paid in the
governmental fund types and when incurred in the proprietary fund types. •
At June 30, 1990, the unfunded liability for vacation and sick leave for
the City's governmental funds totalled $4,321,000 (note 12) . The City has
recorded this amount in the General Inng-Term Debt Account Group since
these amounts will be paid with future financial resources rather than
currently available spendable resources. In the proprietary fund types the
liability of $161,000 has been recorded. These amounts represent the "cash •
surrender value" of all accumulated vacation and sick leave which is the
amount that would be paid to employees if they terminate. Vacation is paid
at 100% of the accrued amount, while sick leave is paid at varying amounts
depending on the employee's contract.
•
k. Fund Equity:
ty:
The various types of fund equity recorded on the balance sheet are
described below:
Governmental Fund Types
Reserved Fund Balance is the portion of fund balance that is not
appropriable for expenditure or that is legally segregated for a specific
future use.
Unreserved/Designated Fund Balance is the portion of fund balance that has
been tentatively set aside by the City Council.
Unreserved/Undesignated Fund Balance is the portion of fund balance that is
available to be spent by the City Council.
•
See Independent Auditor's Report 18
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
1. S[IIKK1RY OF SIGNIFICANT ACOOUNFa1G POLICIES (ODNrIN[JED)
• k. Fund Equity:
Proprietary Fluid Tripes
Retained Earnings is the accumulated earnings of an enterprise or internal
• service fund. -
Contributed Capital is the permanent fund capital of a proprietary fund
created when assets are contributed to a proprietary fund or a residual
equity transfer is made to a proprietary fund.
Pension Trust Fund
Reserved fund balance is the portion of fund balance that is reserved for
future pension payments. .
Account Groups
Investment in General* Fixed Assets is the City's investment in general
fixed assets recorded at cost.
1. 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 government,
school districts, cities and special districts. Additional levies require
two-thirds approval by voters and are allocated directly to the specific
government unit. Property tax revenue is recognized in the fiscal year
levied provided that the revenue is collected during the year or within 60
days of year-end.
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- March 1st of prior fiscal year
Levy Date- July 1st
Due Date, First Installment- November, loth
Due Date, Second Installment- February loth
See Independent Auditor's -Report 19
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
1. SUMMRY OF SIGNIFICANT' ACWMnUW POLICIES (00WINUED) :
1. Property Tax Revenue: •
Delinquent Date, First Installment- December llth
Delinquent Date, Second Installment- February lath
The taxes are paid to the local governments periodically during the year. •
Below are the dates and percentages of the payments from the County (dates
and percentages vary slightly from year to year)
November 30th- 5%
December 19th- 20%
December 28th- 20% •
February 1st- Balance of First Installment
March 28th- 5%
April 26th- 34%
July 26th of next fiscal year- Balance of Second Installment
•
m. Allocation of Interest Intone Among Funds:
The City pools all non-restricted cash for investment purchases. Interest
income is allocated monthly to the various funds based on the month-end
cash balances. Interest income from restricted cash is recorded directly •
in the fund earning the income.
n. Equipment Replacement Fund:
•
All machinery and equipment which is not awned by proprietary funds is
owned by the Equipment Replacement Fund, an internal service fund, and
leased to user departments. All machinery and equipment which does not
replace existing equipment is purchased by the respective fund and
transferred to the Equipment Replacement Fund. The transaction is recorded
as a capital outlay expenditure in the fund making the purchase and •
contributed capital in the Equipment Replacement Fund.
•
See Independent Auditor's Report 20
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
1. SUMMAW OF SIGNIFICANP ACMM?rM POLICIES (OoNrINUED):
• o. Emerald Owe Housing Fund Transfer:
The City operates the Emerald Cove Senior Citizens Apartment Complex and
records the activity in the Emerald Cove Housing Fund, an enterprise fund.
The City annually transfers funds from the Low-Income Housing Fund to
subsidize operations. The transfer is reported as an operating transfer.
•
p. Total Columns and Comparative Data on Combined Financial Statements:
The combined financial statements include "total" columns which total the
• financial statements of the fund types and account groups. The columns are
labeled "memorandtmi only" because the totals are not comparable to a
consolidation. Interfund transactions (except for certain leases between
the oversight unit and component units described in note 2) are not
eliminated.
• Comparative total data for the prior year have been shown in the
accompanying financial statements in order to provide an understanding of
changes in the City's financial position and operations. However,
comparative data for individual funds have not been presented in all
statements because their inclusion would make certain statements unduly
complex and difficult to understand.
•
q. Joint Ventures:
The City is involved in one joint venture which is recorded in a
• proprietary fund type using the equity method of accounting. The net
increase or decrease in the City's equity position is shown as a non-
operating revenue or expense.
r. PERS Surplus:
•
The City has surplus funds in its account at the California Public
Retirement System (PERS) . This represents excess contributions received
from past years. The City has elected to reduce future contribution rates
to Pam. These amounts are recorded as "Other Assets" and are offset by an
• identical amount recorded as "Deferred Revenue" (See notes 5 and 6) .
See Independent Auditor's Report 21
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
1. SUMMARY OF SIGNIFICANT A0MUWr NG POLICIES (COWTIN M)
s. Cash Flow Statements: •
For purposes of the Statement of Cash Flows, the Proprietary and Similar
Trust Fund types considers all cash and investments to be cash and cash
equivalents. •
2. Dt CRIPTIOIJ OF THE REPORTING ENTITY:
The financial activity of certain separate legal entities have been
included in this report. Each separate legal entity was evaluated to see •
if its operations should be combined with the City's. The criteria used
were; oversight responsibility, financial dependency, ability to influence
operations, designations of management, budget adoption, entitlements of
budget surpluses or deficits and location within the City's geographic
boundaries. Below is a description of each of these entities and how their •
financial activity has been evaluated and shown in this report:
Huntington Beach Public Facilities Corporation (Public Facilities
Corporation)- This entity was formed in 1970 to issue bonds to construct
the civic center and library complexes. The Public Facilities Corporation
leases the library complex to the City. The lease is a capital lease •
because title to the facilities passes to the City upon termination of the
lease. The Public Facilities Corporation's original governing body was
appointed by the City Council. However, the governing board itself appoints
any successors. The City Council adopts an annual budget for the Public
Facilities Corporation which cannot end its lease with the City if the City
meets the terms of the lease. At the end of the lease, the Public •
Facilities Corporation will dissolve and its assets will revert to the
City. The assets and related revenue and expenditures that are used for
repayment of the bonds are recorded as a debt service fund. Assets used to
construct capital improvements were recorded in a capital projects fund.
Since the Public Facilities Corporation is a part of the City's reporting
entity, the capital lease between the City and the Public Facilities .
Corporation is not shown on the combined balance sheet.
Parking Authority of the City of Huntington Beach (Parking Authority)-
This entity was formed in 1967 to issue bonds to construct off-street
parking facilities. The City leases the facilities from the Parking
Authority. The lease is a capital lease because the City Council may, by .
resolution, dissolve the Parking Authority and deed the assets to the City.
See Independent Auditor's Report 22
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
2. DESC RIPPICN OF THE REPORTING F3Jl.' :
• The Parking Authority's governing body is the City Council which annually
adopts a budget for the Parking Authority. The Parking Authority is
financially dependent on the City for all its operations. At any time
during the term of the lease the lease payment may be forgiven by
resolution of the City Council if there is enough cash in the Parking
Authority to meet the debt service requirements. The assets and related
• revenue and expenditures that are used for repayment of the bonds are
recorded in a debt service fund. Assets used to construct capital
improvements were recorded in a capital projects fund. Since the Parking
Authority is a part of the City's reporting entity, the capital lease is
not shown on the combined balance sheet.
• Redevelopment Agency of the City of. Huntirx#= Beach (the Agency)- This
entity was formed in 1967 to renovate older areas in the City. The City
Council serves its governing body of and adopts its annual budget. The
Agency is financially dependent on the City for all of its operations.
The tax increment revenue received and disbursed by the Agency is recorded
in a debt service fund and the capital iprovements made are recorded in a
• capital projects fund. The Agency's debt is recorded in the General Long-
Term Debt Account Group since these amounts will be paid from future.
financial resources.
Huntington Beach Civic Improvement Corporation (Civic Improvement
Corporation)- This corporation was formed to provide for the defeasance of
• the Huntington Beach Public Facilities Corporation Leasehold Mortgage
Bonds- 1st Issue as described in Note 12. The Civic Improvement
Corporation -issued $20,000,000 of certificates of participation to provide
.for this defeasance. During the year the Civic Improvement Corporation
also issued an additional $15,025,000 of additional certificates of
participation. The governing board of the Civic Improvement Corporation is
• the City Council which also adopts its annual budget. The Civic
Improvement Corporation is dependent uponz the City for all of its
operations. The Civic Improvement Corporation has title to the Civic
Center ccuplex and leases it to the City. It is a capital lease because
title to the Civic Center complex reverts to the City at the end of the
lease. The lease cannot be terminated if the City meets all its financial
• obligations. The assets pledged for repayment of the certificates of
participation and the related revenues and expenditures are recorded in the
Civic Improvement Corporation .Debt Service Fund. Since the Civic
Improvement Corporation is a part of the City-Is reporting entity, the
capital lease is not shown on the balance-sheet.
•
See Independent Auditor's Report 23
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUKE ,30, 1990
•
2. DESCRIPTION OF 00 REPORTING ENTITY( CONTINUM :
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 Authority's governing body is the City Council which also
adapts the annual budget. The Authority is totally financially dependent
on the City. The Authority's activity is recorded as both a debt service
fund and as a portion of the activity in the Equipment Replacement Fund (a •
proprietary fund type) .
The City of Huntington Beach C mmunity Facilities District 1990-1
(Community Facilities District) and the Reservoir Hill Assessment District •
(the Assessment District) 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 expenditure for the
public improvements are recorded in capital projects funds. The monies
collected to retire the debt are recorded in an agency fund.
There are many other governmental agencies, including the County of Orange,
various elementary school districts, the Coast Community College District,
the Huntington Beach Union High School District and various assessment
districts and other special districts which provide services within the
City. These are not component units of the City of Huntington Beach and
their financial information is not included in this report. •
3. CASH AND INVES*II�fPs:
Cash and investments at June 30, 1990 totalled $119,714,000 and are shown •
in the accompanying combined balance sheet as follows (expressed in
thousands) :
Cash and Investments $95,789
Cash with Fiscal Agent 23,925 •
Total $119,714
•
See Independent Auditor's Report 24
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
3. CASH AND INVESTMEWS (COQJI'II =) :
• Collateral for Deposits
The California Government Code requires California banks and savings and
loan associations to secure a City's deposits by pledging government
securities with a value of 110% of a City's deposit. California law also
allows financial institutions to secure City deposits by pledging first
• trust deed mortgage notes having a value of 150% of a City's total
deposits.
The collateral for deposits in Federal and state chartered banks is held in
safekeeping by an authorized Agent of Depository recognized by the State of
California Department of Banking. The collateral for deposits with savings
• and loan associations is generally held in safekeeping by the Federal Home
Iran Bank in San Francisco, California as a third party trustee. These
securities are physically held in an undivided pool for all California
public agency depositors. The trustees keep detailed records of the
security pool.
• The City Treasurer, at his discretion, may waive the collateral requ.irev ent
for deposits which are fully insured up to $100,000 by the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance
Corporation. It is the City's policy to waive the collateral requirenwit
if there is a higher interest yield on the investments.
• Authorized Investments
The City of Huntington Beach operates its pooled cash investments under the
"Prudent Man Rule" (California Civil Code sections 2261 et seq.) . This
allows a broad spectrum of investments as long as the investment is
allowable under legislation of the State of California (Government Code
• Section 53600 et seq.) .
Under the provisions of the City's investment policy and in accordance
with Section 53601 of the California Government Code, the City may invest
in the following types of instruments:
• a. Bankers acceptances
b. Negotiable certificates of deposit
c. Commercial paper
d. Bonds issued by the City
e. Obligations of the United States Treasury
•
See Independent Auditor's Report 25
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
3. CASH AMID INVES aWM (OONr WED) :
f. Federal Agency Obligations of: •
Federal Intermediate Credit Bank (FICBs)
Federal land Bank (FLBs)
Federal Home Loan Bank (FHLBs)
Federal National Mortgage Association (RMs) •
Small Business Administration (SBAs)
Government National. Mortgage Association (Gills)
Tennessee Valley Authorities (TVAs)
Student loan Association Notes (Sallie Mae's)
g. Obligations of the State of California or of any local agency within the
State of California: •
The Local Agency Investment Fund (IAIF) is a special fund of the
California State Treasury through which any local government may pool
investments. Each agency may invest up to $10,000,000 in this fund.
Investments in LAIF are highly liquid and may be converted to cash
within 24 hours. Investments with LAIF are secured by the full faith •
and credit of the State of California.
h. Repurchase Agreements:
Throughout the year ending June 30, 1990, the City utilized overnight
repurchase agreements for temporary investment of idle cash. Such •
agreements were used on average of 20 to 22 times per month and
generally did not exceed 10% of the City's investment portfolio.
i. Reverse-Repurchase Agreements:
Although the City's investment policy does not preclude the use of •
Reverse-Repurchase Agreements, the City did not borrow through the use
of reverse repurchase agreements at any time during the year.
j. Medium-Term Corporate Notes
•
•
See Independent Auditor's Report 26
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 301 1990
•
3. CASH AMID INVES HEM (CMMN=):
• k. Ritual Funds
Safekeeping Arrangements for Investments
Under Sections 53651 to 53653 of the California Government Code, as
amended, the collateral underlying an agency's i.nvestments .must be
• delivered to the City. If U.S. Federal obligations are used as the
underlying collateral, the delivery may be made by "book-entry" only.
For all other collateral, the security must be physically delivered to
the City or a third-party custodial agent.
A bank is permitted to maintain the underlying securities in its Trust
• or Safekeeping Department when acting as a third-party custodial agent.
The City's balance of deposits and investments with financial
institutions us categorized under the following risk categories:
Deposits
•
Category 1- Deposits which are insured by FDIC, FSLIC, a state
depository insurance fund or a multiple-financial institution collateral
pool, or deposits which are collateralized with securities held by the
City or the City's agent in the City's name.
• Category 2- Deposits which are collateralized with securities held by
the pledging financial institutions trust department in the City's name.
Category 3- Deposits which are uncollateralized, or collateralized but
the pledged securities are not held in the CityIs -name.
• Investments
Category 1- Investment which are insured by SIPC, or where the
securities are held by the City or the .City Is agent in the City's name.
Category 2- Investments which are uninsured, where the securities are
• held by the purchasing financial institution's trust department or agent
in the City's name.
Category 3- Investments which are uninsured, where the securities are
held by the purchasing financial institution's trust department or
agent, but not in the City's name.
•
See Independent Auditor's Report 27
•
CITY -OF .HUNT.INGTON .BEACH •
NOTES TO '.7INANCZAL ;STATEMENTS
(continued)
JUNE 30, `1990
•
3. CASH AMID (OONinwm).:
Category Market
1 2 3 Cost Value
Deposits
Demand Ants $ 181 $2-,524 $- :< -. .a $ 2:,705 r $ .2:;705 =
Certificates- -
of Deposit 41656 --44-,899. _.. r o 49.',555- =-49,555 r
Cash with Fiscal - - 10,646 10,646 10,646
Agent
Deferred _ ---A 13:;279 -1;2.79 ".Y=E 134 279-
Ccapensation
423 -_23.-,925'_ 76w 185_=. ~-==76;38. 5.= •
Subtotal 4,837 . 47; _ ,
Investments
Corporate Notes 3,500 784 6,478 10,762 10,765
Federal Mortgage - - 938 938 921
Notes -
Federal --_ _-.- _: _- -:.: 7-391 : _ . 7,-391: '. == c_7,364:
ObligationsU.S. Treasury Notes - 5;989' - -__-_5-;989.:-:_ i r::5,989-
Repurchase - _- v _- 4;350__ter ::.4,350 4,350
Agreements •
Subtotal 3,500 784 25,146 29,430 29,389
Others
Investment in--IAIF __. ,.19_,:000.-,`- :=19;000
Petty Cash 8 --8. •
Subtotal 19,008 19,008
btal�Deposits -.124;623 124,582 =
and Investments
in Financial
Institutions
Less Demand Warrants (4,909) (4,909)
Outstanding
._ .Total=Cash and $119,714 $119,673
See Independent Auditor's Report 28
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
4. DEFERRED COMPENSATION:
• Permanent City employees may defer a portion of their salary under Section
457 of the Internal Revenue Code. These amounts are invested in savings
accounts, certificates of deposit and other prudent investments. The City
retains title to these funds until withdrawn by the employee, which may
take place at termination or any later date. The assets of the plan remain
subject to the general claims of creditors of the City. The amount of
• deferred compensation payable at June 30, 1990 was $15,795,000 which
represents the market value of the investments.
Since the City has a fiduciary responsibility to administer the plan, the
assets are recorded in an agency fund in the City's financial statements.
The City believes that it is unlikely that it will use the assets to pay
• any general creditors now or in the future. The City offers two different
investment mediums for participants. The choice of investment is made by
the participants.
5. DEFERRED REVENUE:
Certain revenues in goverrmPntal funds have been deferred until received.
Interest on these amounts accrues at 10% per annum with the exception of
interest on loans from the Public Financing Authority and the PERS surplus
which accrue interest at varying rates. The amounts are as follows
• (expressed in thousands) :
GENERAL RAL FUND:
Development fees deferred in 1984 and 1985 $ 49
Land sales from the City to the
Redevelopment Agency from 1982/83 to 32,903
1989/90
Interest on above amounts and on general 9,021
fund advances from 1978/79 to 1989/90
PERS Surplus-see note 6 7,519
•
Total General Fund 49,492
•
See Independent Auditor's Report 29
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
5. DEFEMW REVENUE (OMITINUED)
SPECIAL REVENUE FUNW: •
Park Acquisition and Development Fund:
Sale of Emerald Cove site to Redevelopment
Agency $1,741
Land sale proceeds paid to Emerald Cove 832 •
Development fees deferred in 1985 248
Interest on above amounts 407
Total Park Acquisition and Development Fund 3,228
•
Sewer Fund:
Development fees deferred in 1985 43
Interest on above amounts and on 1989/90
Advances 41
Total Sewer Fluid 84
Gas Tax Fund:
Interest on advances fiat 1988/89 105
•
Planned Local Drainage:
Development fees deferred in 1985 73
Interest on above amounts and on advances 120
from 1987/88 •
Total Drainage Fund 193
Grant Fund:
Revenue Received in Advance 50 •
Total Special Revenue FZinds $3,660
•
See Independent Auditor's Report 30
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
5. DEFERRED REVENUE (CONTINUED)
• UM SERVICE FUNDS:
Public Financing Authority:
Interest on advances fram 1988/89 $358
CAPITAL PRaTECTS FUNDS
•
Capital Improvement Fund:
Interest on Advances from 1989/90 20
Parking Structure:
Interest on advances from 1988/89 2,225
• and 1989/90
Total Capital Projects Rind 2,245
Total Deferred Revenue $55,755
6. Rh'I'IPIZEN' PLAN - NORMAL:
a. Plan Description:
The City contributes to the California Public Employees Retirement System
(PERS) , an agent, multiple employer retirement system that acts as a common
investment and administrative agent for participating public entities in
California. Generally only an employee's base salary (excluding overtime)
• is subject to retirement benefits. The total payroll for the year ending
June 30, 1990 was $48,393,307. The payroll subject to retirement benefits
was $40,414,710.
The plan covers all permanent City employees and t Tporary employees who
work more than 1000 hours in a twelve month period. Benefits vest after
• =five years of service. Benefits for employees vary based upon final yearly
sensation, safety or non-safety status and age at retirement. There are
two groups of covered employees:
Safety employees- include sworn police, fire and marine safety employees
Miscellaneous employees- all other covered employees
i
See Independent Auditor's Report 31
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
6. RETrIIMXMTP PLAN - NORMAL (OOrTPIN-W)
b. aployee and Employer Contribution Obligations: •
The City makes two types of contributions on behalf of covered employees.
The first contribution represents the amount required to be made by the
City (the employer rate) . The second represents an amount which is
normally paid by the employee, but is reimbursed to the employee by the •
City (the m rber rate) . The member rate is set by contract and normally
remains unchanged.
The employer rate is set by PERS and changes fran year to year. The
employer rates for the fiscal year ending June 30, 1990 are shown below:
•
Miscellaneous Safety
��� category
Normal Cost Rate 6.110% 14.508%
Unfunded Liability Rate 6.110)% 1.043% •
Total Required 0% 15.551%
The member rates for the fiscal year ending June 30, 1990 are as follows:
•
Member Rates
as a Percentage
of Wages
Local Miscellaneous Members- 7%
Local Safety Members- 9% •
The employer rate contributes the remaining amounts necessary to fund the
benefits for its members, using the actuarial basis recommended by the PERS
actuaries and and adopted by the Board of Administration.
•
See Independent Auditor' s Report 32
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
6. IMfIREHENr PLAN - M MAL (CONTINUED)
• c. Funding Status and Progress:
Pension benefit obligation is a standardized measure of the present value
of future pension benefits estimated to be payable in the future due to
employee service to date. It helps assess the funding status of the
• system, assess progress made in ac=milating enoaxp assets to pay benefits
when due, and make cmiparisons among employers. This measure is
independent of the funding method used to determine City contributions to
the system.
PEPS conducted an actuarial valuation to determine the City's pension
• benefit obligation as of June 30, 1990. Significant actuarial assumptions
used were as follows:
. Rate of return on present and future assets- 8.5% per annum
. Projected salary increases for covered employees due to inflation- 5.0%
per year
. Projected salary increases due to merit- 1.5% per year.
. Across the board real salary increases- .50%
. Postretirement benefit increases- 0%
Assets in excess of the pension benefit obligation applicable to City
employees were $625,000 at June 30, 1990. There was no change in the
• pension benefit obligation from last year resulting from benefit provisions
or actuarial assumptions:
Retirees and beneficiaries currently receiving benefits
and terminated employees not yet receiving benefits $49,509
• Current E xployees:
Accumulated employee contributions and investment 36,364
earnings
Ernployer-financed, vested 51,363
Employer-financed, non vested 1,671
•
Total pension benefit obligation 138,907
Less net assets available for benefits at cost 139,532
(market value is $163,532)
Excess of assets available aver pension $ 625
• benefit obligation
See Independent Auditor's Report 33
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
r
6. TWIMWENr PLAN - NORMAL (CONTINUED)
d. Actuarially Determined Contribution Requirements and Contributions Made:
PERS uses the Entry Age Normal Actuarial Cost Method which is a projected
benefit cost method and takes into account those benefits that are expected
to be earned in the future as well as those already accrued.
This method states that the normal cost for an employee is the level aomamt
which would fund the projected benefit if it were paid annually from date
of employment until retirement. PERS uses a modification of the Entry Age
Cost method in which the employer's total normal cost is expressed as a
level percent of payroll. PERS also uses the level percentage of payroll •
method to amortize any unfunded actuarial liabilities. The amortization
period of the unfunded actuarial liability ends in the year 2000 for prior
service benefits and in 2011 for current service benefits.
The significant actuarial assumptions used to compute the actuarially
determined contribution requirement are the same as those used to conxite
the pension benefit obligation, as previously described.
The contribution to the system for 1989/90 of $7,375,289 was made in
accordance with actuarially determined requirements computed through an
actuarial valuation performed as of June 30, 1988. The contribution
consisted of the normal cost, $3,945,538 (9.76% of current covered payroll)
and a $179,810 amortization of the unfunded actuarial accrued liability
(.44% of covered payroll) . The City made employer contributions of
$4,128,245 (10.21% of covered payroll) and on behalf of employees
contributed $3,247,044 (8.03% of covered payroll.
e. Trend Information:
Trend information gives an indication of the progress made in accumulating
enough assets to pay benefits when due. Ten year trend information for the
City of Huntington Beach is not published in the California Public
Employees Retirement System Annual Report. Therefore, ten years of trend
information are required within the City's financial statements since PERS
does not display financial information for individual agencies within their
report. 1987/88 is the first year that this actuarial information has been
made available by PERS and until ten years are available, as many years as
are available will be presented. Trend information for 1987/88, 1988/89 •
and 1989/90 are shown and employer contributions for 1986/87, 1987/88 and
1988/89 are shown (dollar amounts expressed in millions) :
See Independent Auditor's Report 34
41
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
6. RETII09TP PLAN - NORMAL (C@PPINED)
• e. Trend Information:
1986/87 1987/88 1988 89 1989 90
Net assets available for benefits $105.6 $120.6 $139.5
Pension benefit obligation $115.3 $126.7 $138.9
Net assets available for benefits,
• expressed as a percentage of the 91.6% 95.1% 100.4%
pension benefit obligation
Unfunded pension benefit obligation 9.7% 6.1% (.7)
Annual Covered Payroll $32.1 $ 34.4 $ 37.0 $40.4
Unfunded pension benefit obligation as 28.3% 16.7% 1.5
• a percentage of covered payroll
Employer contributions $ 4.5 $ 4.4 $ 4.5 $4.1
Employer contributions expressed as a
percentage of annual covered made 14.1% 12.7% 11.9% 10.1%
according to actuarially determined
• requirements
7. RETIRFMERP PLAN - :
• a. Plan Description:
The City provides a supplemental retirement plan to all employees covered
under the City's normal retirement plan with the California Public
Employees Retirement System (see note 6) . It is a single-employer PERS.
• It is a defined benefit plan and will pay the retiree an additional amount
to his or her normal amount for life. The amount will cease upon the
employee's death. The amount is computed at retirement and remains
constant for his or her life.
•
•
See Independent Auditor's Report 35
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
7. IMVIREKEUr PLAN e (CCHrINUED) :
b. flqployer Obligations: •
The City estimated the pension benefit obligation as of June 30, 1990 by
estimating the total expected pension payments to be made and discounting
them at 8%. The pension benefit obligation as of June 30, 1990 is as
follows (expressed in thousands) :
Retirees and beneficiaries currently receiving benefits
and terminated employees not yet receiving benefits $1,335
Current employees who are vested 5,915
•
Total pension benefit obligation 7,250
Net assets available for benefits 18
Unfunded pension benefit obligation $7,232
•
There was no actuarial study of the annual contribution required to fund
the pension liability. City management does not believe that there is a
significant difference between the unfunded pension benefit obligation
calculated above and the amount that would result from an independent
actuarial computation. •
The City annually transfers the estimated payments for the year from the
General Fund to a pension trust fund.
c. Trend Information:
This is the second year that the City is accounting for these benefits.
Therefore only two years of trend information is presented. As soon as
trend information is available, it will be presented (expressed in
thousands) :
•
See Independent Auditor's Report 36
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
7. RETIREMENP PLAN - (OON+1INUED) :
• 1988/89 1989/90
Net assets available for benefits - $18
Pension benefit obligation $7,071 $7,250
Net assets available for benefits, - .35%
expressed as a percentage of the
pension benefit obligation
Unfunded pension benefit obligation $7,071 $7,232
Annual Covered Payroll N/A N/A
Unfunded pension benefit obligation as N/A N/A
a percentage of covered payroll
• Employer contributions - 185
Employer contributions expressed as a
percentage of annual covered payroll made - -
according to actuarially determined
requirements
d. Accountin
g For Supplemental Pension Plan:
Expenditures for this pension plan are recorded in a pension trust fund.
During the year, contributions of $184,779 were made and expenditures of
$166,341 were recorded.
8. MEDICAL INSURANCE:
• a. Plan Description:
The City provides post-retirement medical insurance benefits to retirees
who meet all three of the following criteria:
• .At the time of retirement the employee is employed by the City; and
.At the time of retirement the employee has a minimum of ten years of
service or is granted a service connected disability retirement.
.Following official separation frcam the City, the retiree is granted a
retirement allowance by the California Public Employee's Retirement
System.
•
See Independent Auditor's Report 37
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
S. Pourrommme MEDICAL nOMANCE (CMINUED) :
a. Plan Description: •
The City's obligation to provide the benefits to a retiree ceases when any
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 will be provided to the spouse or family for eighteen months. •
Benefits for insurance premiums are payable based on the years of service
credit for the retiree. The premiums may be used for any of the health
plans that the City's active employees may participate in.
b. Accounting and Funding:
The Retiree Medical Insurance Fund is recorded as an agency fund.
Contributions are made by the City's operating funds on a periodic basis.
The fund is only to be used to purchase medical insurance for retirees. •
There are no outstanding liabilities at year-end. For the year
contributions of $1,163,046 were made by active employees and $103,155 of
premiums were paid from the fund.
The plan is being "advance-funded", but not on an actuarial basis. 48
participants were eligible to receive benefits at June 30, 1990. •
9. RISK MAID:
The City is exposed to various risks of loss related to torts; theft of, •
damage to and destruction of assets; errors and omissions; injuries to
employees; natural disasters and employee health insurance claims.
•
See Independent Auditor's Report 38
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
9. RIM MKIDW3EMERr (CM?rINUM)
• The City established a Self-Insurance Fund (an internal service fund) to
account for and finance uninsured risks of loss. This fund provides
liability coverage for claims up to $1,000,000, workers cagDensation
coverage up to $150,000 per claim and the first $75,000 of each health
claim. The City is also a participant in the Big Independent Cities
• Excess Fool Joint Powers Authority, (see note 18) which provides insurance
for individual liability claims in excess of $1,000,000. Independent
insurance coverage is purchased for health and workers coapensation claims
in excess of the above amounts. Settled claims have not exceeded this
crcial coverage in any of the past three fiscal years.
• All funds of the City participate in the program and make payments to the
Self-Insurance Fund based on historical cost information. The payments are
adjusted over a reasonable period of time so that revenues and expenses of
the Self-Insurance Fund are approximately equal.
The claims liability of $6,962,000 is dosed of the following claims
• totals (expressed in thousands) :
Liability Claims $2,837
Workers Compensation Claims 3,990
Health Claims 135
Total 6,962
Liabilities are reported if, prior to the issuance of the financial
statements, it is probable that a liability has been incurred as of the
date of the financial statements and the amount of the claim can be
• reasonably estimated. Changes in the claims liability during the year were
as follows (expressed in thousands) :
Balance Balance
July 1, 1989 Additions Payments June 30, 1990
• Liability $3,329 $ 378 ($870) $2,837
Workers 3,901 1,017 (928) 3,990
Cmpensation
Health 192 2,545 (2,602) 135
• Total $7,422 $3,940 ($4,400) $6,962
See Independent Auditor's Report 39
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
10. IMERFUNID TRAVEACTIMS:
a. Receivables/Payables: •
Individual interfund receivables and payables at June 30, 1990 were as
follows (expressed in thousands) :
Advances to Advances from •
Other Funds Other Funds
General Fund $57,140
Special Revenue Funds:
Sewer 259
Planned local Drainage 442
Grants 1,173
Gas Tax 605
Park Acquisition and 3,228
Development
Debt Service Funds:
Public Financing Authority 24,122
Capital Projects Funds:
Parking Structure 17,044
Capital Itprovement 220 •
Enterprise Funds:
Water Utility 1,560
Mmrald Cove Housing $ 944
General Long-Term Debt Account Group 104,849 •
Totals $105,793 $105,793
See Independent Auditor's Report 40
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
10. IIRI'E WMM TPMNSALTIONS (C1ONTI UED) :
• b. Operating Transfers In/Out:
Below is a schedule reconciling operating transfers in and out:
Cperating Transfers In, Governmental Funds- $4,241
•
Cperating Transfers In, Proprietary Funds- 466
Total Cperatuq Transfers In- $4,707
Operating Transfers Out, Govemnental Funds- $4,594
•
Operating Transfers Out, Proprietary Funds- 113
Total Operating Transfers Out- $4,707
c. Residual Equity Transfers In/Out:
Below is a schedule reconciling residual equity transfers in and out:
Total Residual Equity Transfers In- $10,829
•
Transfers from Reservoir Hill Capital
Projects To Reservoir Hill Debt 214
Service (an Agency Fund) which
does not show transfers
• Residual Equity Transfers to Emergency
Fire Medical Fund which were recorded 311
as contributed capital in
Total Residual Equity Transfers Out $11,354
•
•
See Independent Auditor's Report 41
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
11. PROPRIETARY FUNDS SUPPLEMENTARYII 1iMATION:
a. Segment Information for Enterprise Funds: •
The City maintains four enterprise funds; Water Utility, Meadowlark Golf
Course, Emerald Cove Housing and Fire Paramedical. Certain key financial
data was as follows (expressed in thousands) :
•
MEADOWLARK EMERAID
WATER GOLF COVE FIRE
UTILITY COURSE HOUSING PARAMEDICAL TOTAL
Operating $13,838 $289 $610 $148 $14,885
Revenues •
Depreciation 1,253 27 82 0 1,332
Expense
Operating 124 262 291 37 714
Inccre (Loss) •
Net Income (Loss) 951 253 67 46 1,317
Contributed 1,074 0 0 311 1,224
Capital Received,
Net •
Net Acquisitions 1,094 0 0 0 1,097
(Dispositions)
of Fixed Assets
Net Working 9,117 1,181 1,672 357 12,327 •
Capital
Total Assets 41,865 4,379 7,112 392 53,748
bong-11� 711 1,636 5,492 0 7,839
Obligations •
Net of
Current Portion
Total Equity 38,817 20,671 1,497 357 43,342
•
See Independent Auditor's Report 42
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
11. PBflPRIL'i C FUNDS II TION (OONrINUED)
• b. Contributed Capital:
Below is a schedule of the changes in contributed capital during the year
(expressed in thousands) :
Meadowlark Emerald Emergency
• Water Golf Cove Fire Equipment
Utility Course Housing Medical Replacement
Additions
Developer $ 1,074 $ 0 $ 0 $ 0 $ 0
Contributions
•
Contributions
from other funds 0 0 0 311 1,567
• Prior Period
Adjustment,
(note 20) 0 0 (147) 0 0
Net Increase 1,074 0 (147) 311 1,567
(Decrease)
•
Contributed
Capital
July 1, 1989 34,884 1,267 1,435 0 0
Contributed
• Capital, $35,958 $1,267 $1,288 $311 $1,567
June 30, 1990
•
•
See Independent Auditor's Report 43
•
CITY OF HUNTINGTON BEACH •
NOTES, TO FINANCIAL STATEMENTS
(continued)
JUNE 300 1990
12. GENERAL ICM-TERK DEBT:
Below is a sunrazy of changes in general long-tern debt for the year ending •
June 30, 1990 (expressed in thousands) :
Balance Balance
Outstanding Outstanding
July 1, June 30,
1989 Additions (Retirements) 1990 •
1970 Park Bonds $2,280 $ 0 $(305) $1,975
Public Facilities
Corporation Leasehold 2,770 0 (240) 2,530
Mortgage Bonds- 2nd Issue
•
Parking Authority 700 0 (135) 565
Revenue Bonds
Civic Inprovement
Corporation
Certificates 19,610 0 (230) 19,380
of Participation-1986'
Civic Inprovement
Corporation
Certificates 0 15,025 (0) 15,025
of Participation-1989 •
Ccapensated Absences 4,307 14 0 4,321
Advances From 82,940 25,151 (3,242) 104,849
' Other Funds
•
Amounts Due Under
Owner Participation 1,246 341 0 1,587
and Disposition and
Development Agreements
Public Financing
Authority Revenue Bonds 26,510 0 (270) 26,240
Mortgages Payable 2,875 0 (413) 2,462
Total $143,238 $40,531 $4 835 $178,934
•
See Independent Auditor's Report 44
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
12. GENERAL LCNG-iT DEBT (C@TrDMED):
• a. 1970 Park Bonds:
On March 1, 1970 the City sold $6,000,000 of general obligation bonds to
acquire and construct park facilities. Principal matures annually on March
1st with interest, at 6%, payable semi-annually. The annual debt service
• requirements to amortize the bonds outstanding at June 30, 1990 are as
follows (expressed in thousands) :
Year
Fading
• June 30, Principal Interest Total
1991 $ 350 $118 $ 468
1992 370 98 468
1993 395 75 470
1994 415 52 467
1995 445 27 472
Total $1,975 $370 $2,345
• b. Huntington Beach Public Facilities Corporation Leasehold Mortgage Bonds-
Second Issue:
On September 1, 1972 $5,000,000 of leasehold mortgage bonds were issued to
construct the Central Library complex. The bonds are secured by a lease
• which requires the City's General Fund to annually transfer $399,000 to the
Public Facilities Corporation's Debt Service Fund. Principal matures
annually on September 1st with interest ranging frcm 5.0% to 5.9% per annum
payable semi-annually. The annual debt service requirements to amortize
the bonds outstanding at June 30, 1990 are as follows (expressed in
thousands) :
•
•
See Independent Auditor's Report 45
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
12. GENERAI, IOWCYERM DEBT (CONTINUED) :
b. Huntington Beach Public Facilities Corporation Leasehold Mortgage Bonds- •
Second Issue:
Year
Ending
June 30, Principal Interest Total
•
1991 $ 260 $132 $ 392
1992 270 117 387
1993 290 101 391
1994 305 84 389
1995 320 66 386
1996 340 46 386
1997 360 28 388
1998 385 10 395
Total $2,530 $584 $3,114
•
c. Parking Authority Revenue Bonds:
On September 1, 1968 $2,300,000 of revenue bonds were issued to construct
off-street parking improvements. The bonds are secured by a lease which •
requires that the City budget annual transfers to the Parking Authority
sufficient to meet the debt service requirements on the bonds. Principal
matures annually on September 1 and bears interest at 5.25% per annum,
payable semi-annually. The annual debt service requirements to amortize
the bonds outstanding at June 30, 1990 are as follows (expressed in
thousands) : •
Year
Ending
June 30, Principal Interest Total
•
1991 $140 $ 26 $166
1992 150 18 168
1993 160 10 170
1994 115 3 118
Total $565 $57 $622 •
See Independent Auditor's Report 46
0
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 300 1990
•
12. COAL I ERM DEBT (OOrTPINUED) :
d. Huntington Beach Civic Improvement Corporation Certificates of
Participation- 1986:
On July 15, 1986 the Huntington Civic Improvement Corporation issued
$20,000,000 of certificates of participation in order to defease the
• Huntington Beach Public Facilities Corporation Ieasehold Mortgage Bonds-
First Issue and construct certain parking facilities. The certificates are
secured by a lease on the Civic Center complex which requires the City's
General Fund to transfer to the Civic Improvement Corporation an amount
equal to the annual debt service requirements on the certificates. The
interest rates on the certificates varies between 4.75% and 7.9%. Interest
• is payable semi-annually on February 1st and August 1st with principal
maturing annually on August 1st. Debt service requirements to maturity are
as follows (expressed in thousands) :
Year
• Ending
June 30, Principal Interest Total
1991 $ 245 $1,494 $ 1,739
1992 260 1,479 1,739
1993 275 1,462 1,737
1994 295 1,443 1,738
1995 315 1,422 1,737
1996 335 1,399 1,734
1997 360 1,374 1,734
1998 385 1,346 1,731
1999 415 1,316 1,731
2000-2007 4,715 9,079 13,794
2008-2016 11,780 5,234 17,014
Total $19,380 $271048 $46,428
•
•
See Independent Auditor's Report '47
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
2.2. GENERAL ICWD-TERK DEBT (oaNrII UED):
e. Huntington Beach Civic Improvement Corporation Certificates of •
Participation- 1989:
In August, 1989 the Civic Improvement Corporation issued $15,025,000 of
additional certificates of participation to provide further funds for •
parking structure and other public improvements in the Main/Pier
redevelopment project area. As described in note 2, the Civic Improvement
corporation owns the Civic Center complex which represents the security for
the certificates. The City will annually transfer sufficient monies to
fund the debt service requirements on the certificates. The interest rates
on the certificates vary between 5.9% and 7.0$ with interest payable semi-
annually on February 1st and August 1st with principal maturing annually on
August ist. Debt service its to maturity are as follows
(expressed in thousands) :
Year
Ending •
June 30, Principal Interest Total
1991 $ 135 $ 1,031 $ 1,166
1992 180 1,021 1,201
1993 190 1,010 1,200
1994 205 998 1,203 •
1995 215 985 1,200
1996 230 971 1,201
1997 245 955 1,200
1998 260 939 1,199
1999 275 921 1,196
2000 295 902 1,197 •
2001 315 882 1,197
2002 335 860 1,195
2003 360 837 1,197
2004 385 811 1,196
2005-2020 11,400 12,369 23,904
•
Total $15,025 $25,492 $40,517
•
See Independent Auditor's Report 48
•
• CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
12. GENERAL T ERM DEBT (CMUINOED) :
• f. Ooapetsated Absences Payable:
There is no fixed payment schedule to pay the governmental fund liability
of $4,321,000 for ccapensated absences earned through June 30, 1990 (see
note lj) .
•
g. Long-term Advances from Other Funds:
There is no fixed repayment schedule for the Redevelopment Agency to pay
• the long-term advances from the City which totalled $104,849,000 at June
30, 1990. These advances were used to fund the operating and capital
expenditures of the Redevelopment Agency. Below is a description of the
various transactions (expressed in thousands) :
•
General Fund:
Cash Advances from 1979 to 1990 $15,055
Land Sales from 1982 to 1990 32,903
Deferred Development Fees 49
• Interest on above at 10% per annum 9,021
Total Advances from General Fund 57,028
Special Revenue Funds:
Park Acquisition and Development Fund
Land Sale in 1983 1,741
Deferred Development Fees 248
Interest on above at 10% per annum 407
Total Advances from Park Acquisition $2,396
Development Fund
•
See Independent Auditor's Report 49
•
CITY OF HUNTINGTON BEACH •
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
12. GENERAL IJOW.Y-TERK DEBT (CONTINUED) :
g. Long-term Advances fr m Other Funds: •
Sewer Fund:
Advance in 1989/90 $175 •
Deferred Development Fees 43
Interest on above at 10% per anrmm 41
Total Advances from Sewer Fund 259
Drainage FLmd:
•
Advance in 1987/88 250
Deferred Development Fees 72
Interest on above at 10% per annum 120
Total Advances from Drainage Fund 442 •
Gas Tax Fund:
Advance in 1988/89 500
Interest on above at 10% per annum 105
Total Gas Tax Fund 605 •
Grant Fund
Advances from 1983 to 1989 1,173
Total Special Revenue Ru-ds 4,875 •
Capital Projects Funds
Capital Improvement Fund:
Advance in 1989/90 200 •
Interest on above at 10% per annum 20
Total Capital Improvement Fund $220
•
See Independent Auditor's Report 50
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
12. GERMtAL 1CW.,- 'ERM DEBT (OONPnMED)
• g. long-tern Advances from Other Funds:
Parking Structure:
Advance in 1989/90 $14,820
• Interest on above at 10% per annum 2,224
Total Parking Structure Fund 17,044
Total Capital Projects Funds 17,264
• Debt Service Funds:
Public Financing Authority:
Advances from 1988 to 1990 23,764
Interest on above at varying rates 358
Total Debt Service Funds 24,122
Enterprise Funds
Water Fund:
•
Advances frown 1986/87 to 1988/89 1,138
Deferred 'Development Fees 422
Total Water Fund 1,560
• Total Advanced frcan Other Funds $104,849
Below is a reconciliation of the changes in amounts advanced from other
funds to the Redevelopment Agency recorded as general long-term debt for
the year ended June 30, 1990:
• Amount due to other funds on July 1, 1989 $82,940
Advances Received 15,848
Advances Repaid (3,242)
Interest recorded in other funds as deferred revenue 9,303
• Amount advanced from other funds, June 30, 1990 $104,849
See Independent Auditor's Report 51
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
12. GENERAL I@]G-TEF44 DEBT (OOQd nmm):
h. Amounts Due Under owner Participation and Disposition and Development
Agreements:
In 1988 the Redevelopment Agency entered into an agreement with a private
party to receive a loan to relocate tenants of a mobile hcane park. At year •
end, $2,192,075 of the loan was received. This advance carries no
interest. r1here is no fixed repayment schedule for this advance but the
amount will be repaid with a pledge of tax increment revenues and transient
occupancy tax revenues received by the Agency. The principal amount of the
debt is recorded at $1,587,212 which represents the present value of the
future debt service payments expected to be made from 1992 to 1996
discounted at 8%.
i. Public Financing Authority Revenue Bonds:
On May 1, 1988 the Public Financing Authority issued $26,775,000 of Revenue
Bonds to finance loans to four of the Redevelopment project areas. The
bonds are secured by four separate loan agreements between the Public
Financing Authority and the Redevelopment Agency. Each loan agreement is
secured by a pledge of all taxes levied upon all taxable property within
the related project area. Interest on the bonds ranges from 5.75% to
8.375%. Interest is payable semi-annually on May 1st and November 1st.
Principal matures annually on November 1st. Debt service requirements are
as follows (expressed in thousands) :
Year
Exiling
June 30, Principal Interest Total
1991 $ 295 $2,149 $ 2,444 •
1992 305 2,131 2,436
1993 325 2,111 2,436
1994 340 2,089 2,429
1995 370 2,065 2,435
1996 405 2,038 2,444
1997 430 2,009 2,439 .
1998 465 1,976 2,441
1999 495 1,940 2,435
2000-2007 5,735 13,775 19,510
2008-2018 17,075 4,858 21,933
Total $26,240 $37,141 $63,382 •
See Independent Auditor's Report 52
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
12. GENERAL IDWa-TERM DEBT (COQ$IrII&W) :
• j. Miscellaneous Notes Payable:
In 1988 the Redevelopment Agency purchased property in the Main/Pier
project area and assumed three separate mortgages. The mortgages bear
interest at 11% with debt service payable monthly according to the mortgage
• contract.
Below is a schedule of debt service requirements to maturity (expressed in
thousands) .
Fiscal
Year
Ending
June 30, Principal Interest Total
1991 $1,050 $200 $1,250
• 1992 615 134 749
1993 18 87 105
1994 21 85 106
1995 758 759 1,517
Total $2,462 $1,265 $3,727
•
k. Defeased Bonds Outstanding:
As of June 30, 1990, there were $5,565,000 of defeased Public Facilities
Corporation Leasehold Mortgage Bonds- 1st Issue outstanding. The debt
service on these bonds is being handled by an escrow account consisting of
guaranteed Federal securities with yields sufficient to fund all of the
required debt service. Accordingly, the bonds payable are not reflected in
the accompanying financial statements.
•
•
See Independent Auditor's Report 53
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990 •
13. PROPRIETARY FOND IERM DEBT:
The following is a summary of changes in proprietary fund long-term debt •
for the year ending June 30, 1990 (expressed in thousands) :
Balance Balance
Outstanding Outstanding
July 1, July 1, •
1989 Additions (Retirements) 1990
1963 Water
Revenue Bonds $703 $ - $(26) $ 677
San Joaquin 166 - (53) 113
Reservoir Note •
Meadowlark Golf 1,700 - (31) 1,669
Course Note
&ierald Cove
Certificates of •
Participation, net
of unamortized
discount of $51 4,536 12 0 4,548
Note Payable 336 - (77) 259
County of Orange •
Compensated
Absences 128 33 - 161
Advances from other 944 - - 944
Funds •
Claims Payable 7,422 - (460) 6,962
Public Financing
Authority Certificates
of Participation 5,510 - - 5,510 •
Total $21,445 $45 jj647 $20,843
The current portion of the proprietary furry long-term debt is $354,000
•
See Independent Auditor's Report 54
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
13. PlmPRI11;T'ARY FM IIJTXr-I'ERM DEBT (CONrI NM):
• a. 1963 Water Revenue Bonds:
On November 1, 1963 the City sold $3,750,000 of revenue bonds to construct
crater improvements. The bonds are secured by revenues of the Water Fund.
Principal matures annually on November 1 and bears interest at 3.5% per
• annum, payable semi-annually.
The annual debt service requirements to amortize the bonds outstanding at
June 30, 1990 are as follows (expressed in thousands) :
Year
• Ending
June 30, Principal Interest Total
1991 $190 $19 $209
1992 200 10 210
1993 200 6 206
1994 87 1 88
Total $677 $36 $713
The bond indenture requires that the Water Fund net revenues equal or
• exceed 1.25 times the annual debt service requirement (principal and
interest) . Net revenues are defined as gross revenues less maintenance and
operation revenues, excluding depreciation. The City has complied with
this requirement as shown below (in thousands) :
Gross revenues $14,809
Operating expenses, excluding $12,430
interest and depreciation
Net revenues $ 2,379
•
Debt service $ 209
Debt service coverage 11.3
•
See Independent Auditor's Report 55
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990 •
13. PROPRIEn= F@ID LCWr-TES DEBT (oaNTIN M):
b. San Joaquin Reservoir Note Payable: •
In 1979 the City and several other local cities and water districts
purchased the San Joaquin Reservoir. The City is paying a portion (13.56%)
of the debt service for the 1961 construction of the reservoir plus
operating and improvement costs. In the event of default, the expenses •
and,/or debt service payments shall be reallocated among the remaining non-
defaulting owners in proportion to the percentage interest owned as though
the party in default did not exist. The City recorded its portion of the
reservoir as plant, property and equipment in the Water Fund.
Interest on the note is payable semi-annually on December 1st and June 1st •
with principal maturing on December 1st. Debt service requirements to
maturity are as follows (expressed in thousands) :
Year
Ending •
June 30, Principal Interest Total
1991 $ 59 $2 $ 61
1992 54 1 55
Total $113 $3 $116 •
c. Meadowlark Golf Course Note Payable:
•
In October, 1974 the City purchased of Meadowlark Golf Course through a
long-term 7% note totalling $2,272,000 (Sales price of $3,200,000 less
downpayment of $928,000. The note payable is collateralized by future
revenues and does not represent a general obligation of the City. The City
has leased the golf course to an outside party for a minimum amount of
$150,000 annually through 2002 plus a percentage of income based upon gross •
revenues. Fran 2003 until 2008 the minimum payment will be $200,000 plus a
percentage of income above a certain amount of base gross revenues. In
2009 the payment will be $115,703.
•
See Independent Auditor's Report 56
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
13. PROPRIETARY FMM LONG-TERM DEBT (O0 T n4UED) :
• c. Meadowlark Golf Course Note Payable:
As part of the City's initial payment of $928,000 the County of Orange
contributed $600,000 upon the City's guarantee to use general City funds,
when and if necessary, to ensure that Meadowlark Golf Course will be
• maintained as open space.
The annual debt service (principal and interest) is due on February 28th of
each year. Debt service requirements to maturity (ass m uyg the percentage
of income rent does not exceed the base) are as follows (expressed in
thousands)
•
Year
Ending
June 30, Principal Interest Total
1991 $ 33 $ 117 $ 150
• 1992 35 115 150
1993 38 112 150
1994 40 110 150
1995 43 107 150
1996 46 104 150
1997 50 100 150
• 1998 53 97 150
1999 57 93 150
2000-2009 1,274 548 1,922
Total $1,669 $1,503 $3,172
•
d. Emerald Cave Housing Certificates of Participation:
On June 1, 1984, the Redevelopment Agency sold certificates of
• participation to finance the construction of a senior citizens apartment
complex. The certificates bear interest at 9.5% per annum, which is
payable semi-annually. The entire principal is due on June 1, 1994 A
discount of $126,500 is being amortized to maturity. The unamortized
discount at June 30, 1990 is $52,000. Below is a schedule of debt service
• requirements to naturity (expressed in thousands) :
See Independent Auditor's Report 57
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
13. FWID IiOWr� DEBT (CONTINUED):
•
d. Emerald Cove Housing Certificates of Participation:
Year
Juing
ne 30, Principal Interest Total •
1991 $ 0 $ 437 $ 437
1992 0 437 437
1993 0 437 437
1994 4,548 400 4,948
•
Totals $4,548 $1,711 $6,259
e. Note Payable- County of Orange:
In July, 1987 the City received $409,140 of Fire Camunications Equipment
under an agreement with the County of Orange whereby the City will repay
the County for the equipment. The equipment and note are recorded in the
Equipment Replacement Fund, an internal service fund. Interest rates on
the note vary between 5.4% and 6.5%. Interest is payable annually on
December 1st and June 1st with principal maturing on June 1st. Debt service •
requirements are as follows (expressed in thousands) :
Year
Junding
e 30, Principal Interest Total •
1991 $ 81 $16 $ 97
1992 86 11 97
1993 92 6 98
Total $259 $33 $292 •
•
See Independent Auditor's Report 58
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
•
13. PROPRIEnM F@ID I NG-TEI M DEBT (OMT INUED) :
• f. Compensated Absences:
There is no fixed repayment schedule to repay the ccwensated absences for
proprietary fund types of $161,000 at June 301 1990.
•
g. Advances Frxm Other Funds:
There is no fixed repayment schedule to repay the amounts advanced from the
General Fund and Park Acquisition and Development Fund to the Emerald Cove
• Housing Fund of $943,081 at June 30, 1990. $832,430 was advanced from the
Park Acquisition and Development Fund and $111,411 was advanced in 1984
from the General Fund which helped fund the initial operation of the
apartment ecraplex. Both advances bear no interest.
• h. Claims Payable
There is no repayment schedule for claims payable of $6,962,000 as of June
30, 1990 (see note 9) .
• i. Public Financing Authority Certificates of Participation:
In March, 1989, the Public Financing Authority issued $5,510,000 of
certificates of participation to finance the purchase of capital equipment.
• The amount is recorded as a liability of the Equipment Replacement Fund, an
internal service fund. Interest on the certificates ranges from 6.75% to
6.95%. Interest is payable semiannually on February 1st and August 1st
with principal maturing annually on February 1st. A discount of $69,000 is
being amortized to maturity. Debt service requirements to maturity are as
follows (expressed in thousands) :
•
•
See Independent Auditor's Report 59
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990 •
13. PROPRIETARY FM LONG-TERM DEBT (CONTINUED)
i. Public Financing Authority Certificates of Participation: •
Year
Ending
June 30, Principal Interest Total
•
1991 $ 0 $ 376 $ 376
1992 960 376 1,336
1993 1,025 313 1,338
1994 1,100 243 1,343
1995 1,170 168 1,338
1996 1,255 87 1,342 •
Total $5,510 $1,563 $7,073
14. RESERVOIR HILL ASSESSMERr BONDS:
•
In January, 1989, the City issued $1,653,905 of special assessment bonds to
finance certain public improvements. Proceeds from the issue which are to
be used for improvements have been accounted for in a capital project fund,
and have been designated as "contribution from property owners". The bonds
are to be repaid only by property taxes levied in the assessment district. •
The City has no liability on the bonds if revenues are insufficient to fund
the required debt service. The debt has been excluded from the General
Long-JreYm Debt Account Group.
Principal matures annually on September 2nd, with interest payable
semiannually on March 2nd and September 2nd. Interest rates on the bonds •
range between 6.5% and 8.1% Debt service requirements to maturity are as
follows (expressed in thousands) :
•
•
See Independent Auditor's Report 60
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
14. TMSERWIR HILL ASSESSMENT BMMS:
• Year
Ending
June 30, Principal Interest Total
1991 $ 0 $ 146 $ 146
1992 4 133 137
1993 40 129 169
1994 45 125 170
1995 50 122 172
1996 50 118 168
1997 55 114 169
1998 60 110 170
• 1999 65 105 170
2000 70 100 170
2001-2011 1,215 610 1,825
Total $1,654 $1,812 $3,466
15. CHANGES IN FIXED ASSETS:
Below is a schedule of the changes in general fixed assets for the year
• (expressed in thousands) :
Balance Balance
July 1, 1989 Additions Dispositions June 30, 1990
Iru�d $ 57,570 $ 4,383 ($ 485) $61,468
• Buildings 24,647 837 (1,041) 24,443
Other 1,733 0 0 1,733
Construction in
Process 564 7,146 (564) 7,146
Total $ 84,514 $12,366 9 090 $94,790
•
•
See Independent Auditor's Report 61
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990 •
15. CIMNGES IN FIXED ASSETS ma Ti INUED)
Below is a schedule of changes in proprietary fund fixed assets for the •
year (in thousands) :
Enterprise Fluids:
Balance Balance •
July 1, 1989 Additions Dispositions June 30, 1990
Land $ 4,732 $ 0 $ 0 $ 4,732
Buildings 5,334 0 0 5,334
Machinery and •
Equipment 49,563 1,108 (11) 50,660
Total Cost $59,629 $ 1,108 $ 11 60,726
Less accumnilated
depreciation (22,975) (24,332)
Net Book Value, $36,654 $36,394
Enterprise Fluids
Internal Service Fluids
Balance Balance
July 1, 1989 Additions Dispositions June 30, 1990
Machinery and $22,342 $6,306 $11301 $27,347
Equrpmrit
Less accumulated •
depreciation (11,440) (13,154)
Net Book Value, $10,902 $14,193
Internal Service
Fluids
•
See Independent Auditor' s Report 62
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
16. RESERVES AMID DESIGNATIONS OF FM EQUITY:
r Under generally accepted accounting principles, the City is allowed to set
up reserves and designations of fund equity. Reserves indicate amounts
which cannot be appropriated in future periods or which are legally set
aside for a specific future use. Designations represent amounts that the
City has made tentative plans to use in a future period. The City's
reserves and designations are described below (expressed in thousands) :
•
Special Debt Capital Trust
General Revenue Service Projects and
Fund Funds Funds Funds Agency Total
RESERVES
Encumbrances $ 2,258 $4,176 $ 0 $ 0 $ 0 $ 6,434
Long-term 15,155 1,959 23,764 15,019 0 55,897
receivables
Reimbursement 0 432 0 0 0 432
agreements
Capital 5,213 0 0 38,509 0 43,722
projects
Debt service 0 0 11,162 0 0 11,162
go Pension Payments 0 0 0 0 18 18
Land held for 0 0 0 24,597 0 24,597
resale
Other fund 49 0 0 0 0 49
` deficits
Inventory 284 0 0 0 0 284.
TOTAL RESERVES 22,959 6,567 34,926 78,125 18 142,595
DESIGNATIONS
• Subsequent
year's
expenditures 0 3,946 0 0 0 3,946
TEAL RESERVES $22,959 $10,513 $34,296 $78,125 $ 18 $ 146,541
AND DESIGNATIONS
•
See Independent Auditor's Report 63
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
16. r43SERVFS AND DESIGNATIONS OF FMM EQUITY:
a. Reserves for encumbrances are amounts committed for unperformed services
or for undelivered goods where a commitment to purchase has been made.
b. Reserves for advances to other funds, deposits and other assets are for
amounts not scheduled to be repaid until future years, and for which there
is no offsetting deferred revenue.
•
c. Reserves for reimbursement agreements are expected future reimbursements
to developers for sewer and drainage construction.
d. Reserves for continuing projects are amounts committed for long-term
projects not yet completed.
•
e. Reserves for debt service are amounts accumulated in debt service funds
or set aside in another fund in accordance with a bond indenture or similar
covenant
f. Reserve for pension payments are amounts accumulated in the Retirement
Supplement Pension Trust fund to fund future pension payments.
g. Reserves for land held for resale represent land held by the
Redevelopment Agency that is legally committed for resale.
h. Reserves for inventory are for general supplies inventory.
•
i. Reserves for other fund deficits are amounts to cover fund deficits in
the Self-Insurance Fund.
j. Designations for subsequent years' expenditures are made to fund
deficits budgeted in subsequent years.
17. COMMITMENTS AND :
a. Legal Actions:
•
Theme 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.
•
See Independent Auditor' s Report 64
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
17. COMNII'II1PS AMID CONTINGENCIES (CONTINUED)
• b. Mortgage Revenue Bonds:
The City established a program in February, 1983 to provide funds for the
purchase of hom mortgages within the City. Under this program, a total of
$40,000,000 of mortgage revenue bonds has been issued, $20,000,000 in
• March, 1983 and an additional $20,000,000 in July, 1984. In 1983 the City
also issued $16,000,000 of Loans to Lender Revenue Bonds to construct an
apartment cmiplex for low and moderate income housing. In 1985 the City
also issued $25,000,000 of Multi-Family Housing Revenue Bonds for
construction of various apartment complexes.
• The bonds are payable from, and are secured by, a pledge of payments made
on the home mortgages and all funds held by the trustee under the indenture.
agreements. The City is not required to make payments on the bonds from
any other source. Therefore, these programs have been excluded from the
accompanying combined financial statements.
•
C. Land Purchases- A.C. Marion:
In 1987, City has agreed to purchase a parcel of land from a private party
for $3,190,000 in various phases. At June 30, 1990, one remaining phase
• had not yet been purchased. The City pays a rental option for the use of
the unpurchased land which is paid quarterly on February 28th, May 31st,
August 31st and November 30th. The City may cancel the agreement at any
time in which case the obligation to pay the remaining rental/option fees
or to purchase the remaining phase ends. Listed below is the schedule of
payments and rental/option fees for the life of the contract (expressed in
• thousands) :
Fiscal
Year
DxUng Purchase Quarterly
• June 30, Price Phase Rents
1991 $690 5 $26
•
See Independent Auditor's Report 65
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
17. W�NPS AND (Cour mm) :
d. 1988 Owner Participation Agreement-Mola Development Corporation:
In. July, 1988, the Redevelopment Agency, the City and Mola Development
Corporation (Mola) entered into an owner participation agreement for the
Townssquare project (a residential and commercial development in the
MairVPier project area of the Redevelopment Agency) . Certain property 0
which was owned by third parties was acquired by both the Agency and Nola.
This property was combined with adjacent property owned by Mola, property
owned by the Agency and property sold to the Agency by the City for
$1,956,000 (see note 12) , which represented the lower of cost or market of
the land. The market value was $2,500,000. The combined land was used for
the development
Mien the individual residential units are cmpleted and sold, the proceeds
will reimburse the Redevelopment Agency for the market value of its land
and pay a 9% developers fee to Mola. The remaining proceeds will be
divided between the Agency and Mola based on the value of the respective
land contributed by each party.
In the prior year a land draw of $1,250,000 was received by the Agency
which left a beginning year balance of $1,250,000 to be reimbursed. During
the year, $810,848 was repaid to the Agency leaving an unreimbursed amount
of $439,152.
One year after the commercial units are completed, Mola will be obligated
to pay to the Agency 50% of the net operating income of the commercial
units for the proceeding year and on a monthly basis thereafter.
- •
f. Owner Participation Agreement-Koury:
In November, 1988, the City, the Redevelopment Agency and Robert Koury, an
individual entered into an owner participation agreement which will provide a
for the development of a parking structure and related commercial and
retail space in the Main/Pier project area of the Redevelopment Agency.
•
See Independent Auditor's Report 66
0
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
17. OOMMITHENTS AND CuNrINGEW (CONTINUED):
•► The Redevelopment Agency purchased land from the City valued at $3,133,500.
This sales price will be paid to the City by future tax increment revenues
of the Main/Pier project area (see note 12) . This land was combined with
other Redevelopment Agency owned land and land owned by Koury to provide
the space for the development. The Agency purchased the land held by Koury
for $1,235,000 and secured the performance of the agreement by issuing
• Koury a deed of trust. The Agency agreed to construct a parking garage and
32,000 square feet of its retail/ccmwzcial space. When the constriction
is completed the Agency will sell its interest in the retail/commercial
space for $1,235,000. The Agency will retain title to the parking
structure.
•
g. Disposition and Development Agreement-Robert L. Mayer Corporation:
In August, 1988, the Redevelopment Agency, the City and Robert L. Mayer
Corporation (Mayer) entered into a disposition and development agreement
for the development of hotels, residential and commercial parcels in the
Main/Pier project area. The development will take place in three different
residential and six different commercial phases.
Mayer agreed to loan to the Agency up to $4,800,000 to relocate residents
of a mobilehcme park in the area. As of June 30, 1990, $2,192,075 in loans
from Mayer have been made (see note 12h) . Mayer will be repaid by the
Agency pledging a portion of the tax increment and transient occupancy tax
revenues that the improvements generate. After the indebtedness is repaid,
the Agency will also be liable to rebate to Mayer additional tax increment
and transient occupancy tax revenue generated by the project when the
project is completed.
•
The Agency purchased land from the City for $22,400,000. This sales price
will be repaid to the City by future tax inert revenues of the
Main/Pier project area. The land purchased fraan the City which will be
used for the commercial portion of the development will be leased by the
Agency to Mayer for 99 years under an operating lease. The minimum annual
lease payments to be received by the Agency are as follows (expressed in
thousands) :
•
See Independent Auditor's Report 67
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990 •
17. COMMIT149M AND COMINGENCIES (OOrTPIN W :
Year Ending
r
June 30, Amount
1991 $34
1992 125
1993 125
1994 125
1995 131
Totals $540
The remaining land will be used for the residential development. When the
residential units are sold, the Agency will receive revenue based on a
specific schedule in the agreement. •
At June 30, 1990, $8,377,000 of the land representing the residential
portion is recorded as "Land Held for Resale" on the balance sheet of the
Redevelopment Agency's Capital Projects Fund.
h. Arbitrage:
Under Internal Revenue Code Section 148, governmental obligations are
subject to "arbitrage" rules which require that investment income with a
yield of 1/8 of 1% over the yield of the debt issued must be rebated to the
federal government every five years unless a rebate exception is made. As
of June 30, 1990, the following debt issues have arbitrage rebate amounts
as follows (expressed in thousands) :
1989 Public Financing Authority Certificates of
Participation (note 13i) $ 67
1989 Civic Improvement Corporation Certificates of
Participation (note 12e) 19
1988 Public Financing Authority Revenue Bonds (note 12i) 133
Total $220
•
See Independent Auditor's Report 68
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
18. JOINr VENrMMS:
• In October, 1988, the City and the cities of Persona, San Bernardino, Santa
Ana and Oxnard formed the Big Independent Cities Excess Pool Joint Powers
Authori , (BICEP) to finance a claims payment pool for certain liability
claims in excess of $1,000,000 per claim.
BICEP is governed by a Board of Directors which is cagx sed of one director
• representing each City appointed by each City's City Council. A director
must be a member of the City Council or an official or staff person of the
City which he or she represents. Any changes to the board must be approved
by the current board members. Each participating City pays an insurance
premium to BICEP which is used to fund the operating and debt service
expenditures of BICEP. The participants' shares of the assets, liabilities
• and fund equity are as follows:
Huntington Beach 21.43%
Oxnard 15.62%
• San Bernardino 19.09%
Santa Ana 30.27%
Pomona 13.59%
In December, 1988, BICEP issued $15,055,000 of Insurance Program Revenue
• Bonds, 1988A which was used to initiate the insurance pool. The interest
rates on these bonds varies between 6.5% and 8.25% and are payable from
premium payments from the participating cities. The premiums paid from the
participants represents the security for the debt Debt service
requirements to maturity are as follows (in thousands) :
•
•
See Independent Auditor's Report 69
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990 •
18. JOINT VENTURES (CONTINUED) :
Year •
Ending
June 30, Principal Interest Total
1991 $ 360 $ 1,203 $ 1,563
1992 390 1,178 1,568
1993 425 1,151 1,576
1994 450 1,120 1,570
1995 485 1,087 1,572
1996 520 1,050 1,570
1997 560 1,010 1,570
1998 620 967 1,587 '
1999 670 918 1,588
2000-2009 10,485 8,639 19,124
Total $14,965 $18,323 $33,288
The city's share of the above liability is $3,206,999. �
The June 30, 1990 financial information for BICEP is as follows (expressed
in thousands) :
BICEP City
Balance Sheet Total Share •
Assets $16,665 $3,571
Liabilities 15,389 3,287
Equity 1,276 274
Revenue and Exper�.se •
Revenues 2,372 508
Expenses 1,745 374
Non-Operating Revenue 627 134
Net Non-Operating Revenue (211) (45)
(Expense)
Excess of Revenue over 415 89
Expense
See Independent Auditor's Report 70
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
19. SUPPLEMENEM IMMO. ITION:
• a. Actual Expenditures Exceeding Appropriations:
Expenditures exceeded appropriations at the departmental level in the funds
shown as follows (expressed in thousands) :
• General Fund
City Administrator $71
City Treasurer 27
City Attorney 2
Fire 1,095
Police 823
• Cmm unity Services 9
Redevelopment Agency Debt Service
Interest 2,026
Parking Authority Debt Service
Principal 2
Interest 1
Civic Improvement Corporation,
Debt Service
Non-Departmental 94
•
Public Financing Authority
Interest - 300
b. Budgetary Changes:
•
During the year the appropriations authorized by the City Council for
governmental fund expenditures are changed by action of the City Council as
described in note 1(d) . Fund's with changed budgets for total expenditures
and transfers out are shown below (expressed in thousands) :
•
•
See Independent Auditor's Report 71
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
19. au II EDrOM ION (Coffri2mm)
b. Budgetary Changes: •
Fund Original Revised
General $86,340 $96,115
Special Revenue Funds: •
Gas Tax 7,868 9,437
Sewer 1,686 2,208
Planned local Drainage 1,674 2,118
Public m mm mications 0 737
Grants 1,395 5,185 •
Park Acquisition 5,843 6,504
and Development
Narcotics Forfeiture 200 497
20. PRIOR PERIOD AD7US MENT:
a. Redevelopment Agency Capital Projects Fluid:
At June 30, 1989. the City had recorded $19,549,000 of Land Held for Resale
on the balance sheet of the Redevelopment Agency Capital Projects Fund.
The amount was also recorded by an offsetting reserve of fund balance. The
amount was understated by $827,010.
At June 30, 1989 the Agency recorded $2,730,470 of revenue received from •
Robert Mayer for a loan to relocate tenants of a mobile hone park (see note
17g) in the Redevelopment Agency Capital Projects Fund. Only $461,435 of
the revenue should have been recorded which resulted in a $2,269,035
overstatement of beginning equity.
Below is a restatement of the Redevelopment Agency Capital Projects Fund
Equity as of June 30, 1989 (expressed in thousands) : •
•
See Independent Auditor' s Report 72
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
20. PRIOR PERIOD ADJUSTMERr (CC NrngUED)
• a. Redevelopment Agency Capital Projects Fund:
Fund Balance 6/30/89 $34,761
• Restatement due to prior year 827
error regarding Land Held
for Resale
Restatement due to isproper
• recording of loan proceeds (2,269)
Fund Balance as Restated $33,319
b. Accruals of Utility Taxes and Certain State Subventions:
y At June 30, 1989 the City did not accrue utility taxes and certain state
subventions that met the criteria for revenue accrual. This resulted in an
understatement of the beginning General Fund Balance as follows (expressed
in thousands) :
• Fund Balance 6/30/89 $29,543
Restatement due to prior
year error 1,377
Fund Balance as Restated $30,920
•
c. General Fixed Assets Account Group:
At June 30, 1989 the City did not record $15,027,000 of land in the General
Fixed Assets Account Group. This amount is shown as an addition in note
• 15. Below is a restatement of the beginning balance for land in the
General Fixed Assets Account Group:
•
See Independent Auditor's Report 73
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1990
20. PRIOR PERIM ADJUSTMENP (OOZJI'nWM) :
c. General Fixed Assets Account Group: •
Land 6/30/89 $42,498
Restatement due to prior 15,027
year error •
Beginning Balance as $57,570
Restated
d. Emerald Cove Operating Transfers: •
Prior to this fiscal year, subsidies from the Low-Ism Housing Capital
Projects Rand were recorded as contributed capital in the Emerald Cove
Housing Fund. These should have been recorded as operating transfers in
and been added to retained earnings instead of contributed capital. Below �!
is a restatement of the beginning balance of retained earnings in the
Emerald Cove Housing Fund:
Beginning Balance $ (5)
Restatement due to above 147 •
Beginning Balance as $ 142
Restated
f. General IcM-1rerm Debt Account Group:
•
At June 30, 1989, the City incorrectly recorded a loan fran Robert Mayer
Corporation (see note 20a) . This resulted in an overstatement of the
beginning amount owed under Owner Participation and Disposition and
Development agreements as follows:
Amount Recorded, 6/30/89 $3,588 •
Restatement Due to (2,342)
Prior Year Error
Beginning Balance as Restated $1,246
•
See Independent Auditor's Report 74
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
• JUNE 30, 1990
,21. SUBSDQUEUr EVENTS (CONTIIBiJED):
• a. Mello Roos Bonds:
In August, 1990, the City issued $2,400,000 of Mello-Roos Special Tax Bonds
to finance the acquisition and construction of public improvements within
the Huntington Beach Cmmu ity Facilities District 1990-1. The bonds are
• secured by a special tax levy on property within the district. The City is
not liable to make any bond payment if the taxes collected are not
sufficient to cover the debt service. Interest rates on the certificates
vary frcm 6.35% to 7.6%. Interest is payable semi-annually on April 1st
and October 1st with principal maturing annually on October 1st. Debt
service requirements are as follows:
•
Year
Ending
June 30, Principal Interest Total
1991 $ 0 $ 180 $ 180
1992 0 180 180
1993 25 179 204
1994 25 177 202
1995 30 176 206
1996 30 174 204
1997 30 172 202
• 1998 35 169 204
1999 40 167 207
2000 45 164 204
2001-2021 2,140 1,959 4,099
Total $2,400 $3,517 $5,917
•
b. Tax and Revenue Anticipation Note:
In August, 1990 the City issued $4,500,000 of Tax and Revenue Anticipation
notes bearing interest at 6.25%. The notes (including principal and
interest) are due on July 31, 1991.
•
See Independent Auditor's Report 75
•
Il�EP'IIIDII� AIDITCIRSI' MKIRT AND SCHEDULE
OF FIDII2AL MUMUAL ASSLSVOCE
•
&COMMA 1 V 1 RODNEY.X T r,-\AL CPA
RAI.PH H.\\'EIN'IR4LB.CPA
CERMED PUBLIC ACCOUNTANTS MLCHAEL R.1.1.DIN,CPA
ROBERT R.VINE.CPA
A PARTNERSHIP 6NC=ING ACCOL NTACY CORPORATIONS
• PHILIP H.HOLT1Ci.\{P,CM
18401 VON KARMAN,SUITE 200 September 21, 1990 THOKAS M.PERLOWS5 3.CPA
WINE • CALIFORNIA 92715.1542 KAWEYI SCHROEDER,CK
PHONE(714)757-7700
FAX(714)757.2707
•
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
OF FEDERAL FINANCIAL ASSISTANCE
•
City Council
City of Huntington Beach
Huntington Beach, California
•
We have audited the general purpose financial statements of the City of
Huntington Beach as of and for the year ended June 30, 1990, and have issued our
report thereon dated September 21, 1990. These general purpose financial
statements are the responsibility of the City of Huntington Beach's management.
Our responsibility is to express an opinion on these general purpose financial
• statements based on our audit.
We conducted our audit of such general purpose financial statements in
accordance with generally accepted auditing standards and Government Auditinct
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 general purpose financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the general purpose 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 opinion.
Our audit was made for the purpose of forming an opinion on the general purpose
financial statements of the City of Huntington Beach taken as a whole. The
accompanying Schedule of Federal Financial Assistance is presented for purposes
of additional analysis and is not a required part of the general purpose
financial statements. The information in that schedule has been subjected to
the auditing procedures applied in the audit of ;t�general purpose financial
statements and, in our opinion, is fairly stated -in all material respects in
relation to the general purpose financial statements taken as a whole.
-76-
OTHER OFFICES AT: 2965 ROOSEVELT ST 613 W-XALLEY PKNXT...SUITE 330
CARLSBAD,CA 92CC8.2389 ESCONDIDO,CA 92C25.2552
(619)729-2343 (619)741.3141
(619)729.2234 FAX (619)741-9890 FAX
•
CITY OF HUNTINGTON BEACH
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
For the year ended June 30, 1990
Accrued or Accrued or
Grant Federal Pass-Through Program (Deferred) (Deferred)
Federal Grantor/Pass Through Identification CFDA Grantor's or Award Revenue at Federal Non-Federal Revenue at
Program Title Number Number Number Amount July 1, 1989 Receipts Receipts Expenditures June 30, 1990
U.S. Department of HUD
Community Development Block
Grant • Entitlement B-89-MC-06-0506 14.218 S 1,318,000 $(1) 467,998_S 1,430,066_S - $ 1,025,703_S 63,635
U.S. Department of Transportation
Passed through State Department of
Transportation:
Highway Planning and Construction
(Federal Aid Highway Program) HES-OOOS(257) 20.205 7.5181 183,600 19,664 196,640 176,976
HES-MO32(005) 20.205 7.5181 85,500 - 8,272 82,718 74,446
HES-M014(2) 20.205 7.5181 69,300 7,120 5,198 12,318 -
HES-M021(3) 20.205 7.5181 85,500 4,193 2,923 7,116
HES-M004(5) 20.205 7.5181 974,917 (2) 213,468 213,468 19,815 19,815
HES-M033(3) 20.205 7.5181 45,000 15,216 38,250 32,238 55,272 -
HES-M019(8) 20.205 12.5181 364,690 307,600 330,544 330,562 387,652 34,146
HES-Mo19(006) 20.205 12.5181 796,112 - 91,389 673,464 582,075
536,284 593,575 510,061 1,434,995 867,643
U.S. Department of Education
Library Literacy G008610694 84.167 - 21,540 (415) - 415
R167A80169 84.167 18,414 (1,372) 3,986 - 5,305 (53)
R167A90110 84.167 18,684 14,379 837 15.216
(1,787) 18,365 837 20,936 (53)
Passed through California State
Library LSCA-I-7.8 84.034 40.1435 13,989 (4,203) - 118 4,321
LSCA-1-7.6 84.034 40.1709 15,113 15,113 - 15,110 (3)
(4,203) 15,113 118 19,431 (3)
Federal Emergency Management Agency
Passed through State Office of
Emergency Services:
Emergency Management
Assistance Program 83.516 34,855 10,981 34,855 54,893 88,701 9,935
TOTAL FEDERAL ASSISTANCE $ 2,091,974 $ 565,909 S 2,589,766
(1) Amount increased from prior year's report by $184,356 which constitutes an increase in accrued revenues from prior
years.
(2) Amount increased from prior year's report by $213,468 which constitutes an increase in accrued revenues from prior
years.
See Independent Auditors' Report on Schedule of Federal Financial Assistance (Page 76).
-77-
• • • • • • • • • • •
•
•
•
IIIDEPENDM AMITCIRSf IUM)CRLS ON COMPUMCE
AND
SCHEME OF FDOINGS AMID COSTS
•
•
•
•
•
DIEHL,EVANS
&CONT 11 V 1 RODNEY ML.CPA
RALPH H..�1'ERv'EINI i dRAI,'B.CPA
CERDRED PUBLIC ACCOUNTANTS MICHAEL R.LIMN,CPA
ROBERi R.%1NE.CP.a
A PARITIEASWP eacwonac MCOIMACY coxroannoru
PHB.IP H.HOLTKA2.CPA
18401 VON KARMAN,SUITE 200 Se 21, 1990 THOMAS M.PERLOWSM,CPA
UWM • CALIFORNIA 92715.1542 HAMY 1 SCHROEDER.CPA
PHONE(714)757-7700
FAX(714)757.2707
IMEPENDEPTr AUDITORS' RFU30RT ON CCMPLTANCE
P ATED TO THE GENERAL PupjwE FINANCIAL STATEmE m
City Council
City of Huntington Beach
Huntington Beach, California
We have audited the general purpose financial statements of the City of
Huntington Beach as of and for the year ended June 30, 1990, and have issued our
report thereon dated September 21, 1990.
We conducted our audit in accordance with generally accepted auditing standards
and 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 general purpose financial
statements are free of material misstatement.
Compliance with laws, regulations, contracts, and grants applicable to the City
of Huntington Beach is the responsibility of the City of Huntington Beach's
management. As part of obtaining reasonable assurance about whether the general
purpose financial statements are free of material misstatement, we performed
tests of the City's aaltplianee with certain provisions of laws, regulations,
contracts, and grants. However, our objective was not to provide an opinion on
overall compliance with such provisions.
The results of our tests indicate that, with respect to the items tested, the
City of Huntington Beach ccuplied, in all material respects, with the provisions
referred to in the preceding paragraph. With respect to items not tested,
nothing came to our attention that caused us to believe that the City had not
cmplied, in all material respects, with those provisions.
This report is intended for the information of the City's management, the City
Council and the City's oversight agency (U.S. Department of Housing and Urban
DevelopTent) . This restriction is not intended to limit the distribution of this
report which, upon acceptance by the City, is a matter of public record.
-78-
OTHER OFFICES AT: 296S ROOSEVELT ST. 613 W.VALLEY PKWY,SL1TE 330
CARLSBAD.CA 92008-2389 ESCONDIDO,CA 9202S.2552
(619)729.2343 (619)741.3141
1619)729.2234 FAX (619)741.9890 FAX
DiEHL,EvANs
&COW *Y RODNEY. E:N-MA L.CPA
���j C11 V 1 R41.PH H.�•EL\"IR.�LB,CPA
CERTIFIED PUBLIC ACCOUNTANTS MICHLAEL R L DIN.CI'A
A PARTNERSI9P DXUJDM ACCOUNTACY CORPORATIONS ROBERT R.51•LN-E.CPA
PHMJP H.HOLTKA-%1P•CPA
18401 VON KARMAN,SUITE 200 THOMAS M.PERLOWSM.CPA
WINE • CALIFORNIA 92715-1542 HARVEY 1 SCHROEDER.CPA
PHONE(714)757.7700 SepteMber 21, 1990
FAX(714)757.2707
IlMEPENDENT AUDITORS' REPORT ON C HPLIANCE
WITH LAWS AND RDGU=ONS RIM= TO
MAJOR FEDERAL FIMNCIAL ASSISTANCE PROGRAMS
City Council
City of Huntington Beach
Huntington Beach, California
We have applied procedures to test the City of Huntington Beach's compliance
with the following general requirements applicable to each of its major federal
financial assistance programs, which are identified in the schedule of federal
financial assistance, for the year ended June 30, 1990:
Political Activity Relocation Assistance and Real
Davis-Bacon Act Property Management
Civil Rights Federal Financial Reports
Cash Management Drug-free Workplace Act
Our procedures were limited to the applicable procedures described in the Office
of Management and Budget's Compliance Supplement for Single Audits of State and
Local Gaverrmlents. Our procedures were substantially less in scope than an
audit, the objective of which is the expression of an opinion on the City of
Huntington Beach's cmpliance with the requirements listed in the preceding
paragraph. Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no
material instances of noncompliance with the .requirements listed in the first
paragraph of this report. Our procedures included all of the requirements
listed above. With respect to items not tested, nothing came to our attention
that caused us to believe that the City of Huntington Beach had not complied, in
all material respects, with those requirements.
•
-79-
OTHER OFFICES AT: 2965 ROOSEVELT ST. 613 W.VALLEY PK%`Y.,SLITS 330
CARLSBAD,CA 92008.2389 ESCONDIDO,CA 92025-2552
(619)729.2343 (619)741-3141
(619)729-2234 FAX (619)741.9890 FAX
•
•
We also have audited the City of Huntington Beach's compliance with the
following specific requirements that are applicable to each of the City's major •
federal financial assistance programs, which are identified in the accompanying
schedule of federal financial assistance, for the year ended June 30, 1990:
Types of services Reporting
allowed or unallowed Claims for advances and
Eligibility reimbursements
Matching, level of effort Special requirements •
or earmarking
The management of the City of Huntington Beach is responsible for the City's
ompliance with those requirements. Our responsibility is to express an opinion
on cou liance with those requirements based on our audit. •
We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Ccaptroller General of the United
States, and OMB Circular A-128, "Audits of State and Focal Governments". Those
standards and OMB Circular A-128 require that we plan and perform the audit to
obtain reasonable assurance about whether material noncompliance with the •
requirements referred to above occurred. An audit includes examining, on a test
basis, evidence about the City's compliance with those requirements. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the City of Huntington Beach complied, in all material respects,
with the requirements governing types of services allowed or unallowed;
matching, level of effort or earmarking; reporting; claims for advances and
reimbursements, and the special requirements in the Office of Management and
Budget's Commliance Supplement for Single Audits of State and Local Governments;
and amounts claimed or used for matching that are applicable to each of its
major federal financial assistance programs for the year ended June 30, 1990.
This report is intended for the information of the City's management, the City •
Council and the City's oversight agency (U.S. Department of Housing and Urban
-Development) . This restriction is not intended to limit the distribution of
this report which, upon acceptance by the City, is a matter of public record.
•
•
-80-
•
DIEHLXvANs
&CO (n^NY RALPH F.%T MNIE1,CPA
�,J��/�(��J i RALPI4 H.N'EPfIR4l1B,CPA
CER-IFIED PUBLIC ACCOUNfANPB MICHAEL R.LUDIN,CI'A
ROBERT R.%T-ZE.CPA
• n PARINERSMP Lkz i vLuc nccot�rrncY cownMno�s PHILIP H.HOLTKAMP.CPA
18401 VON KARMAN,SUITE 200 THOMAS M.PERLOWSIG,CPA
IRVINE • CALIFORNIA 92715.1542 HARVEY I SCHROEDER,CPA
PHONE(714)757-7700 September 21, 1990
FAX(714)757.2707
INDEPENDENT AUDIMRSI REPORT ON COMPLIANCE
WITH LAWS AND RDCQJIATIONS RETATED TO
NON-MANOR FEDERAL FIlWCIAL ASSISTANCE PFDGPJ MS
City Council
• City of Huntington Beach
Huntington Beach, California
in connection with our audit of the general puttee financial statements of the
City of Huntington Beach, as of and for the year ended June 30, 1990, and with
our study and evaluation of the City's internal control systems used to
administer federal financial assistance programs, as required by Office of
Management and Budget Circular A-128, "Audits of State and Local Governments",
we selected certain transactions applicable to certain nonmajor federal
financial assistance programs for the year ended June 30, 1990.
• As required by Circular A-128, we have performed auditing procedures to test
compliance with the requirements governing types of services allowed or
unallowed and for allowable costs. Our procedures were substantially less in
scope than an audit, the objective of which is the expression of an opinion on
the City's compliance with these requirements. Accordingly, we do not express
such an opinion.
With respect to the items tested, the results of those procedures disclosed no
material instances of noncompliance with the requirements listed in the
preceding paragraph. With respect to items not tested, nothing came to our
attention that caused us to believe that the City of Huntington Beach had not
complied, in all material respects, with those requirements.
This report is intended for the information of the City's management, the City
Council and the City's oversight agency (U.S. Department of Housing and Urban
Development) . This restriction is not intended to limit the distribution of
this report which, upon acceptance by the City, is a matter of public record.
-81-
OTHER OFFICES AT: 2965 ROOSEVELT ST. 613 W.V.MM I'MY.,SUITE 330
CARLSBAD,CA 92008.2389 ESCONDIDO.CA 92025 2552
1619)729-2343 (619)741.3141
(619)729-2234 FAX (619)741.9890 FAX
•
CITY OF HUNTINGT'ON BEACH •
saffDULE OF FINDINGS AND QUESPIONFD COSTS
For the year ended June 30, 1990
•
Award Questioned
Program Amount Finding/Non-Compliance Costs
There were no findings or questioned costs for the year ended June 30, 1990. •
One finding and instance of non-oonpliance reported on the Single Audit report •
for the year ended June 30, 1989 remained unchanged from our previous reports
concerning the Library Literacy Program. The City has not reimbursed $415 to
the U.S. Department of Education for an advance received but not expended. We
have not included this finding in our report for the year ended June 30, 1990.
The City has taken action to prevent the reoo =ences of the other findings as
listed in the prior year Schedule of Findings and Questioned Costs. •
•
•
•
•
•
See Independent Auditors' Report on Compliance with Laws and Regulations Related
to Federal Financial Assistance Programs (Pages 7.9 to 81) .
-82-
•
• ���ID AMITORS' IU12CIRT5 CAI INTERNAL AMOUNTING CIS
DiEHLXvANs
&C �� m,��n 7 RODNEY..ELN- lEl.CP:\
vl�/��V� RALPH H.\\'EL\'iR.\f;R.CPA
CERTIFIED PURUC ACCOUNTANTS NICFL\F.L R.WON.CR\
n rAxruFRsluP wn2rowc Acra xrk rolun r coRoru September 21, 1990 ROBEKf R.NINE.CPAPHILIP H.HOLTK.-\,\1P.CR
18401 VON KARMAN,SUITE 200 THOMAS M.PERLO\VSKI.CPA
IRVINE • CALIFORNIA 92715.1542 HARVEY I.SCHROEDER.CPA
PHONE(714)757-7700
FAX(714)757.2707
INDEPEMENr AUDITORS' REPORT ON THE IlNTEPNAL
CONTROL STRUCTURE IN AOOORDMCE WITH
GO'VERNMEW AUDITING STANDAMS
• City council
City of Huntington Beach
Huntington Bead, California
We have audited the general purpose financial statements of the City of
• Huntington Beach as of and for the year ended June 30, 1990, and have issued our
report thereon dated September 21, 1990.
We conducted our audit in accordance with generally accepted auditing standards
and 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 general purpose financial
statements are free of material misstatement.
In planning and performing our audit of general purpose financial statements of
the City of Huntington Beach for the year ended June 30, 1990, we considered its
internal control structure in order to determine our auditing procedures for the
• purpose of expressing our opinion on the general purpose financial statements
and not to provide assurance on the internal control structure.
The management of the City of Huntington Beach is responsible for establishing
and maintaining an internal control stricture. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and
recorded properly to permit the preparation of financial statements in
. accordance with generally accepted accounting principles. The objectives of
internal control systems used in administering federal financial assistance
programs are to provide management with reasonable, but not absolute, assurance
that, with respect to federal financial assistance programs, resource use is
• -83-
OTHER OFFICES AT: 2965 ROOSEVELT ST. 613\V.\ALM PK\\'Y.,SUITE 3 30
CARLSBAD,CA 92008-2389 ESCONDIDO,CA 92025-2552
(619)729.2343 (619)741-3141
(619)729-2234 FAX (619)741.9890 FAX
•
•
consistent with laws, regulations, and policies; resources are safeguarded
against waste, loss, and misuse; and reliable data are obtained, maintained, and
fairly disclosed in reports. Because of inherent limitations in any internal •
control structure, errors or irregularities may nevertheless occur and not be
detected. Also, projection of any evaluation of the structure to future periods
is subject to the risk that procedures may become inadequate because of changes
in conditions or that the effectiveness of the design and operation of policies
and procedures may deteriorate.
•
For the purpose of this report, we have classified the significant internal
control structure policies and procedures in the following categories:
Cash receipts
Cash disbursements
Purchasing and accounts payable •
Billings and receivables
Payroll
Inventory
Budgeting
Property and equipment
General ledger •
For all of the internal control structure categories listed above, we obtained
an understanding of the design of relevant policies and procedures and whether
they have been placed in operation, and we assessed control risk.
We noted a certain matter involving the internal accounting control structure •
and its operation that we consider to be a reportable condition under standards
established by the American Institute of Certified Public Accountants. A
reportable condition involves matters coming to our attention relating to
significant deficiencies in the design or operation of the internal accounting
control structure that, in our judgment, could adversely affect the City's
ability to record, process, s=rarize, and report financial data consistent with
the assertions of management in the general purpose financial statements.
FAU/HES PFD= BILLINGS
Currently, all FAU/HES project billings are prepared by the Public Works •
Department. For most projects, billings are submitted when the project is
complete, which results in the City financing the project for the duration of
the project. In order to assure timely billings, and take advantage of .all
revenue sources available, we recommend that the Accounting Department
periodically review with the Public Works Department the status of FAU/HES
grants and related expenditures and prepare progress billings when appropriate.
•
A material weakness is a reportable condition in which the design or operation
of the specific internal accounting control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the general purpose financial statements being
audited may occur and not be detected within a timely period by employees in the •
normal course of performing their assigned functions.
-84-
•
•
Our consideration of the internal control structure would not necessarily
• disclose all matters in the internal control structure that might be reportable
conditions and, accordingly, would not necessarily disclose all reportable
conditions that are also considered to be material weaknesses as defined above.
We believe the reportable condition described above is not a material weakness.
Also, was noted certain matters involving the internal control structure and its
operation that we have reported to the management of the City of Huntington
Beach in a separate commmication dated DecmWp 10, 1990.
This report is intended for the information of the City's management, the City
Council and the City's oversight agency (U.S. Department of Housing and Urban
Development) . This restriction is not intended to limit the distribution of
• this report which, upon acceptance by the City, is a matter of public record.
90.4" -'.
•
•
•
•
•
•
-85-
•
•
DiEHL,EVANs
&CO' T� RAITH I'K.WDATINIR E1.CP.A
�J RrU.I'H 11.N'Elh'fR.-11;11,lT.-\
CERIIFIF.D PUBLIC ACCOUNI'ANI'S MICIIALL R.111AN.CPA
ROBERT R.WINE.CPA
• A PARMERSHIP NILUMI4c ACCOWTACY CORPORAnONS September 21, 1990 PHILIP H.HOLTKNW.CPA
18401 VON KARb4AN,SUITE 200 THOALAS Ni.PERLOW'SKI.CPA
IRVINE • CALIFORNIA 92715-1542 HAMY y SCHROEDER,CPA
PHONE(714)757.7700
FAX(714)757-2707
INDEPENDENT AUDITORS' REPORT ON INfER!iAL CONTROLS
(ACaXUrING AND ADMINISTRATIVE) BASED ON A STUDY AND
EVALZIATION MADE AS A PART OF AN AUDIT OF THE GENERAL
PURPOSE FINANCIAL SIATEMnS AND THE ADDITIONAL TEST'S
RDQiT112ED BY THE SINGLE AUDIT ACT'
•
City Council
City of Huntington Beach
Huntington Beach, California
We have audited the general purpose financial statements of the City of
Huntington Beach, for the year ended June 30, 1990, and have issued our report
thereon dated September 21, 1990. As part of our audit, we made a study and
• evaluation of the internal control systems, including applicable internal
adm=strative controls, -used in administering federal financial assistance
programs to the extent we considered necessary to evaluate the systems as
required by generally accepted auditing standards, Government Auditinct
Standards, issued by the Ccnptroller General of the United States, the Single
Audit Act of 1984, and the provisions of Office of Management and Budget
• Circular A-128, "Audits of State and Local Governments". For the purpose of
this report, we have classified the significant internal accounting and
administrative -controls used in administering federal financial assistance
programs in the following categories:
Accounting Controls
• Cash receipts
Cash disbursements
Purchasing and accounts payable
Billings and receivables
Payroll
Inventory
• Budgeting
Property and equipment
General Ledger
• -86-
OTHER OFFICES AT: 2965 ROOSEVELT ST. 613 W.VALLEY PK%VY.,SUITE 330
CARLSBAD.CA 92008.2389 ESCONDIDO.CA 92025-2552
(619)729-2343 (619)741.3141
(619)729.2234 FAX (619)741-9890 FAX _
•
•
Administrative Controls
General: Specific: •
Political Activity Types of services
Davis-Bacon Act Eligibility
Civil Rights Matching level of effort
Cash Management Reporting
Relocation assistance and Cost Allocation
real property management Claims for advances and
Federal financial reports reimbursements •
Drug-free Workplace Act Monitoring subrecipients
Special requirements
The management of the City of Huntington Beach, is responsible for establishing
and maintaining internal control systems used in administering federal financial _ •
assistance programs. In fulfilling that responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs of
control procedures. The objectives of internal control systems used in
administering federal financial assistance programs are to provide management
with reasonable, but not absolute, assurance that, with respect to federal
financial assistance programs, resource use is consistent with laws, •
regulations, and policies; resources are safeguarded against waste, loss and
misuse; and reliable data are obtained, maintained, and fairly disclosed in
reports.
Because of inherent limitations in any system of internal accounting and
administrative controls used in administering federal financial assistance •
programs, errors or irregularities may nevertheless occur and not be detected.
Also, projection of any evaluation of the systems to future periods is subject
to the risk that procedures may become inadequate because of changes in
conditions or that the degree of compliance with the procedures may deteriorate.
Our study included all of the applicable control categories listed above, except •
for Cost Allocation which was not applicable. During the year ended June 30,
1990, the City of Huntington Beach, expended 95 percent of its total federal
financial assistance under major federal financial assistance programs. With
respect to internal control systems used in administering major federal
financial assistance programs, our study and evaluation included considering the
types of errors and irregularities that could occur, determining the internal
control procedures that should prevent or detect such errors and irregularities, •
determining whether the necessary procedures are prescribed and are being
followed satisfactorily, and evaluating any weaknesses.
With respect to the internal control systems used solely in administering the
nonmajor federal financial assistance programs of the City of Huntington Beach, •
our study and evaluation was limited to a preliminary review of the systems to
obtain an understanding of the control environment and the flow of transactions
through the accounting system. Our study and evaluation of the internal control
systems used solely in administering the nonmajor federal financial assistance
programs of the City of Huntington Beach, did not extend beyond this preliminary
review phase.
•
-87-
•
•
our study and evaluation was more limited than would be necessary to express an
• opinion on the internal control systems used in administering the federal
financial assistance programs of the City of Huntington Beach. Accordingly, we
do not express an opinion on the internal control systems used in administering
the federal financial assistance programs of the City of Huntington Beach.
Further, we do not express an opinion on the internal control systems used in
administering the major federal financial assistance programs of the City of
• Huntington Beach.
Also, our audit, made in accordance with the standards mentioned above, would
not necessarily disclose material weaknesses in the internal control systems
used solely in administering nonmajor federal financial assistance programs.
Also, our study and evaluation and our audit disclosed no condition that we
believe to be a material weakness in relation to a federal financial assistance
program of the City of Huntington Beach.
This report is intended for the information of the City's management, the City
Council and the City's oversight agency (U.S. Department of Housing and Urban
Development) . This restriction is not intended to limit the distribution of
• this report which, upon acceptance by the City, is a matter of public record.
•
•
•
•
•
-88-
•
PUBLIC NOTICE
The City of Huntington Beach has completed its Single Audit
Report for the fiscal year ending June 30 , 1989 . The Single
Audit Report is a special report required by the Single Audit Act
of 1984 . All programs , revenues and expenditures from federal
funds received directly or passed through other agencies are
subjected to special audit procedures . The report ishvailable
for public inspection between the hours of Sam and 5pm at the
City Clerk' s office at 2000 Main St . Huntington Beach, CA 92648 .
Dated: March 2, 1990
CONNIE BROCKWAY
CITY CLERK
CITY OF HUNTINGTON BEACH
o
Authorized to Publish Advertisements of all kinds including
public notices by Decree of the Superior Court of Orange
County, Caldomia, Number A-6214, September 29, 1961, and -- --
A-24831 June 11,1963.
STATE OF CALIFORNIA
County of Orange
am a Citizen of the United States and a _
resident of the County aforesaid; I am over the
age of eighteen years, and not a party to or
interested in the below entitled matter. I am a
principal clerk of the ORANGE COAST DAILY
PILOT, a newspaper of general circulation,
printed and published in the City of Costa Mesa,
County of Orange, State of California, and that
attached Notice is a true and complete copy as
was printed and published in the Costa Mesa, PUBLIC NOTICE '
PUBLIC NOTICE
Newport Beach, Huntington Beach, Fountain The City_ of Huntington
Beach has Completed its
Valley, Irvine, the South Coast communities and Single Audit Report for the
fiscal year ending June 30,
Laguna Beach issues of said newspaper to wit 1989.'The;Single Audlf
the issue(s)of: I quired bys nee ISir,g eoa�dn
Act of 1984..All programs
revenues and expenditures
from federal.funds received
directly or passed.through
other agencies are sub-
March 8, 15, 1990 jected procedures. The 1al audit
rocedu I
available for public Inspec- i
tion between the hours of ` -
8am to 5pm at_the City 1
Clerk's office at 2000 Main I
Street, Huntington Beach, i!
CA 92648.
Dated:March 2, 1990
CONNIE BROCKWAY,.
CITY CLERK, CITY OF
HUNTINGTON BEACH
Published Orange Coast
Daily Pilot March 8,15,1990:
Th238
I declare, under penalty of perjury, that the
foregoing is true and correct.
Executed on Mach 14, , 199 0
at Costa Mesa,Califo
S' nature. U
�� PROOF OF PUBLICATION
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
6. RLTIREMP.W PLAN - NORMAL (CONTINUED):
•
b. Employee and Employer Contribution Obligations:
Miscellaneous Safety
Category Category'
• Normal Cost Rate 6.141% 16.384%
Unfunded Liability Rate .038% .137%
Total Required 6.179% 16.521%
The member rates for the fiscal year ending June 30, 1989 are as follows:
Member Rates
as a Percentage
of Wages
Local Miscellaneous Members- 7%
Local Safety Members- 9%
The employer rate contributes the remaining amounts necessary to fund the
• benefits for its members, using the actuarial basis recommended by the PERS
actuaries and actuarial consultants and adopted by the Board of
Administration.
c. Funding Status and Progress:
•
Pension benefit obligation is a standardized measure of the present value
of future pension benefits estimated to be payable in the future due to
employee service to date. It helps assess the funding status of the
system, assess progress made in accumulating sufficient assets to pay
• benefits when due, and make comparisons among employers. This measure is
independent of the funding method used to determine City contributions to
the system.
PERS conducted an actuarial valuation to determine the City's pension
• benefit obligation as of June 30, 1989. Significant actuarial assumptions
used were as follows:
See independent auditor ' s report -31-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
6. RLTIREMWr PLAN - NWMhL (ODG�D)
•
c. Funding Status and Progress:
. Rate of return on present and future assets- 8.5% per annum
.. Projected salary increases for covered employees due to inflation- 5.5%
per year
. Projected salary increases due to merit- 1.5% per year.
. Postretirement benefit increases- 0%
The pension benefit obligation as of June 30, 1989 based upon June 330,
1988 data adjusted for plan amendments adopted through January 9, 1989 was
as follows (in thousands) :
Retirees and beneficiaries currently receiving benefits
and terminated employees not yet receiving benefits $44,478
Current Employees:
Accumulated employee contributions and investment 32,135
earnings
Employer-financed, vested 48,521
Employer-financed, non-vested 1,653
Total pension benefit obligation 126,787
Net assets available for benefits at cost
(market value is $136,408 120,609
Unfunded pension benefit obligation
d. Actuarially Determined Contribution Requirements and Contributions Made:
PERS uses the Entry Aye Nonnal Actuarial Cost Method which is a projected
benefit cost method. That is, it takes into account those benefits that
are expected to be earned in the future as well as those already accrued.
This method states that the normal cost for an employee is the level amount
which would fund the projected benefit if it were paid annually from date
of employment until retirement. PERS uses a modification of the Entry Age
See independent auditor ' s report -32-
•
CITY oP nUNTINGTON BEACH
NOTtS TO' FINANCIAL STATEMENTS,
• (continued Y
JUNE1 3OF, 1981,
6`. RETIRDIMT PLAN - N� (COO[J17 WEb)s
•
d. Actuarially DeterminedContribution Requirements and Contributions Made:
Cost method in which the eiiployer's total normal cost is expressed as a
• level percent of payroll: PERS also uses the level percentage of payroll
method to amortize any unfunded actuarial liabilities. The amortization
period of the unfunded actuarial liability ends in the year 2000 for prior
§ei-vice benefits and in 2011 for current service benefits.
The significant actuarial assumptions used to compute the actuarially
determined contribution requirement are the same as those used to compute
the pension benefit obligation, as previously described.
The contribution to the system for 1988/89 of $6,817,910 was made in
accordance with actuarially determined requirements computed through an
actuarial valuation performed as of June 30, 1987. The contribution
• consisted of the normal cost, $4;400,028 (11.540 of current covered
payroll) and a $121;050 amortization of the unfunded actuarial accrued
liability ( .320 of co'iered payroll) . The City made employer contributions
of $4,521,078 (11.86% of covered payroll) and on behalf of employees
contributed $2,296,832 (6.020 of covered payroll.
• e. Trend Infori atioh:
Trend information gives an indication of the progress made in accumulating
sufficient assets to pay benefits when due. Ten year trend information for
` the City of Huntington Beach is not published in the California Public
Employees Retirement System Annual Report. Therefore, ten years of trend
information are required within the City's financial statements since PERS
does not display financial information for individual agencies within their
report. 1987/88 is the first year that this actuarial information has been
made available by PERS and until ten years are available, as many years as
` are available will be presented. Trend information for 1987/88 and 1988/89
are shown and employer contributions for 1986/87, 1987/88 and 1988/89 are
shown (dollar amounts expressed in millions) :
•
See independent auditor ' s report -33-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
.TUNE 30, 1989
6. RETIREMENT PLAN -NORMAL WOMI NUED)
•
e. Trend Information:
1986/87 1987/88 1988/89
Net assets available for benefits - $105.6 $120.6
Pension benefit obligation - $115.3
$126.7
Net assets available for benefits, expressed - 91.6% 95.1%
as a percentage of the pension benefit
obligation
Unfunded pension benefit obligation - 9.7% 6.1%
Annual Covered Payroll $32.1 $ 36.7 $ 38.1
•
Unfunded pension benefit obligation as - 26.4% 16.0%
a percentage of covered payroll
Employer contribution's ' $ 4.5 $ 4.4 $ 4.5
Employer contributions expressed as a •
percentage of annual covered made 14.1% 12.7% 11.9%
according to actuarially determined
requirements
7. RLTMBM NT PI&N - SUPPLfiM&WAL: •
a. Plan Description:
The City provides a retirement supplement plan to all employees covered •
under the City's normal retirement plan with the California Public
Employees Retirement System (see note 6) . This plan will pay the retiree
an additional amount to his or her normal amount for life. The amount will
cease upon the employee's death. The amount is computed at retirement and
remains constant for his or her life.
•
b. Employer and Employee Contribution Obligations:
The City is funding the retirement supplement plan on a "pay-as-you-go"
basis. This means that no funds are being set-aside to fund the future •
unfunded liabilities.
See independent auditors report -34-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
7. RETIREMENT PLAN - (CONTINUED):
•
c. Funding Status and Progress:
The City conducted an actuarial valuation to determine the pension benefit
• obligation as of June 30, 1989. Significant actuarial assumptions used
were identical to the assumptions described in note 6. The pension benefit
obligation as of June 30, 1988 is as follows:
Retirees and beneficiaries currently receiving benefits
and terminated employees not yet receiving benefits $1,292
Current emmployees who are vested 5,779
Total pension benefit obligation $7,071
Net assets available for benefits 0
Unfunded pension benefit obligation 7$ ,071
Since there was no analysis of the pension benefit obligation as. of June
30, 1988, .no analysis of the total change in pension benefit obligation is
presented.
d. Actuarially Determined Contribution Requirements and Contributions Made
Since the City is on a "pay-as-you-go" basis, there was no computation as
to the level of funding for the plan.
e. Trend Information
This is the first year any analysis of funding status and no trend
information is available. As soon as trend information is available, it
will be presented.
f. Accounting ['or Supplemental Pension Plan
Expenditures for this pension plan are recorded in the general fund.
During the year, expenditures of $156,170 were recorded.
See independent .auditor ' s report -35-
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
.LUNG 30, 1989
8. MCDICAL INSURANCE:
a. Plan Description:
The City provides post-retirement medical insurance benefits to retirees
who meet all three of the following criteria:
.At the time of retirement the employee is employed by the City; and
.At the time of retirement the employee has a minimum of ten years of
service or is granted a service connected disability retirement.
.Following official separation from the City, the retiree is granted a
retirement allowance by the California Public Employee's Retirement
System.
The City's obligation to provide the benefits to a retiree ceases when any
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 an retiree dies, the benefits that would be payable for his or her
insurance would be provided to the spouse or family for eighteen months.
•
Benefits for insurance premiums are payable based on the years of service
credit for the retiree. The premiums may be used for any of the health
plans that the City's active employees may participate in.
b. Accounting and Funding:
The Retiree Medical Insurance Pund is recorded as an agency fund.
Contributions are made by the City's operating funds on a periodic basis.
The fund is only to be used to purchase medical insurance for retirees.
There are no outstanding liabilities at year-end. During the year payments
of $53,151 were made for insurance premiums.
See independent auditor ' s report -36-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
9. SELF INSURANCE:
•
The City is self-insured for workers' compensation, general liability and
certain health claims. The self-insurance covers the first $150,000 for
worker's compensation claims and the first $75,000 of each health claim.
Claims in excess of self-insurance limits are covered by insurance up to
$1,000,000 for health and the statutory limit for workers' compensation.
The City maintains no general liability policy.
Self-Insurance activity is recorded in an internal service fund. It is the
City's policy to charge expense claims that are reasonably determinable and
where the evidence of the City's liability is probable in accordance with
GASB Code Section C.50.110. Expense is recognized for claims that have
occurred but have not yet been reported to the City. Charges are made by
the Self-Insurance Fund to other funds based on estimated costs. The
liability for self-insurance claims includes an estimate for amounts
incurred but not reported at year-end. Transfers from the General Fund are
periodically made to cover deficits caused from inadequate charges to other
funds.
10. INTERF[ M TRAN.SACTIOW:
• a. Receivables/Payables:
Individual interfund receivables and payables at June 30, 1989 were as
follows (in thousands) :
• Advances to Advances from
Other Funds Other Funds
General Fund $48,402
Special Revenue runds:
Sewer 62
• Planned Local Drainage 406
Grants 1,172
Gas Tax 550
Park Acquisition and 3,110
Developu ent
•
See independent auditor' s report -37-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
10. INrERFUND TRANSACTIONS (OONTINUM):
•
Debt Service Funds:
Public Financing Authority 21,340
Capital Projects Funds:
Parking Structure 7,425 •
Enterprise Funds:
Water Utility 1,417
Emerald Cove Housing $ 944
General Long-Term Debt Account Group 82,940
Totals 8$ 3,884 83$ ,884
b. Residual Equity Transfers 0
Below is a schedule reconciling total residual equity transfers in with
total residual equity transfers out (in thousands)
Residual Equity transfers $41992
Plus current year transfers to Equipment Replacement
Fund (a proprietary fund) which were recorded as
contributed capital in the Equipment Replacement Fund 819
Plus transfers from Low Income IIousing Fund to the
Emerald Cove Housing Fund (a proprietary fund) which
were recorded as contributed capital in the Emerald 60
Cove Housing Fund.
Plus transfers from Reservoir Hill fluid to the Water
[find (a proprietary fund) which were recorded as •
contributed capital in the Water Fund. 94
Residual transfers out 5$ ,965
•
See independent auditor ' s report -38-
•
CITY OF HUNTINGTON BEACH
NOTES. TO,. FINANCIAL STATEMENTS,
• (continued)
DUNE 30, 1989
11, PROPRIETARY F[1 M SUPPIOIENTARY IN. HVICN:
•
a. Segment. Information for Enterprise Funds:
The City maintains three enterprise funds;. Water Utility, Meadowlark Golf.
• Course and Emerald Cove Housing. Certain key financial, data was as follows
(in thousands) :
MEADOWLARK EMERALD
WATER GOLF COVE
UTILITY COURSE HOUSING TOTAL
•
Operating
Revenues $13,483 $ 283 $ 607 $14,373
Depreciation
Expense 1,275 27 90 1,392
•
Operating
Income (Loss) 1,442 256 248 1,946
Net Income (Loss) 2,191 221 13 2,425
! Contributed
Capital Received, 470 0 62 532
Net
Net Acquisitions
(Dispositions)
of Fixed Assets 430 0 0 430
Net Working
Capital 7,079 936 1,525 9,540
Total Assets 40,222 4,159 6,986 51,367
Long-Tenn
obligations,
Net of
Current Portion 756 1,671 5,480 7,907
! Total Equity 36,792 2,418 1,430 40,640
• See independent auditor ' s report -39-
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
11. PROPRIETARY FUNDS SUPPI114MVMY INECIMTICN:
•
b. Contributed Capital:
Below is a schedule of the changes in contributed capital during the year
(in thousands) :
•
Water Meadowlark Emerald Equipment
Source: Utility Golf Course Cove Housing Replacement
Additions
Developer $ 282 $ - $ - $ -
Contributions
Reservoir Hill
Transfer (note 10b) 94 - - -
Low Income
Housing Transfer - - 62 -
(note 11b)
Equipment Purchases - - -
by City (note 11b) 819
Total Additions $ 376 $ - $ 62 $ 819
Reductions
Disposals of
Equipment - - - 379
Total Reductions - - - 379
Net Increase
(Decrease) in
Contributed Capital 376 - 62 440
Contributed Capital
July 1, 1988 34,508 1,267 1,373 12,214
Contributed Capital, 124,884 1,267 IL,435 JL2,654
June 30, 1989 •
See independent auditor ' s report -40-
•
•
CITY OF HUNTINGTON BEAcn
• NOTES 'TO FINANCIAL STATEMENTS
(continued)
JUAIC 30=, 1'989
12. CftIIDZAL 1MG—TUN DWr:
•
Below is a sutmry of changes in general long-term debt for the year ending
June 30, 1989 (in thousands) :
Balance Balance
• -Outstanding Outstanding
July 1, June 30,
1988 Additions (Retirements) 1989
1970 Park Bonds $2;590 $ 0 $(310) $2,280
Public Facilities
• Corporation Leasehold 3,000 0 (230) 2,770
Mortgage Bonds-
2nd Issue
Parking Authority 825 0 (125) 700
Revenue Bonds
•
Civic Improvement
Corporation
Certificates 19,830 0 (220) 19,610
of Paft,icipation
• Coastal Conservancy 408 0 (408) 0
Note
Compensated Absences 3,822 485 0 4,307 -
Advances From 36,918 51,145 (6,194) 82,940
• Other Funds
Amounts Due Under
Owner Participation 1,408 3,588 (1,408) 3,588
and Disposition and
Develortnent Agreements
•
Public Financing
Authority Revenue 26,775 0 (265) 26,510
Bonds
• Mortgages Payable 0 2,815 0 2,875
Total $95,576 560,871 ($.11,167) 145,580
• See independent auditor ' s report -41
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
. (continued) •
JUNE 30, 1989
12. (� - DONG-TERM DIr (CONTINUED):
:
•
a. 1970 Park Bonds:
On March 1, 1970 the City sold $6,000,000 of general obligation bonds to
acquire and construct park facilities. Principal matures annually on March
1st with interest, at 6%, payable semi-annually. The annual debt service
requirements to amortize the bonds outstanding at June 30, 1989 are as
follows (in thousands) :
Year
Ending
June 30, Principal Interest Total
1990 $305 $137 $442
1991 350 118 468
1992 370 98 468
1993 395 75 470
1994 415 52 467
1995 445 27. 472
Total 2$ ,280 $507 $2,787
b. HuntingLon Beach Public Facilities Corporation Leasehold Mortgage Bonds-
Second Issue:
On September 1, 1972 $5,000,000 of leasehold mortgage bonds were issued to
construct the Central Library complex. The bonds are secured by a lease
whereby the City annually transfers $399,000 to the Public Facilities
Corporation. Principal matures annually on September 1st with interest
ranging from 5.0o to 5.9% per annum payable semi-annually The annual debt
service requirements to amortize the bonds outstanding at June 30, 1989 are
as follows tin thousands) :
See independent auditor' s report -42-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 3.0, 1989
12. (SAL UWr-TER4 DEBT (CONTINUED):
•
b. Huntington Beach Public Facilities Corporation Leasehold Mortgage Bonds-
Second Issue:
Year
• Ending
June 30, Principal Interest Total
1990 $240 $146 $386
1991 260 132 392
1992 270 117 387
• 1993 290 101 391
1994 305 84 389
1995 320 66 386
1996 340 46 386
1997 360 28 388
1998 385 10 395
Total 2$ ,770 $730 3$ ,500
c. Parking Authority Revenue Bonds:
A
On September 1, 1968 $2,300,000 of revenue bonds were issued to construct
off-street parking improvements. The bonds are secured by a lease which
requires that the City budget annual transfers to the Parking Authority
sufficient to meet the debt service requirements on the bonds. Principal
• matures annually on September 1 and bears interest at 5.25% per annum,
payable semi-annually.
The annual debt service requirements to amortize the bonds outstanding at
June 30, 1989 are as follows (in thousands) :
•
•
See independent auditor' s report -43-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
12. GENERAL If=-TERM D[Wr (OCNTINUM):
c. Parking Authority Revenue Bonds:
Year
Ending
June 30, Principal Interest Total
1990 135 33 168
1991 140 26 166
1992 150 18 168
1993 160 10 170
1994 115 3 118
Total $ 700 90 $ 790
d. Huntington Beach Civic Improvement Corporation Certificates of
Participation:
On July 15, 1986 the Huntington Civic Improvement Corporation issued
$20,000,000 of certificates of participation in order to defease the
Huntington Beach Public Facilities Corporation Leasehold Mortgage Bonds-
First Issue and construct certain parking facilities. The Civic
Imcprovement Corporation owns the Civic Center complex and leases it to the
City. The City has agreed to make annual lease payments equal to debt
service requirements on the certificates. The interest rates on the
certificates varies between 4.75% and 7.90. Interest is payable semi-
annually on Cebruary 1st and August 1st with principal maturing annually on
August 1st. Debt service requirements to maturity are as follows (in
thousands) :
r
See independent auditor' s report --44-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
J.UNE 30, 1989
12. ORAL DONG-TERM Dtr (CONTINUED):
•
d. Huntington Beach Civic Improvement Corporation Certificates of
Participation:
• Year
Ending
June 30, Principal Interest Total
1990 $230 $1,508 $1,738
1991 245 1,494 1,739
• 1992 260 1,479 1,739
1993 275 1,462 1,737
1994 295 1,443 1,738
1995 315 1,422 1,737
1996 335 1,399 1,734
1997 360 1,374 1,734
• 1998 385 1,346 1,731
1999 415 1,316 1,731
2000-2007 4,715 9,079 13,794
2008-2016 11,780 5,234 17,014
Total 1$ 9,610 2$ 8,556 $ 48,166
•
e. California Coastal Conservancy Note Payable:
In March,. 1983, a storm .damaged the municipal pier. The California Coastal
Conservancy agreed to lend the City $425,000 to cover a portion of the
repair costs. Due to the complete destruction of the end of the pier in
January of 1988 and the later condemnation of the entire pier, the State
Coastal Conservancy Commission agreed to amend the original loan agreement
and forgive the loan..
•
f. Compensated Absences Payable:
There is no fixed payment schedule to pay the governmental fund liability
• of $4,307,025 for compensated absences earned through June 30, 1989 (see
note 1k1 .
See independent auditor ' s report -45-
•
•
CITY OF ❑UNTINGTON BEACn
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
12. GIINMW, Ia4G-TEIi"►I DEITY (CONVINUED)
•
g. Long-term Advances from Other Funds:
There is no fixed repayment schedule for the Redevelopment Agency to pay
the long-term advances from the City which totalled $82,940,076 at June 30,
1989. Below is a description of the various transactions (in thousands) :
Sale of land by the Park Acquisition and Development
rand in 1983 for $1,741 plus interest of $74 which was $1,915
computed at 10% per annum. During the year $177 of •
principal and $192 of interest was repaid.
Land sales from the General Fund from 1983 to 1989
totalling $30,635 plus interest totalling $3,064. 33,699
During the year 358 of interest was repaid.
Cash advances from the General Fund from 1978 to
1989 for $13,132 plus interest of $1,271 14,403
which was computed at 10% per annum. During the
year $3,570 and $1,648 of interest was repaid.
Cash advances from the Grant Fund in 1983 and 1989 •
no interest. 1,173
Developers fees payable to various funds totalling
$558 which are subsidized by the Agency plus
interest of $190 which was computed at 10o per annum.
During the year $130 of principal and $117 of interest 748 •
was repaid.
Cash advances from the Public Financing Authority
in 1988 and 1989 totalling $20,979 plus interest of 21,340
$361 computed at varying rates.
Advances from the Drainage Pund in 1987 totalling $250
plus interest. of $53 computed at 10o per annum: 303
Advances frtNn the Parking Structure Fund in 1988 totalling 7,425
$6,750 plus interest of $675 computed at 10% per annum.
See independent auditor ' s report -46-
•
•
CITY OF. HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
12. G&VIMAL I1 NG-THZM D= (CONTINUED):
•
g. Long-term Advances from Other rands:
Advances from the Gas Tax Eland in 1988 totalling $500 plus 550
• interest of $50 computed at 10% per annum.
Advances from the Water [end totalling $1,139 in
1986/87 and 1987/88 plus interest of $245 which
was computed at 10% per annum: 1,384
• Total amount advanced from other funds 8,� 2,940
Below is a reconciliation of the changes in amounts advanced from other
funds to the Redevelopment Agency recorded as general long-term debt for
the year ended June 30, 1989:
Amount due to other funds on July 1, 1988 $36,918
Advances Received 46,033
Advances Repaid (6,194)
Interest recorded in other funds as deferred revenue 5,112
Amount advanced from other funds, June 30, 1989 8� 2,940
h. Amounts Due Under Owner Participation and Disposition and Development
Agreements:
Beginning in 1983, the Redevelopment Agency entered into various agreements
with outside parties to facilitate Redevelopment activities (see note 17) .
Part of two of these agreements calls for debt to be incurred to outside
• developers.
In 1983, the Redevelopment Agency agreed to purchase certain public
improvements from Mola Development Corporation for $1,408,047. The amount
carried interest at 11% per annum. The amount was to be repaid to Mola by
a pledge of tax increment revenues generated by other improvements
• constructed by Mola. In July, 1988 the agency and Mola agreed to settle
the debt, for $1,200,000.
See independent auditor' s report -47-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
12. CMVERAL ILXQG-TM 4 DMr (CONTINUED):
•
h. Amounts Due Under Owner Participation and Disposition and Development
Agreements:
In 1988 the Redevelopment Agency was loaned $2,730,332 by a private
corporation to relocate tenants of a mobile home park. This advance •
carries no interest. There is no fixed repayment schedule for this advance
but the amount will be repaid with a pledge of tax increment revenues and
transient occupancy tax revenues received by the Agency.
Also in 1989 the Agency agreed to reimburse a private party for various
public improvements made for a specific project totalling $857,771. There •
is no specific repayment schedule except that the amount is expected to be
repaid by early 1991.
i. Public Financing Authority Revenue Bonds: •
on May 1, 1988 the Public Financing Authority issued $26,775,000 of Revenue
Bonds to finance loans to four of the Redevelopment project areas. The
bonds are secured by four separate loan agreements between the Public
Financing Authority and the Redevelopment Agency. Each loan agreement is
secured by a pledge of all taxes levied upon all taxable property within •
the related project area. A portion of the proceeds of the bonds were
withheld from the Public Financing Authority since the increment assessed
valuation (assessed valuation minus base year valuation) was not sufficient
to yield tax increment revenues to repay the loans. These proceeds are
recorded as "Restricted Cash" on the Public Financing Authority's balance •
sheet. This escrowed cash is invested in securities with yields sufficient
enough to cover debt service on the bonds should the incremment assessed
valuation not increase enough to yield sufficient tax increment revenues.
If the increment assessed valuation becomes large enough, this cash will be
released for general use by the Public Financing Authority.
Interest on the bonds ranges .from 5.75' to 8.3750. Interest is payable �
semi-annually on May 1st and November 1st. Principal matures annually on
November lst.. Debt service requirements are as follows (in thousands) :
See independent auditor ' s report -48-
•
•
CITY OF HUNTINGTON DEACTI
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
12. GENMAL ILM-TE14M DLr (CONTINUED)
•
i. Public financing Authority Revenue Fonds:
Year
Ending
June 30, Principal Interest Total
1990 $270 $2,165 $2,435
1991 295 2,149 2,444
1992 305 2,131 2,436
• 1993 325 2,111 2,436
1994 340 2,089 2,429
1995 370 2,065 2,435
1996 405 2,038 2,444
1997 430 2,009 2,439
1998 465 1,976 2,441
1999 495 1,940 2,435
2000-2007 5,735 13,775 19,510
2008-2018 17,075 4,858 21,933
26,510 3$ 9,306 6$ 5,817
• j. Miscellaneous Notes Payable:
In 1988 the Redevelopment Agency purchased property in the Main/Pier
project area and assumed three separate mortgages. The mortgages bear
interest at 11% with debt service payable monthly according to the mortgage
• . contract.
Below is a schedule of debt service requirements to maturity (expressed in
thousands) .
•
•
See independent auditor' s report_ -49-
•
•
CITY OF 11UNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
12. GENU AL IONG-TERM DEBT (OWTINUED):
•
j. Miscellaneous Notes Payable:
Fiscal
Year
Ending •
June 30, Principal Interest Total
1990 $ 14 321 $ 335
1991 1,050 200 1,250
1992 1,014 134 1,148
1993 18 87 105 •
1994 21 85 106
1995 758 759 1,517
Total $ 2,875 $ 1,586 4$ ,461
•
k. Defeased Bonds Outstanding:
As of June 30, 1989, there were $6,095,000 of defeased Public Facilities
Corporation Leasehold Mortgage Bonds -1st Issue outstanding. The debt
service on these bonds is being handled by an escrow account consisting of
guaranteed Federal securities with yields sufficient to fund all of the
required debt service.
13. PROPRIETARY FUND IONG-TERM DI P: •
The following is a summary of changes in proprietary fund long-term debt
for the year ending June 30, 1989 (in thousands) :
•
See _independent auditor' s report -50-
•
CITY OF HUNTINGTON BEACH
NOTES -TO TINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
13. PROPRIETARY FUND ta4G-TERK DEBT:
w
Balance Balance
Outstanding Outstanding
July 1, July 1,
1988 Additions (Retirements) 1989
1963 Water
Revenue Bonds $ 869 $ 0 $166 $ 703
San Joaquin 220 0 54 166
Reservoir Note
Meadowlark Golf
Course Note 1,729 0 29 1,700
Emra1d Cove
Certificates of
ParLicipation, net 4,523 13 0 4,536
of unamortized
discount of $64
Note Payable
County of Orange 409 0 73 336
• Compensated
Absences 119 9 0 128
Advances from other 944 0 0 944 .
Funds
Claims Payable 7,336 86 0 7,422
Public Financing
Authority Certificates
of Participation 0 5,510 0 5,510
Total 16,149 5$ ,618 $322 2$ 1,445
The current portion of the proprietary fund long-term debt is $269,620
•
See independent_ auditor' s report -51-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JDNE 30, 1989
13. PFD RIOMY FM IONG-TERM DEBT (OMrINU D:
•
a. 1963 Water Revenue Bonds:
On November 1, 1963 the City sold $3,750,000 of revenue bonds to construct
water improvements. The bonds are secured by revenues of the Water Fund.
Principal matures annually on November 1 and bears interest at 3.5% per
annum, payable semi-annually.
The annual debt service requirements to amortize the bonds outstanding at
June 30, 1989 are as follows (in thousands) :
Year
Ending
June 30, Principal Interest Total
1990 $ 190 $ 19 $ 209
1991 200 10 210
1992 200 6 206
1993 113 1 114
Total S 703 �5 36 $ 739
The bond indenture requires that the Water Fund net revenues equal or •
exceed 1.25 times the annual debt service requirement (principal and
interest) . Net revenues are defined as gross revenues less maintenance and
operation revenues, excluding depreciation. The City has complied with
this requirement as shown below (in thousands) :
•
Gross revenues $ 12,467
Operating expenses, excluding $ 10,766
interest and depreciation
Net revenues $ 1,701 •
Debt service $ 30
Debt service coverage 56.7
See i ndopendent audi t t)r ' s repot-t. -52-
•
• CITY OP HUNTINGTON BEACH
NOTES TO FINANCIAL .STATEMENTS
(continued)
JUNE. 30., 1989
•
13. D IETARY FUND IONG-TM4 DEBT tOONYI M):
b. San Joaquin Reservoir Note Payable:
•
In 1979 the City and several other local cities and water districts
purchased the San Joaquin Reservoir. The City is paying a portion (13.56%)
of the debt service for the 1961 construction of the reservoir plus
operating and improvement costs. In the event of default, the expenses
• and/or debt .service payments shall be reallocated among the remaining non-
defaulting owners in proportion to the percentage interest owned as though
the party in default did not exist. The City has recorded its portion of
the reservoir as a fixed asset in the Water Pund.
The future required payments on the note are as follows (in thousands) :
•
Year
Ending Required
June 30, Payment
1990 $ 60
1991 61.
• 1992 55
$ 176
less amount representing
interest (10)
Principal Outstanding $ 166
at June 30, 1989
c. Meadowlark Golf Course Note Payable:
•
In October, 1974 the City financed the purchase of Meadowlark Golf Course
through a long-term 7% note totalling $2,272,000 (Sales price of $3,200,000
less downpayment of $9.28,000. The note payable is collateralized by future
revenues and does not represent a general obligation of the City. The City
has leased the golf course to an outside party for a minimum amount of
• $150,000 annually through 2002 plus a percentage of income based upon gross
revenues. rrom 2003 until 2008 the minimum- payment will be $200,000 plus a
percentage of income based upon gross revenues. In 2009 the payment will
be $115,703.
•
See independent auditor ' s report -53-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
13. PBfJPitIL'1`ARY F EM I1 NG-TERM DEBT (CONTINUED):
•
c. Meadowlark Golf Course Note Payable:
As part of the City's initial payment of $928,000 the County of Orange
contributed $600,000 upon the City's guarantee to use general City funds,
when and if necessary, to ensure that Meadowlark Golf Course will be
maintained as open space
The future required payments on the note are as follows (in thousands) :
Year
Ending Required
June 30, Payment
1990 $ 150
1991 150
1992 150
1993 150
1994 150
1995 and after 2,565
3,315
less amount •
representing interest (1,615)
Principal Outstanding $ 1,700
at June 30, 1989
d. Emerald Cove I1ousing Certificates of Participation: •
On June 1, 1984, the RedeveloPnent Agency sold certificates of
participation to finance the construction of a senior citizens apartment
complex. The certificates bear interest at 9.51. per annum, which is
payable semi-annually. The entire principal is due on June 1, 1994 A
discount. of $126,500 is being amortized to maturity. Below is a schedule
of debt service requirements to maturity (expressed in thousands) :
•
See independent auditor' s report -54-
•
4 ,
•
CITY OF 11UNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
.TUNE . 30, 1989
13. PLaDPRIL'PARY FUND DONG-TERM DEW (C0NrLN=):
•
d. Emerald Cove Housing Certificates of Participation:
Year
Ending
June 30, Principal Interest Total
1990 $ 0 $ 437 $ 437
1991 0 437 437
• 1992 0 437 437
1993 0 437 437
1994 4,600 400 5,000
Totals 4�5 600 $2,148 66,748
•
e. Note Payable- County of Orange:
In July, 1987 the City received Cire Convmications Dquipment valued at
$409,140 under an agreement with the County of Orange whereby the City will
repay the County for the equipment. The equipment and note are recorded in
the Equipment Replacement Fund, an internal service fund. Interest rates
on the note vary between 5.4% and 6.5%. Debt service requirements are as
follows (in thousands) :
Year
• Ending Required
June 30, Payment
1990 $ 98
1991 98
1992 97
• 1g93 and after 97
$390
less amount representing
interest (54)
Principal Outstanding $336
at June 30, 1989
• See independent auditor ' s report -55-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
.TUNE 30, 1989
13. PR40PRILTARY FUND IEWY-TERK DI P (CONTINUED):
•
f. Compensated Absences:
There is no fixed repayment schedule to repay the compensated absences for
proprietary fund types of $128,075 at June 30, 1989.
g. Advances From Other Funds:
There is no fixed repayment schedule to repay the amounts advanced from •
other funds of $943,081 at June 30, 1989.
h. Claims Payable
There is no repayment schedule for claims payable of $7,422,000 as of June •
30, 1989 (see note 10) .
i. Public Financing Authority Certificates of Participation:
•
In March, 1989, the Public Financing Authority issued $5,510,000 of
certificates of parLicipation to finance the purchase of capital equipment.
The amount is recorded as a liability of the Equipmnt Replacement fund.
Interest on the certificates ranges from 6.75% to 6.95%. Interest is
payable semiannually on February 1st and August 1st with principal maturing •
annually on February 1st. A discount of $68,875 is being amortized to
maturity. Debt service requirements to maturity are as follows:
•
•
See .Lndependent auditor ' s report -56-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
13. Ply mErARY FUND Inw Tm4 DINT (c=rINUED),:
•
i. Public Financing Authority Certificates of Participation:
Year
Ending
• June 30, Principal Interest Total
1990 $ 0 $ 346 $ 346
1991 0 376 376
1992 960 376 1,336
1993 1,025 313 1,338
• 1994 11100 243 1,343
1995 1,170 168 1,338
1996 1,255 87 1,342
Total 5$ ,510 11,909 7$ ,419
•
14. RISI MI R MLL AvSES.4Mr DONW:
• In January, 1989, the City issued $1,653,905 of special assessment bonds to
finance certain public improvements. Proceeds from the issue which are to
be used for improvements have been accounted for in a capital project fund,
and have been designated as "contribution from property owners". The bonds
are only to be repaid by property taxes levied in the assessment district.
The City has no liability on the bonds if revenues are insufficient to fund
• the required debt service. Accordingly, these bonds have been excluded
from the General Long-Term Debt Account Group.
Principal matures annually on September 2nd, with interest payable
semiannually on March 2nd and September 2nd. Interest rates on the bonds
range between 6.5' and 8.1% Debt service requirements to maturity are as
follows (in thousands) :
•
•
See. Independent auditor ' s report -57
•
CITY OF UUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
.TUNE 30, 1989
14. RESUMIR UTM AS::TS�r :DONDS (OONTINUm):
•
Year
Ending
June 30, Principal Interest Total
1990 $ 0 $ 146 $ 146
1991 4 133 137
1992 40 129 169
1993 45 125 170
1994 50 122 172
1995 50 118 168
1996 55 114 169
1997 60 110 170
1998 65 105 170
1999 70 100 170
2000-2010 1,215 610 1,825
Total IL,654 11,812 $3,466
15. CPAGES IN FIXED ASSETS:
Below is a schedule of the changes in general fixed assets for the year (in •
thousands) :
Balance Balance
July 1, 1988 Additions Dispositions June 30, 1989
Land $ 38,784 $ 3,714 $ 0 $42,498 •
Buildings 25,158 0 (511) 24,647
Other 1,733 0 0 1,733
Construction in
Process 0. 564 0 564
Total L6.5,Ei75 $ 4,2.78 (5l 1 $69,442 •
•
See independent auditor ' s report -58-
•
CITY OF• HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
.TUNE 30, 1989
15. Cimms 1N FIX® ASSETS. (awrnwm):
•
Belay is a schedule of changes in proprietary fund fixed assets for the
year (in thousands) :
40 Enterprise Funds:
Balance Balance
July 1, 1988 Additions Dispositions June 30, 1989
Land $ 4,731 $ 0 $ 0 $ 4,731
Buildings 5,334 0 0 5,334
Machinery and
Equipment 49,134 458 (28) 49,564
Total Cost $59,199 $ 458 $ (28) 59,629
Less accumulated
depreciation (21,270) (22,975)
Net Book Value, 3�" 7,929 $ 36,654
Enterprise Funds
• Internal Service elands
Balance Balance
July 1, 1988 Additions Dispositions June 30, 1989
Machinery and $21,267 $1,580 $(505) $ 22,342
Equipment
Less accumulated
depreciation (10,128) (11,440)
Net Book Value, 1$ 1,139 101902
Internal Service _
• rands
•
See independent auditor' s report -59-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
16. RESSIRVM, AND DESICT MCNS OF FUND EQUITY:
•
Under the provisions of GASB Code Sections 1800.121-123, the City has set
up reserves and designations of fund equity. Reserves indicate amounts
which cannot be appropriated in future periods or which are legally set
aside for a specific future use. Designations represent amounts that the
City has made tentative plans to use in a future period. The City's
reserves and designations are described below (in thousands) :
Special Debt Capital
General Revenue Service Projects
Fund Funds Funds Funds Total
RESERVES �
Encumbrances $2,086 $2,706 $ - $ - $ 4,792
Long-team
receivables 13,241 1,922 21,340 9,100 45,603
Reimbursement - 423 - - 423
agreements
Capital 11,453 - - 25,087 36,540
projects
Debt service - - 12,806 - 12,806
Land held for - - - 19,549 19,549
resale
Inventory 263 - - - 263
TOTAL RPSERVES 27,043 5,051 34,146 53,736 119,476
DESIGNATIONS
Subsequent
year's 486 3,550 - - 4,036
expenditures
TOTAL RrSERVES 27,529 8,601 3$ 4,146 $53,736 12$ 4,012
AND DESIGNATIONS--
. •
See independent auditor' s report -60-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
16. RGS'CEWES AMID DESIGNATIONS OF FUND 0WITY:
•
a. Reserves for encumbrances represent amounts committed for unperformed
services or for undelivered goods where a commitment to purchase has been
made.
b. Reserves for long-term receivables represent amounts included in
• advances to other funds. and other receivables which are not scheduled to be
repaid until future years, and for which there is no offsetting deferred
revenue.
c. Reserves for reimbursement agreements represent expected future
reimbursements to developers for sewer and drainage construction.
•
d. Reserves for continuing projects represent amounts committed for long-
term projects not yet completed.
e. Reserves for debt service represent amounts accumulated in debt service
funds or set aside in another fund in accordance with a bond indenture or
similar covenant.
f. Reserves for land held for resale represent land held by the Agency that
is legally committed for resale.
g. Reserves for inventory represent amounts for general supplies inventory.
•
h. Designations for subsequent years' expenditures are made to provide for
deficits budgeted in subsequent years.
i. Designations for other fund deficits represent amounts to cover fund-
deficits in the Self-Insurance Fund.
•
17. COMT�J AND CKWrrNG NCIES:
• a. Legal Actions:
There are certain legal actions.pending against the City that have arisen
in the course of normal operations. In the opinion of management and the
City Attorney, the ultimate resolution of these actions is not expected to
have a significant impart on these financial statements.
•
See independent auditor ' s report -61-
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30, 1989
17. O0MMITMRns AND CONTINGUq= (OCNrINUM):
•
b. MorLgage Revenue Bonds:
The City established a program in February, 1983 to provide funds for the
purchase of home mortgages within the City. Under this program, a total of
$40,000,000 of mortgage revenue bonds has been issued, $20,000,000 in •
March, 1983 and an additional $20,000,000 in July, 1984.
In 1983 the City also issued $16,000,000 of Loans to Lender Revenue Bonds
to construct an apartment complex for low and moderate income housing. In
1985 the City also issued $25,000,000 of Multi-Family Housing Revenue Bonds
for construction of various apartment complexes. •
The bonds are payable from, and are secured by, a pledge of payments made
on the home mortgages and all funds held by the trustee under the indenture
agreements. The bonds are not an indebtedness of the City and there exists
no legal obligation on the part of the City to make payments on the bonds
from any source other than the revenue and assets that were pledged.
Accordingly, these programs have been excluded from the accompanying
combined financial statements.
c. Land Purchases- A.C. Marion:
•
The City has entered into an agreement to purchase a parcel of land from a
private party for $3,190,000. The agreement required the City to pay
$1,000,000 for the purchase of phase I of the parcel and pay $500,000 for
phase II of the parcel. For the next three years the City may purchase one
of the remaining phases each year. For the use of the remaining parcels •
the City pays a rental/option fee which is paid quarterly on February 28th,
May 31st, August 31st and November 30th. The City may cancel the agreement
at any time in which case the obligation to pay the remaining rental/option
fees or to purchase any remaining phases ceases. Listed below is the
schedule of payments and rental/option fees for the life of the contract
(in thousands) :
•
See independent auditor ' s report -62-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
• (continued)
.LONE 30, 1989
17. cON Mani 15 AND awrna3m= (COnINOED):
•
c. Land Purchases- A.C. Marion:
Fiscal
• Year
Ending Purchase Quarterly
June 30, Price Phase Rents
1990 .$500 4 $ 71
1991 690 5 26
• Total 1$ ,190 $ 97
d. 1988 Owner Participation Agreement-Mola Development Corporation:
•
In July, 1988, the Redevelopment Agency, the City and Mola Development
Corporation (Nola) entered into an owner participation agreement for the
Townsquare project (a residential and commercial development in the
Main/Pier project area of the Redevelopment Agency) . Certain property
• which was owned by third parties was acquired by both the Agency and Mola.
This property was combined with adjacent property owned by Mola, property
owned by the Agency and property sold to the Agency by the City for
$1,956,000 (see note 17) . The resultant configuration was used for the
development.
• During the year, Mola obtained a land draw to construct the project. . The
Agency received $1,250,094 of this land draw representing its share of the
total proceeds which was computed based upon the relative value of the
Redevelopment Agency's land to the total land value in the project. This
amount is recorded as an "other financing source" in the Redevelopment
Agency's Capital Projects Fund. The total value of Redevelopment Agency
• owned land in the project is $1,956,000 which is recorded as "Land Held for
Resale" on the balance sheet of the Agency's Capital Projects Fund.
When the individual residential units are completed and sold, proceeds will
be distributed which will reimburse the Redevelopment Agency for the
remaining value of its land which was not reimbursed by the land draw
• ($1,250,000) and pay a 9% developers fee to Nola. The remaining proceeds
will be divided between the Agency and Nola based on the value of the
respective land contributed by each party.
See independent auditor ' s report -63-
•
•
CITY OF HUNTINGTON DEACn
NOTES TO FINANCIAL STATEMENTS
(continued) •
JDNE 30, 1989
17. CMMITHMWS AND C TrINM4MES (CONTINUED):
•
d. 1988 Owner Participation Agreement-Nola Development Corporation:
One year after the commercial units are completed, Nola will be obligated
to pay to the Agency 50% of the net operating income of the commercial
units for the proceeding year and on a monthly basis thereafter.
e. 1983 Owner Participation Agreement Nola Development Corporation:
In 1983, the City, the Redevelopment Agency and Nola Development
Corporation (Nola) entered into an owner participation agreement relating
to certain improvements in the Oakview project area of the Redevelopment
Agency. The Agency agreed to purchase certain public improvements from .
Nola for $1,408,047 plus interest at 11% per annum. The purchase price was
to be paid by a pledge of certain tax increment revenues in the project
area. The Agency agreed to advance to the City $211,394 plus interest at
11% per annum of building fees normally due at the time of occupation.
In July, 1988, the Agency and Nola agreed that the Agency would pay Nola
$1,200,000 to settle the liability for the public improvements. It was
also agreed that the amount of deferred development fees plus interest was •
$300,000. Nola paid $100,000 in July, 1988 and agreed to pay $81,843
annually on June 30th 1989, 1990 and 1991 to settle the deferred
development fees.
f. Owner Participation Agreement-N/R Huntington Partners: •
In October, 1987, the City, the Redevelopment Agency and N/R entered into
an owner participation agreement which will provide for a residential
development in the Main/Pier project area of the Redevelolx:ent Agency. N/R
HuntingLon Partners loaned the City $300,000 for certain parcel •
acquisitions. The amount will be repaid by a pledge of a portion of tax
increment revenues generated by the improvements.
See independent auditor ' s report -64-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JDNE 30, 1989
17. WTIITMiNIS AND OOi rRJG94CIES (00NTINum):
•
g. Owner Participation Agreement-Koury:
In November, 1988, the City, the Redevelopment Agency and Robert Koury, an
• individual entered into an owner participation agreement which will provide
for the development of a parking structure and related commercial and
retail space in the Main/Pier project area of the Redevelopment Agency.
The Redevelopment Agency purchased land from the City valued at $3,133,500.
This sales price will be paid to the City by future tax increment revenues
of the Main/Pier project area (see note 12) . This land was combined with
other Redevelopment Agency owned land and land owned by Koury to provide
the space for the development. The Agency purchased the land held by Koury
for $1,235,000 and secured the performance of the agreement by issuing
Koury a deed of trust. The Agency agreed to construct a parking garage and
32,000 square feet of retail/commercial space. When the construction is
completed the Agency will sell interest in the retail/commercial space for
$1,235,000. The Agency will retain title to the parking structure.
h. Disposition and Development Agreement-Robert L. Mayer Corporation:
In August, 1988, the Redevelopment Agency, the City and Robert L. Player
Corporation (Mayer) entered into a disposition and development agreement
for the development of hotels, residential and commercial parcels in the
Main/Pier project area. The development will take place in three different
residential and six different commercial phases.
• Mayer agreed to loan to the Agency $4,800,000 to relocate residents of a
mobilehome park in the area. As of June 30, 1989, $2,730,332 of the costs
have been incurred and $461,535 cash has been received from Mayer. Mayer
will be repaid by the Agency pledging a portion of the tax increment and
transient occupancy tax revenues that the improvements generate. After the
• indebtedness is repaid, the Agency will also be liable to rebate to Mayer
additional tax increment and transient occupancy tax revenue generated by
the project when the project is completed.
The Agency purchased land from the City for $22,400,000. This sales price
• will be repaid to the City by future tax increment revenues of the
MainlPier project area. The land purchased from the City which will be
See independent auditor ' s report -65-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued)
JUNE 30, 1989
17. AND CUNTINGENCIES (CONTINUED):
•
h. Disposition and Development Agreement-Robert L. Mayer Corporation:
used for the commercial portion of the development will be leased by the
Agency to Mayer for 99 years. The remaining land will be used for the •
residential development. When the residential units are sold, the Agency
will receive revenue based on a specific schedule in the agreement.
At June 30, 1989, $8,377,000 of the land representing the residential
portion is recorded as "Land Held for Resale" on the balance sheet of the
Redevelopment Agency's Capital Projects Ptund. •
i. Disposition and Development Agreement-California Resorts:
In August, 1988, the Redevelopment Agency, the City and California Resorts .
entered into a disposition and development agreement. The City sold the
Redevelopment Agency certain land for $1,512,500. This will be repaid from
future tax increment revenues. This land was combined with land owned by
California Resorts and other third parties to construct a hotel.
18. JOINT VM?I RES: •
In October, 1988, the City and the cities of Pomona, San Bernardino, Santa
Ana and Oxnard formed the Big Independent Cities Excess Pool Joint Powers
Authority, (BICEP) to finance a claims payment pool for certain liability •
claims in excess of $1,000,000 per claim.
BICEP is governed by a Board of Directors. which is composed of one director
representing each City, appointed by each City's City Council. A director
must be a member of the City Council or an official or staff person of the .
City which he or she represents. Any changes to the board must be approved
by the current board rr_inbe.rs. Mach participating City pays an insurance
premium to BICEP which is used to fund the operating and debt service
expenditures of DICrIl. The partic#ants' shares of the assets, liabilities
and fund equity- are as follows:
•
See independent auditor ' s report -66-
•
•
CITY OF HUNTINGTON BEACn
NOTES TO FINANCIAL STATEMENTS
• (continued)
JUNE 30, 1989
18. JOIW VW1111 :i (CONTINUED):
•
Hunting Lon Beach 21.43%
Oxnard 15.62%
San Bernardino 19.09%
Santa Ana 30.27%
Pomona 13.59%
•
In December, 1988, BICEP issued $15,055,000 of Insurance Program Revenue
Bonds, 1988A which was used to initiate the insurance pool. The interest
rates on these bonds varies between 6.5% and 8.25% and are payable from
• premium payments from the participating cities. The premiums paid from the
participants represents the security for the debt Debt service
requirements to maturity are as follows (in thousands) :
Year
Ending
• June 30, Principal Interest Total
1990 $ 90 $1,208 $1,298
1991 360 1,203 1,563
1992 390 1,178 1,568
1993 425 11151 1,576
1994 450 1,120 1,570
• 1995 485 1,087 1,572
1996 520 11050 1,570
1997 560 11010 1,570
1998 620 967 1,587
1999 670 918 1,588
2000-2009 10,485 8,639 19,124
• Total 15,055 1$ 9,531 3$ 4,586
The City's share of the liability is $3,226,287.
The June 30, 1989 financial information for BICEP is as follows (expressed
in thousands) :
•
See independent auditor' s report -67-
•
•
CITY OF HUNTINGTON BEACH
NOTES TO FINANCIAL STATEMENTS
(continued) •
JUNE 30; 1989
18. JOINT VR?rUREti (OONTPINUM):
•
BICEP City
Balance Sheet Total Share
Assets $16,711 $3,581
Liabilities 15,850 3,397 •
Equity 861 184
Revenue and Expense
Revenues 1,824 391 •
Expenses 1,268 272
Non-Operating Revenue 305 65
Expense
Excess of Revenue over 861 184 •
Expense
19. TAX AND REVENUE AAIIZCIPATIONT NOTES:
•
On November 21, 1988 the City issued $5,000,000 of tax and revenue
anticipation notes which bear interest at 4.5%. The entire principal and
interest is due on November 20, 1989. At year-end the City had accrued
$200,000 of interest on these notes.
•
20. 0M]R RDQUU= DiSCEOSURFS.-
a. Budgetary Information:
•
Expenditures exceeded appropriations at the departmental level in the funds
shown as follows (expressed in thousands) :
•
See independent auditor ' s report -68-
CITY OF HUNTINGTON BEACH
NOTES. TO, FINANCIAL STATEMENTS.
(,continued.)
JUNE 30•, 1989
20. OTHER RDQUIRM DISCLDSUPM::
•
a. Budgetary Information:
General Fund.
. City Council. $ 15
City Administrator 10-
City Treasurer 1 '
City Attorney 17
Fire 21
Police 181
• Community.. Services; 86
Operating: Transfer Out 126:
Public Communications
City Administrator 9
Grants
Economic Development 311
Pa.rking. Authority
Operating. Transfer Out 3
b. Other Financing Sources (Other).:
Other financing sources (other) totalled $7,441,097 which included the
following:
.$1,250,094 of proceeds from the sale of City owned property (see note 17)
in the Main/Pier project area of the Redevelopment Agency which is recorded
in the Capital Projects Fund of the- Redevelopment Agency.
.$6,191,003 of proceeds were recorded in- the General Fund from the sale of
the City's right. to own its cable television franchise.
•
c. Deficit Retained Earnings:
The llmerald Cove (lousing Rind (an enterprise fund) had a deficit retained
• earnings of $4,601 at year-end. This deficit will be funded in future
years through increased rents.
See independent auditor' s report -69-
•
CITY OF HUNTINGTON BEACII
NOTES TO FINANCIAL STATEMENTS
(continued) •
3UNE .30, 1989
20. OTM-It RDQUIRID DISCIOSMM:
•
d. Other Assets:
Other assets include the following (in thousands) :
Prepaid Expenses, General hand $ 13 •
Investment in Joint Venture, Self-Insurance Lund 184
an Internal Service Rand
House owned by Deferred Compensation Rand, 29
an Agency Rand
Total $226 •
21. SUBSEQUENT LVL%M:
In August, 1989 the Civic U provement Corporation issued $15,025,000 of •
additional certificates of participation to provide further funds for
parking structure and other public improvements in the Main/Pier
redevelopment project area. As described in note 2, the Civic Improvement
owns the Civic Center complex which represents the security for the
certificates. The City will annually transfer sufficient monies to fund
the debt service requirements on the certificates. The interest rates on •
the certificates vary between 5.9% and 7.0% with interest payable seini-
annually on rebruary 1st and August 1st with principal maturing annually on
August 1st. Debt service requirements to maturity are as follows:
•
•
•
See independent auditor ' s report -70-
•
•
CITY OF HUNTINGTON BEAC❑
NOTES TO FINANCIAL STATEMENTS
(continued)
.TUNE 30, 1989
21. SUBSEQUENT EVENTS (OORTI ajm):
•
Year
Ending
June 30, Principal Interest Total
• 1990 $ 0 $ 517 $ 517
1991 135 1,031 1,166
1992 180 1,021 1,201
1993 190 1,010 11200
1994 205 998 1,203
1995 215 985 1,200
1996 230 971 1,201
1997 245 955 1,200
1998 260 939 11199
1999. 275 921 1,196
2000 295 902 1,197
2001 315 882 1,197
2002 335 860 1,195
2003 360 837 1,197
2004 385 811 1,196
2005-2020 11,400 12,369 23,769
Total 1$ S,025 2$ 6,009 4$ 1,034
•
•
•
•
See independent auditor ' s report -71-
INE AZZCN
FEEERAIM ASSISM PIm(RAIN1S
ENEM Ai]DMXMF ItE AMID SCHED=
OF FOAL FnQQK IAL
•
DIEHL,EvANS
&COMPANY OTHER OFFICES AT:
CERTIFIED PUBLIC ACCOUNTANTS 2965 ROOSEVELT ST.
• CARLSBAD.CA 92008-2389
A PARTNERSHIP INCLUDING A CCOIiNTANCY CORPORATIONS (619) 729-2343
18401 VON KARMAN,SUITE 200 120 WEST WOODWARD AVE.
IRVINE • CALIFORNIA 92715-1542 ESCONDIDO.CA 92025-9990
PHONE(714) 757-7700 (619) 741-3141
FAX(714) 757-2707 September 15, 1989
•
INDEPENM?r AUDI'iC.1R.S' REPORT C K SCfEDJIE
OF FEDERAL FIlWCTAT• ASSISTANCE
•
City Council
City of Huntington Beach
Huntington Beach, California
We have audited the general purpose financial statements of the City of
Huntington Beach_ as of-and for the year ended June 30, 1989, and have issued our
report thereon dated September 14, 1989. These general purpose financial
statements are the responsibility of the City of Huntington Beach's management.
Our responsibility is to express an opinion cn these general purpose financial
statements based on our audit.
We conducted our audit of such general purpose financial statements in
• accortdance.with generally accepted auditing standards and 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 general purpose financial statements are free of
material misstatement. An audit includes examining,n+g, Ion a test basis, evidence
supporting the amounts and disclosures in the general purpose 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 opinion.
Our audit was made for the purpose of forming an opinion on the general purpose
• financial statements of the City of Huntington Beach taken as a whole. The
aeoclpanying Schedule of Federal Financial Assistance is presented for purposes
of additional analysis and is not a required part of the general purpose
financial statements. The information in that schedule has been subjected to
the auditing procedures applied in the audit of the general purpose financial
statements and, in our opinion, is fairly stated in all material respects in
• relation to the general purpose financial statements taken as a whole.
n � J
-72-
CITY OF HUNTINGTON BEACH
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
For the year ended June 30, 1989
Accrued or Accrued or
Grant Federal Pass-Through Program (Deferred) (Deferred)
Federal Grantor/Pass Through Identification CFDA Grantor's or Award Revenue at Federal Non-Federal Revenue at
Program Title Number Number Number Amount July 1, 1988 Receipts Receipts Expenditures June 30, 1989
U.S. Department of HUD
Community Development Block
Grant - Entitlement 8-88-MC-06.0506 14.218 S 1,268,000 $ 49.236 E 2,272.979 E E 2,507,385 S 283.642
U.S. Department of Transportation
Passed through State Department of
Transportation::
Highway Planning and Construction
(Federal Aid Highway Program) HES-M014(2) 20.205 7.5181 69,300 (1) 57,992 57,992 -
HES-M021(3) 20.205 7.5181 85,500 (2) 74,866 74,866
HES-M004(5) 20.205 7.5181 974,917 168,864 923,058 877,136 1,631,310 -
HES-14033(3) 20.205 7.5181 45,000 - 1,691 16,907 15,216
HES-1O19(8) 20.205 12.5181 364,690 - - 48,254 355,854 307,600
301,742 1,055,916 927,081 2,004,071 322,816
U.S. Department of Education
Library Literacy 0005610694 84.167 - 21,540 (415) - - (415)
G008715118 84.167 - 25,000 (759) 4,752 20 5,531 -
R167A80169 84.167 - 18,414 - 14.428 - 13,056 (1,372)
(1,174) 19,180 20 18.587 (1,787)
Passed through California State
Library LSCA-13 84.034 40.1109 13,989 (6,270) - 1,129 7,399
LSCA-1-7.6 84.034 40.1435 13,989 13,989 - 9,786. (4,203)
(6,270) 13,989 1.129 17,185 (4,203)
Federal Emergency Management Agency
Passed through State Office of
Emergency Services:
Emergency Management
Assistance Program - 83.516 - 47,674 22,898 47,674 52,735 88,492 10,981
Disaster Service - 83.516 059.3600 58,051 (4) 36,161 36,161 -
59,059 83,835 52,735 88,492 10,981
See Independent Auditors' Report on Schedule of Federal .Financial Assistance (Page 72).
.73-
CITY OF HUNTINGTON BEACH
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
(Continued)
For the year ended June 30, 1989
Accrued or Accrued or
Grant Federal Pass-Through Program (Deferred) (Deferred)
Federal Grantor/Pass Through Identification CFDA Grantor's or Award Revenue at Federal Non-Federal Revenue at
Program Title Number Number Number Amount July 1, 1988 Receipts Receipts Expenditures June 30, 1989
U.S. Department of Commerce
.Pass through California Coastal
Commission:
Coastal Management Program LCP-7544 11.419 - S 68,410 SO) 17,918 i 66,525 f - f 48.607 S
Cash at Federal Non-Federal Cash Cash at
July 1, 1988 Receipts Receipts Disbursements June 30, 1989
U.S. Department of the Treasury
State and Local Government
Fiscal Assistance:
General Revenue Sharing
Entitlement No. 17 11 05-20030-009 21.300 - 1,283,572 596,377 - 596,377
TOTAL FEDERAL ASSISTANCE S 3,512,424 t 980,965 ! 5,280,704
(1) Amount decreased from prior year's report by $10,048 which constitutes a decrease in accrued revenues from prior years.
(2) Amount decreased from prior year's report by $1,263 which constitutes a decrease in accrued revenues from prior years.
(3) Proper expenditures of f17,918 had not been included in the fiscal year 87-88 audit report, resulting in an
understatement of accrued revenue at June 30, 1988. Beginning accrued revenue at July 1, 1988 has been adjusted to
reflect the additional $17,918 receivable from the California Coastal Commission.
(4) Proper expenditures S",286 had not been included in the fiscal year 87-88 audit report, resulting in an understatement
of accrued revenue of S36,161 at June 30, 1988. Beginning accrued revenue at July 1, 1988 has been adjusted to reflect
the additional receivable from the State Office of Emergency Services.
See Independent Auditors' Report on Schedule of Federal Financial Assistance (Page 72).
-74-
•
•
•
• INI7EPENDERr ALWIMS' IT'S ON COMPLIANCE
AMID
SCHED= OF FIlEaNGS AND COSTS
s
•
•
•
•
•
•
•
DIEHL,EVANS
&COMPANY OTHER OFFICES AT:
CERIIFlED PUBLIC ACCOUNTANTS 2965 ROOSEVELT ST.
CARLSBAD.CA 92008-2389
• A PAR INVIISHI►IN('I.I-I1Ml:AC(III IN FAN(Y1'1111NIRAf11IN% (619) 729-2343
18401 VON KARMAN,SUI"TF.200 120 WEST WOODWARD AVE.
IRVINE IF CALIFORNIA 92715-1542 ESCONDIDO.CA 92025-9990
PRONE(714) 757-7700 September 15 1989 (619) 741.3141
FAX(714) 757-2707
•
INDEPENDEW AUDIT(MS' REPORT CAI 030MIMCE
RELATED TO Tim GENEFIL PURPOSE FINANCIAL STATEMENTS
City Council
City of Huntington Beach
• Huntington Beach, California
We have audited the general purpose financial statements of the City of
-Huntington Beach as of and for the year ended June 30, 1989, and have issued our
report thereon dated September 14,- 1989.
We conducted our audit in accordance with generally accepted auditing standards
and 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 general purpose financial
statements are free of material misstatement.
Coplianoe with laws, regulations, contracts, and grants applicable to the City
of Huntington Beach is the responsibility of the City of Huntington Beach's
managaller>,t. As part of obtaining reasonable assurance about whether the general
purpose financial statements are free of material misstatement, we performed
tests of the City's ompliance with certain provisions of laws, regulations,
contracts, and grants. However, our objective was not to provide an opinion on
overall amplianoe with such provisions.
The results of our tests indicate that, with respect to the items tested, the
City of Huntington Beach ccuplied, in all material respects, with the provisions
referred to in the preceding paragraph. With respect to items not tested,
nothing came to our attention that caused us to believe that the City had not
cmplied, in all material respects, with those provisions.
This report is intended for the information of the City's management, the City
Council and the City's cognizant agency, U.S. Department of Housing and Urban
DeveloP'nent. This restriction is not intended to limit the distribution of this
report which, upon acceptance by the City, is a matter of public record.
' L
-75-
DIEHL,EVANS
&COMPANY OTHER OFFICES AT:
CERTIFIED PUBLIC ACCOUNTANTS 2965 ROOSEVELT ST.
• CARLSBAD.CA 9 2008-2 399
A PARTNERSHIP INCLUDING At CUUNTANCY CORPORATIONS (619) 729 2343
18401 VON KARMAN,SUITE 200 120 WEST WOODWARD AVE.
IRVINE • CALIFORNIA 92715-1542 ESCONDIDO.CA 92025-9990
PHONE(714) 757-7700 September 15 1989 (619) 741-3141
FAX(714) 757-2707 '
INDEPENDRU AUDITORS' REPOM CN CC14PZIMCE
WI'Ili LAWS AND RDGfJLA' CM RELATED rM
FOAL FINANCIAL ASSISTANCE PROGT A
City Council
City of Huntington Beach
Huntington Beach, California
We have applied procedures to test the City of Huntington Beach's compliance
with the following general requirements applicable to each of its major federal
financial assistance programs, which are identified in the schedule of federal
financial assistance, for the year ended June 30, 1989:
Political Activity Relocation Assistance and Real
Davis-Baoon Act Property Management
Civil Rights Federal Financial Reports
Cash Management Drug-free Workplace Act
our procedures were limited to the applicable procedures described in the Office
of Management and Budget's CImliance Supplement for Single Audits of State and
Focal Gvverrunents. Our procedures were substantially less in scope than an
audit, the objective of which is the expression of an opinion on the City of
Huntington Beach's oompliance with the requirements listed in the preceding
paragraph. ' Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no
material instances of nonlcmplianoe with the requirements listed in the first
paragraph of this report. our procedures included all of the requirements
listed above except for Drug-Free Workplace Act because this requirement was not
applicable. With respect to items not tested, nothing came to our attention
that caused us to believe that the City of Huntington Beach had not o applied, in
all material respects, with those requirements. However, the results of our
procedures disclosed immaterial instances of noncompliance with those
requirements, which are described in the accMpanying schedule of findings and
questioned costs.
-76-
We also have audited the City of Huntington Beach's compliance with the
following specific requirements that are applicable to each of the City's major
federal financial assistance programs, which are identified in the accompanying
schedule of federal financial assistance, for the year ended June 30, 1989:
Types of services Reporting
allowed or unallowed Claims for advances and
Eligibility reimbursements
Matching, level of effort Special requirements
or earmarking
The management of the City of Huntington Beach is responsible for the City's
compliance with those requirements. our responsibility is to express an opinion
on compliance with those requirements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards,
Gaverrmient Auditing Standards, issued by the Camptroller General of the United
States, and CMB Circular A-128, "Audits of State and Iocal Governments". Those
standards and OMB Circular A-128 require that we plan and perform the audit to
obtain reasonable assurance about whether material noncompliance with the
requirements referred to above occurred. An audit includes exm in ng, on a test
basis, evidence about the City's cmpliance with those requirements. We believe
that our audit provides a reasonable basis for our opinion.
The results of our audit procedures disclosed immaterial instances of
noncamplianee with the requirements referred to above, which are described in
the accompanying schedule of findings and questioned costs. We considered these
instances of noncompliance in forming our opinion on compliance, which is.
expressed in the following paragraph.
In our opinion, the City of Huntington Beach complied, in all material respects,
with the requirements governing types of services allowed or unallowed;
matching, level of effort or earmarking; reporting; claims for advances and
reimbursements, and the special requirements in the Office of Management and
Budget's Compliance Supplement for Single Audits of State and local Governments;
and amounts claimed or used for matching that are applicable to each of its
major federal financial assistance programs for the year ended June 30, 1989.
As required by Circular A-128, we have performed auditing procedures on certain
selected transactions of nonmajor programs to test compliance for allowable
costs. Our procedures were substantially less in scope than an audit, the
objective of which is the expression of an opinion on the city's cmTplianee with
these requirements. Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no
material instances of noncompliance with the requirements listed in the
preceding paragraph. With respect to items not tested, nothing came to our
attention that caused us to believe that the City of Huntington Beach had not
complied, in all material respects, with the non-major specific requirements.
However, the results of our procedures disclosed immaterial instances of
noncompliance with those requirements, which are described in the accompanying
schedule of findings and questioned costs.
This report is intended for the information of the City's management, the City
Council and the City's cognizant agency, U.S. Department of Housing and Urban
Development. This restriction is not intended to limit the distribution of this
report which, upon acceptance by the City, is a matter of public record.
•
CITY OF H UM4GIM BEACH
SC3IEDUIE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 1989
Award Questioned
Program Amount Findirnt/Non-Cmpliance Costs
• Community Develgm ent $ 1,268,000 Finding:
Block Grant A charge for payroll costs was
Grant No. B-88 MC-06-0506 not approved by an authorized
employee.
Recam*ndaticn:
• We reconanend that an authorized
authorized employee approve
time sheets before payment. $ -
Finding:
• For subrecipients receiving
$25,000 or more, the City is
required to review audit
reports submitted by the
subrecipient and ensure that
prcapt and corrective action
is taken on instances of
material non-compliance with
laws and regulations. The City
provided more than $25,000
to one subrecipient, but did
not require the subrecipient
to submit an audit report.
Reecmmen]ation:
We reams end that the City
required all subrecipients
receiving $25,000 or more to
submit an audit report.
U.S. Department of $ 21,540 Finding:
Education Library Advances fran the federal
Literacy Program government were not spent
Grant No. 9008610694 within the entitlement period.
Reoanrer elation:
We reecnmend that the advance
not spent be returned to the
U.S. Department of Education. $ 415
See Independent Auditors' Report on Ccniplianee with Laws and Regulations Related
to Federal Financial Assistance Programs (Pages 76 and 77) .
-78-
CITY OF HUN INGPON BEACH
SCH]'n Tf F OF FINDINGS AND QUESTIONED OOSTS
(Continued)
For the year ended June 30, 1989
A plan for corrective action for fiscal year ended June 30, 1988 was not submitted
to the cognizant agent. We recommend that the City submit a plan for corrective
action to the cognizant agent for the fiscal year ended June 30, 1989.
One finding and instance of non-compliance reported in the single audit report for
the year ended June 30, 1988 remains unchanged. fram. our previous report concerning
the Library Literacy Program and is still applicable for the fiscal year ended
June 30, 1989 and is included above. The City has taken action to prevent the
reoccurrence of the other finding in the prior year.
The Single Audit Report for fiscal year ended June 30, 1988 was not made available
for public inspection within 30 days after completion of the audit. We recommend
that the Single Audit Report for fiscal year ended June 30, 1989 be available for
public inspection within 30 days after completion of the audit.
•
•
•
•
i
See Independent Auditors' Report on Compliance with Iaws and Regulations Related
to Federal Financial Assistance Programs (Pages 76 and 77) .
-79-
•
•
•
j,
• MEM ADDTTORS' laUKM CAI INTERNAL ACOOONTING CC RMIS
•
•
•
•
•
•
DIE} iL,EVA�N�S
�](,COM PAL�1 1J
OTHER OFFICES AT:
CERTIFIED PUBLIC ACCOUNTANT5 2965 ROOSEVELT ST.
CARLSBAD.CA 92008-2389
• APARTNFRSHIPINCLUDING AI'COI:NT AN('YCORPORATIONS (619) 729-2343
18401 VON KARMAN,SUITE 200 120 WEST WOODWARD AVE.
IRVINE • CALIFORNIA 92715-1542 ESCONDIDO.CA 92025-9990
PHONE(714) 757-7700 Sept,amber 15 1989 (619) 741-3141
FAX(714) 757-2707
INDEPENDEW AUDITORS' REPORT CK INTERNAL
CORML STRUCILM IN ACCORDANCE WIM
GOVE 009M AUDITING STANDARDB
City Council
City of Huntington Beach
Huntington Beach, California
•
We have audited the general purpose financial statements of the City of
Huntington Beach as of and for the year ended June 30, 1989, and have issued our
report thereon dated September 14, 1989.
• We conducted our audit in accordance with generally accepted auditing standards
and 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 general purpose financial
statements are free of material misstatement.
• In planning and performing our audit of general purpose financial statements of
the City of Huntington Beach for the year ended June 30, 1989, we considered its
internal control structure in order to determine our auditing procedures for the
purpose of expressing our opinion on the general purpose financial statements
and not to provide assurance on the internal control structure.
• The management of the City of Huntington Beach is responsible for establishing
and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. Zhe objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and
recorded properly to permit the preparation of financial statements in
accordance with generally accepted accounting principles. The objectives of
internal control system used in administering federal financial assistance
programs are to provide management with reasonable, but not absolute, assurance
that, with respect to federal financial assistance programs, resource use is
consistent with laws, regulations, and policies; resources are safeguarded
against waste, loss, and misuse; and reliable data are obtained, maintained, and
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fairly disclosed in reports. Because of inherent limitations in any internal
control structure, errors or irregularities may nevertheless occur and not be
detected. Also, projection of any evaluation of the stricture to future periods
is subject to the risk that procedures may becom inadequate because of changes
in conditions or that the effectiveness of the design and operation of policies
and procedures may deteriorate.
For the purpose of this report, we have classified the significant internal
control structure policies and procedures in the following categories: •
Cash receipts
Cash disbursements
Purchasing and accounts payable
Billings and receivables
Payroll
Inventory
Budgeting
Property and equipanent
General ledger
For all of the internal control stricture categories listed above, we obtained •
an understanding of the design of relevant policies and procedures and whether
they have been placed in operation, and we assessed control risk.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a reportable condition in which the
design or .operation of one or. more of the specific internal control structure
elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the general
purpose financial statements being audited may occur and not be detected within
a timely period by enployees in the normal course of performing their assigned •
functions. We noted no matters involving the internal control structure and its
operation that we consider to be material weaknesses as defined above.
However, we noted certain matters involving the internal control structure and
its operation that we have reported to the management of the City of Huntington
Beach in a separate cxmnmication dated Deoamber 15, 1989. •
This report is intended for the information of the City's management, the City
Council and the City's cognizant agency, U.S. Department of Housing and Urban
Development. This restriction is not intended to limit the distribution of this
report which, upon acceptance by the City, is a matter of public record.
•
DrIE////--H-����L,EVANS
&COMPANY OTHER OFFICES AT
r tip VIIIr)pr`rpl/Ir1l�Altt`l/ru'f�t�`Ir111. 2965 ROOSEVELTST.
• CARLSHAD.CA 92008-2399
r•011.1 NMI.r—i m,i�..,..� .u.i.m r r�-..rnp.n.u.^ (6191 729-2343
18401 VON KARMAN,SUITE 200 120 WEST WOODWARD AVE.
IRVINE • CALIFORNIA 92715-1542 ESCONDIDO.CA 92025-9990
PHONE(714) 757-7700 Seber em 15 1989 (619) 741-3141
FAX(714) 757-2707 Y` �`
•
REPORT ON iNuERmAL DOP mbis (AcoouNrING AND ALmIINISPRA=)
BASED CN A STUDY AND EVAL=CN MADE AS A PART OF AN
• AUDIT OF THE GERMAL PURPOSE FINANCIAL STATEMENTS AND
THE ADDITIONAL TESTS RDQUIRED BY ME SINGLE AUDIT ACT
• City Council
City of Huntington Beach
Huntington Beach, California
We have audited the general purpose financial statements of the City of
Huntington Beach, for the year ended June 30, 1989, and have issued our report
thereon dated September 14, 1989. As part of our audit, we made a study and
evaluation of the internal control systems, including applicable internal
a&A istrative controls; used in administering federal financial assistance
programs to the extent we considered necessary to evaluate the systems as
required by generally accepted auditing standards, Government Auditing
Standards, issued by the CaVtroller General of the United States, the Single
Audit Act of 1984, and the provisions of Office of Management and Budget
Circular A-128, "Audits of State and Local Governments". For the purpose. of
this report, we have classified the significant internal accounting and
administrative controls used in administering federal financial assistance
programs in the following categories:
Ao=mtim Controls
Cash receipts
Cash disbursements
Purchasing and ants payable
Billings and receivables
Payroll
Inventory
Budgeting
Property and equipment
General Ledger
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Administrative Controls
General: Specific:
Political Activity Types of services
Davis-Bacon Act Eligibility
Civil Rights Matching level of effort
Cash Management Reporting
Relocation assistance and Cost Allocation
real property management Claims for advances and
Federal financial reports reimbursements
Drug-free Workplace Act Monitoring subrecipients
Special requirements
The management of the City of Huntington Beach, is responsible for establishing
and maintaining internal control systems used in administering federal financial
assistance programs. In fulfilling that responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs of
control procedures. The objectives of internal control systems used in
administering federal financial assistance programs are to provide management
with reasonable, but not absolute, assurance that, with respect to federal
financial assistance programs, resource use is consistent with laws,
regulations, and policies; resources are safeguarded against waste, loss and
misuse; and reliable data are obtained, maintained, and fairly disclosed in
reports.
Because of inherent limitations in any system of internal accounting and
administrative controls used in administering federal financial assistance
programs, errors or irregularities may nevertheless occur and not be detected.
Also, projection of any evaluation of the systems to future periods is subject
to the risk that procedures may become inadequate because of changes in
conditions or that the degree of cco pliance with the procedures may deteriorate.
our study included all of the applicable control categories listed above except
for administrative controls for Drug-Free Workplace Act and Cost Allocation
which were not applicable. During the year ended June 30, 1989, the City of
Huntington Beach, expended 96.3 percent of its total federal financial
assistance under major federal financial assistance programs. With respect to
internal control systems used in administering major federal financial
assistance programs, our study and evaluation included considering the types of
errors and irregularities that could occur, determining the internal control
procedures that should prevent or detect such errors and irregularities,
determining whether the necessary procedures are prescribed and are being
followed satisfactorily, and evaluating any weaknesses.
With respect to the internal control systems used solely in administering the
nonmajor federal financial assistance programs of the City of Huntington Beach,
our study and evaluation was limited to a preliminary review of the systems to
obtain an understanding of the control environment and the flow of transactions
through the accounting system. Our study and evaluation of the internal control
systems used solely in administering the nonmiajor federal financial assistance
programs of the City of Huntington Beach, did not extend beyond this preliminary
review phase.
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•
Our study and evaluation was more limited than would be necessary to express an
opinion on the internal control systems used in administering the federal
• financial assistance programs of the City of Huntington Beach. Accordingly, we
do not express an opinion on the internal control systems used in administering
the federal financial assistance programs of the City of Huntington Beach.
Further, we do not express an opinion on the internal control systems used in
administering the major federal financial assistance programs of the City of
Huntington Beach.
•
Also, our audit, made in accordance with the standards mentioned above, would
not necessarily disclose material weaknesses in the internal control systems .
used solely in administering normajor federal financial assistance programs.
Our study and evaluation and our audit disclosed no condition that we believe to
• be a material weakness in relation to a federal financial assistance program of
the City of Huntington Beach.
This report is intended solely for the use of the City's management and the City
Council and should not be used for any other purpose. This restriction is not
intended to limit the distribution of this report which, upon acceptance by the
• City, is a matter of public record.
•
•
•
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