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Home My WebLink About2003/2004 Comprehensive Annual Financial Report - CAFR - Yea HUNTINGTON BEACH CALIFORNIA r � i COMPREHENSIVE REPORTANNUAL FINANCIAL HUNTINGTON BEACH CITY COUNCIL 2004/2005 Jill Hardy, Mayor Dave Sullivan, Mayor Pro Tem Cathy Green, Councilmember Debbie Cook, Councilmember Gil Coerper, Councilmember Keith Bohr, Councilmember Don Hansen, Councilmember HUNTINGTON BEACH CITY COUNCIL 2003/2004 Cathy Green, Mayor Jill Hardy, Mayor Pro Tern Connie Boardman, Councilmember Debbie Cook, Councilmember Gil Coerper, Councilmember Pam Houchen, Councilmember Dave Sullivan, Councilmember City of Huntington Beach Executive Tea Penelope J. Culbreth-Graft, City Administrator Robert F. Beardsley, Acting Assistant City Administrator Dan T. Villella, Finance Officer Laurie E. Payne, Public Information Officer Department Directors David C. Biggs, Economic Development Ross D. Cranmer, Building & Safety Paul S. Emery (Acting Director), Public Works Jim B. Engle, Community Services Joan L. Flynn, City Clerk Shari L. Freidenrich, City Treasurer Jennifer M. McGrath, City Attorney Chief Duane S. Olson, Fire Capt. Charles F. Thomas (Acting Director), Administrative Services Howard S. Zelefsky, Planning Vii City of Huntington Beach' Adopted Budget-FY 2004105 THE PEOPLE �i CITY CLERK CITYGOEIIVC1 , CITY TREASURER CITY ATTORNEY'' �„ :Mayor i, Mayor,PrtJ Teen".,, AdmiNPublic "' Investments OifyCouncil°t '{jbEig Litigation Support -�_�;,• =r.. Elections r;CITY ADMINISTRATOR Business License Advisory A Accounts Records Receivable Municipal Services Billing hi Central Cashiering ASSISTANT CITY ADMINISTRATOR ADMINISTRATIVE COMMUNITY LIBRARY " ' BUILDING& ECONOMIC;_, PUBLIC; °_INFORMATION FIRE POLICE .` PLANNING SERVICES SERVICES SERVICES SAFETY DEVELOPMENT WORKS 4F,�SEFiVICES Finance Beach O erations Administration Fire Uniform Planning Pe mit&Plan Redelopment& Engineenng Systems Prevention Check Services Housing Human Recreation,Human Children's/ Emergency Investigations Code Inspection Business Utilities Communications Resources &Cultural Services Branch Response Enforcement Services Development Admen Risk Facilities, Real Estate Maintenance O erations Concessions& Adult/ Operations O erations p Management Technical Services P Development Central Services Transportation Vlll Certificate of Achievement for Excellence in Financial Reporting Presented to City of Huntington Beach, California For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30,2003 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports(CAFRs)achieve the highest standards in government accounting and financial reporting. President o�%SAt�g4 aeuw I�,Ae.-e-10, Executive Director ix THIS PAGE INTENTIONALLY LEFT BLANK r r i r 1 THIS PAGE INTENTIONALLY LEFT BLANK 1 1 1 1 L 1 1 1 i 1 Non-Major Enterprise Funds Enterprise Funds Account for operations similar to private businesses. The City's intent is to recover the costs to the general public through user charges or where the City wished to periodically determine net income. Emerald Cove Housing Fund Accounts for the operations of a senior-citizen apartment complex. j Emergency Fire Medical Fund g Y Accounts for the user-fee portion of the City's paramedic service. Hazmat Service Fund Accounts for user fees charged for City's hazardous material program. Ocean View Estates Fund Accounts for the operation of the Ocean View Estates Mobile Home Park owned by the City. 77 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF NET ASSETS NON-MAJOR ENTERPRISE FUNDS SEPTEMBER 30,2004 (in thousands) Emerald Cove Emergency Ocean View ASSETS Housing Fire Medical lHazmat Service Estates Total CURRENT ASSETS: Cash and Investments $ 2,229 $ 617 $ 281 $ 1,118 $ 4,245 General Receivables 10 1,353 14 2 1,379 TOTAL CURRENT ASSETS 2,239 1,970 295 1,120 5,624 CAPITAL ASSETS: Land 1,289 - - 2,644 3,933 Buildings 4,102 - - 560 4,662 Machinery and Equipment - 1,257 - - 1,257 Less Accumulated Depreciation (1,559) (467) - (56) (2,082) TOTAL CAPITAL ASSETS 3,832 790 - 3,148 7,770 TOTAL ASSETS 6,071 2,760 295 4,268 13,394 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts Payable - 123 - 1 124 Accrued Payroll - 42 2 - 44 Deposits Payable 49 - - - 49 TOTAL CURRENT LIABILITIES 49 165 2 1 217 NON-CURRENT LIABILITIES: Compensated Absences - 92 20 - 112 TOTAL NON-CURRENT LIABILITIES - 92 20 - 112 TOTAL LIABILITIES 49 257 22 1 329 NET ASSETS: Invested in Capital Assets,Net of Related Debt 3,832 790 - 3,148 7,770 Unrestricted 2,190 1,713 273 1,119 5,295 TOTAL NET ASSETS $ 6,022 $ 2,503 $ 273 $ 4,267 $ 13,065 i 1 78 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET ASSETS NON-MAJOR ENTERPRISE FUNDS SEPTEMBER 30,2004 (in thousands) Emerald Cove Emergency Ocean View Housing Fire Medical 111azmat Service Estates I Total OPERATING REVENUES: Rentals $ 779 $ - $ - $ 258 $ 1,037 Fees for Service - 5,650 187 - 5,837 Other 2 - - - 2 TOTAL OPERATING REVENUES 781 5,650 187 258 6,876 OPERATING EXPENSES: Supplies and Operations 327 5,465 204 51 6,047 Depreciation 82 140 11 233 TOTAL OPERATING EXPENSES 409 5,605 204 62 6,280 OPERATING INCOME(LOSS) 372 45 (17) 196 596 NON-OPERATING REVENUES(EXPENSES): Interest Income 35 2 11 19 67 CHANGE IN NET ASSETS BEFORE OPERATING TRANSFERS AND CAPITAL CONTRIBUTIONS 407 47 (6) 215 663 TRANSFERS AND CAPITAL CONTRIBUTIONS: Transfers Out (357) (181) (13) (551) TOTAL TRANSFERS AND CAPITAL CONTRIBUTIONS (357) (181) (13) - (551) ! TOTAL CHANGE IN NET ASSETS 50 (134) (19) 215 112 NET ASSETS-BEGINNING OF YEAR 5,972 2,637 292 4,052 12,953 NET ASSETS-END OF YEAR $ 6,022 $ 2,503 $ 273 $ 4,267 $ 13,065 79 CITY OF HUNTINGTON BEACH STATEMENT OF CASH FLOWS NON-MAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2004 (in thousands) Emerald Cove Emergency Fire Ocean View Housing Medical lHazmat Service Estates Total Cash Flows from Operating Activities: Cash Received from Customers and Users $ 771 $ 5,696 $ 182 $ 260 $ 6,909 Cash Paid to Employees for Services - (2,655) (207) - (2,862) Cash Paid to Suppliers of Goods and Services (317) (3,013) (18) (51) (3,399) Net Cash Provided(Used)by Operating Activities 454 28 (43) 209 648 Cash Flows from Noncapital Financing Activities: Transfers Out (357) (181) (13) - (551) Net Cash Provided(Used)by Non Capital Financing Activities (357) (181) (13) - (551) � Cash Flows from Capital and Related Financing Activities: Purchase of Plant,Property,and Equipment - (167) - - (167) Net Cash Provided(Used)by Capital and Related Financing Activities - (167) - - (167) Cash Flows from Investing Activities Cash Received from Investments 35 2 11 19 67 Net Increase(Decrease)in Cash and Cash Equivalents 132 (318) (45) 228 (3) Cash and Cash Equivalents-Beginning of Year 2,097 935 326 890 4,248 Cash and Cash Equivalents-End of Year $ 2,229 $ 617 $ 281 $ 1,118 $ 4,245 Reconciliation of Operating Income to Net Cash provided(used)by Operating Activities Operating Income(Loss) $ 372 $ 45 $ (17) $ 196 $ 596 Adjustments to Reconcile Operating income to Net Cash Provided(Used)by Operating Activities Depreciation 82 140 - 11 233 Decrease(Increase)in Accounts Receivable (10) 47 (3) 2 36 Increase(Decrease)in Accounts Payable - (155) (10) - (165) Increase(Decrease)in Accrued Payroll - (58) (11) - (69) Increase(Decrease)in Deposits 10 - - - 10 Increase(Decrease)in Compensated Absences - 9 (2) - 7 Net Cash Provided(Used)by Operating Activities $ 454 $ 28 $ (43) $ 209 $ 648 80 Fiduciary Funds . Fiduciary Funds . Account for assets held by the City as an agent for other organizations or individuals. General Deposit Fund Accounts for the deposit of general monies held by the City for private individuals and businesses. Community Facilities District Accounts for the debt service activity of the City's community facilities a district. Huntington Beach Auto Business Improvement District Accounts for the activities of the City's business improvement district. Central Net Fund Accounts for the activity of the Central Net Operations Authority. Retiree Medical Insurance Fund Accounts for the City's medical retirement program. t 81 1 CITY OF HUNTINGTON BEACH STATEMENT OF FIDUCIARY FUND NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30,2004 Agency Funds Huntington Beach Auto Business Central Net Retiree Community Improvement Operations Medical Total Agency Assets: General Deposit Facilities Districts District Authority Insurance Funds Cash and Investments $ 514 $ 987 $ 73 $ 1,567 $ 4,609 $ 7,751 Cash with Fiscal Agent - 19,841 - - - 19,841 Accounts Receivable,Net - 65 - - 21 86 Total Assets $ 514 $ 20,893 $ 73 $ 1,567 $ 4,630 $ 27,678 Liabilities: Due to Bondholders $ - $ 20,893 $ - $ - $ - $ 20,893 Held for others 514 - .73 1,567 4,630 6,785 Total Liabilities $ 514 $ 20,893 $ 73 $ 1,567 $ 4,630 $ 27,678 82 Statistical Section This part of the City of Huntington Beach's Comprehensive Annual Report provides detailed information to better understand information presented within the financial statements, note disclosures, and required supplementary information say about the City's overall financial health. Financial Trends Contain trend information to aid the reader understand how the City's financial performance has changed over time Revenue Capacity Contain information to help the reader assess the City's most significant local revenue source,the property tax Debt Capacity Present information to assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future Demographic and Economic Information IOffers information to help the reader understand the environment within which the City's financial activities take place Operating Information Contains service and infrastructure data to help the reader understand how the City's financial report relates to the services the City provides and the activities it performs Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB 34 in the 2002 fiscal year; schedules presenting government-wide information include information beginning in that year. 83 City of Huntington Beach Net Assets by Component-Last Three Fiscal Years (In Thousands) Fiscal Year Ending September 30, Governmental Activities: 2004 2003 2002 Investment in Capital Assets,Net of Related Debt $ 448,217 $ 446,061 $ 425,967 Restricted 61,051 51,261 42,417 Unrestricted (9,278) (12,924) (10,745) Total Governmental Activities Net Assets: $ 499,990 $ 484,398 $ 457,639 Business-Type Activities Investment in Capital Assets,Net of Related Debt $ 92,890 $ 88,884 $ 79,781 Restricted 32,968 30,946 31,043 Unrestricted 33,664 25,671 23,236 Total Business-Type Activities $ 159,522 $ 145,501 $ 134,060 Changes in Net Assets-Last Three Fiscal Years (In Thousands) Expenses: Fiscal Year Ending September 30, Governmental Activities: 2004 2003 2002 City Council $ 280 $ 267 262 City Administrator 1,188 1,587 2,214 City Treasurer 1,541 1,341 1,160 City Attorney 2,775 2,899 3,634 City Clerk 717 559 698 Administrative Services 6,348 8,357 7,230 Planning 2,396 3,633 2,658 Building 2,858 3,045 3,101 Fire 20,000 19,490 19,361 Information Systems 6,423 4,401 4,464 Police 40,686 41,104 42,187 Economic Development 19,372 3,830 3,080 Community Services 15,735 9,989 12,440 Library Services 4,138 6,721 4,801 Public Works 30,277 25,386 28,237 Non-Departmental 4,054 25,604 19,725 Interest on Long-Term Debt 6,001 6,199 9,438 Total Governmental Activities 164,789 164,412 164,690 Business-type Activities: Water Utility 24,643 24,943 27,250 Sewer Service 4,042 3,775 2,419 Refuse Collection 9,806 9,681 9,178 Emerald Cove Housing 409 401 405 Emergency Fire Medical 5,605 3,765 3,172 Cultural Affairs - - 317 Hazmat Service 204 150 143 Ocean View Estates 62 58 11 Total Business Type Activities 44,771 42,773 42,895 Total Business and Government Type Activities $ 209,560 $ 207,185 $ 207,585 Source:Finance Office,City of Huntington Beach. The City implemented the new reporting model in fiscal year 2001-2002. Until 10 years of data are available,only the available years will be presented. 84 City of Huntington Beach Changes in Net Assets-Last Three Fiscal Years (In Thousands) (continued) Revenues. Fiscal Year Ending September 30, Governmental Activities: 2004 2003 2002 Charges for Services $ 30,419 $ 22,958 $ 23,556 Operating Grants 6,343 1,736 5,063 Capital Grants 7,384 6,955 13,039 Total Governmental Activities Program Revenue 44,146 31,649 41,658 Business-Type Activities Program Revenue Water Utility 40,172 37,943 59,104 Sewer Service 6,373 5,876 4,540 Refuse Collection 10,412 9,123 9,182 Emerald Cove Housing 781 746 707 Emergency Fire Medical 5,650 4,103 4,103 Cultural Affairs - - 189 Hazmat Service 187 233 145 Ocean View Estates 258 245 192 Total Business Type Activities 63,833 58,269 78,162 Total Primary Government Program Revenue 107,979 89,918 119,820 Net(Expense)Revenue: Governmental Activities (120,643) (132,763) (123,032) Business-type Activities 19,062 15,496 35,267 Total Net(Expense)Revenue (101,581) (117,267) (87,765) General Revenue and Other Changes in Net Assets Governmental Activities: Property Taxes 47,405 40,633 38,106 Sales Taxes 28,273 28,011 23,449 Utility Taxes 19,424 18,310 18,114 Other Taxes 11,365 13,337 13,521 Use of Money and Property 4,613 11,405 16,135 From Other Agencies 14,406 16,414 20,359 Other 7,328 5,491 2,603 Total General Revenue and Transfers 132,814 133,601 132,287 Change in Net Assets 31,233 16,334 44,522 Net Assets-Beginning of Year(Restated) 628,279 613,567 563,111 Net Assets-End of Year $ 659,512 $ 629,901 $ 607,633 Source:Finance Office,City of Huntington Beach. The City implemented the new reporting model in fiscal year 2001- 2002. Until 10 years of data are available,only the available years will be presented. 85 r t THIS PAGE INTENTIONALLY LEFT BLANK i 1 1 1 ( City of Huntington Beach Fund Balances-Governmental Funds-Last Ten Fiscal Years (In Thousands) (Modified Accrual Basis of Accounting) Fiscal Year Ending September 30, 2004 2003(b) 2002(a) 2001 2000 General Fund: Reserved $ 2,113 $ 2,757 $ 25,773 $ 23,677 $ 26,115 Unreserved 24,219 12,217 15,972 11,741 17,618 Total $ 26,332 $14,974 $ 41,745 $ 35,418 $ 43,733 Other Governmental Funds: Reserved $ 30,143 $35,470 $ 45,259 $ 81,465 $ 72,056 Unreserved,Reported in: Special Revenue Funds 11,810 10,399 7,967 21,698 19,073 Debt Service Funds 4,434 10,992 (33,364) 12,969 - 1 Capital Projects Funds 10,242 8,553 8,637 7,898 11,793 Total Other Governmental Funds $ 56,629 $65,414 $ 28,499 $ 124,030 $102,922 Fiscal Year Ending September 30, 1999 1998 1997 1996 1995 General Fund: $ 23,628 $23,807 $ 23,358 $ 28,069 $ 26,147 Reserved 19,291 8,998 11,142 591 (3,182) Unreserved $ 42,919 $32,805 $ 34,500 $ 28,660 $ 22,965 Total Other Governmental Funds: Reserved $ 61,401 $58,634 $ 54,676 $ 64,716 $ 72,979 Unreserved,Reported in: Special Revenue Funds 12,748 8,845 8,004 7,797 11,857 Debt Service Funds - 9,567 9,442 1,952 - Capital Projects Funds 4,968 9,933 10,465 10,704 3,292 Total Other Governmental Funds $ 79,117 $86,979 $ 82,587 $ 85,169 $ 88,128 Notes: (a)Beginning with fiscal year 2001/2002,the City implemented the new reporting model which changed the way interfund advances were reported and resulted in a larger negative fund balance in the Redevelopment Agency Debt Service fund. (b)In fiscal year 2002-2003 the City changed accounting for interfund advances and eliminated the advances to/from in each fund.This results in a smaller reserved fund balance in the General Fund and eliminates the deficit in the Redevelopment Agency Debt Service Fund Source:Finance Office,City of Huntington Beach 86 Changes in Fund Balances- Governmental Funds-Last Ten Fiscal Years (In Thousands) (Modified Accrual Basis of Accounting) Fiscal Year Ending September 30, 2004 2003 2002 2001 2000 REVENUES: Property Taxes $ 43,501 $38,983 $ 33,204 $ 36,860 $ 37,645 Sales Taxes 28,273 28,011 23,449 28,082 26,268 Utility Taxes 19,424 18,310 18,014 17,045 15,058 Other Taxes 11,365 13,337 13,621 15,096 10,868 Licenses and Permits 7,736 8,045 7,162 6,902 8,538 Fines and Forfeitures 4,342 3,815 3,797 4,092 4,018 From Use of Money and Property 11,856 9,923 13,895 15,812 14,603 From Other Agencies 26,321 25,103 28,426 31,634 32,021 Charges for Current Service 17,553 14,140 15,201 12,150 15,847 TOTAL REVENUES 170,371 159,667 156,769 167,673 164,866 EXPENDITURES Current: City Council 280 269 237 231 277 City Administrator 1,165 1,559 2,109 1,776 1,799 City Treasurer 1,519 1,377 1,108 916 884 City Attorney 2,771 2,836 3,570 2,943 2,227 City Clerk 712 555 676 559 451 Administrative Services 6,295 8,323 7,095 3,874 31559 Community Development - - - - - Planning 2,382 2,544 2,585 2,329 2,180 Building 2,938 3.043 2,991 2,589 2,384 Fire 19,018 19,021 18,024 18,142 17,471 Information Systems 5,315 3,619 3,500 2,814 Police 39,414 41,184 37,990 39,081 36,140 Economic Development 5,132 3,616 3,073 2,816 6,749 Community Services 11,718 10,182 11,065 11,395 9,815 Library Services 3,745 4,215 4,350 4,265 3,984 Public Works 16,756 19,832 21,565 24,870 25,263 Non-Departmental 23,809 31,236 13,407 15,298 18,572 Capital Outlay 29,484 24,217 54,356 33,687 18,740 Debt Service: Principal 8,718 7,427 5,541 11,884 6,333 Interest 5,987 6,273 7,152 16,204 14,965 TOTAL EXPENDITURES 187,158 191,328 200,394 195,673 171,793 EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER) EXPENDITURES (16,787) (31,661) (43,625) (28,000) (6,927) OTHER FINANCING SOURCES(USES): Transfers In 30,274 54,463 58,948 21,267 30,529 Proceeds of Bankruptcy Settlements - - - - 3,833 Reclassification of Interfund Advances 16,018 - Capital Assets Reclassification for Changes in Fund Type (1,743) Payments to Escrow - (52,673) - - Proceeds of Long-Term Debt 13,236 24,582 61,514 37,947 30,110 Transfers Out (24,148) (57,096) (59,818) (21,908) (32,958) TOTAL OTHER FINANCING SOURCES(USES) 19,362 36,224 7,971 37,306 31,514 INCREASE(DECREASE)IN FUND BALANCES 2,575 4,563 (35,654) 9,306 24,587 DEBT SERVICE AS A PERCENTAGE OF NON-CAPITAL EXPENDITURES 10.3% 8.9% 9.5% 21.0% 16.2% Notes: (e)Community Development was reorganized into two separate departments(Planning and Building). Information Systems was recorded originally in the Non-Departmental area and transferred to a new department Source:Finance Office,City of Huntington Beach 87 t l Fiscal Year Ending September 30, 1999(c) 1998 1997 1996 1995 $ 34,345 $ 32,477 $ 29,341 $ 29,320 $ 30,108 22,699 21,156 19,512 18,555 17,678 14,936 13,888 14,059 13,222 12,916 1 11,122 9,851 8,632 8,102 7,665 10,527 8,848 8,121 6,567 5,978 2,744 2,649 2,707 2,134 2,134 10,913 12,614 12,971 14,291 11,704 24,753 21,539 19,810 18,171 19,941 14,071 13,945 11,191 16,708 9,777 146,110 136,967 126,344 127,070 117,901 275 207 233 224 224 1,569 1,092 1,856 2,140 1,672 820 805 781 743 709 1,969 2,340 1,738 1,466 1,866 474 434 470 488 485 2,876 3,056 4,028 4,181 4,200 4,067 3,919 3,694 3,252 3,252 15,639 16,368 15,806 14,747 15,304 34,343 34,127 33,413 32,650 32,795 3,598 3,452 2,142 3,010 2,637 8,439 7,723 7,301 7,535 7,064 3,510 3,212 3,034 2,951 2,921 18,287 18,686 17,159 16,297 16,712 12,929 14,919 9,867 9,399 9,953 20,739 15,894 13,833 9,823 12,958 12,111 2,313 2,340 2,966 3,438 16,654 9,648 10,189 11,261 8,497 158,299 138,195 127,884 123,133 124,687 (12,189) (1,228) (1,540) 3,937 (6,786) 7,794 12,494 14,820 9,203 19,909 (10,001) - - 25,684 1,179 9,977 3,603 5,324 (9,053) (12,852) (20,924) (9,716) (20,166) 14,424 821 3,873 3,090 5,067 2,235 (407) 2,333 7,027 (1,719) 26.4% 10.8% 12.3% 14.4% 12.0% 88 CITY OF HUNTINGTON BEACH ASSESSED AND ACTUAL VALUATION OF ALL TAXABLE PROPERTY LAST TEN FISCAL YEARS (IN THOUSANDS) Total Assessed Total Direct Tax Fiscal Year Common Property Public Utilities Total Secured Unsecured Valuation Rate 1994-1995 $ 11,712,153 $ 2,151 $ 11,714,304 $ 599,842 $ 12,314,146 $ 1.05963 1995-1996 11,817,571 2,218 11,819,789 538,559 12,358,348 1.05921 1996-1997 11,761,075 2,129 11,763,204 542,084 12,305,288 1.05832 1997-1998 12,338,032 2,297 12,340,329 624,469 12,964,798 1.05830 1998-1999 13,376,116 2,705 13,378,821 598,733 13,977,554 1.05840 1999-2000 14,493,635 2,383 14,496,018 636,747 15,132,765 1.05810 2000-2001 15,796,157 2,745 15,798,902 674,719 16,473,621 1.05810 2001-2002 17,076,822 2,805 17,079,627 732,334 17,811,961 1.00770 2002-2003 18,660,711 2,779 18,663,490 851,591 19,515,081 1.01902 2003-2004 19,003,162 262,906 19,266,068 944,590 20,210,658 1.02571 Source:County of Orange Auditor Controller PROPERTY TAX RATES ALL DIRECT AND OVERLAPPING GOVERNMENTS TAX RATE 04-001 LARGEST AREA IN CITY Year Basic Lev City Orange County School Districts Metro Water District Others Total 1994-1995 $ 1.00000 $ 0.04930 $ 0.00078 $ 0.00046 $ 0.00890 $ 0.00019 $ 1.05963 1995-1996 1.00000 0.04930 0.00050 0.00033 0.00890 0.00018 1.05921 1996-1997 1.00000 0.04930 " 0.00012 - 0.00890 - 1.05832 1997-1998 1.00000 0.04930 0.00010 0.00890 1.05830 1998-1999 1.00000 0.04930 0.00020 0.00890 1.05840 1999-2000 1.00000 0.04930 - 0.00880 1.05810 2000-2001 1.00000 0.04930 0.00880 1.05810 2001-2002 1.00000 - - 0.00770 1.00770 2002-2003 1.00000 - 0.01232 0.00670 - 1.01902 2003-2004 1.00000 0.00696 0.01214 0.00610 0.00051 1.02571 Note-Rates are per$100 of assessed valuation Source:County of Orange 2003-2004 Source:Finance Office,City of Huntington Beach 89 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (IN THOUSANDS) SECURED TAXES UNSECURED TAXES TOTAL TOTAL DELINQUENCY DELINQUENCY TOTAL DELINQUENCY DELINQUENCY LEVY COLLECTIONS AMOUNT PERCENT TOTAL LEVY COLLECTIONS AMOUNT PERCENT 1994-95 $ 16,781 $ 16,300 $ 481 2.87% $ 1,231 $ 1,299 $ 69 5.61% 1995-96 16,272 16,100 647 3.8617b 1,165 1,138 27 2.32% 1996-97 16,722 16,401 320 1.91% 1,102 1,085 17 1.60%a 1997-98 17,630 17,176 272 1.54% 1,247 1,077 40 3.21% 1998-99 18,341 17,868 262 1.47% 1,243 1,146 35 3.05% 1999-2000 21,001 20,676 284 1.35% 1,321 1,231 29 2.20% 2000-2001 22,724 22,035 629 2.77% 1,348 1,267 33 2.45% 2001-2002 24,581 24,238 343 1.40% 1,419 1,366 53 3.74% 2002-2003 26,376 25,937 362 1.37% 1,467 1,343 82 5.59% 2003-2004 29,423 28,669 293 1.00% 1,507 1,382 35 2.32% RESERVOIR HILL COMMUNITY FACILITIES DISTRICTS 1994-95 $ 187 $ 183 $ 4 2.19% $ 264 $ 258 $ 6 2.33% 1995-96 186 176 9 5.11% 264 239 25 10.46% 1996-97 182 179 3 1.68% 264 251 13 5.18% 1997-98 173 184 9 4.89% 264 255 9 3.53% 1998-99 194 184 9 4.89% 264 255 8 3.14% 1999-2000 184 181 3 1.63% 264 259 5 1.89% 2000-2001 184 180 4 2.17% 264 258 5 1.89% 2001-2002 188 184 4 2.13% 264 258 6 2.27% 2002-2003 191 188 3 1.57% 538 538 1 0.19% 2003-2004 191 192 - 0.00% 1,796 1,789 2 0.11% Source:County of Orange Auditor Controllers Office Note-Delinquency amount does not always equal levy amount minus collections r t 90 CITY OF HUNTINGTON BEACH RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (IN THOUSANDS) Long-Term Indebtedness Fiscal Year Ending September 30, Governmental Activities: 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Judgment Obligation Bonds 12,500 - - - - - - Public Financing Authority: Revenue Bonds - - - 20,460 20,885 21,275 30,860 31,360 31,840 32,285 Leasehold Revenue Bonds 60,840 63,535 66,125 37,940 7,020 7,440 7,840 8,070 Certificates of Participation 16,140 16,730 17,295 17,840 18,310 - Public Facilities Corporation Leasehold Mortgage Bonds - - - - - - - - 385 745 Civic Improvement Corporation: Refunding Certificates of Participation - 29,750 30,880 31,955 32,980 33,960 34,900 35,800 Assessment Bonds - 360 415 605 815 1,030 1,090 1,145 1,200 1,255 Redevelopment Agency: Tax Allocation Bonds 28,305 29,375 30,370 9,770 10,060 10,340 - - - - Disposition and Development Agreement 10,730 10,549 11,280 4,756 9,770 10,142 - - - - Notes Payable 337 545 1,035 1,272 1,566 759 810 862 606 654 Section 108 Loan 7,850 7,630 7,890 8,130 8,355 - Capital Leases Payable 4,885 6,420 4,107 2,007 155 - - - 387 99 Claims Payable 11,937 37,191 12,612 10,177 9,743 9,982 11,774 11,761 11,372 11,266 Compensated Absences Payable 8,037 8,223 8,950 8,075 6,135 5,463 5,323 4,977 5,014 4,853 Pension Benefit Obligation 8,409 8,342 8,593 8,337 8,150 7,255 6,271 5,592 - - Business Activities: Emerald Cove Certificates of Participation - - - - - 5,105 5,205 5,300 5,390 5,475 Capital Leases 183 250 595 432 1,550 1,633 2,215 993 896 572 Compensated Absences 710 623 491 472 457 383 375 333 266 277 $170,863 $189,773 $169,758 $160,023 $133,851 $112,762 $104,743 $104,353 $ 92,256 $ 93,281 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Population 198,895 196,954 194,600 191,500 199,327 196,660 192,430 188,518 187,180 186,587 Debt Per Capita $ 859 $ 964 $ 872 $ 836 $ 672 $ 573 $ 544 $ 554 $ 493 $ 500 Per-Capita Personal Income $ 36,417 $ 37,800 - - - - - - Total Debt as a Percentage of Personal Income(Citywide) Unemployment Rate by Year 2.70% 2.60% Prior to 2001 information on unemployment and per capita income not available. All long-term advances are eliminated Source:Comprehensive Annual Financial Reports 91 t CITY OF HUNTINGTON BEACH LEGAL DEBT MARGIN LAST TEN FISCAL YEARS (IN THOUSANDS) Debt Debt Limit-12%of Assessed Applicable to Legal Debt Assessed Valuation Valuation Limit Margin 1994-95 $ 12,314,146 $ 1,477,698 $ $ 1,477,698 1995-96 12,358,348 1,483,002 - 1,483,002 1996-97 12,305,288 1,476,635 = 1,476,635 1997-98 12,964,798 1,555,776 1,555,776 1998-99 13,977,554 1,677,306 1,677,306 1999-2000 15,132,765 1,815,932 - 1,815,932 2000-2001 16,473,621 1,976,835 1,976,835 2001-2002 17,811,961 2,137,435 2,137,435 2002-2003 19,515,081 2,341,810 - 2,341,810 2003-2004 20,210,658 2,425,279 - 2,425,279 PRINCIPAL PRIVATE EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2004 %of total 1995 % of total Boeing 4,800 3.73% 5,600 4.35% Quiksilver 1,600 1.24% - 0.00% Cambo Manufacturing 886 0.69% 750 0.58% Dynamic Cooking Systems 700 0.54% 0.00% C&D Aerospace 665 0.52% 430 0.33% Triad Financial 637 0.49% - 0.00% E-Trade Mortgage 561 0.44% 0.00% Huntington Beach Hospital 513 0.40% 500 0.39% Rainbow Disposal 420 0.33% - 0.00% Verizon 352 0.27% 0.00% Lucky Stores - 0.00% 485 0.38% Pacifica Hospital 0.00% 300 0.23% Waterfront Beach Resort = 0.00% 290 0.23% Bally's Health Club Service 0.00% 260 0.20% Ralph's Grocery - 0.00% 225 0.17% Cost Care - 0.00% 225 0.17% Total of top 10 11,134 8.64% 9,065 7.04% all others 117,706 91.36% 93,935 72.91% total employment(public and private) 128,840 100.00% 103,000 79.94% Source-Economic Development Department,City of Huntington Beach 92 CITY OF HUNTINGTON BEACH FULL-TIME BUDGETED CITY EMPLOYEES BY PROGRAM/FUNCTION General Government: 2004 2003 2002 2001 City Council 1.00 1.00 1.00 1.00 City Administrator 7.00 13.00 17.00 17.00 City Treasurer 16.00 16.00 16.00 16.00 City Attorney 15.00 14.00 16.00 16.00 City Clerk 7.50 8.00 8.00 8.00 Administrative Services 47.00 49.00 53.50 50.50 Planning 25.00 26.00 28.00 28.00 Building 27.50 27.50 27.50 25.50 Information Systems 37.00 18.50 18.25 15.25 Economic Development 11.00 12.00 15.00 15.00 Library Services 38.25 40.25 45.75 45.75 Fire 156.50 162.00 166.00 165.00 Police 366.00 379.00 388.00 388.00 Community Services 62.25 67.50 71.50 71.50 Public Works 231.00 264.00 270.00 263.00 1,048.00 1,097.75 1,141.50 1,125.50 OPERATING INDICATORS BY FUNCTION/ACTIVITY CITY OF HUNTINGTON BEACH CAPITAL ASSET STATISTICS Function/Program 2004 BY FUNCTION/ACTIVITY City Treasurer: Library Services One Main Library Water Bills Processed 632,868 and Four Branches City Clerk: Fire: Passports Issued 3,795 Fire Stations 8 Planning Police: Entitlements Processed 572 One Main Station Plan Reviews 1,414 Stations and Two Substations Field Inspection Complaints 3,857 Code Violation Cases 2,018 Community Services: Building: Acreage of Parks 955 Field Inspections 45,629 Community Centers #of Plan Checks Processed 3,211 Miles of Beach Process Certificate of Occupancies 647 Maintained 3 Automated Information Requests 81,141 Public Works: Library: Volumes in Collections 439,789 Centerline Square Miles Volumes Borrowed 1.2 MILLION of Streets Maintained 467.67 Fire: Miles of Storm Drains Inspections 4,000 Maintained 135 Responses 12,800 Miles of Sewer Police: Maintained 355 Physical Arrests 5,942 Parking Violations 79,235 Traffic Violations 24,467 Community Services: Acreage of Parks Estimated Beach Visitors 7,958,466 Enrollment in Recreation Classes 22,670 Public Works: Water Sold 34,525 Acre Feet Gallons of Sewage Pumped per Day 6.5 million Source:Various Departments-City of Huntington Beach 93 1 ' STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT SEPTEMBER 30,2004 2003-2004 Assessed Valuation$20,210,658,410(after deducting$1,039,995,937)of incremental redevelopment valuation) Percent Debt Repaid with Property Taxes(Tax and Assessment Debt): Applicable Debt Tax Debt: Orange County Teeter Plan Obligations 7.40% $ 9,203,717 Metropolitan Water District 1.57% 7,01 1,933 Coast Community College District 30.95% 34,039,500 Huntington Beach City School District 97.64% 29,172,922 Assessment Debt: Los Alamitos United School District Comm Facilities Dist. 1990-1 1.29% 153,262 City of Huntington Beach Community Facilities District 1990-1 100.00% 1,995,000 City of Huntington Beach Community Facilities District 2000-1 100.00% 16,000,000 City of Huntington Beach Community Facilities District 2002-1 100.00% 4,900,000 City of Huntington Beach 1915 Act Bonds 100.00% 195,000 Tax and Assessment Debt 102,671,334 Other Debt Other Entities: ' Orange County General Fund Obligations 7.40% 66,525,215 Orange County Pension Obligations 7.40% 8,637,661 Orange County Board of Education Certifictes of Participation 7.40% 1,475,702 Orange County Transit Authority 7.40% 274,059 MWDOC Facilities Corporation 8.82% 3,102,960 Orange County Sanitation District Certificates of Participation 10.11% 15,116,890 Coast Community College District Certificates of Participation 30.95% 2,373,842 Huntington Beach Union High School District Certificates of Participation 76.05% 12,928,670 Los Alamitos Unified School District Certificates of Participation 1.29% 145,773 Huntington Beach City School District Certificates of Participation 97.64% 4,325,319 Ocean View School District Certificates of Participation 94.69% 9,265,025 City of Huntington Reporting Entity Beach General Fund Obligations: 76,950,000 Total Gross and Overlapping Bonded Debt Not Repaid by Property Taxes 201,121,116 1 Less Self Supporting Debt of MWDOC and OCTA (3,322,207) Total Net Direct and Overlapping General Fund Obligation Debt 197,798,909 Combined Total Debt $ 300,470,243 Source:California Municipal Statistics and City of Huntington Beach Finance Department 1 r 94 r 1 1 THIS PAGE INTENTIONALLY LEFT BLANK ' r Cover Photo: Courtesy of the Huntington Beach Conference and Visitors Bureau 1 City of Huntington Beach California Comprehensive Annual Financial Report for the Year Ended September 30, 2004 with Deport on Audit by Independent Certified Public Accountants Prepared by the Finance Office � Introductory Section 1 1 1 1 i 1 1 1 1 1 1 1 1 TABLE OF CONTENTS INTRODUCTORY..SECTION Tableof Contents................................................................. ........................................................................ Letterof Transmittal....................................................................................................................................iii-v CityOfficials..............................................................................................................................................vi-vii OrganizationalChart......................................................................................................................................vcii Certificate of Achievement in Excellence in Financial Reporting..................................................................ix FINANCIAL SECTION IndependentAuditor's Report...............................................................................................................................1-2 Management Discussion and Analysis..................................................................................................................3-12 Basic Financial Statements: Government-wide Financial Statements: Statementof Net Assets...............................................................................................................................13 Statement of Activities and Changes in Net Assets.....................................................................................14 Fund Financial Statements: Balance Sheet—Governmental Funds.........................................................................................................15 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets....................16 Statement of Revenues,Expenditures and Changes in Fund Balances—Governmental Funds..................17-18 Reconciliation of the Statement of Revenues,Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities.................................................................................19 Statement of Net Assets—Proprietary Funds..............................................................................................20 ' Statement of Revenues,Expenses and Changes in Fund Net Assets—Proprietary Funds..........................21 Statement of Cash Flows—Proprietary Funds.............................................................................................22 Statement of Fiduciary Fund Net Assets ....................................................................:................................23 Statement of Changes in Fiduciary Fund Net Assets—Trust Funds ...........................................................23 Notes to Financial Statements.........................................................................................................................24-53 Required Supplemental Information: BudgetaryInformation.................................................................................................................................54 Schedule of Revenues,Expenditures and Changes in Fund Balances—Budget AndActual—General Fund......................................................................................................................55 Schedule of Revenues,Expenditures and Changes in Fund Balances—Budget And Actual—Public Financing Authority...................................................................................................56 Schedule of Revenues,Expenditures and Changes in Fund Balances—Budget And Actual—Redevelopment Agency.....................................................................................................56 Schedule of Revenues,Expenditures and Changes in Fund Balances—Budget AndActual—Grants Fund........................................................................................................................57 Schedule of Revenues,Expenditures and Changes in Fund Balances—Budget AndActual—Property Tax Refund..........................................................................................................57 Schedule of Funding Progress (Normal and Supplemental Retirement Plans)............................................58 Supplementary Information: Description of Non-Major Governmental Funds.............................................................................................59-60 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet—Nonmajor Governmental Funds.....................................................................61-64 Combining Statement of Revenues,Expenditures, and Changes in Fund Balances NonmajorGovernmental Funds ...............................................................................................................65-68 Schedule of Revenues,Expenditures, and Changes in Fund Balances— Budget and Actual—Non Major Governmental Funds............................................................................69-76 Description of Non-Major Enterprise Funds................................................................................................77 i Combining Statement of Net Assets—Nonmajor Enterprise Funds............................................................78 Combining Statement of Revenues,Expenses, and Changes in Net Assets— NonmajorEnterprise Funds......................................................................................................................79 Combining Statement of Cash Flows—Nonmajor Enterprise Funds..........................................................80 Descriptionof Fiduciary Funds ...................................................................................................................81 Combining Statement of Fiduciary Fund Net Assets...................................................................................82 STATISTICAL SECTION Descriptionof Statistical Section...........................................................................................................................83 NetAssets by Component .....................................................................................................................................84 Change in Net Assets-Last Three Fiscal Years ....................................................................................................84 Change in Net Assets-Last Three Fiscal Years ....................................................................................................85 Fund Balances—Governmental Funds—Last Ten Fiscal Years...........................................................................86 Changes in Fund Balances—Last Ten Fiscal Years..............................................................................................87-88 Assessed and Actual Valuation of All Taxable Property ......................................................................................89 Property Tax Rates—All Direct and Overlapping Government............................................................................89 Property Tax Levies and Collections—Last Ten Fiscal Years..............................................................................90 Ratios of Outstanding Debt by Type—Last Ten Fiscal Years ..............................................................................91 Legal Debt Margin—Last Ten Fiscal Years..........................................................................................................92 Principal and Private Employers—Current Year and Nine Years Ago.................................................................92 Full-Time Budgeted City Employees by Program/Function.................................................................................93 Operating Indicators by Function/Activity............................................................................................................93 Capital Assets Statistics by Function/Activity ......................................................................................................93 Statement of Direct and Overlapping Bonded Debt..............................................................................................94 i M 1 1 1 ii CITY OF HUNTINGTON BEACH March 17, 2005 To the honorable Mayor and City Council City of Huntington Beach Huntington Beach, California We are pleased to submit to you the Comprehensive Annual Financial Report for the City of Huntington Beach,California for the year ending September 30,2004 as required by Section 616 of the City Charter. The intent of this report is to provide the residents, the City Council and staff of Huntington Beach with a firm understanding of the City's financial position. This report is published in accordance with state law requirements that financial statements are presented in conformity with generally accepted accounting principles and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Responsibility for both the accuracy of the information and the completeness and fairness of the presentation including all disclosures rests with the City's Finance Office. The City's Finance Office is responsible for establishing a system of internal control so that financial activity is properly recorded. The City's internal control system has been carefully designed so that the cost of any control does not exceed the expected benefit. City management believes this financial report is complete and reliable in all material respects. Caporicci and Larson, CPAs, a firm of licensed independent certified public accountants, has audited the City's financial statements for the year ending September 30, 2004. The auditors' report is located at the front of the financial statement. The City received an unqualified(clean) opinion. Management's discussion and analysis (MD &A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the financial statements. MD&A complement this letter and should be read in conjunction with it. ABOUT THE CITY OF HUNTINGTON BEACH The City of Huntington Beach is located along the Southern California coast in Orange County, 35 miles south of Los Angeles and 90 miles north of San Diego. With a population of approximately 200,000 residents, it is known as Surf City due to its abundance of beaches; sunny, warm Mediterranean climate; and casual lifestyle. Huntington Beach covers 28 square miles of land, 26 square miles of water, and is one of the 20 largest cities in California. With 8.5 miles of uninterrupted beach along the Pacific Ocean, the city also plays host to an annual visitor population of over 11 million people, especially during the summer, special events and weekends. Listed among the nation's safest cities for decades, Huntington Beach has often been ranked among the Top Ten Safest Cities by City Crime Rankings. Founded in the late 1880s, Huntington Beach was incorporated as a Charter City in 1909. Huntington Beach has a City Council/City Administrator form of government. The City Council has seven members, each of whom are elected to four-year terms. City Council Members are limited to two consecutive terms. There are three elected department heads, the City Attorney, City Clerk and City Treasurer. The position of Mayor is filled on a rotating basis. The City of Huntington Beach is a full service city. Its major departments include the City Administrator's Office, Administrative Services, Building and Safety, City Treasurer, Community Services, Economic Development,Fire, Information Services, Library Services,Planning,Police, and Public Works. iii This report includes the financial activity of separate legal entities whose activities the City controls. These entities are: ® Redevelopment Agency of the City of Huntington Beach • Huntington Beach Public Financing Authority • Huntington Beach Civic Improvement Corporation • Various community facilities districts • Reservoir Hill Assessment District • Huntington Beach Auto Business Improvement District A component unit reports (stand-alone report)is available for the Redevelopment Agency. The City operates on a fiscal year basis, beginning October V and ending September 30`h. The budget is prepared under the supervision of the City Administrator and transmitted to the City Council for deliberation sixty days prior to the end of the fiscal year. The City Council adopts the annual budget by September 30`h of the prior fiscal year and may amend it or revise it at any time at a properly noticed meeting. Budgetary control is at the department level within each fund. A Department Head, with the Finance Officer's approval, may transfer funds within like categories (salaries and benefits, operating, and capital expenditures) of the same department. LOCAL ECONOMY The City of Huntington Beach is one of the leading commercial and industrial centers in Southern California. The City works diligently to maintain its business friendly atmosphere, working closely with the Huntington Beach Chamber of Commerce and the Huntington Beach Conference and Visitors Bureau. The City seeks to attract new businesses and support existing business through retention and expansion efforts. Benefits from tourism and continued modest economic growth present a steady stream of revenue opportunities for the City. As the third largest city in Orange County, more than 60,000 people are currently employed by over 12,800 businesses in the City. Huntington Beach residents represent nearly 10% of the entire Orange County working population. Huntington Beach businesses include aerospace and high technology; petroleum and petroleum support; manufacturing; computer hardware and software; financial and business services; automobile services; machine shop services, precision instruments, surf apparel manufacturers and retailers, just to name a few. LONG-TERM FINANCIAL PLANNING In November 2004 California voters approved Proposition IA, which will help stabilize the flow of revenues to municipalities and end future State infringements on City finances. This will allow for better forecasting of City revenues and, along with modest economic growth, should allow for future sustainable revenue growth. The City has made infrastructure improvements a major policy initiative. In 2004/2005 approximately $29.2 million of such improvements are budgeted.This is a trend that will continue. MAJOR INITIATIVES Through its Strategic Plan, the Huntington Beach City Council seeks to assure a high quality of life endures and improves as the City ages. The Strategic Plan was first created in July 2001 as a way to help the City Council assess the effects of today's decisions on the City's future quality of life. As a blueprint for the City's future, the Strategic Plan defines the City Council's goals and objectives. The following are the City Council's strategic goals set forth in the City's development of the annual budget: • Public Safety-Maintain a healthy and safe community • Fiscal Integrity -Establish a sound financial foundation for the City's finances • Infrastructure and Transportation - Assure the long-term adequacy of the City's infrastructure, facilities, and transportation network. • Economic Development - Achieve development that maintains and improves the city's fiscal viability and reflects economic demands while maintaining and improving quality of life for current and future iv residents • Organizational Development and Technology - Maintain and continually improve organizational effectiveness. • Community Livability and Sustainability — Build and maintain a sense of place and an exceptional quality of life within a sustainable urban environment. • Enrichment, Communication and Involvement - Ensure that Huntington Beach's local government is open, accessible, responsive, nurturing, and respectful to all the citizens it serves. • Environment and Natural Resources — Enhance the community's environmental quality and its unique natural resources. CASH MANAGEMENT POLICES AND PRACTICES The elected City Treasurer invests surplus cash in authorized investments allowed by the government code and City policy. The City adopts an annual Investment Policy intended to provide guidelines for the prudent investment of the city's cash balances, and outlines the policies to assist in maximizing the efficiency of the city's cash management system while meeting the daily cash flow demands of the city. Both the Investment Advisory Board and the City Council approved the City's Investment Policy. The investment practices and policies of the City of Huntington Beach are based upon state law and prudent money management. The primary goals of these practices are: • To assure compliance with all Federal, State, and local laws governing the investment of public funds under the control of the City Treasurer. • To protect the principal monies entrusted to the City Treasurer. • Achieve a reasonable rate of return within the parameters of prudent risk management while minimizing the potential for capital losses arising from market changes or issuer default. The City forecasts revenues and expenditures to meet current obligations and to earn a market rate of return on its investments. The City Treasurer earned a return of 2.45% for the year. The California Government Code requires the City Treasurer to prepare an annual statement of investment policy. The City Treasurer complied with this law. Note 3 to the Financial Statements shows further information on the City's cash and investments. AWARDS AND ACKNOWLEDGEMENTS: The Governmental Finance Officers Association (GFOA) of the United States and Canada awarded the Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report ended September 30, 2003. This was the eighteenth consecutive year the City has received this prestigious award. To qualify for the Certificate of Achievement, the government entity must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, the contents of which conform to program standards. Such report must satisfy both generally accepted accounting principles as well as all legal requirements. The Certificate of Achievement is valid for one year only. The City believes that this Comprehensive Annual Financial Report continues to conform to the Certificate of Achievement Program requirements and will be submitted to GFOA to determine its eligibility for another certificate. We wish to thank the City Council and the City Departments for responsibly conducting the fiscal affairs of the City of Huntington Beach. We would also like to thank Robert Sedlak, Principal Accountant, who prepared this report. G22��2 an T.Villella, CPA Finance Officer v z 0 H U W U w � � a� � � � w � � w +� � � s � �s � � i. C&L Capolicci&Larson INDEPENDENT'AUMORS'REPOW17 To the Honorable Mayor and Members of City Council of the City of Huntington Beach Huntington Beach,California We have audited the accompanying financial statements of the governmental activities, the business type activities, each major fund, and the aggregate remaining fund information of the City of Huntington Beach,California(City),as of and for the year ended September 30,2004,which collectively comprise the City's basic financial statements 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 in the United States and the standards applicable to financial audits contained in Ckwerninent Auditing Standards,issued by the Comptroller General of the United States. Those standards require that eve plan and perform the audit to obtain reasonable assurance about whether the financial statement- 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 basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion,the basic financial statements referred to,above present fairly,in all material respects—the respective financial position of the governmental activities,the business-type activities,each major fund, and the aggregate remaining fund information of the City as of September 30,MM,and the respective changes in financial position and cash flows, where applicable, thereof for the year than ended in conforinih,with generally accepted accounting principles in the United States. In accordance with Government Audifing Stanthirds,we have also issued our report dated February 11, 2005 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts,and grants. That report is an integral part (3f an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit, The accompanying Required Supplementary Information, such as management's discussion and analysis,budgetary comparison information and other information as listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquires of management regarding the methods of measurement and presentation of the Required Supplementary Information. However, we. did not audit the information and express no opinion on it. 101 1'.-v Mv(87-)46-1-22(w T01 F"r f4;1x: iA(�olj-27 0V&1*.d 0—g.C—ty sac meavv San Ri"o tibi 31-1H)Ax-1A-11- 7—0—p-Co—.—M Wt-NA) 0aMw,d-(Af,—L.9-zf,12 92626 qili3i CAR'm4 W,€I I To the H(-,)norable Mayor and W-inbers of City Council of the City of Huntington Beach Huntington Beach,California Our audit was conducted for the purpose of forming opirdons on the financial statements that collectively comprise the City's basic financial statement,;. The accompanying supplementary information is presented for purpose of additional analysis and is not a required part of the basic in tin --) financial statements. The supplementary formation has been subjected to the auditing cedures pr-, applied in the audit of the basic financial statements and,incur opini6n, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The Introductory Section and Statistical Tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and,accordingly,we express no opinion on them. � . (I�M*.41" Costa Mesa,California February 11,2005 2 City of Huntington Beach - m _ --- — Management's Discussion and Analysis For the Year Ended September 30 200 As management of the City of Huntington Beach, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City of Huntington Beach for the fiscal year ended September 30, 2004. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iii-v of this report. Financial Highlights E Below is a summary of the City's government-wide financial information (in thousands): Total Governmental and Business Activities Amount Increase Percent Increase September 30,2004 September 30,2003 (Decrease) (Decrease) Assets $ 869,576 $ 845,077 $ 24,499 3% Liabilities 210,065 215,178 (5,113) -2% Total Net Assets 659,512 629,899 29,613 5% Unrestricted Net Assets 24,386 12,747 11,639 91% Long-Term Obligations 170,862 188,900 (18,038) -10% Program Revenues 107,979 89,918 18,061 20% Taxes 106,467 100,291 6,176 6% Other General Revenues 26,347 31,826 (5,479) -17% Expenses 209,560 207,18.5 2,376 1% ® The total assets of the City of Huntington Beach exceeded its liabilities at the close of the most recent fiscal year by $659,512,000. Of this amount, $24,386,000 may be used to meet the City's ongoing obligations to citizens and creditors. Net assets increased $29,613,000 (4.5%), while unrestricted net assets increased by $11,639,000(91.0%). ■ Long-term obligations decreased by $18,038,000(-9.5%). ® Program revenues increased $18,061,000, or 20.1%. Taxes increased $6,176,000 (6.2%), while other general revenues decreased$5,479,000(47.2%). Expenses increased$2,375,000(1.1%). Overview Of The Financial Statements: This discussion and analysis serve as an introduction to the City of Huntington Beach basic financial statements. The City of Huntington Beach basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains certain other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements: The government-wide financial statements are designed to provide readers with a broad overview of the City's financial condition and are similarly prepared to those in the private sector. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, continued increases or decreases in net assets may indicate whether the City's financial condition is improving or deteriorating. The statement of activities presents information on how the City's net assets changed during the most recent fiscal year. These changes are reported on the accrual basis (when the economic event occurs), not when the cash is received or paid. i 3 City of Huntington Beach Management's Discussion and awns For the Year Ended September 30, 2004 The government-wide financial statements separate functions that are primarily supported by taxes and intergovernmental revenues (governmental activities) from functions that are supported by user fees (business activities). Governmental activities include public safety, public works, general government, and community- related activities. Business activities include Water, Sewer, Refuse, Emergency Fire Medical, Hazmat Service, and Ocean View Estates. The government-wide financial statements include the City and all of its component units that are legally separate but whose activities entirely support the City of Huntington Beach. These entities are, the Redevelopment Agency of the City of Huntington Beach, the Huntington Beach Public Financing Authority, the Huntington Beach Civic Improvement Corporation, and various assessment districts described in Note 2 to the financial statements. The government-wide financial statements can be found on pages 13-14 of this report. Fund Financial Statements The City separates financial activities into funds to maintain control over resources that have been legally separated. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds Governmental funds are used to account for the same functions reported in governmental activities in the government-wide financial statements. However, the focus in the governmental fund section of these financial statements is on near-term inflows and outflows of resources available for spending, as well as balances of resources available for spending at the end of the fiscal year. It is useful to compare information presented for the governmental funds to information presented for'governmental activities in the government-wide financial statements. The included reconciliation indicates to the reader the differences in financial reporting between the governmental activities section and the governmental funds section. The City maintains 21 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenue, expenditures, and changes in fund balances for the General Fund, Redevelopment Agency, Huntington Beach Public Financing Authority, Property Tax Refund, and Capital Improvement Funds, all of which are considered to be major funds. Data from the other 15 funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in a combining statement elsewhere in this report. The City provides an annual appropriated budget for its governmental funds. Budgetary comparison schedules on pages 55-57 demonstrate compliance. The basic governmental fund financial statements can be found on pages 13-18 of this report. Proprietary funds, or enterprise funds are used to account for the same activities as the business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Water, Sewer, Refuse, Emerald Cove Housing,Emergency Fire Medical,Hazmat Service,and Ocean View Estates activities. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statement provides information for Water, Sewer Service, and Refuse Funds, which are considered to be major funds of the City. The remaining proprietary funds noted above are combined into a single, aggregated presentation. The basic proprietary fund financial statements can be found on pages 20-22 of this report. 4 City of Huntington Beach n- Management's Discussion and Analvsis For the Year Ended September 30, i004 Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City of Huntington Beach's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds The basic fiduciary fund financial statements can be found on page 23 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 24-53 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits to its employees and Major Fund budget to actual comparisons. Required supplementary information can be found on pages 54-58 of this report. The combining statements referred to earlier in connection with non-major government funds are presented immediately following the required supplementary information on pensions. Combined and individual fund statements and schedules can be found on page 59-82 of this report. Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. Below is a summary schedule of the City's net assets at September 30, 2004 (in thousands): Percent Increase Governmental Activities September 30,2004 September 30,2003 Amount Increase(Decrease) (Decrease) Current and Other Assets $ 126,313 $ 111,518 $ 14,795 13% Capital Assets 577,305 581,205 (3,900) -1% Total Assets 703,618 692,723 10,894 13% Current Liabilities 33,658 27,796 5,862 21% Long-Term Liabilities 169,970 188,900 (18,930) -10% Total Liabilities 203,628 216,696 (13,068) 11% Net Assets: Invested in Capital Assets,Net of Related Debt 448,217 446,061 2,156 0% Restricted 61,051 51,261 9,790 19% Unrestricted (9,278) (12,924) 3,646 na Total Net Assets $ 499,990 $ 484,398 $ 15,592 3% 5 City of Huntington Beach � J Management's Discussion and Analvsis For the Year Ended September 30, 2004 Percent Increase Business Activities September 30,2004 September 30,2003 Amount Increase(Decrease) (Decrease) Current and Other Assets $ 72,886 $ 63,220 $ 9,666 15.3% Capital Assets 93,073 89,134 3,939 4.4% Total Assets 165,959 152.354 13,605 19.7% Current Liabilities 5,739 6,303 (564) -8.9% Long-Term Obligations 698 550 148 na Total Liabilities 6,437 6,853 (416) -6.1% Net Assets: Invested in Capital Assets,Net of Related Debt 92,890 88,884 4,006 4.5% Restricted 32,968 30,946 2,022 6.5% Unrestricted 33,664 25,671 7.993 31.1% Total Net Assets $ 159,522 $ 145,501 $ 14,021 9.6% The largest portion of the City's net assets reflects investment in capital assets (e.g., land, buildings,-machinery, equipment, and infrastructure), less any related debt used to acquire those assets that are still outstanding. The City uses capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, the resources needed to repay this debt must be provided from other sources, since capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net assets is subject to external (legal imposed or statutory) restrictions ($61,051000 for governmental activities, and $32,968,000 for business activities). These amounts represent 12.2% and 20.7% of net assets for governmental activities and business activities respectively. The unrestricted assets totaling$24,386,000 represent 3.7% of the City's total net assets. 6 City of Huntington Beach L� h e.trlerl.t's Discussion l()11 an Analysis For the Year Ended September 30, 200 A condensed summary of governmental activities(in thousands)follows: Governmental Activities Year Ended September Year Ended September Amount Increase Percent Increase Revenues: 30,2004 30,2003 (Decrease) (Decrease) Program Revenues: Charges for Current Services $ 30,419 $ 22,958 $ 7,461 32.5% Operating Grants and Contributions 6,343 1,736 4,607 265.4% Capital Grants and Contributions 7,384 6,955 429 6.2% Total Program Revenues 44,146 31,649 12,496 39.5% General Revenues: Property Taxes 47,405 40,633 6,772 16.7% Sales Taxes 28,273 28,011 262 0.9% Utility Taxes 19,424 18,310 1,114 6.1% Other Taxes 11,365 13,337 (1,972) -14.8% Use of Money and Property 3,528 9,923 (6,395) -64.4% From Other Agencies 14,406 16,412 (2,006) -12.2% Other: 7,328 5,491 1,837 33.5% Total General Revenues $ 131,729 $ 132,117 $ (388) -0.3% Total Revenues $ 175,875 $ 163,766 $ 12,109 7.4% Expenses: City Council 280 267 13 4.9% City Administrator 1,188 1,587 (399) -25.2% City Treasurer 1,541 1,341 200 14.9% City Attorney 2,775 2,899 (124) -4.3% City Clerk 717 559 158 28.2% Administrative Services 6,348 8,357 (2,009) -24.0% Planning 2,396 3,633 (1,237) -34.0% Building 2,858 3,045 (187) -6.1% Fire 20,000 19,490 510 2.6% Information Systems 6,423 4,401 2,022 46.0% Police 40,686 41,104 (418) -1.0% Economic Development 19,372 3,830 15,542 405.8% Community Services 15,735 9,989 5,746 57.5% Library Services 4,138 6,721 (2,583) -38.4% Public Works 30,277 25,386 4,891 19.3% Non-Departmental 4,054 25,604 (21,550) -84.2% Interest on Long-Term Debt 6,001 6,199 (198) -3.2% Total Expenses 164,789 164,412 377 0.2% Increase in Net Assets Before Transfers 11,086 (646) Transfers 6,126 5,537 Net Assets-Beginning of Year(Restated) 482,778 479,507 Net Assets-End of Year $ 499,990 $ 484,398 7 i ,., City of Huntington Beach _; ,......_. Management's Discussion and Analysis For the Year Ended September 30, 2004 The cost of all governmental activities this year was $164 789 000. However, as shown in the Statement of g Y > Activities, the amount that the taxpayers ultimately financed for these activities was only $120,643,000, because some of the cost was paid by those who directly benefited from the programs ($30,419,000), or by other governments and organizations that subsidized certain programs with operating grants and contributions ($6,343,000), and capital grants and contributions ($7,384,000). Overall, the City's governmental program revenues were $44,146,000. The City paid for the remaining "public benefit" portion of governmental activities with $131,729,000 in taxes and general revenue (some of which could only be used for certain programs) and with other revenues, such as interest and general entitlements. Total resources available during the year to finance governmental operations were $664,779,000, consisting of net assets at October 1, 2003 of$482,778,000,program revenues of$44,146,000, general revenues of$131,729,000, and transfers of $6,126,000. Total expenses for governmental activities during the year were $164,789,000, thus, net assets were increased by $17,212,000,to$499,990,000. A condensed summary of business activities (in thousands)follows: Business Activities Amount Percent September 30, September 30, Increase Increase 2004 2003 (Decrease) (Decrease) Program Revenues: Charges for Current Services $ 53,419 $ 47,169 $ 6,250 13.3% Capital Grants and Contributions 10,414 11,100 (6861 -6.2% Total Program Revenues 63,833 58,269 5,564 9.5% Use of Money and Property 1,085 1,482 (397) -26.8% Total Revenues 64,918 59,751 5,167 8.6% Expenses: Water Utility 24,643 24,943 (300) -1.2% Emerald Cove Housing 409 401 8 2.0% Emergency Fire Medical 5,605 3,765 1,840 48.9% Refuse Collection 9,806 9,681 125 1.3% Sewer Service 4,042 3,775 267 7.1% Hazmat Service 204 150 54 36.0% Ocean View Estates 62 58 4 6.9% Total Expenses 44,771 42,773 1,998 4.7% Increase in Net Assets Before Transfers 20,147 16,978 Transfers (6,126) (5,537) Net Assets-Beginning of Year 145,501 134,060 Net Assets-End of Year $ 159,522 $ 145,501 The City's business activities net assets increased, before transfers, by $20,147,000. The primary reason for this increase was developer contributions of infrastructure of$2,576,000 and capital contributions for the Water Master Plan of$7,838,000. The cost of all Proprietary (Business Type) activities this year was $44,771,000. As shown in the Statement of Activities and Changes in Net Assets, the amount paid by users of the systems was $53,419,000, capital grants and contributions were $10,414,000, other revenue was $1,085,000, and transfers were $6,125,000. Beginning net assets were $145,501,000 and ending net assets were $159,522,000. Of the ending net asset amount, $92,890,000, or 58.2%, was invested in capital assets, $32,968,000, or 20.7%, was restricted for expenditures for the Water Master Plan, and $33,664,000, or 2 1.1% was unrestricted. i 1 8 City of Huntington Beach Management's Discussion and Analysis For the Year Ended September 30, 2004 The City's programs for governmental activities include General Government, Fire, Police, Public Works, Redevelopment, Community Services and Library. Business type activities include the Water, Sewer, Refuse, Emerald Cove Housing, Emergency Fire Medical, Hazmat Service, and Ocean View Estates. A listing of each program's revenues and expenses (in thousands) for the current year is presented below (in thousands): 2003-2004 2002-2003 Funded by Taxes Funded by Taxes Less Program and Other General and Other General Governmental Activities: Expenses Revenues Revenues Revenues -City Council $ 280 $ - $ 280 $ 267 City Administrator 1,188 (46) 1,142 1,587 City Treasurer 1,541 - 1,541 1,341 City Attorney 2,775 2,775 2,899 City Clerk 717 717 477 Administrative Services 6,348 6,348 8,357 Planning 2,396 (1,403) 993 2,881 Building 2,858 (4,513) (1,655) (22) Fire 20,000 (1,430) 18,570 18,333 Information Systems 6,423 6,423 4,322 Police 40,686 (2,155) 38,531 36,021 Economic Development 19,372 (3,532) 15,840 2,316 Community Services 15,735 (14,839) 896 (322) Library Services 4,138 (4,459) (321) 5,920 Public Works 30,277 (9,570) 20,707 16,588 Non-Departmental 4,754 (2,199) 2,555 25,599 Interest on Long-Term Debt 6,000 6,000 6,199 Total Governmental Activities 165,488 $ (44,146) $ 121,342 $ 132,763 Business Activities Water Utility 24,643 (40,172) (15,529) (13,000) Emerald Cove Housing 409 (781) (371) (345) Emergency Fire Medical 5,605 (5,650) (45) (338) Refuse Collection 9,806 (10,412) (606) 558 Sewer Service 4,042 (6,373) (2,332) (2,101) Hazmat Service 204 (187) 17 (83) Ocean View Estates 62 (258) (196) (187) Total Business Activities $ 44,771 $ (63,833) $ (19,062) $ (15,496) City of Huntington each Management's Discussion and Analysis For the Year Ended September 30, 2004 Financial Analysis Of The City's Governmental Funds Below is an analysis of the City's governmental funds for the year(in thousands): GOVERNMENTAL FUNDS Amount Increase Percent Increase Se tember 30,2004 � September 30,2003 (Decrease) (Decrease) Total Fund Equity: General Fund $ 26,332 $ 14,974 $ 11,358 75.9% Redevelopment Agency 14,130 25,565 (11,435) na Public Financing Authority 7,509 16,085 (8,576) -53.3% Grants 5,115 1,294 3,821 295.3% Property Tax Refund 4,369 2,380 1,989 na Other Governmental Funds 25,506 20,088 5,418 27.0% Total Fund Equity $ 82,961 $ 80,386 $ 2,575 3.2% Unreserved Fund Equity: General Fund $ 21,094 12,217 $ 8,877 72.7% Redevelopment Agency - 9,363 (9,363) na Property Tax Refund 4,369 2,380 1,989 na Other Governmental Funds 22,117 18,201 3,916 21.5% Total Unreserved Fund Equity $ 47,581 $ 42,161 $ 5,420 94.2% a As of the close of the current fiscal year, the City's governmental fund balances reported a combined ending balance of$82,961,000, an increase of$2,575,000, or 3.2%, in comparison to the prior year. 0 The total fund balance at year-end for the City's General fund was $26,332,000, which is an overall increase of $11,358,000, or 75.9% over last year. The unreserved fund balance was $21,094,000 or 17% of General Fund expenditures Financial Analysis of the City's Proprietary Funds Below is an analysis of the fund equity of the City's proprietary-funds(in thousands): Enterprise Funds Amount Increase Percent Increase September 30,2004 T-September 30,2003 (Decrease) (Decrease) Net Assets: Water Fund $ 113,915 $ 105,629 $ 8,286 7.8% Sewer Fund 32,826 27,809 5,017 18.0% Refuse Fund (284) (890) 606 -68.1% Other Enterprise Funds 13,065 12,953 112 0.9% Total Net Assets $ 159,522 $ 145,501 $ 14,022 9.6% Unrestricted Net Assets: Water Fund $ 18,776 $ 14,903 $ 3,873 26.0% Sewer Fund 9,877 6,541 3,336 51.0% 1 Refuse Fund (284) (365) 81 -22.3% Other Enterprise Funds 5,295 5,117 178 3.5% Total Unrestricted Net Assets $ 33,664 $ 26,196 $ 7,468 28.5% 10 r City of Huntington Beach -_-.` Management's Discussion and .A,.nalvsis For. the Year Envied September 30, 2004 1 ■ Total net assets of the Water Fund increased $8,286,000 (7.8%), while unrestricted net assets increased $3,873,000(26.0%). ■ Total net assets of the Sewer Fund increased $5,017,000 (18.0%) while unrestricted net assets increased by $3,336,000 (51.0%). The increase in total assets is largely due to additional contributed infrastructure. The increase in net assets is due to funds being accumulated to pay for future capital improvements. ■ The unrestricted net deficit of the Refuse Fund was reduced by $606,000(-68.1%) ■ Total net assets of non-major enterprise funds increased $112,000 (0.9%) while unrestricted net assets increased$178,000(3.5%). Debt Administration Below is a schedule of the changes to the City's long-term debt (in thousands). Additional information on the City's long-term debt is shown in note 10 to the financial statements. Balance October 1, Balance Governmental Activities: 2003 Additions Retirements September 30,2004 Certificates of Participation - $ 16,730 $ $ (590) $ 16,140 Revenue Bonds 63,535 (2,695) 60,840 Tax Allocation Bonds 29,375 (1,070) 28,305 Judgment Obligation Bonds - 12,500 - 12,500 Special District Bonds 295 - (295) - Claims 9,153 14,182 (11,398) 11,937 Compensated Absences 8,223 1,596 (1,782) 8,037 Pension Obligation 8,342 2,067 (2,000) 8,409 Loans 20,410 736 (2,229) 18,917 Property Tax Claims 22,138 - (22,138) - Leases Payable 6,420 304 (1,839) 4,885 Total Debt-Governmental Activities 184,621 36,485 (46,036) 169,970 Business Activities: Compensated Absences 623 216 (129) 710 Leases 250 - (67) 183 Total Long-Term Obligations-Business Activities 873 216 (196) 893 Total Debt $ 185,494 $ 36,701 $ (46,232) $ 175,963 The City of Huntington Beach is legally restricted to issuing general obligation bonds to 15% of its assessed valuation. Since the City has no general obligation bonds outstanding, the limit does not apply. This is shown on page 92 of the financial statements. The City's total debt decreased $9,531,000 (-5.1%) from its beginning amount i largely due to the property tax refund claim. Certain long-term obligations of the City are rated by independent agencies for their relative safety as an investment. r The City received AAA ratings on the following recently issued obligations: ■ Public Financing Authority 2000 Certificates of Participation r■ Public Financing Authority 2001 (a)Lease Revenue Bonds • Public Financing Authority 2001 (b) Lease Revenue Bonds Capital Assets The capital assets of the City are those assets, which are used in the performance of the City's functions including infrastructure assets. The City has elected to use the "Basic Approach" as defined by GASB statement 34 for infrastructure reporting. The following infrastructure networks are recorded as capital assets in the government-wide financial statements: • Storm drain system including pump stations, drainage system and manholes. ■ Streets, (including land underneath streets) traffic signals,curbs, gutters,and sidewalks. 11 City of Huntington Beach Management's Discussion and Analysis For. the Year Ended September 30, 2004 Below is a schedule of the City's capital assets, net of accumulated depreciation (in thousands): September 30, September 30, Amount Increase Percent Increase Governmental Activities: 2004 1 2003 (Decrease) I (Decrease) Land $ 323,714 $ 323,095 $ 619 0.2% Buildings 88,815 87,435 1,380 1.6% Machinery and Equipment 16,816 19,577 (2,761) -14.1% Construction in Progress 12,992 11,817 1,175 9.9% Joint Venture 1,339 328 1,011 308.2% Infrastructure 133,629 138,953 (5,324) -3.8% Total Governmental Activities 577,305 581,205 (3,900) -0.7% Business Activities: Land $ 7,840 $ 7,839 $ 1 0.0% Buildings 30,401 31,435 (1,034) -3.3% Machinery and Equipment 6,440 3,833 2,607 68.0% Construction in Progress 8,070 8,071 (1) 0.0% Infrastructure 40,322 37,956 2,366 U% Total Business Activities 93,073 19,134 3,939 4,4% Total Capital Assets $ 670,378 $ 670,339 $ 39 0.0% Capital assets from governmental activities decreased $3,900,000 (-0.7%) while capital assets from business activities increased $3,939,000(4.4%). The increase was largely due to infrastructure additions. Further information on the City's capital assets can be found in note I I of the financial statements. General Fund Budgetary Highlights Comparing the fiscal year 2003/2004 General Fund original (or adopted) budget for expenditures and transfers amount of$146,920,090 to the final budgeted amount of$146,947,090 shows a net decrease of$73,000. Included in original budget amount is$2,757,000 of prior year encumbrance carryover into fiscal year 2003/2004. General Fund actual expenditures were $13 million less than final budgeted expenditures. This was largely the result of significant spending freezes and less than expected increases in medical costs during the year. Economic Factors And Next Year's Budgets And Rates The key assumptions in the General Fund revenue forecast for fiscal year 2004/2005 were: ■ Stabilization of local revenues due to recently passed statewide legislation ■ Modest,consistent general economic growth ■ Strong growth in property tax revenues Contacting the City's Financial Management This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report, separate reports of the City's component units or need any additional financial information please contact: Robert Sedlak, Principal Accountant City of Huntington Beach 2000 Main Street Huntington Beach, California, 92648 Phone (714)536-5907 E-mail. rsedlak@surfcity-hb.org. 12 THIS PAGE LEFT BLANK INTENTIONALLY ` 1 i 1 � BASIC FINANCIAL STATEMENTS 1 1 1 1 1 1 1 1 1 1 1 1 1 CITY OF HUNTINGTON BEACH STATEMENT OF NET ASSETS SEPTEMBER 30,2004 (IN THOUSANDS) Governmental Business-Type Total ASSETS: Activities Activities Cash and Investments $ 22,685 $ 31,689 $54,374 Receivables 20,225 7,630 27,855 Inventory - 1,157 1,157 Other Assets 3,705 - 3,705 Subtotal 46,615 40,476 87,091 Restricted Assets: Cash and Investments 39,660 32,410 72,070 Cash with Fiscal Agent 22,236 - 22,236 Receivables 14,967 - 14,967 Land Held for Resale 2,835 - 2,835 Total Restricted Assets 79,698 32,410 112,108 Capital Assets: Non-Depreciable 338,045 15,910 353,955 Depreciable 239,260 77,163 316,423 Total Capital Assets 577,305 93,073 670,378 TOTAL ASSETS $ 703,618 $ 165,959 $ 869,577 LIABILITIES: Accounts Payable $ 3,910 $ 3,682 $ 7,592 Accrued Payroll 4,572 145 4,717 Deposits 1,430 1,718 3,148 Claims Payable 5,100 - 5,100 Subtotal 15,012 5,545 20,557 Liabilities Payable from Restricted Assets: ' Accounts Payable 11,573 - 11,573 Accrued Interest Payable 761 - 761 Deferred Revenue 3,438 - 3,438 Deposits 2,874 - 2,874 Total Liabilities Payable from Restricted Assets 18,646 - 18,646 Long-Term Obligations: Long-Term Obligations Due Within One Year 10,555 194 10,749 Long-Term Obligations Due in More than One Year 159,415 698 160,114 Total Long-Term Obligations 169,970 892 170,862 TOTAL LIABILITIES 203,628 6,437 210,065 NET ASSETS: Investment in Capital Assets,Net of Related Debt 448,217 92,890 541,107 Restricted for: Debt Service 12,003 - 12,003 Capital Projects 12,690 - 12,690 Other Purposes 36,358 32,968 69,326 Total Restricted Net Assets 61,051 32,968 94,019 Unrestricted (9,278) 33,664 24,386 TOTAL NET ASSETS $ 499,990 $ 159,522 $659,512 See Independent Auditors'Report and Notes to the Financial Statements r 13 CITY OF HUNTINGTON BEACH STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED SEPTEMBER 30,2004 (In Thousands) Program Revenues Net(Expense)Revenue and Changes in Net Assets Charges for Operating _ Capital Current Grants and Grants and Governmental Business-Type Expenses Services Contributions Contributions Activities 1 Activities Total Functions/Programs Governmental Activities: City Council $ 280 $ $ $ $ (280) $ $ (280) City Administrator 1,188 46 - (1,142) (1,142) City Treasurer 1,541 - (1,541) (1,541) City Attorney 2,775 (2,775) (2,775) City Clerk 717 (717) (717) Administrative Services 6,348 (6,348) - (6,348) Planning 2,396 1,403 (993) (993) Building 2,858 4,513 1,655 1,655 Fire 20,000 1,183 47 200 (18,570) (18,570) Information Systems 6,423 - - - (6,423) _ (6,423) Police 40,686 1,605 317 233 (38,531) (38,531) Economic Development 19,372 5 3,527 - (15,840) (15,840) Community Services 15,735 12,611 351 1,877 (896) (896) Library Services 4,138 4,290 166 3 321 321 Public Works 30,277 4,220 1,882 3,468 (20,707) (20,707) Non-Departmental 4,054 589 7 1,603 (1,855) (1,855) Interest on Long-Term Debt 6,001 - - - (6,001) _ (6,001) Total Governmental Activities 164,789 30,419 6,343 7,384 (120,643) (120,643) Business-type Activities: Water Utility 24,643 29,758 - 10,414 15,529 15,529 Sewer Service 4,042 6,373 2,331 2,331 Refuse Collection 9,806 10,412 - - 606 606 Emerald Cove Housing 409 781 372 372 Emergency Fire Medical 5,605 5,650 = _ = 45 45 Hazmat Service 204 187 (17) (17) Ocean View Estates 62 258 - - 196 196 Total Business Type Activities 44,771 53,419 - 10,414 19,062 19,062 Total Business and Government Type Activities $ 209,560 $ 83,838 $ 6,343 $ 17,798 (120,643) 19,062 (101,581) General Revenues: Taxes: Property Taxes 47,405 47,405 Sales Taxes 28,273 28,273 Utility Taxes 19,424 = 19,424 Other Taxes 11,365 11,365 Total Taxes 106,467 - 106,467 Other General Revenue: Use of Money and Property 3,528 1,085 4,613 From Other Agencies 14,406 - 14,406 Other: 7,328 - 7,328 Total Other General Revenue 25,262 1,085 26,347 Transfers 6,126 (6,126) Total General Revenues and Transfers 137,855 (5,041) 132,814 Change in Net Assets 17,212 14,021 31,233 Net Assets-Beginning of Year 484,398 145,501 629,899 Prior Period Adjustment-Note 13 (1,620) (1,620) Net Assets-Beginning of Year(Restated) 482,778 145,501 628,279 Net Assets-End of Year $ 499,990 $ 159,522 $ 6592512 See Independent Auditor's Report and Notes to the Financial Statements 14 CITY OF HUNTINGTON BEACH BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30,2004 Other Major Governmental Funds General Fund Redevelopment Public Financing Grants Property Tax Total Major Other Total Agency Authority Refund Governmental Governmental ASSETS: Funds Funds Cash and Investments $ 22,685 $ 7,324 $ 339 $ 4,726 $ 1,874 $ 36,948 $ 25,397 $ 62,345 Cash and Investments with Fiscal Agent - 2,464 T082 - 12,320 21,866 370 22,236 Taxes Receivable 17,169 2,504 - - - 19,673 1,077 20,750 Other Receivables 3,056 6,959 88 4,118 9 14,230 211 14,441 Due from Other Funds - - - - - - 1,003 1,003 Inventory - - - - - Land Held for Resale - 2,835 2,835 - 2,835 Other Assets 2,412 - - - - 2,412 1,293 3,705 TOTAL ASSETS $ 45,322 $ 22,086 $ 7,509 $ 8,844 $ 14,203 $ 97,964 $ 29,351 $ 127,315 LIABILITIES AND FUND BALANCES: LIABILITIES Accounts Payable $ 3,910 $ 11 $ $ 205 $ 9,834 $ 13,960 $ 1,522 $ 15,482 Accrued Payroll 4,521 5 20 - 4,546 26 4,572 Due to Other Funds - - - - 1,003 1,003 Deposits Payable 1,430 1,513 67 - 3,010 1,294 4,304 Deferred Revenue 4,029 6,427 3,437 13,893 - 13,893 Claims Payable 5,100 - - - 5,100 5,100 TOTAL LIABILITIES 18,990 7,956 3,729 9,834 40,509 3,845 44,354 FUND BALANCES Reserved for: Encumbrances 2,113 117 5,115 - 7,345 3,389 10,734 Long-Term Receivables - 1,488 - 1,488 - 1,488 Debt Service 60 7,509 7,569 7,569 Capital Projects 9,630 - - 9,630 9,630 Land Held for Resale - 2,835 - - - 2,835 - 2,835 Total Reserved Fund Balance 2,113 14,130 7,509 5,115 28,867 3,389 32,256 Unreserved,Designated: Designated for Future Expenditures(Reported in): 3,124 - - - 3,124 - 3,124 Special Revenue Funds 563 563 Debt Serviced Funds Capital Projects Funds - - 10,017 10,017 Designated for Economic Uncertainties 10,359 10,359 - 10,359 Unreserved,Undesignated (Reported in): General Fund 10,736 10,736 - 10,736 Special Revenue Funds - - - 11,247 11,247 Debt Service Funds 4,369 4,369 65 4,434 Capital Projects Funds - - - 225 225 Total Unreserved 24,219 - - - 4,369 28,588 22,117 50,704 TOTAL FUND BALANCES 26,332 14,130 7,509 5,115 4,369 57,455 25,506 82,961 TOTAL LIABILITES AND FUND BALANCES $ 45,322 $ 22,086 $ 7,509 $ 8,844 $ 14,203 $ 97,964 $ 29,351 $ 127,315 See Independent Auditor's Report and Notes to the Financial Statements i 1 15 CITY OF HUNTINGTON BEACH RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS ' SEPTEMBER 30,2004 (In Thousands) Amounts reported for governmental activities in the statement of net assets are different because: Total Fund Balances Governmental Funds $ 82,961 Net capital assets used in governmental activities are not financial resources and,therefore, are not reported in the funds 577,305 Other long-term assets are not available to pay for current-period 10,455 expenditures and,therefore,are deferred in the funds Accrued Interest Payable not Recorded in Liabilities (761) Long-term Liabilities, including bonds and certificates of participation payable are due and payable and therefore are not ' reported in the funds. (169,970) Net Assets of Governmental Activities $ 499,990 ' See P Independent Auditor's Report and Notes to the Financial Statements 16 CITY OF HUNTINGTON BEACH STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Other Major Governmental Funds Redevelopment Public Financing Property Tax REVENUES: General Fund Agency Authority Grants Refund Property Taxes $33,797 $ 9,547 $ $ $ Sales Taxes 26,101 - Utility Taxes 19,424 - Other Taxes 10,046 1,319 Licenses and Permits 7,732 - Fines and Forfeitures 4,342 - From Use of Money and Property 8,924 852 548 646 37 From Other Agencies 10,146 - - 8,988 - Charges for Current Service 7,819 - - - Other 3,709 1,360 85 TOTAL REVENUES $132,040 13,078 548 9,719 37 EXPENDITURES Current: City Council 280 - - - - City Administrator 1,165 - City Treasurer 1,519 City Attorney 2,771 City Clerk 712 Administrative Services 6,295 - Planning 2,237 145 Building 2,830 - Fire 18,758 260 , Information Systems 5,117 - Police 39,140 - 245 Economic Development 842 2,983 1,057 Community Services 10,345 - 266 Library Services 2,525 131 Public Works 14,684 602 Non-Departmental 11,222 - 39 10,368 Capital Outlay - 13,137 - 3,131 - Debt Service: Principal 1,786 3,006 3,285 85 - Interest 258 1,685 3,642 175 180 TOTAL EXPENDITURES 122,486 20,811 6,927 6,136 10,548 EXCESS(DEFICIENCY)OF REVENUES OVER (UNDER)EXPENDITURES 9,554 (7,733) (6,379) 3,583 (10,511) OTHER FINANCING SOURCES(USES) Transfers In 11,092 - 6,633 283 - Proceeds of Long-Term Debt - 736 - - 12,500 Transfers Out (9,288) (4,438) (8,830) (45) TOTAL OTHER FINANCING SOURCES(USES) 1,804 (3,702) (2,197) 238 12,500 INCREASE(DECREASE)IN FUND BALANCES 11,358 (11,435) (8,576) 3,821 1,989 FUND BALANCE-BEGINNING OF YEAR 14,974 25,565 16,085 1,294 2,380 FUND BALANCE-END OF YEAR $ 26,332 $ 14,130 $ 7,509 $ 5,115 $ 4,369 See Independent Auditors'Report and Notes to the Financial Statements 17 Other Total Major Governmental Governmental Funds Funds Total $ 43,344 $ 157 $ 43,501 26,101 2,172 28,273 ' 19,424 - 19,424 11,365 11,365 7,732 4 7,736 4,342 - 4,342 11,007 849 11,856 19,134 7,187 26,321 7,819 2,708 10,527 5,154 1,872 7,026 155,422 14,949 170,371 280 - 280 1,165 1,165 1,519 1,519 2,771 2,771 712 712 6,295 = 6,295 2,382 2,382 2,830 108 2,938 19,018 - 19,018 5,117 198 5,315 39,385 29 39,414 4,882 250 5,132 10,611 1,107 11,718 ' 2,656 1,089 3,745 15,286 1,470 16,756 21,629 2,190 23,909 16,268 13,216 29,484 8,162 556 8,718 5,940 47 5,987 166,908 20,250 187,158 (11,486) (5,301) (16,787) 18,008 12,266 30,274 ' 13,236 - 13,236 (22,601) (1,547) (24,148) 8,643 10,719 19,362 (2,843) 5,418 2,575 60,298 20,088 80,386 $ 57,455 $ 25,506 $ 82,961 Ig CITY OF HUNTINGTON BEACH RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30,2004 (In Thousands) Net Changes in Fund Balances- Total Governmental funds $ 2,575 Amounts reported for governmental activities in the Statement of Activities are different because: CAPITAL EXPENDITURES -Governmental funds report capital outlays as expenditures. 7,411 However, in the Statement of Activities,the cost of these assets is allocated over their estimated useful lives and reported as depreciation expense. DONATED ASSETS - Infrastructure and other capital assets donated from developers and 1,906 other sources that increased the City's capital assets. DEPRECIATION EXPENSE - Depreciation is not reported in the governmental funds. (13,219) However, it is recorded in the Statement of Activities. ACCRUAL OF REVENUES -Certain revenues in the Statement of Activities do not meet 3,903 the "availability"criteria for revenue recognition in the governmental funds and are not reported in the governmental funds as revenue. LIABILITIES NOT LIQUIDATED WITH CURRENT RESOURCES-Some expenses reported in the statement of activities do not require the use of current financial resources (319) and, therefore,are not reported as expenditures in governmental funds. LONG-TERM DEBT PROCEEDS -Issuances and changes in long-term debt(bonds, leases,certificates of participation, compensated absences, etc) provide current financial (13,236) resources to governmental funds, while repayments of this debt consumes the current financial resources of governmental funds. These transactions, however, have no effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, etc. when debt is first issued. These amounts are deferred and amortized in the Statement of Activities. CLAIMS PAYABLE- Due to the City's recording of long-term insurance claims 19,473 PAYMENTS OF LONG-TERM DEBT- on Principal payments long-term debt are p P y g recorded an expenditure in the governmental funds and a reduction of liability in the 8,718 government-wide statements. Change in Net Assets of Governmental Activities $ 17,212 See Independent Auditors'Report and Notes to the Financial Statement t 19 CITY OF HUNTINGTON BEACH STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30,2004 (In Thousands) Non-Major Sewer Service Total Major Enterprise ASSETS Water Fund Fund Refuse Fund Enterprise Funds Funds Total Current Assets: Cash and Investments $ 17,533 $ 9,911 $ $ 27,444 $ 4,245 $ 31,689 Restricted Cash and Investments 32,410 32,410 32,410 Other Receivables 3,160 403 594 4,157 1,379 5,535 Inventories 1,157 - - 1,157 - 1,157 Unbilled Receivable 1,436 264 395 2,095 2,095 Due from Other Funds 495 495 495 Total Current Assets 56,191 10,578 989 67,758 5,624 73,382 Capital Assets: Land 3,907 3,907 3,933 7,840 Buildings and Improvements 30,019 3,720 - 33,739 4,662 38,401 Improvements other than Buildings - - _ - - Machinery and Equipment 9,096 224 9,320 1,257 10,577 Infrastructure 52,793 37,578 90,371 90,371 Construction in Process 8,070 - - 8,070 - 8,070 Less Accumulated Depreciation (41,531) (18,573) - (60,104) (2,082) (62,186) Total Capital Assets 62,354 22,949 85,303 7,770 93,073 TOTAL ASSETS 118,545 33,527 989 153,061 13,394 166,455 LIABILITIES Current Liabilities: Accounts Payable 2,274 509 775 3,558 124 3,682 Accrued Payroll 75 23 3 101 44 145 Due to Other Funds - - 495 495 - 495 Deposits Payable 1,669 1,669 49 1,718 Current Portion of Claims and Leases 194 - - 194 194 Total Current Liabilities 4,212 532 1,273 6,017 217 6,234 Liabilities Payable from Restricted Assets Non-Current Liabilities: Compensated Absences 429 169 - 598 112 710 Capital Leases 183 - - 183 - 193 Less Current Portion of Claims and Leases (194) (194) (194) Total Non Current Liabilities 418 169 587 112 699 TOTAL LIABILITIES 4,630 701 1,273 6,604 329 6,933 NET ASSETS Invested in Capital Assets,Net of Related Debt 62,171 22,949 85,120 7,770 92,890 Restricted for: Other Purposes 32,968 - - 32,968 - 32,968 Unrestricted 18,776 9,877 (284) 28,369 5,295 33,664 TOTAL NET ASSETS $113,915 $ 32,826 $ (284) $ 146,457 $ 13,065 $ 159,522 See Independent Auditors'Report and Notes to the Financial Statements 20 CITY OF HUNTINGTON BEACH STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (In Thousands) Non-Major Sewer Service Total Major Enterprise Water Fund Fund Refuse Fund Enterprise Funds Funds Total OPERATING REVENUES: Sales $ 28,884 $ - $ - $ 28,884 $ - $ 28,884 Rentals - - - 1,037 1,037 Fees for Service - 6,373 10,357 16,730 5,837 22,567 Other 874 - 55 929 2 931 TOTAL OPERATING REVENUES 29,758 6,373 10,412 46,543 6,876 53,419 OPERATING EXPENSES: Water Purchases 9,122 - 9,122 - 9,122 Supplies and Operations 4,643 3,224 9,707 17,574 6,047 23,121 Engineering 2,581 - - 2,581 - 2,581 Production 2,692 - - 2,692 - 2,692 Maintenance 2,228 - - 2,228 - 2,228 Water Meters 991 - - 991 - 991 Water Quality 267 267 267 Depreciation 2,119 818 - 2,937 233 3,170 TOTAL OPERATING EXPENSES 24,643 4,042 9,707 38,392 6,280 44,672 OPERATING INCOME(LOSS) 5,115 2,331 705 8,151 596 8,747 NON-OPERATING REVENUES (EXPENSES): Interest Income 908 110 - 1,018 67 1,085 Capital Improvement Fees 7,838 - - 7,838 - 7,838 Interest Expense - - (99) (99) - (99) TOTAL NON-OPERATING REVENUES (EXPENSES) 8,746 110 (99) 8,757 67 8,824 CHANGE IN NET ASSETS BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS: 13,861 2,441 606 16,908 663 17,571 TRANSFERS AND CAPITAL CONTRIBUTIONS: Transfers Out (5,575) - - (5,575) (551) (6,126) Capital Contributions 2,576 2,576 - 2,576 TOTAL TRANSFERS AND CAPITAL CONTRIBUTIONS (5,575) 2,576 - (2,999) (551) (3,550) TOTAL CHANGE IN NET ASSETS 8,286 5,017 606 13,909 112 14,021 NET ASSETS-BEGINNING OF YEAR 105,629 27,809 (890) 132,548 12,953 145,501 NET ASSETS-END OF YEAR $113,915 $ 32,826 $ (284) $ 146,457 $ 13,065 $ 159,522 See Independent Auditors'Report and Notes to the Financial Statements 1 21 CITY OF HUNTINGTON BEACH STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (In Thousands) Total Sewer Major Non-Major Water Service Refuse Enterprise Enterprise Fund Fund Fund Funds Funds Total Cash Flows from Operating Activities: Cash Received from Customers and Users $ 31,198 $ 6,624 $ 10,843 $ 48,665 $ 6,909 $ 55,574 Cash Paid to Employees for Services (4,986) (1,334) (167) (6,487) (2,862) (9,349) Cash Paid to Suppliers of Goods and Services (22,614) (1,555) (10,577) (34,746) (3,399) (38,145) Net Cash Provided(Used)by Operating Items 3,598 3,735 99 7,432 648 8,080 Cash Flows from Noncapital Financing Activities: Transfers Out (551) (551) Net Cash Provided(Used)by Non Capital Financing Activities - - - (551) (551) Cash Flows from Capital and Related Financing Activities: Purchase of Plant,Property,and Equipment (4,443) - (4,443) (167) (4,610) Proceeds from Sale of Plant,Property,and Equipment = 76 - 76 76 Capital Surcharge 7,838 7,838 7,838 Net Cash Provided(Used)by Capital and Related Financing Activities 3,395 76 - 3,471 (167) 3,304 Cash Flows from Investing Activities Cash Received from Investments 908 110 - 1,018 67 1,085 Interest Expense - - (99) (99) - (99) Net Increase in Cash and Cash Equivalents 7,901 3,921 - 11,822 (3) 11,819 Cash and Cash Equivalents,Beginning of Year 42,042 5,990 48,032 4,248 52,280 Cash and Cash Equivalents,End of Year $ 49,943 $ 9,911 $ - $ 59,854 $ 4,245 $ 64,099 Reconciliation of Operating Income to Net Cash Provided (used)by Operating Activities Operating Income(Loss) $ 5,115 $ 2,331 $ 705 $ 8,151 $ 596 $ 8,747 Adjustments to Reconcile Operating income to Net Cash Provided(Used)by Operating Activities Depreciation 2,119 818 2,937 233 3,170 Decrease(Increase)in Accounts Receivable 1,164 250 432 1,846 36 1,882 Decrease(Increase)in Unbilled Receivables 275 - (1) 274 - 274 Decrease(Increase)in Due from Other Funds 1,032 - 1,032 - 1,032 Decrease(Increase)in Inventory (3) (3) (3) Increase(Decrease)in Accounts Payable (587) 319 9 (259) (165) (424) Increase(Decrease)in Accrued Payroll (158) (30) (14) (202) (69) (271) Increase(Decrease)in Due to Other Funds - - (1,032) (1,032) - (1,032) Increase(Decrease)in Claims Payable (67) (67) (67) Increase(Decrease)in Advances from Other Funds (5,575) - (5,575) - (5,575) Increase(Decrease)in Deposits 251 - - 251 10 261 Increase(Decrease)in Compensated Absences 32 47 79 7 86 Net Cash Provided(Used)by Operating Activities $ 3,598 $ 3,735 $ 99 $ 7,432 $ 648 $ 8,080 See Independent Auditors'Report and Notes to the Financial Statements 22 CITY OF HUNTINGTON BEACH STATEMENT OF FIDUCIARY FUND NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30,2004 Trust Fund-Retirement Assets: Total Agency Funds Supplemental Fund Cash and Investments $ 7,751 $ 11,881 Cash with Fiscal Agent 19,841 - Accounts Receivable,Net 86 55 Interest Receivable - Total Assets $ 27,678 $ 11,936 Liabilities: Due to Bondholders $ 20,893 $ - Held for Others 6,785 - Net Pension Obligation - 8,409 Total Liabilities 27,678 8,409 Net Assets - 3,527 Total Liabilities and Net Assets $ 27,678 $ 11,936 CITY OF HUNTINGTON BEACH STATEMENT OF CHANGES IN FIDUCIARY FUND NET ASSETS TRUST FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 Trust Fund-Retirement Additions: Supplemental Fund Employer Contributions $ 3,002 Interest Income 198 Total Additions $ 3,200 Deductions: Benefits 1,855 Change in Net Assets 1,346 Net Assets-Beginning of Year 10,523 Prior Period Adjustment-Note 13 (8,342) Net Assets-Beginning of Year,Restated 2,181 Net Assets-End of Year $ 3,527 See Independent Auditor's Report and Notes to the Financial Statements 23 1 1 NOTES TO THE i FINANCIAL STATEMENTS 1 1 i 1 1 i i i 1 1 THIS PAGE INTENTIONALLY LEFT BLANK ' i 1 1 1 i 1 i 1 i "'YIN;t-0J't'jy- r wr_ City of Huntington Beach. ; = Notes to the Financial tateme is For the Year Ended September 30, 2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A.Reporting Entity: The City of Huntington Beach is the primary government. It was incorporated in 1909, is a charter, full-service city. The form of government is Council-Manager. Component units are legally separate organizations for which the City Council is financially accountable, or organizations that if excluded from the accompanying financial statements, would make them misleading. The component units described below are blended (presented as if they are part of the primary government) with the primary government for financial reporting purposes because either the component units have governing bodies identical to the City's (the City Council) or provide services exclusively to the City. Financial accountability means the appointment of a voting majority of the component unit's board and either the ability to impose will by the City or the possibility that the component unit will provide a financial benefit or impose a financial burden on the City. ■ Redevelopment Agency of the City of Huntington Beach (Redevelopment Agency) —This entity was formed in 1967 to renovate older areas in the City. The City Council serves as its governing body and adopts its annual budget. The Redevelopment Agency is financially dependent on the City for all of its operations. Separately prepared financial statements are available for the Redevelopment Agency from the City's Finance Department. ■ Huntington Beach Public Financing Authority (Public Financing Authority) —This Corporation was formed in March 1988 to issue debt to finance public improvements and other capital purchases for the City and Redevelopment Agency. The Public Financing Authority's governing body is the City Council, which also adopts the annual budget.The Public Financing Authority is financially dependent on the City. ■ The City of Huntington Beach Community Facilities Districts 1990-1, 2000-1, and Boeing (Community Facilities Districts), and the Reservoir Dill 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 expenditures for the public improvements are recorded in capital projects funds. The Community Facilities Districts' debt is not an obligation of the City. There are no separate financial statements prepared for these entities. ■ The Huntington Beach Auto Business Improvement District (Business Improvement District) was formed in 1992 to fund capital improvements within this non-contiguous district. The Business Improvement District's governing body is the City Council. The business owners within the district petitioned the City Council under the Streets and Highways Code to form the district, which assisted in the funding of an electronic reader board sign advertising the auto dealers.There are no separate financial statements for this entity. B. Government-Wide Financial Statements: The Government-Wide Financial Statements include a Statement of Net Assets, Statement of Activities, and Changes in Net Assets. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. These statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period,in which the liability is incurred. (continued) 24 City of HuntingtonBeach Notes to the Financial_ Statements For the Year Ended September 30, 2004 (I-B Continued) The statement of activities demonstrates the degree with which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expenses are allocated to the various functions based on a proportionate use of services. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for current services, 2) operating grants and contributions, and 3) capital grants and contributions. Taxes and other items not properly included among program revenues are reported as general revenues. Government-wide financial statements do not provide information by fund or account group. They simply distinguish between governmental and business activities. The City's statement of net assets includes both current and non-current assets and liabilities. Financial Statement Classification In the Government-Wide financial statements, net assets are classified in the following categories: ® Invested In Capital Assets,Net of Related Debt: This category groups all capital assets, including infrastructure,into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category. ■ Restricted Net Assets: This category presents restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. This category presents restrictions placed on the categories of Capital Projects, Debt Service, and Specific Projects and Programs as established by the City Council. • Unrestricted Net Assets: Represent the net assets of the City, not restricted for any project or other purpose. C. Fund Financial Statements: Separate fund financial statements are prepared for governmental funds, proprietary funds, and fiduciary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. The City applies all applicable GASB pronouncements (including all NCGA Statements and Interpretations currently in effect) as well as the following pronouncements issued on or before November 30, 1989, to the business type activities, unless those pronouncements conflict with or contradict GASB pronouncements, Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the committee on Accounting Procedure. The City applies all applicable FASB Statements and Interpretations issued after November 30, 1989, except those that conflict with or contradict GASB pronouncements. Measurement Focus, Basis of Accounting and Financial Statement Presentation All governmental funds are accounted for on a spending or "current financial resources" measurement focus and (continued) 25 City. of Huntington Beach ` Notes to the Financial. Statements For the Year Ended Se tetra r �3, 2004 CN I-C continued the modified accrual basis of accounting. Only current assets and current liabilities are included on the Balance. Sheets. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred. In the Fund financial statements, reserves and designations segregate portions of fund balance that are either not available or have been earmarked for specific purposes. The various reserves and designations are established by actions of the City Council and Management and can be increased,reduced or eliminated by similar actions. The City reports the following major funds: Governmental Funds ® General Fund Used to account for activity not required to be accounted for in another fund ® Redevelopment Agency Accounts for the acquisition and construction of capital assets and the related debt service activity for certain projects in the City's Redevelopment project areas Public Financing Authority Accounts for the activity of the Huntington Beach Public Financing Authority ® Grant Fund Accounts for revenues and expenses of grant-related activity I ® Property Tax Refund Fund Records the activity relating to the refund of property taxes for the Jarvis case. Proprietary Funds Water Fund Used to account for water sales to customers Sewer Service Fund Accounts for user fees charged to residents and businesses for sewer services ■ Refuse Fund Used to account for the activities of the City's refuse program. Governmental Fund Financial Statements: Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues,Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in net assets as presented in these statements to the net assets presented in the Government-Wide Financial Statements. The City presents all major funds that met those qualifications. (continued) i26 City of Huntingtoneach w = Notes to the Financial Statements For the Year Ended September 30, 200 1-C continued Proprietary Fund Financial Statements: Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Fund Net Assets, and a Statement of Cash Flows for each major proprietary fund and non-major funds aggregated. Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or non-current) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Fund Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. Fiduciary Fund Financial Statements: Fiduciary Fund Financial Statements include a Statement of Net Assets and a Statement of Changes in Net Assets for Trust Funds. The City's Fiduciary funds represent Agency Funds, which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The Agency funds are accounted for on the accrual basis of accounting. Contributions made are funded by a percentage of payroll and are recognized when the payroll is incurred. Fiduciary funds are not presented in the government-wide financial statements because these funds do not represent net assets available to the City. Reconciliations of Financial Statements: Reconciliation of the Fund financial statements to the Government-Wide financial statements is provided to explain the differences created by the integrated approach of GASB Statement No. 34. D. Cash and Investments: The City records investments at fair value. The City pools cash resources of its various funds to facilitate cash management. Cash in excess of current requirements is invested and reported as investments. It is the City's intent to hold investments until maturity. However, the City may, in response to market conditions, sell investments prior to maturity in order to improve the quality, liquidity or yield of the portfolio. Interest earnings are apportioned among funds based on ending accounting period cash and investment balances. The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and highly liquid investments with original maturities of three months or less at the time of acquisition. In accordance with GASB Statement No. 31,Accounting and Financial Reporting for Certain Investments and for External Investment Pools, highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. Market value is used as fair value for those securities for which market quotations are readily available. (continued) 27 City of Huntingtoneach - Notes to the Financial Statements�. .. For the Year Ended Se tehcr 30, 2004 I-D Continued The City participates in the Local Agency Investment Fund (LAIF), an investment pool managed by the State of California. LAIF has invested a portion of the pooled funds in Structured Notes and Asset-Backed Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition,these Structured Notes and Asset-Backed Securities are subject to market risk as a result of changes in interest rates. The City early-implemented GASB Statement 40 (Deposit and Investment Risk Disclosures)The City's investment policy is further discussed in note 2. F. Capital Assets: Capital assets, which include property, plant, equipment, and infrastructure, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets have an acquisition cost of$5,000 or greater ($50,000 for infrastructure) and a useful life of two years or more. The City records all purchased capital assets at historical cost (where historical records are available) and at estimated historical cost where no historical records exist. Capital assets acquired from gifts or contributions are recorded at fair market value at the time received, or in the case of infrastructure assets, at City Council acceptance date. In the Government-Wide and proprietary fund financial statements, depreciation is recorded on the on the straight-line method over the estimated useful lives of the assets shown below and charged to the respective fund. No depreciation is recorded in the governmental funds of the fund financial statements. Production,pumping transmission and distribution plant 10 to 15 years General Plant 20 to 50 years Transportation Equipment. 5 to 30 years ` Infrastructure 50 Years Interest is capitalized on proprietary fund assets acquired with tax-exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense incurred from the date of borrowing until completion of the project with interest earned on the invested proceeds over the same period. F.Inventories: Proprietary inventories are valued at weighted-average cost. There are no inventories in governmental funds. G.Interfund Transactions: As a general rule, interfund transactions have been eliminated from the government-wide financial statements. Exceptions to this rule are payments in-lieu or charges for current service between the City's enterprise activity and the City's General Fund. Elimination of these transactions would distort the direct costs and program revenues for the various functions. Certain eliminations have been made regarding interfund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. Numerous transactions occur between funds of the City resulting in operating transfers, amounts due to or from other funds. Amounts due to or from are the current (due within one year) portion of moneys that are to be paid or to be received from other funds. (continued) 28 City Of Huntington Beach Notes to the Financial, Statements Or the Year Ended September 30, 200 (1-G continued) H. Long-Term Obligations: In the government-wide and proprietary fund financial statements, long-term obligations are recorded as liabilities in the applicable governmental activities, business-type activities, or proprietary fund-type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the debt for all issues after October 1, 2001. Premiums and discounts for debt issued before October 1, 2001 are not recorded or amortized. In the governmental fund financial statements, bond discounts and premiums are recognized as other financing source or use. Issuance costs are recorded as a current year expenditure. 1. Employee Compensated Absences: The City records the cost of all accumulated and unused leave time (vacation, sick, comp) as a liability when earned in the government-wide financial statements. In the fund financial statements these amounts are recorded as expenditures in the years paid since it is the City's policy to pay these from future financial resources, rather than available, spendable resources. J. Property Tax Revenue: Property tax in California is levied according to Article 13-A of the California Constitution. The basic levy is a countywide-levy of one percent of total assessed valuation and is allocated to county governments, school districts, cities and special districts. Additional levies require two-thirds approval by voters and are allocated directly to the specific government. In the government-wide financial statements, property tax is recorded when earned, regardless of when levied, due, or received. In the fund financial statements, property tax revenue is recognized in the fiscal year levied provided that revenue is collected in time to pay current year liabilities. Deferred property tax revenue represents property taxes related to the current fiscal year that are collected more than 60 days after the fiscal year end. Since the City's fiscal year differs from the County's property tax year, there is a difference between the property tax revenue recorded on the fund financial statements and the government-wide financial statements which is noted as a reconciling item in both the Reconciliation of the Statements of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities and the Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets. The County acts as a collection agent for property tax for all of the local governmental units. Property taxes are normally collected twice per year. The property tax calendar is as follows. ■ Lien Date-January 1 -Prior Fiscal Year • Levy Date-July 1 -Prior Fiscal Year ■ Due Date, First Installment-November 10 ® Due Date, Second Installment-February 10 Delinquent Date, First Installment-December 10 ® Delinquent Date, Second Installment-April 10 (continued) 29 City, of HuntingtonBeach Notes to t c Financial Statements For the Year Ended September ber 30, 2004 (14 continued) The taxes are paid to the local governments periodically during the year. Below are the dates of the payments from the County: ■ Payments of First Installment November to December m Balance of First Installment February 1 ® Payments of Second Installment March to April m Balance of Second Installment July 26 K. Allocation of Interest Income Among Funds: The City pools all non-restricted cash for investment purchases and allocates interest income based on month-end cash balances. Funds that have restricted cash record interest income in the respective fund. L. Cash Flow Statements: For purposes of the Statement of Cash Flows, the Proprietary Fund types consider all cash and investments to be cash equivalents, as these funds participate in the citywide cash and investment pool. M. Estimates: The accompanying financial statements require management to make estimates and assumptions that effect certain report amounts and disclosures.Actual results could differ from those estimates. 2. CASH AND INVESTMENTS: Cash and investments were recorded in the government-wide statements as follows (in thousands): Investment Maturities(In Years) DEPOSITS: F Fair Value I Less than 1 1 to 3 3 to 5 More than 5 Total 1 Demand Accounts $ 2,010 $ 2,010 $ $ - $ 2,010 INVESTMENTS: - US Treasuries 9,379 998 6,376 2,005 9,379 US Agencies 76,332 23,576 37,051 15,705 76,332 Guaranteed Investment Contracts 8,190 - - - 8,190 8,190 Commercial Paper 10,961 10,961 - - 10,961 Mutual Funds 877 877 877 Medium Term Notes 1,018 1,018 1,018 Local Agency Investment Fund 39,913 39,913 - - 39,913 Subtotal of Investments 146,670 77,343 43,427 17,710 8,190 146,670 Total Deposits and Investments $ 148,680 $ 79,353 $ 43,427 $ 17,710 $ 8,190 $ 148,690 At September 30, 2004 the City had the following investments and maturities (amounts in thousands): Statement of Net Assets: Cash and Investments $ 39,850 Restricted Assets(Cash and Cash Equivalents) 86,594 Cash with Fiscal Agent-Restricted 22,236 Total Per Statement of Net Assets 148,680 Fiduciary Funds: Cash and Investments 19,631 Cash with Fiscal Agent-Restricted 19,841 Total Fiduciary Funds 39,472 Total Cash and Investments $ 188,153 (continued) 30 City of Huntington Beach Notes to the Financial Statements For the Year Ended September ber 30, 2004 (#2 Continued) Interest Rate Risk As a means of limiting exposure to fair value losses arising from interest rates,the City's investment policy limits investments over three years to be 30% or less. Credit Risk State law limits investments in commercial paper and medium term notes to have at least an "A"rating issued by a nationally recognized statistical rating organization. It is the City's policy to limit its investments in these investment types to the top two ratings issued by these rating organizations. As of September 30, 2004, Standard and Poor's rating of the City's investments in commercial paper was Al or better, and Moody's Investor's Service rating was P-L. Standard and Poor's rated the City's investments in medium-term notes AAA or AA, and a rating of AAA or AA, and Moody's Investor Services rated these investments as AAA,AA or A. Concentration of Credit Risk The City's investment policy limits investments in any one issuer, except for U.S. Government Agencies to no more than 10% of the investments. In addition, no more than 60% can be invested in U.S. Government Agencies ma and each investment type has a specific limit. Local Agency Investment Fund As of September 30, 2004, the City held $35,490,000 in callable securities, which amounted to approximately 25% of investments. In addition, the City holds investments with the Local Agency Investment Fund (LAIF), a State of California investment pool, which at September 30, 2004 also included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities, the bulk of which are mortgaged-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest. 3.DEFERRED COMPENSATION: Permanent City employees may defer a portion of their salary under Section 457 of the Internal Revenue Code. This plan permits employees to defer a portion of their salary until future years. The compensation is not available to the employees until termination,retirement, or unforeseen emergency. The City has established a trust for the assets of the plan held by third parties. All property and rights purchased with these assets, as well as all income attributable to them are held in trust for the exclusive benefit of the participant and their beneficiary. The amounts are no longer the property of the City and are not subject to the claims of the City's general creditors. Amounts administered by outside organizations in a trustee capacity are no longer reported as assets of the City. The City does not have fiduciary responsibility for these assets. These amounts are not included in the accompanying financial statements. 4.DEFERRED REVENUE: Certain revenues in governmental funds are deferred until received. The property tax amounts are recognized in the year as revenue in the government-wide financial statements, but are recorded as deferred revenue in the fund financial statements. The other amounts are unearned revenue in both the funds and government-wide financial statements. (continued) Ma 31 City of Huntington Beach Notes to the Financial Statements For the Year Ended September 30, 2004 #4 Continued The amounts are as follows(in thousands): Other Deferred Property Taxes Revenue Funds: (Unavailable) (Unearned) Total General Fund $4,029 $ $4,029 Redevelopment Agency 1,484 4,943 6,427 Grant Fund 3,437 3,437 Total $5,513 $ 8,380 $13,893 5.RETIREMENT PLAN—NORMAL: A. Plan Description: The City contributes to the California Public Employees' Retirement System (CALPERS), an agent, which is a multiple-employer public employee defined benefit pension plan. CALPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CALPERS acts as a common investment and administrative agent for participating public entities within California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of CALPERS annual financial report may be obtained from their executive office: 400 P Street,Sacramento, CA 95814. a.. Employer and Employee Contribution Obligations: The City makes two types of contributions for covered employees. The first contribution represents the amount the City is required to make (the employer rate). The second represents an amount, which is made by the employee, but is reimbursed to the employee by the City (the member rate). The member rate is set by contract and normally remains unchanged. The employer rate is an actuarially established rate,is set by CALPERS, and changes from year to year. The employer rates for the fiscal year ending September 30, 2003 are: October 1,2003 July 1,2004 to to June 30,2004 September 30,2004 Local Miscellaneous 0.000% 0.000% Local Safety 8.997% 25.144% b. Employer and Employee Contribution Obligations: The member rates are as follows: Rate . Local Miscellaneous 7.000% Local Safety 9.000% C. Annual Pension Cost: The City's annual pension cost of$8,123,000 was equal to the City's required and actual contributions. The required contribution was determined as part of a June 30, 2003 actuarial valuation using the entry age normal actuarial cost method. (continued) 32 k'L3N City of Huntington Beach Notes to theFinancial- Statements For the Year Ended September 30, 2004 (5-A:c Continued) CALPERS conducted an actuarial valuation using the entry-age actuarial cost method using a level percent of payroll to determine the City's net pension obligation as of June 30, 2004. Significant assumptions were: ® Average amortization remaining period— 18 Years as of the Valuation Date—closed end • Asset valuation method—3 years smoothed market ® Investment Rate of Return—7.75% ® Projected salary increases—3.25%to 14.45% (safety) and 3.75%to 14.2% (miscellaneous)depending on age, service, and type of employment • Inflation—3.00% a Payroll growth—3.25% ® Individual salary growth—A merit scale varying by duration of employment coupled with an assumed annual inflation component of 3.0% and an annual production growth of.25% Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into CALPERS. Subsequent plan amendments are amortized as a level percent of pay over a closed 20-year period. Gains and losses that occur in the operation of the plan are amortized over a rolling period, which results in an amortization of 10% of the unamortized gains and losses each year. If the plan's accrued liability exceeds the actuarial value of the assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30-year amortization period. d. Trend Information: Fiscal Year Annual Pension Percentage of Net Pension Cost APC Funded Obligation 9/30/2002 $4,642 100% $0 9/30/2003 $5,583 100% $0 9/30/2004 $8,123 100% $0 6.RETIREMENT PLAN—SUPPLEMENTAL: A. Plan Description: The City provides a supplemental retirement plan for all employees hired prior to January 1, 1998. 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 City's contracts with employee bargaining associations establish the plan. These associations must agree to any changes to the plan. The amount will cease upon the employee's death. The amount that is computed as a factor of an employee's normal retirement allowance is computed at retirement and remains constant for his or her life. Of the 1,068 active employees reported on the July 1, 2004 data, only 643 were eligible for plan benefits. No separately prepared financial statements are prepared for this plan and it is not included in the financial report of any other pension plan. P. Employer Obligations and Funding Status and Progress: The City annually transfers amounts from the various City funds to a pension trust fund. The City is required to contribute an actuarially determined rate 4.95% of total payroll for all permanent employees. Administrative costs of this plan are financed through investment earnings. 33 W City of Huntington Beach Notes to the Financial Statements For the Year Ended September 30, 2004 — (#6 C.Annual Pension Cost and Not Pension Obligation: � The��`n�� m��ni� N� ��r� �J� 3� 2� n� �L�m��: ' - ' Annual required contribution $3,231 0� Interest on net pension obligation 459 Adjustment toannual required contribution (621) Annual pension cost 3.073 Contributions made 002 Increase(decrease) iu net pension obligation 67 Net 9cnuoo Obligation-Beginning of Year 8342 l� Net Pension Obligatimm-EmdwKYear The annual required contribution was determined ua part oJun independent actuarial valuation using the Entry Age Normal Actuarial Cost Method which ixa projected bouefi\fuU-coatozedzndwbioh{ukcoinioucoount those benefits that are expected tobe earned in the future as well as those already accrued. �- The actuarial assumptions used were: * Rate of return on present and future assets-5.596 per uonurn Projected oNuoy increases for covered cn�p|uyeendue to inflation-3.O9� poronnunu 0 Projected salary increases due to oucdt-096 * Inflation rate-3.0% * Post employment benefit increases-0Y6 * Amortization of unfunded liability-level percentage of pay ending in 2027 (closed) * Actuarial value of assets-market value D. Trend Information: Below is the required three-year trend information(dollar amounts in thousands): Fiscal Year Annual Percentage of Net Pension Annual Percentage of Pension Cost APC Funded Obligation Required ARC - Contribution Contributed E. Accounting for Plan: Since the City is required to adopt GASB 25 for the muyp|coeotu|pension plan,the difference between the eu ARC and the amount of pension cost funded for the years in which there was an actuarial study must be recorded uou liability iu the government-wide financial statements.The total amount of this liability io $84090U0 Benefits ��cbzudulstudies and npd�envveropedorned 0� ' ` ' ` since 1991 and there is a substantial amount of unfunded pension benefit liability that would have been recorded umu liability inthe government-wide financial statements if the studies had been perfonned(see Note 10). v� 34 City of Huntington Beach e � Notes to the Financial Statements For the Year Ended September 30, 200 7.POST-EMPLOYMENT MEDICAL INSURANCE: A. Plan Description: The City agreed via contract with each employee association to provide post-employment medical insurance to retirees. The benefits are based on years of service and are available to all retiree who meet all three of the following criteria: ■ At the time of retirement the employee is employed by the City. ® At the time of retirement the employee has a minimum of ten years of service credit or is granted a service connected disability retirement. ® Following official separation from the City, CALPERS grants a retirement allowance. ■ The City's obligation to provide the benefits to a retiree ceases when either of the following occurs: V • During any period the retiree is eligible to receive health insurance at the expense of another mployer. • The retiree becomes eligible to enroll automatically or voluntarily in Medicare. If a retiree dies, the benefits that would be payable for his or her insurance are provided to the spouse or family for 18 months. Benefits for insurance premiums are payable based on the years of service credit for the retiree. The retiree may use the subsidy for any of the insurance plans that the City's active employees may enroll. B. Accounting and Funding: The Retiree Medical Insurance Fund is an agency fund. Other funds contribute on a periodic basis. Employees do not contribute. The actuarial assumptions for the plan are identical to the assumptions used for the Retirement Supplement Plan (see Note 6). Below are the required-disclosures for this plan (in thousands): Number of active participants 1,068 Employer's actuarially required contributions $766 Employer's actual contributions $623 Below is a summary of the Unfunded Actuarial Accrued Liability for the plan(in thousands) Actuarial accrued liability $11,307 Net assets available for plan benefits 4,630 Unfunded Actuarial Accrued Liability 6,677 Under current generally accepted accounting principles, recording of unfunded liabilities on other post- employment benefits in the financial statements is not required. 8.RISK MANAGEMENT: The City is exposed to various risks of losses related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; natural disasters and employee health insurance claims. The City records all of these claims as expenditures in the General Fund. The liability for these claims is recorded as part of long-term obligations in the Government-Wide financial statements. The City records the amount of claims payable at year-end that is due and payable at year-end in the fund financial statements. The full amount of claims is reported as a liability in the government-wide financial statements. Liabilities include amounts incurred, but not reported. (continued) 35 r City of Huntington Beach -= Notes to the Financial Statements For the Year Ended eteioe }, 2{l04 (#8 Continued) Liability Claims: Claims of up to $1,000,000 are paid from the General Fund. The City is also a participant in the Big Independent Cities Excess Pool Joint Powers Authority (BICEP), which provides general liability insurance of $24,000,000 above the City's retention of $1,000,000. BICEP was created by a joint powers agreement between the City of Huntington Beach and four other local entities for the purpose of providing joint insurance coverage and related risk management services for member cities. BICEP allows member entities to finance claims payment pool for certain liability claims in excess of $1 million to a limit of $25 million. BICEP's governing board has one representative from each city (either a member of the City Council or designate). Current members must approve any changes to the board. Each participating City pays an insurance premium to BICEP that is used to fund the operating and debt service requirements. Workers' compensation claims of up to $350,000 per claim and health claims of greater than $100,000 per claim are paid from these funds. The City purchases independent insurance coverage for health and workers' compensation claims in excess of the above amounts. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. All funds of the City participate in the program and make payments to these funds based on estimated cost information. The City reports liabilities at year-end that can be reasonably estimated claims prior to the issuance of the financial statements including an estimate of incurred but not reported claims. Claims activity and liabilities relating to the current and prior year are (in thousands): Health Insurance Workers Liability Total Compensation Insurance Balance September 30,2002 $ 385 $ 5,065 $ 7,162 $ 12,612 Additions 2002-2003 7,470 6,231 3,130 16,831 Reductions 2002-2003 (7,455) (4,727) (2,208) (14,390) Net Increase(Decrease)2002-2003 15 1,504 922 2,441 Balance September 30,2003 400 6,569 8,084 15,053 Additions 2003-2004 6,511 2,041 4,080 12,632 Reductions 2003-2004 (6,911) (2,701) (1,036) (10,648) Net Increase(Decrease)2003-2004 (400) (660) 3,044 1,984 Balance September 30,2004 $ - $ 5,909 $ 11,128 $ 17,037 9. INTERFUND TRANSACTIONS: A. Due To/From Other Funds: The amounts at September 30, 2004 were (in thousands): Due from Other Due to Other Funds Funds Governmental Funds Gas Tax $ 1,003 $ - Sewer Development - 105 Drainage - 898 Total Due tolfrom Other Funds Governmental Funds 1,003 1,003 Proprietary Funds Water 495 - Refuse - 495 Total all Funds $ 1,498 $ 1,498 (continued) 36 City of Huntington Beach : a p Notes to the Fa.ftci`i1 Statements for the Year Ended -ner 3 , 0 (9-A Continued) These outstanding balances result primarily from short-term borrowings to cover payments for goods and services. B. Transfers In/Out: The amounts at September 30, 2004 were(in thousands): Transfers Out Transfers In: General Fund Redevelopment Public Grants Non-Major Total Agency Financing Governmental Governmental Authority Funds Funds General Fund $ - $ 4,359 $ - $ - $ 1,120 $ 5,479 Redevelopment Agency - - - - - - Public Financing Authority 5,955 79 - - 242 6,27 Grants 128 - - - - 128 Non-Major overnmental Funds 3,205 - 8,830 45 185 12,265 Total Transfers Out $ 9,288 $ 4,438 $ 8,830 $ 45 $ 1,547 $ 24,148 Transfers Out Transfers In: Water Fund Non-Major Total Transfers Enterprise In Funds General Fund $ 5,420 $ 194 $ 11,092 Redevelopment Agency - - - Public Financing Authority - 357 6,633 Grants 155 - 283 Non-Major Governmental Funds - - 12,265 Total Transfers Out $ 5,575 $ 551 $ 30.274 These transfers are primarily used to: • Move revenues from a specific fund to the specific debt service fund as payments become due. • Move monies to specific funds to finance programs that the City wishes to or is required to account for in other funds. • Close out or open specific funds per City Council direction. 37 City of Huntington Beach Notes to the Financial Statements ,q Y For the Year Ended September 30, 2004 10.LONG-TERM OBLIGATIONS: Below is a schedule of changes in long-term governmental obligations for the year(in thousands): r Restated Balance Prior Balance Balance Principal October Period October 1, September Accrued Due Within Governmental Activities: Note 1,2003 Adjustment 2003 Additions Retirements 30,2004 Interest One Year Judgment Obligation Bonds 10(a) $ - $ $ - 12,500 $ - 12,500 52 255 Public Financing Authority: _ 1997 Leasehold Revenue Bonds 10(b)(1) 5,515 5,515 (575) 4,940 71 610 2000 Certificates of Participation 10(b)(2) 16,730 - 16,730 (590) 16,140 69 615 2001-a Lease Revenue Bonds 10(b)(3) 30,220 - 30,220 (585) 29,635 115 605 2001-b Lease Revenue Bonds 10(b)(4) 27,800 27,800 (1,535) 26,265 170 1,595 Total Public Financing Authority 80,265 80,265 (3,285) 76,980 425 3,425 Redevelopment Agency: 1999 Tax Allocation Refunding Bonds 10(c)(1) 9,160 - 9,160 (320) 8,840 41 335 2002 Tax Allocation Refunding Bonds 10(c)(2) 20,215 - 20,215 - (750) 19,465 140 765 Mayer Disposition and Development Agreement 10(c)(3) 10,549 1,186 11,735 736 (1,741) 10,730 - - Section 101 Loan 10(c)(4) 7,630 500 8,130 - (280) 7,850 94 300 Total Redevelopment Agency 47,554 1,686 49,240 736 (3,091) 46,885 275 1,400 Other Long-Term Obligations: Reservoir Hill Assessment Bonds 360 (65) 295 - (295) - - - Energv Financing Loan 10(d)(1) 545 _ 545 - (208) 337 9 221 Leases Pavahle 10(d)(2) 6,420 _ 6,420 304 (1,839) 4,885 - 1,951 Comnensated Ahsences 10(d)(3) 8,223 _ 8,223 1,596 (1,782) 8,037 2,153 Net Pension Obligation 10(d)(4) 8,342 _ 8,342 2,067 (2,000) 8,409 - Claims Pavahle 10(d)(5) 15,053 (5,900) 9,153 14,182 (11,398) 11,937 1,150 Property Tax Claims 10(d)(6) 22,138 - 22,138 - (22,138) - Total Other Long-Term Obligations 61,081 (5,965) 55,116 18,149 (33,605) 38,705 9 5,475 Total Long-Term Obligations- Governmental Activities $188,900 $ (4,279) $184;621 $ 31,385 $(46,036) $169,970 $ 761 $ 10,555 (continued) 38 City of Huntington Beach . u.._ .: totes to the Financial Statements for the Year Ended Septetnber 0, 200 (#10 Continued) Below are reconciliations from amounts in the above table to amounts in the accompanying government-wide financial statements (in thousands): Proceeds of Long-Term Debt in Governmental Fund Financial Statements $ 13,236 Increase in Leases Payable 304 Increase in Compensated Absences 1,596 Increase in Net Pension Obligation 2,067 Increase in Claims Payable 14,182 Increases in Above Schedule $ 31,385 Principal Paid in Governmental Fund Financial Statements $ 8,718 Decrease in Property Tax Claims 22,138 Decrease in Compensated Absences 1,782 Decrease in Net Pension Obligation 2,000 Decrease in Claims Payable 11,398 Decreases in Above Schedule $ 46,036 A. Judgment Obligation Bonds: Year of Issuance 2004 Type of Debt Judgment Obligation Bonds Original Principal Amount $12,500,000 Security Council Appropriations Interest Rates 2.00%to 4.20% Interest Payment Dates February 1 st and August 1 st Principal Payment Dates February 1st Purpose of Debt Pay claims on court judgment Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total September 30, 2005 $ 255 $ 367 $ 622 2006 720 419 1,139 2007 730 405 1,135 2008 745 389 1,134 2009 765 368 1,133 2010-2014 4,200 1,438 5,638 2015-2019 5,085 535 5,620 $ 12,5001 $ 3,9211 $ 16,421 (continued) 39 ONG City of HuntingtonBeach Notes to the Financial Statements For the Year Ended September 30, 2004 (#10 continued) B. Public Financing Authority (1.) 1997 Public Financing Authority Revenue Bonds: Year of Issuance 1997 Type of Debt Lease Revenue Bonds Original Principal Amount $8,070,000 Security Lease Agreement with City for Central Library Interest Rates 5.00%to 5.50% Interest Payment Dates June 15"and December 15`' Principal Payment Dates December 151' Purpose of Debt Construct Pier Plaza and Purchase 800 MHZ System Debt service requirements to maturity are(in thousands): Year Ending principal Interest Total September 30 2005 $ 610 $ 245 $ 855 2006 640 214 854 2007 665 171 836 2008 80 163 243 2009 85 159 244 2010-2014 500 719 1,219 2015-2019 645 563 1,208 2020-2024 850 361 1,211 2025-2028 865 98 963 Total $ 4,9401 $ 2,693 $ 7,633 (2.) 2000,Public Financing Authority Certificates of Participation: Year of Issuance 2000 Type of Debt Certificates of Participation Original Principal Amount $18,310,000 Security Lease with City Interest Rates 4.0%to 5.0% Interest Payment Dates September l s`and March I" Principal Payment Dates September ls` Purpose of Debt Capital improvements and defeasance of Emerald Cove Certificates of Participation(see note 14) (continued) 40 ��i"LfEJG3+a City of Huntington Beach „- Notes to the Financial Statements r 'o the Year EndedSeptember 09 2004 (I0-B2 Continued) Debt service requirements to maturity are(in thousands): Year Ending Principal Interest Total September 30 2005 $ 615 $ 827 $ 1,442 2006 640 801 1,441 2007 670 773 1,443 2008 700 744 1,444 2009 730 713 1,443 2010-2014 2,855 3,117 5,972 2015-2019 3,285 2,387 5,672 2020-2024 3,005 1,449 4,454 2025-2029 2,950 691 3,641 2030 690 38 728 Total $ 16,140 $ 11,540 $ 27,680 (3).2001(a)Public Financing Authority Lease Revenue Bonds: Year of Issuance 2001 Type of Debt Lease Revenue Bonds Original Principal Amount $31,360,000 Security Lease Agreement with City for Public Buildings Interest Rates 2.45%to 5.0% Interest Payment Dates March 1"and September 1 s` Principal Payment Dates September 1st Purpose of Debt Construct Sports Complex and South Beach Phase Il Improvements Debt service requirements to maturity are (in thousands): Year Ending principal Interest Total September 30 2005 $ 605 $ 1,378 $ 1,983 2006 630 1,354 1,984 2007 650 1,333 1,983 2008 675 1,312 1,987 2009 700 1,288 1,988 2010-2014 3,925 6,004 9,929 2015-2019 4,850 5,074 9,924 2020-2024 6,120 3,808 9,928 2025-2029 7,790 2,130 9,920 2030-2031 3,690 280 3,970 Total $ 29,635 $ 23,961 $ 53,596 (continued) 41 City of un.tington Beach - Notes to the Financial Statements For the Year Ended September 30, 2004 (10-B Continued) (4).2001(b)Public Financing Au hority Lease Revenue Bonds: Year of Issuance 2001 Type of Debt Lease Revenue Bonds Original Principal Amount $31,095,000 Security Lease on Civic Center Buildings Interest Rates 4.0%to 5.0% Interest Payment Dates August 1,February I Principal Payment Dates August 1 Purpose of Debt Defease Civic Improvement Corporation Certificates Debt service requirements to maturity are(in thousands): Year Ending September Principal Interest Total 30,2004 2005 $ 1,595 $ 1,023 $ 2,618 2006 1,640 975 2,615 2007 1,690 926 2,61 2008 1,745 875 2,62 2009 1,800 818 2,618 2010-2014 10,165 2,924 13,089 2015-2019 7,630, 860 8,49 Total $ 26,265 $ 8,40 $ 34,665 C. Redevelopment Agency: (1.) 1999 Redevelopment Agency Tax Allocation Refunding Bonds: Year of Issuance 1999 Type of Debt Tax Allocation Refunding Bonds Original Principal Amount $10,835,000 Security Tax Increment Interest Rates 3.00%to 5.05% Interest Payment Dates February I"and August V Principal Payment Dates August 1" Purpose of Debt Prepay Agency's 1992 Loans to Public Financing Authority Debt service requirements to maturity are(in thousands): Year Ending Principal Interest Total September 30 2005 $ 335 $ 245 $ 580 2006 350 214 564 2007 365 171 536 2008 380 163 543 2009 390 159 549 2010-2014 2,245 719 2,964 2015-2019 2,840 563 3,403 2020-2024 1,935 361 2,296 Total $ 8,840 $ 2,595 $ 11,435 (continued) 42 City of Huntington Beach Notes to the Financial. Statements For the Year Ended September 30, 2004 (10-C continued) (2). 2002 Redevelopment Agency Tax Allocation Refunding Bonds: Year of Issuance 2002 Type of Debt Tax Allocation Refunding Bonds Original Principal Amount $20,900,000 Security Tax Increment Interest Rates 2.00%to 5.00% Interest Payment Dates February I't and August Is' Principal Payment Dates August I" Purpose of Debt Prepay Agency's 1992 Loans to Public Financing Authority and fully defease 1992 Public Financing Authority bonds Debt service requirements to maturity are(in thousands): Year Ending September 30,2004 Principal Interest Total 2005 $ , 765 $ 841 $ 1,606 2006 790 822 1,612 2007 815 798 1,613 2008 845 771 1,616 2009 870 742 1,612 2010-2014 4,970 3,188 8,158 2015-2019 6,195 2,004 8,199 2020-2024 4,215 635 4,850 Total $ 19,465 $ 9,801 $ 29,266 (3).Mayer Disposition and Development Agreement: In fiscal year 1996-97, the Agency entered into a disposition and development agreement with Robert Mayer Corporation (Corporation) concerning additional development adjacent to the Waterfront Hotel. Under the agreement, the Corporation would advance payments for the project costs with the Agency reimbursing up to $16,750,000 of the costs. As of September 30, 2004, the Agency obligation under the agreement amounted to $10,730,000. Project-generated revenues as available will repay these amounts over the time needed to fully amortize the advance. (4.) Section 108 Loan: Year of Issuance 2000 Type of Debt Loan from Federal Government Original Principal Amount $8,570,000 Security Loan Agreement with Federal Government InterestRates 7.7% Interest Payment Dates February I't and August I Principal Payment Dates August Vt Purpose of Debt Capital Improvements (continued) 43 :._.,. City of Huntington Beach 1 M Notes to the Financial Statement For the Year Ended Septct- hc 4 10c 4 continued Debt service requirements to maturity are(in thousands): Year Ending Principal Interest Total September 30 2005 $ 300 $ 561 $ 861 2006 315 540 855 2007 340 518 858 2008 365 493 858 2009 390 466 856 2010-2014 2,365 1,860 4,225 2015-2019 3,775 810 4,585 Total $ 7,850 $ 5,248 $ 13,098 D.Other Long-Term Obligations: (1). Energy Financing Loan: Year of Issuance 1995 Type of Debt Note Payable—State of California Original Principal Amount $1,173,000 Security Loan Agreement Interest Rates 6.1% Interest Payment Dates December 22nd and June 22nd Principal Payment Dates December 22❑d and June 22°d Purpose of Debt Capital Improvements Debt service requirements to maturity are (in thousands): Year Ending September 30, Principal Interest Total 2004 2005 $ 221 $ 18 $ 239 2006 116 10 126 Total $ 337 $ 28 $ 365 (2).Leases Payable: The City entered into capital leases for various items: Year of Insurance 1996 through 2003 Type of Debt Capital Leases Original Principal Amount Various($93,000 to$2,370,000) Security Lease Agreement Interest Rates 4.4%to 6.2% Interest Payment Dates Monthly,Quarterly, Semi-Annually Principal Payment Dates Monthly,Quarterly,Semi-Annually Purpose of Debt Equipment Financing (continued) 44 _ TR City of Huntington Beach - Notes to the Financial Statements GR'" For the Year Ended September 30, 2004 (1042 continued) Future minimum lease payments to maturity are(in thousands): Year Ending Governmental Activities September 30, 2004 2005 $1,951 2006 1,054 2007 549 2008-2013 1,911 Total minimum lease payments 5,465 Less interest (580) Total $4,885 (3) Compensated Absences: There is no repayment schedule to pay the compensated absences amount of $8,037,000 relating to governmental operations. The General Fund typically liquidates the vacation and sick leave liability. (4)Net Pension Obligation: There is no fixed repayment schedule to fund the actuarial liability for the unfunded net pension obligation totaling $8,409,000 for the City's Retirement Supplement Plan described in Note 6. The amount will be funded through a contribution rate determined by an independent actuarial study. This amount is significantly less than the total unfunded liability for this plan since actuarial studies only began in 1991, which was after the Plan was in place. (5). Claims Payable: There is no repayment schedule for the claims payable of$11,937,000(which represents the long term amount of the claims described in Note 8). The City pays the claims upon final settlement. (6).Property Tax Claims: During the year the City issued $12,500,000 of Judgment Obligation Bonds (Note 10(a)) that repaid the total of claims payable. In prior years the amount had been recorded at the City's maximum possible exposure. E. Long-Term Obligations—Business Activities: Below is a schedule of the long-term obligations of business activities (in thousands): Long-Term Balance Additions Retirements September 30, Accrued Principal Due Obligations-Business October 1, 2004 Interest Within One Activities: 2003 Year Compensated Absences 10(e)(1) $ 623 $ 216 $ (129) $ 710 $ - $ 125 Leases Payable 10(e)(2) 250 - (67) 183 - 77 Total Long-Term Obligations-Business Activities $ 873 $ 216 $ (196) $ 893 $ - $ 202 (continued) 45 City of Huntington Beach rotes to the Financial Statements For the Year Ended September 30, 2004 C. (E continued) (L) Compensated Absences: There is no repayment schedule for the compensated absences amount of$710,000 relating to business activities. (2). Leases Payable: The City entered into capital leases for various items: Year of Issuance 1993 through 2003 Type of Debt Capital Leases Original Principal Amount Various Security Lease Agreement Interest Rates 4.4%to 6.2% Interest Payment Dates Monthly,Quarterly,Semi-Annually Principal Payment Dates Monthly,Quarterly, Semi-Annually Purpose of Debt I Equipment Financing Future minimum lease payments to maturity are(in thousands): Year Ending September 30, Business-Type Activities 2005 $ 77 2006 77 2007 38 2008-2013 Total minimum lease payments 192 Less interest (9) Total $183 (F).Long-Term Obligations for which City is not Liable in any Manner: Obligations Not Recorded in Financial Statements: Community Facilities Districts: Note: Balance October Additions Retirements Balance September 1,2003 30,2004 Community Facilities District No. 1990-1 Special Tax Refunding Bonds 10(f)(1) $ 2,070 $ $ (155) $ 1,915 Community Facilities District 2000-1 Special Assessment Tax Bonds 10(f)(2) 16,000 - (245) 15,755 Community Facilities District NO. 2002-1 Special Assessment Tax Bonds 10(f)(3) 4,900 4,900 Community Facilities District NO. 2003-1 Special Assessment Tax Bonds 10(f)(4) - 25,000 - 25,000 Total Community Facilities Districts 22,970 25,000 (400) 47,570 No-Commitment Debt 10(f)(5) 29,500 (4,000) 25,500 Total Obligations Not Recorded in Financial Statements $ 52,470 $ 25,000 $ (4,400) $ 73,070 (continued) 46 City of Huntington Beach ..��, Note to the Financial_ Statements For the Year Ended September 30, 2004 F continu ed) ued) (1). Community Facilities District 1990-12001 Special Tax Refunding Bonds: Year of Issuance 2001 Type of Debt Community Facilities District Assessment Bonds Original Principal Amount $2,155,000 Security Special Tax Levies Interest Rates 4.00%to 5.40% Interest Payment Dates April 1 st and October 1st Principal Payment Dates October I" Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total September 30, 2005 $ - $ 100 $ 100 2006 85 96 181 2007 85 93 178 2008 90 90 180 2009 95 86 181 2010-2014 535 360 895 2015-2019 695 206 901 2020-2021 330 27 357 $ 1,915 $ 1,057 $ 2,972 (2). Community Facilities District 2000-1 Special Tax Bonds: Year of Issuance 2001 Type of Debt Community Facilities District Assessment Bonds Original Principal Amount $16,000,000 Security Special Tax Levies Interest Rates 3.80%to 6.40% Interest Payment Dates September I"and March I" Principal Payment Dates September Ist Purpose of Debt Public Improvements for Grand Coast Resort Debt service requirements to maturity are(in thousands): Year Ending Principal Interest Total September 30, 2005 $ 255 $ 979 $ 1,234 2006 265 968 1,233 2007 280 956 1,236 2008 295 943 1,238 2009 305 928 1,233 2010-2014 1,810 4,370 6,180 2015-2019 2,435 3,747 6,182 2020-2024 3,320 2,858 6,178 2025-2029 4,540 1,640 6,180 2030-2031 2,250 220 2,470 $ 15,755 $ 17,609 $ 33,364 (continued) 47 City of Htintington Beach _= Notes to the Financial Statements ° For the Year Ended September 30, 2004 F Continued (3). Community Facilities District 2002-1 Special Tax Bonds: Year of Issuance 2002 Type of Debt Community Facilities District Assessment Bonds Original Principal Amount $4,900,000 Security Special Tax Levies Interest Rates 3.80%to 6.20% Interest Payment Dates March Is'and September ls` Principal Payment Dates September 1s` Debt service requirements to maturity are(in thousands): Year Ending September 30, Principal Interest Total 2005 $ 15 $ 303 $ 318 2006 15 302 317 2007 20 301 321 2008 30 300 330 2009 40 299 339 2010-2014 330 1,453 1,783 2015-2019 650 1,328 1,978 2020-2024 1,105 1,078 2,183 2025-2029 1,755 655 2,410 2030-2031 940 91 1,031 $ 4,900 $ 6,110 $ 11,010 (4.) Community Facilities District 2003-1 Special Tax Bonds: Year of Issuance 2003 Type of Debt Community Facilities District Assessment Bonds Original Principal $25,000,000 Amount I Security Special Tax Levies Interest Rates 2.65%to 5.85% Interest Payment Dates March 15`and September 1s` Principal Payment Dates September Is' Debt service requirements to maturity are(in thousands): Year Ending September 30, Principal Interest Total 2005 $ - $ 1,366 $ 1,366 2006 440 1,366 1,806- 2007 450 1,354 1,804 2008 465 1,340 1,805 2009 485 1,324 1,809 2010-2014 2,730 6,296 9,026 2015-2019 3,480 5,552 9,032 2020-2024 4,585 4,448 9,033 2025-2029 6,085 2,946 9,031 2030-2033 6,280 946 7,226 $ 25,000 $ 26,938 $ 51,938 (continued) 48 p City of Huntington Beach n Dotes to the Financial Statements For the Year Ended September 30, 2004 (F continued) (5.) No- Commitment Debt: The City is involved in various bond issues where the City or Redevelopment Agency issued bonds to assist in the financing of residential developments. A trustee holds all funds and payment cannot be made from any other source than the mortgages received. These bond issues are (in thousands): Bond Issue Outstanding Original Issue Amount September 30,2004 Five Points Senior Project Multi- $9,500 $9,500 Family Housing Revenue Bonds- Series A- 1991 Huntington Breakers Mortgage $16,000 $16,000 Revenue Bonds Refunding Issue- 1996 Series A 11. CAPITAL ASSETS: A. Changes in Capital Assets: Capital asset activity for the year was (in thousands): Governmental Activities: October 1, Additions Dispositions September 30, 2003 2004 Capital Assets,not depreciated: Land $ 323,095 $ 619 $ - $ 323,714 Construction in Progress 11,817 7,907 (6,732) 12,992 Joint Ventures 328 1,011 - 1,339 Total Capital Assets, not depreciated 335,240 9,537 (6,732) 338,045 Capital Assets being depreciated: Buildings 111,614 5,403 (2,124) 114,893 Machinery&Equipment 51,573 2,912 (1,806) 52,679 Infrastructure 280,347 277 - 280,624 Total Capital Assets being depreciated 443,534 8,592 (3,930) 448,196 Less accumulated depreciation: Buildings (24,179) (2,271) 372 (26,078) Machinery &Equipment (31,996) (5,347) 1,480 (35,863) Infrastructure (141,394) (5,601) - (146,995) Total Accumulated Depreciation (197,569) (13,219) 1,852 (208,936) Total Depreciated,Net 245,965 (4,627) (2,078) 239,260 Total Capital Assets 778,774 18,129 (10,662) 786,241 Total Accumulated Depreciation (197,569) (13,219) 1,852 (208,936) Capital Assets of Governmental Activities- Net $ 581,205 $ 4,910 $ (8,810) $ 577,305 (continued) 49 City of Huntington each. Notes to the Financial. Statements For the Year Ended September 30, 2004 (]]-A continued) Business Activities: October 1,2003 Additions Dispositions September 30,2004 Capital Assets,not depreciated: Land $ 7,840 $ - $ $ 7,840 Construction in Progress 8,071 2,442 (2,443) 8,070 Total Capital Assets,not depreciated 15,911 2,442 (2,443) 15,910 Capital Assets being depreciated: Buildings 39,259 - (858) 38,401 Machinery and Equipment 7,404 3,217 (44) .10,577 Infrastructure 86,805 4,004 (438) 90,371 Total Capital Assets being depreciated 133,468 7,221 (1,340) 139,349 Less Accumulated Depreciation: - Buildings (7,824) (988) 812 (8,000) Machinery&Equipment (3,572) (589) 24 (4,137) Infrastructure (48,849) (1,593) 393 (50,049) Total accumulated depreciation (60,245) (3,170) 1,229 (62,186) Total depreciated,net 73,223 4,050 (109) 77,163 Total Capital Assets 149,379 9,663 (3,783) 155,259 Total Accumulated Depreciation (60,245) (3,170) 1,229 (62,186) Capital Assets of Business Activities-Net $ 89,134 $ 6,493 $ (2,554) $ 93,073 B.Depreciation Expense: Depreciation in governmental activities was charged to the following functions/programs in the Statement of Activities (in thousands) Department: City Administrator $ 71 City Treasurer 36 City Attorney 4 City Clerk 4 Administrative Services 52 Planning 14 Building 29 Fire 886 Information Systems 1,167 Police 1,270 Economic Development 2 Community Services 1,891 Library Services 392 Public Works 7,138 Non-Departmental 263 TOTAL $ 13,219 Depreciation in business activities was charged to the following function s/programs in the Statement of Activities(in thousands): Water Fund $ 2,119 Sewer Service 818 Emerald Cove 82 Emergency Fire Medical 140 Ocean View Estate 11 TOTAL $ 3,170 (continued) 50 City of Huntington beach Notes to the Financial. Statements For the Year Ended September 30, 2004 (#11 continued) C. Capital Assets Acquired via Capital Leases: At year-end the City's assets acquired through outstanding capital leases were (in thousands): Governmental Business-Type Asset: Activities Activities Machinery and Equipment $5,063 $675 Less:Accumulated depreciation (2,140) (183) Total $2,923 $492 12. COMMITMENTS AND CONTINGENCIES: A. Legal Actions: There are legal actions pending against the City resulting from normal operations. In the opinion of management and the City Attorney, the financial resolution of these actions should not have a significant impact on these financial statements. B.Huntington Beach Union High School District(HBUHSD) Sharing Agreement: In 1997 the City Council agreed to pay the HBUHSD certain increased sales tax revenues relating to the development of a new commercial site by Home Depot. The City will retain the first $50,000 of annual increased sales tax revenues and will pay HBUHSD a portion of the amount over $50,000 until the year 2015/2016. C.Redevelopment Agency Debt to City: The City has advanced money to the Redevelopment Agency for capital improvements and operations. There is no fixed repayment schedule for these advances and the Council/Agency has no requirement for the timing of any repayment. Accordingly, the City has not recorded the advances in the accompanying financial statements. These advances have been made since 1984 and include direct advances of cash, overhead charges, deferred development fees, deferred land sales, and interest. Below is a schedule of the activity for the year(in thousands): (continued) i i 1 1 51 City of Huntington Beach Notes to the Financial. Statements For the Year Ended Septernber 30, 2004 (12-C continued) Amount @ Amount @ 10/1/03 Reductions Additions 9/30/04 General Fund: Direct Advances $ 11,586 $ (6,988) $ - $ 4,598 Overhead Charges 6,567 - - 6,567 Land Sales 32,833 - 32,833 Interest 34,201 (303) 2,104 36,002 Total General Fund 85,187 (7,291) 2,104 80,000 Sewer Fund: Direct Advances 131 - 131 Deferred Development Fees 79 = - 79 Interest 130 8 138 Total Sewer Fund 340 8 348 Drainage Fund Direct Advances 250 - 250 Deferred Development Fees 54 - 54 Interest 340 16 356 Total Drainage Fund 644 16 660 Park Acquisition and Development Fund Land Sales 1,741 - 1,741 Deferred Development Fees 247 247 Interest 2,477 111 2,588 Total Park Acquisition and Development Fund 4,465 Ill 4,576 Capital Improvement Fund Direct Advances 200 - 200 Interest 283 12 295 Total Capital Improvement Fund 483 12 495 Water Fund Direct Advances 1,138 - 1,138 Interest 1,990 77 2,067 Total Water Fund 3,128 77 3,205 Total All Funds $94,247 $(7,291) $2,328 $89,284 The cash repayments are recorded as transfers from the Redevelopment Agency to the fund receiving the repayment. 52 City of Huntington Beach == Notes to the Financial Statements For the Year Ended September 30, 2004 13.OTHER INFORMATION: A. Expenditures Exceeding Appropriations: Expenditures exceeded appropriations at the departmental level in the funds shown (in thousands): General Fund: City Council $ 4 Other Major Funds Special Revenue Funds: Grants—Non Departmental 39 Redevelopment Agency Interest 21 Property Tax Interest 180 Non-Major funds Reservoir Hill—Debt Service Principal 105 B.Fund and Accumulated Deficits: The following funds had total fund deficits at year-end(in thousands): Governmental Funds: Non-Major Governmental Funds: Drainage ($898) Sewer Development (108) r Enterprise Funds: Refuse ($284) The deficits in these funds will be eliminated through monitoring of expenditures and reviewing fee structures. C. Prior Period Adjustments: Debt payments relating to the prior year totaling$1,620,000 were not recorded in the government-wide statement of net assets.Net assets for fiduciary funds were overstated by$8,342,000 because the net pension obligation was not recorded as a liability in the financial statements. Below are summaries of these restatements (in thousands): Beginning Net Assets-Governmental Activities $484,398 Prior year debt payments recorded in current year (1,620) Beginning Net Assets-Governmental Activities (Restated) $482,778 Beginning Net Assets-Trust Funds 10,523 Prior Year Pension Obligation (8,342) Beginning Net assets—Trust Funds (Restated) $2,181 53 1 REQUIRED 1 SUPPLEMENTARY INFORMATION 1 1 1 1 1 1 1 1 1 1 THIS PAGE INTENTIONALLY LEFT BLANK 1 r e s i 1 i 1 1 Fbu City of Huntington Beach. Required Supplementary~ Information For the Year Ended September 30, 2004 Budgetary Information ' The City Council must annually adopt a budget by September 30 of the prior fiscal year. The budgeted expenditures become the appropriations to the various departments. The budget includes estimates for revenue that, along with the appropriations, compute the budgetary fund balance. The appropriated budget covers substantially all governmental fund expenditures with the exception of capital improvement projects (capital projects funds) carried forward from prior years, which constitute a legally authorized non- appropriated budget. The City Council may amend the budget at any time. The City Administrator may transfer funds from between object purposes (personal services, operating expenditures or capital outlay expenditures) within the same department without changing the total departmental budget. Department heads may transfer funds from like object categories of the same department. The City Council must approve any changes to departmental budgets. Expenditures may not exceed appropriations at the departmental level. All unused appropriations lapse at year-end. During the year the City Council made several supplemental appropriations including prior year encumbrances, all of which were within available fund balance and estimated revenue amounts. The City Council adopts governmental fund budgets consistent with generally accepted principles as legally required. There are no significant non-budgeted financial activities. Revenues for special revenue funds are budgeted by entitlements, grants and estimates of future development and economic growth. Expenditures and transfers are budgeted based upon available financial resources. On or before May 31 of each year, each department submits data to the City Administrator for budget preparation. Staff prepares the budget by fund, function and activity. The budget includes information on past years, current year estimates and requested appropriations for the next fiscal year. Before August 1, the City Council receives the proposed budget. The City Council holds public hearings and may amend the budget by a majority vote. Changes to the budget must be within the available revenues and reserves. These financial statements show budgetary data for the General, Special Revenue, Capital Projects and Debt Service Funds. The original budget, revised budget, actual expenditures, and variance amounts are shown. The City uses an encumbrance system as an aid in controlling expenditures. When the City issues a purchase order for goods or services, it records an encumbrance until the vendor delivers the goods or performs the service. At year-end, the City reports all outstanding encumbrances as reservations of fund balance in governmental fund types.The City reappropriates these encumbrances into the new fiscal year. Below is a schedule of a budget to actual comparison of the General and Grant Fund's Revenues, and Expenditures (in thousands): 54 r CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30,2004 (In Thousands) General Fund REVENUES: Original Budget Final Budget Actual Variance Property Taxes $32,195 $32,195 $33,797 $ 1,602 Sales Taxes 26,610 26,610 26,101 (509) Utility Taxes 19,114 19,114 19,424 310 Other Taxes 12,578 12,578 10,046 (2,532) Licenses and Permits 6,499 6,506 7,732 1,226 Fines,Forfeitures and Penalties 5,723 5,723 4,342 (1,381) From Use of Money and Property 8,115 8,117 8,924 807 From Other Agencies 12,168 12,168 10,146 (2,022) Charges for Current Service 11,694 7,385 7,819 434 Other 250 4,570 3,709 (861) TOTAL REVENUES 134,946 134,966 132,040 (2,926) EXPENDITURES: Current: City Council 276 276 280 (4) City Administrator 1,609 1,596 1,165 431 City Treasurer 1,610 1,596 1,519 77 City Attorney 3,583 3,333 2,771 562 City Clerk 842 842 712 130 Administrative Services 8,710 8,663 6,295 2,368 Planning 2,937 3,020 2,237 783 Building 2,911 2,933 2,830 103 Fire 19,606 19,536 18,758 778 Information Systems 8,399 8,022 5,117 2,905 Police 40,319 40,310 39,140 1,170 Economic Development 1,088 1,295 842 453 Community Services 10,756 10,840 10,345 495 Library Services 2,691 2,690 2,525 165 Public Works 17,736 16,462 14,684 1,778 Non-Departmental 14,213 12,057 11,222 835 Debt Service: Principal - 1,786 1,786 - Interest - 258 258 - TOTAL EXPENDITURES 137,286 135,515 122,486 13,029 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (2,340) (549) 9,554 10,103 OTHER FINANCING SOURCES(USES): Transfers In 7,765 7,712 11,092 3,380 Transfers Out (11,609) (11,358) (9,288) 2,070 TOTAL OTHER FINANCING SOURCES (USES) (3,844) (3,646) 1,804 5,450 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (6,184) (4,195) 11,358 15,553 FUND BALANCE-BEGINNING OF YEAR 14,974 14,974 14,974 FUND BALANCE-END OF YEAR $ 8,790 $ 10,779 $ 26,332 $ 15,553 r 1 55 r CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30,2004 (In Thousands) Public Financing Authority REVENUES: Original Budget Final Budget Actual Variance From Use of Money and Property EXPENDITURES: $ $ $ 548$ 548 Debt Service: Principal - - - Interest 3,285 3,285 3,285 - TOTAL EXPENDITURES 3,612 6,014 3,635 2,379 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 6,897 9,299 6,920 2,379 OTHER FINANCING SOURCES(USES): (6,897) (9,299) (6,372) 2,927 Transfers In 82 6,633 6,551 Transfers Out (2,402) (8,830) (8,830) - TOTAL OTHER FINANCING SOURCES(USES) (2,402) (8,748) (2,197) 6,551 EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER)EXPENDITURES AND OTHER USES (9,299) (18,047) (8,569) 9,478 FUND BALANCE-BEGINNING OF YEAR 16,085 16,085 16,085 FUND BALANCE-END OF YEAR $ 6,786 $ (1,962) $ 7,516 $ 9,478 CITY OF HUNTINGTON BEACH COMBINING SCHEDULE OF REVENUES,EXPENDITURE AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Redevelopment Agency REVENUES: Original Budget Final Budget Actual Variance Property Taxes $ 7,569 $ 7,569 $ 9,547 $ 1,978 Other Taxes 1,152 1,152 1,319 167 From Use of Money and Property 798 798 852 54 Other 60 60 1,360 1,300 TOTAL REVENUES 9,579 9,579 13,078 3,499 EXPENDITURES: Current: Economic Development 39064 3,173 2,983 190 Capital Outlay 4,731 15,228 13,137 2,091 Debt Service: Principal 7,700 7,700 3,006 4,694 Interest 1,671 1,664 1,685 (21) TOTAL EXPENDITURES 17,166 27,765 20,811 6,954 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (7,587) (18,186) (7,733) 10,453 OTHER FINANCING SOURCES(USES): Transfers In 3,800 - - - Proceeds of Long-Term Debt - 736 736 - Transfers Out (5,187) (59187) (4,438) 749 TOTAL OTHER FINANCING SOURCES(USES) (1,387) (4,451) (3,702) 749 EXCESS OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (8,974) (22,637) (11,435) 11,202 FUND BALANCE-BEGINNING OF YEAR 25,565 25,565 25,565 FUND BALANCE-END OF YEAR $ 16,591 $ 2,928 $ 14,130 $ 11,202 1 56 CITY OF HUNTINGTON BEACH COMBINING SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL (IN THOUSANDS) Grants REVENUES: Original Budget Final Budget Actual Variance From Use of Money and Property $ 318 $ 318 $ 646 $ 328 From Other Agencies 12,792 12,792 8,988 (3,804) Other 20 20 85 65 TOTAL REVENUES 13,130 13,130 9,719 (3,411) EXPENDITURES: Current: Planning 172 172 145 27 Fire 514 559 260 299 Police 459 451 245 206 Economic Development 2,425 2,409 1,057 1,352 Community Services 258 377 266 111 Library Services 145 140 131 9 Public Works 2,153 1,905 602 1,303 Non-Departmental - - 39 (39) Capital Outlay 14,031 12,268 3,131 9,137 Debt Service: Principal 85 85 85 - Interest 175 435 175 260 TOTAL EXPENDITURES 20,417 18,801 6,136 12,665 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (7,287) (5,671) 3,583 9,254 OTHER FINANCING SOURCES(USES): Transfers In - 42 283 241 Transfers Out - (45) (45) TOTAL OTHER FINANCING SOURCES(USES) - 42 238 196 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (7,287) (5,629) 3,821 9,450 FUND BALANCE-BEGINNING OF YEAR 1,294 1,294 1,294 - FUND BALANCE-END OF YEAR $ (5,993) $ (4,335) $ 5,115 $ 9,450 CITY OF HUNTINGTON BEACH COMBINING SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Property Tax Refund REVENUES: Original Budget Final Budget Actual Variance From Use of Money and Property $ 41 $ 41 $ 37 $ (4) EXPENDITURES: Current: Non-Departmental 500 10,539 10,368 171 Debt Service: Interest - - 180 (180) TOTAL EXPENDITURES 500 10,539 10,548 (9) EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (459) (10,498) (10,511) (13) OTHER FINANCING SOURCES(USES): Proceeds of Long-Term Debt - 12,500 12,500 - TOTAL OTHER FINANCING SOURCES(USES) - 12,500 12,500 - EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (459) 2,002 1,989 (13) FUND BALANCE-BEGINNING OF YEAR 2,380 2,380 2,380 - FUND BALANCE-END OF YEAR $ 1,921 $ 4,382 $ 4,369 $ (13) 57 CITY OF HUNTINGTON BEACH REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED SEPTEMBER 30,2004 SCHEDULE OF FUNDING PROGRESS RETIREMENT PLAN-NORMAL Actuarial Entry Age Normal Actuarial Value Excess Assets Funded Covered Excess Assets as a Valuation Date Actuarial Accrued of Assets (Unfunded Ratio Payroll Percentage of Covered Liability(AAL) Liability) Payroll 2001 Safety $ 283,438 $ 295,280 $ 11,842 104.2% $ 27,717 42.7% Non Safety 177,467 237,108 59,641 133.6% 35,985 165.7% Total $ 460,905 $ 532,388 $ 71,483 115.5% $ 63,702 112.2% 2002 Safety $299,052 $272,367 $ (26,685) 91.1% $ 23,270 -114.7% Non Safety 191,997 223,364 31,367 140.7% 37,811 83% Total $ 491,049 $ 495,731 $ 4,682 101.0% $ 61,081 57.7% 2003 Safety $ 320,670 $ 270,538 $ (50,132) 84.4% $ 28,919 -173.4% Non Safety 222,221 225,689 3,468 140.7% 36,918 9.4% Total $ 542,891 $ 496,227 $ (46,664) 91.4% $ 65,837 -70.9% CITY OF HUNTINGTON BEACH REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED SEPTEMBER 30,2004 SCHEDULE OF FUNDING PROGRESS RETIREMENT PLAN-SUPPLEMENTAL Entry Age Actuarial Normal Accrued Actuarial Value Unfunded AAL Funded Covered UAAL as a % of Valuation Date Liability of Assets (UAAL) Ratio Payroll Covered Payroll 6/30/2002 Update $35,524 $8,775 $(26,749) -32.8% $65,137 -41.1% 6/30/2003 Actual 40,4361 10,47 (2�),962) -35.0% 65,227 -45.9% 6/30/2004Update 40,978 11,936 (29,042) -41.1% 163.538 -45.7% 58 1 t THIS PAGE INTENTIONALLY LEFT BLANK 1 1 i i ' SUPPLEMENTARY INFORMATION i 1 i 1 i 1 1 1 1 1 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds account for revenues and expenditures legally restricted to a specific purpose. Gas Tax Fund Accounts for moneys allocated under the Streets and Highways Code of California. Expenditures may be made for any street-related purpose allowed under the code. Drainage Fund Accounts for fees received from developers to construct and maintain the City's drainage system. Public Communications Fund Accounts for revenues from cable television franchises granted within the City's limits spent on community-oriented television. Narcotics Forfeiture Fund Accounts for moneys received from the State of California for special law enforcement expenditures. Transportation Fund Accounts for moneys received from the,countywide '/2 cent sales tax and other specific sources to be spent on transportation-related expenditures. Air Quality Fund Accounts for revenues from the local agencies used to improve local air quality. Traffic Impact Fee Fund Accounts for moneys received from the traffic impact fee levied on new developments in the City. Fourth of July Parade Fund Accounts for the activities of the City's annual parade. Special Library Fund Accounts for revenues and expenditures related to the expanded Central Library including some construction. Park Acquisition and Development Fund Accounts for fees received from developers to develop and maintain the City's park system. Cultural Affairs Fund Accounts revenues and expenditures associated with the City's Art Center. Debt Service Funds Account for the receipts for and payment of general long-term debt. Reservoir Hill Fund Records the debt service activity of the Reservoir Hill Assessment bonds. r 59 Capital Projects Funds Account for the acquisition and construction of capital assets other than those financed by proprietary fund types. Pier Fund Accounts for the construction of the City's pier and surrounding area. Holly Seacliffe Fund Accounts for capital improvements made to the Holly Seacliff area. Capital Improvement Fund Accounts for major new improvements and equipment purchased for governmental operations. Parking in-lieu Fund Records construction activity from developers who pay fees in-lieu of directly providing parking facilities to the City. Sewer Development Fund Accounts for fees received from developers to construct and maintain sewer facilities. 60 CITY OF HUNTINGTON BEACH BALANCESHEET NON-MAJOR GOVERNMENTAL FUNDS SEPTEMBER 30,2004 (in thousands) SPECIAL REVENUE FUNDS Narcotics ASSETS: Gas Tax Drainage Forfeiture Transportation Air Quality Cash and Investments $ 5,087 $ $ 589 $ 5,419 $ 496 Cash and Investments with Fiscal Agent - - - - Taxes Receivable 717 - - 360 - Other Receivables 29 - 17 25 2 Due from Other Funds 1,003 - - - Other Assets - - - - - TOTAL ASSETS $ 6,836 $ - $ 606 $ 5,804 $ 498 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts Payable $ 142 $ $ 7 $ 416 $ 3 Accrued Payroll 5 - - 6 - Due to Other Funds - 898 - Deposits Payable - - - - - TOTAL LIABILITIES 147 898 7 422 3 FUND BALANCES: Reserved for: Encumbrances 336 - 24 2,443 23 Total Reserved Fund Balances 336 - 24 2,443 23 Unreserved Fund Balances Unreserved,Designated for Future Expenditures 2,472 - 40 2,598 472 Undesignated 3,881 (898) 535 341 - Total Unreserved Fund Balance 6,353 (898) 575 2,939 472 TOTAL FUND BALANCES 6,689 (898) 599 5,382 495 TOTAL LIABILITES AND FUND BALANCES $ 6,836 $ - $ 606 $ 5,804 $ 498 r 61 SPECIAL REVENUE FUNDS Park Acquisition Fourth of Special Cultural and Total Special Traffic Impact July Library Affairs Development Revenue Funds $ 7,620 $ 130 $ 1,569 $ 147 $ 2,529 $ 23,586 - - - - 1,077 35 9 7 1 12 137 - - - - - 1,003 - - - 1,293 1,293 $ 7,655 $ 139 $ 1,576 $ 148 $ 3,834 $ 27,096 $ 43 $ 1 $ 50 $ 8 $ 34 $ 704 - 8 3 1 23 - - - - 898 - 1 1,293 1,294 43 1 58 12 1,328 2,919 63 4 18 2 - 2,913 63 4 18 2 - 2,913 4,012 134 196 42 51 10,017 3,537 - 1,304 92 2,455 11,247 7,549 134 1,500 134 2,506 21,264 7,612 138 1,518 136 2,506 24,177 $ 7,655 $ 139 $ 1,576 $ 148 $ 3,834 $ 27,096 1 62 CITY OF HUNTINGTON BEACH BALANCESHEET NON-MAJOR GOVERNMENTAL FUNDS SEPTEMBER 30,2004 (in thousands) DEBT SERVICE FUND CAPITAL PROJECTS FUNDS Reservoir Hill ASSETS: Assessment District Capital Improvement Pier Holly Seacliff Cash and Investments $ 51 $ 750 $ $ 677 Cash and Investments with Fiscal Agent 14 356 - Taxes Receivable - - - Other Receivables - 71 - 3 Due from Other Funds - - - - Other Assets - - - - TOTAL ASSETS $ 65 $ 1,177 $ - $ 680 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts Payable $ - 816 $ - $ - Accrued Payroll - I Due to Other Funds - - - - Deposits Payable - - TOTAL LIABILITIES - 817 0 FUND BALANCES: Reserved for: Encumbrances - - - 476 Total Reserved Fund Balances - - 476 Unreserved Fund Balances Unreserved,Designated for Future Expenditures - 359 204 Undesignated 65 - - - Total Unreserved Fund Balance 65 359 - 204 TOTAL FUND BALANCES 65 359 - 680 TOTAL LIABILITES AND FUND BALANCES $ 65 $ 1,177 $ 0 $ 680 i i 1 1 63 CAPITAL PROJECTS FUNDS Sewer Total Capital Total Non-Major Parkin in-lieu Development Projects Funds Governmental Funds $ 333 $ $ 1,760 $ 25,397 _ = 356 370 1,077 - 74 211 _ _ - 1, 3 1,29293 $ 333 $ - $ 2,190 $ 29,351 $ - $ 1 $ 818 $ 1,522 ' = 2 3 26 105 105 1,003 1,294 108 926 3,845 - 476 3,389 - - 476 3,389 - 563 10,580 333 (108) 225 11,537 333 (108) 788 22,117 333 (108) 1,264 25,506 $ 333 $ - $ 2,190 $ 29,351 t 64 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Special Revenue Funds Narcotics REVENUES: Gas Tax Drainage Forfeiture Transportation Air Quality , Property Taxes $ - $ - $ - $ - $ - Sales Taxes - - 2,172 - Licenses and Permits - - - From Use of Money and Property 118 - 9 75 5 From Other Agencies 4,313 - 158 - 364 Charges for Current Service - 182 - - - Other - 2 - 151 - TOTAL REVENUES 4,431 184 167 2,398 369 EXPENDITURES: Current: Building - - - - - Information Systems - - Police - 29 - Economic Development - - - - Community Services - - - - - Library Services - - - - Public Works 587 - - 489 25 Non-Departmental - - - - - Capital Outlay 1,974 - 17 668 263 Debt Service: Principal - - 53 - - Interest - - 1 - TOTAL EXPENDITURES 2,561 - 100 1,157 288 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 1,870 184 67 1,241 81 OTHER FINANCING SOURCES(USES): Transfers In - - - 45 - Transfers Out (900) (100) - - TOTAL OTHER FINANCING SOURCES(USES) (900) - (100) 45 - ' EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES 970 184 (33) 1,286 81 FUND BALANCE-BEGINNING OF YEAR _ 5,719 (1,082) 632 4,096 414 FUND BALANCE-END OF YEAR $ 6,689 $ (898) $ 599 $ 5,382 $ 495 65 1 Special Revenue Funds Traffic Fourth of Special Cultural Park Acquisition Total Special Impact July Library Affairs and Develo ment Revenue Funds 2,172 3 - 1 - 4 133 2 394 10 40 786 13 102 4,950 889 - 1,012 256 - 2,339 - 392 2 - 1,325 1,872 1,038 394 1,408 267 1,467 12,123 29 362 - 361 384 1,107 1,089 1,089 56 - 1,157 818 - 1,330 5,070 - - - - 53 874 362 1,089 361 1,714 8,506 164 32 319 (94) (247) 3,617 - - - 85 - 130 (475) - - (1,47.5) - - (475) 85 - (1,345) 164 32 (156) (9) (247) 2,272 7,448 106 1,674 145 2,753 21,905 $ 7,612 $ 138 $ 1,518 $ 136 $ 2,506 $ 24,177 66 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) DEBT SERVICE FUND CAPITAL PROJECTS FUNDS Reservoir Hill Capital REVENUES: Assessment District Improvement Pier Holl Seacliff Property Taxes $ 157 $ - $ $ - Sales Taxes - Licenses and Permits -From Use of Money and Property 3 - 10 From Other Agencies - 2,231 - - Charges for Current Service - - 94 Other - _ _ - TOTAL REVENUES 160 2,231 - 104 EXPENDITURES: Current: Building - 108 - - Information Systems 198 - - Police - - - Economic Development - - - Community Services - - - Library Services - - - - Public Works - 161 - Non-Departmental 18 2,162 -Capital Outlay - 8,015 - 127 Debt Service: Principal 295 208 - - Interest 16 30 - - TOTAL EXPENDITURES 329 10,882 - 127 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (169) (8,651) - (23) OTHER FINANCING SOURCES(USES): Transfers In - 10,830 1,206 100 Transfers Out (72) - - TOTAL OTHER FINANCING SOURCES(USES) - 10,758 1,206 100 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (169) 2,107 1,206 77 FUND BALANCE-BEGINNING OF YEAR 234 (1,748) (1,206) 603 FUND BALANCE-END OF YEAR $ 65 $ 359 $ - $ 680 67 CAPITAL PROJECTS FUNDS Total Non-Major Parking in- Sewer Total Capital Governmental lieu Development Projects Funds Funds $ - $ $ - $ 157 2,172 4 50 60 849 - 6 2,237 7,187 - 275 369 2,708 1,872 50 281 2,666 14,949 1 - - 108 108 198 199 = 29 250 250 250 - - 1,107 - - 1,089 - 152 313 1,470 2,162 2,180 - 4 8,146 13,216 _ - 209 556 30 47 250 156 11,415 20,250 (200) 125 (8,749) (5,301) - - 12,136 12,266 - (72) (1,547) 12,064 10,719 (200) 125 3,315 5,418 533 (233) (2,051) 20,088 $ 333 $ (108) $ 1,264 $ 25,506 68 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Gas Tax Original REVENUES: Budget Final Budget Actual Variance From Use of Money and Property $ 40 $ 40 $ 118 $ 78 From Other Agencies 3,400 3,400 4,313 913 TOTAL REVENUES 3,440 3,440 4,431 991 EXPENDITURES: Current: Public Works 1,123 1,105 587 518 Capital Outlay 4,255 4,020 1,974 2,046 TOTAL EXPENDITURES 5,378 5,125 2,561 2,564 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (1,938) (1,685) 1,870 3,555 OTHER FINANCING SOURCES(USES): Transfers Out (900) (900) (900) - TOTAL OTHER FINANCING SOURCES(USES) (900) (900) (900) - EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (2,838) (2,585) 970 3,555 FUND BALANCE-BEGINNING OF YEAR 5,719 5,719 5,719 - FUND BALANCE-END OF YEAR $ 2,881 $ 3,134 $ 6,689 $ 3,555 Drainage Original REVENUES: Budget Final Budget Actual Variance Charges for Current Service $ 350 $ 350 $ 182 $ (168) Other 4 5 2 (3) TOTAL REVENUES 354 355 184 (171) TOTAL EXPENDITURES - - - - EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 354 355 184 (171) FUND BALANCE-BEGINNING OF YEAR (1,082) (1,082) (1,082) - FUND BALANCE-END OF YEAR $ (728) $ (727) $ (898) $ (171) 69 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Narcotics Forfeiture Original REVENUES: Budget Final Budget Actual Variance From Use of Money and Property $ 3 $ 3 $ 9 $ 6 From Other Agencies 160 160 158 (2) TOTAL REVENUES 163 163 167 4 EXPENDITURES: Current: Police 136 76 29 47 Capital Outlay 177 177 17 160 Debt Service: Principal - 53 53 Interest - 1 1 - TOTAL EXPENDITURES 313 307 100 207 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (150) (144) 67 211 OTHER FINANCING SOURCES(USES): Transfers Out (100) (100) (100) TOTAL OTHER FINANCING SOURCES(USES) (100) (100) (100) - EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (250) (244) (33) 211 FUND BALANCE-BEGINNING OF YEAR 632 632 632 FUND BALANCE-END OF YEAR $ 382 $ 388 $ 599 $ 211 Transportation Original REVENUES: Budget Final Budget Actual Variance Property Taxes Sales Taxes $ 2,200 $ 2,200 $ 2,172 $ (28) From Use of Money and Property 79 79 75 (4) Other 151 151 TOTAL REVENUES 2,279 2,279 2,398 119 EXPENDITURES: Current: Public Works 816 800 489 311 Capital Outlay 4,064 7,215 668 6,547 TOTAL EXPENDITURES 4,880 8,015 1,157 6,858 ® EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (2,601) (5,736) 1,241 6,977 OTHER FINANCING SOURCES(USES): Transfers In 45 45 TOTAL OTHER FINANCING SOURCES(USES) - 45 45 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (2,601) (5,736) 1,286 7,022 FUND BALANCE-BEGINNING OF YEAR 4,096 4,096 4,096 FUND BALANCE-END OF YEAR $ 1,495 $ (1,640) $ 5,382 $ 7,022 70 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Air Quality Original REVENUES: Budget Final Budget Actual Variance From Use of Money and Property $ 6 $ 6 $ 5 $ (1) From Other Agencies 221 221 364 143 TOTAL REVENUES 227 227 369 142 EXPENDITURES: Current: Public Works 311 278 25 253 Capital Outlay 541 522 263 259 TOTAL EXPENDITURES 852 800 288 512 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (625) (573) 81 654 FUND BALANCE-BEGINNING OF YEAR 414 414 414 - FUND BALANCE-END OF YEAR $ (211) $ (159) $ 495 $ 654 Traffic Impact Original REVENUES: Budget Final Budget Actual Variance Licenses and Permits $ - $ - $ 3 $ 3 From Use of Money and Property 122 122 133 11 From Other Agencies 13 13 13 - Charges for Current Service 400 400 889 489 TOTAL.REVENUES 535 535 1,038 503 EXPENDITURES: Current: Public Works 1,629 1,627 56 1,571 Capital Outlay 3,413 3,362 818 2,544 TOTAL EXPENDITURES 5,042 4,989 874 4,115 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (4,507) (4,454) 164 4,618 FUND BALANCE-BEGINNING OF YEAR 4,915 4,906 7,448 2,542 FUND BALANCE-END OF YEAR $ 408 $ 452 $ 7,612 $ 7,160 71 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Fourth of July Original REVENUES: Budget Final Budget Actual Variance From Use of Money and Property $ - $ 1 $ 2 $ 1 Other 151 150 392 242 TOTAL REVENUES 151 151 394 243 EXPENDITURES: Current: Community Services 401 382 362 20 TOTAL EXPENDITURES 401 382 362 20 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (250) (231) 32 263 FUND BALANCE-BEGINNING OF YEAR 106 106 106 - FUND BALANCE-END OF YEAR $ (144) $ (125) $ 138 $ 263 Special Library Original REVENUES: Budget Final Budget Actual Variance From Use of Money and Property $ 385 $ 386 $ 394 $ 8 Charges for Current Service 710 940 1,012 72 Other 282 53 2 (51) TOTAL REVENUES 1,377 1,379 1,408 29 EXPENDITURES: Current: Library Services 1,287 1,260 1,089 171 TOTAL EXPENDITURES 1,287 1,260 1,089 171 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 90 119 319 200 OTHER FINANCING SOURCES(USES): Transfers Out (494) (494) (475) 19 TOTAL OTHER FINANCING SOURCES(USES) (494) (494) (475) 19 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (404) (376) (156) 219 FUND BALANCE-BEGINNING OF YEAR 1,674 1,674 1,674 - FUND BALANCE-END OF YEAR $ 1,270 $ 1,298 $ 1,518 $ 219 72 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Cultural Affairs Original REVENUES: Budget Final Budget Actual Variance Licenses and Permits $ - $ - $ 1 $ 1 From Use of Money and Property 14 14 10 (4) Charges for Current Service 277 277 256 (21) TOTAL REVENUES 291 291 267 (24) EXPENDITURES: Current: Community Services 370 371 361 10 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (79) (80) (94) (14) OTHER FINANCING SOURCES(USES): Transfers In 60 60 85 25 TOTAL OTHER FINANCING SOURCES(USES) 60 60 85 25 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (19) (20) (9) 11 FUND BALANCE-BEGINNING OF YEAR 145 145 145 - FUND BALANCE-END OF YEAR $ 126 $ 125 $ 136 $ 11 Park Acquisition and Development Original REVENUES: Budget Final Budget Actual Variance From Use of Money and Property $ 32 $ 32 $ 40$ 8 From Other Agencies 1,059 1,059 102 (957) Other 760 760 1,325 565 TOTAL REVENUES 1,851 1,851 1,467 (384) EXPENDITURES: Current: Community Services 1,268 830 384 446 Capital Outlay 3,136 2,225 1,330 895 TOTAL EXPENDITURES 4,404 3,055 1,714 1,341 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (2,553) (1,204) (247) 957 OTHER FINANCING SOURCES(USES): Transfers Out (53) - - TOTAL OTHER FINANCING SOURCES(USES) (53) - - - EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (2,606) (1,204) (247) 957 FUND BALANCE-BEGINNING OF YEAR 2,753 2,753 2,753 - FUND BALANCE-END OF YEAR $ 147 $ 1,549 $ 2,506 $ 957 73 1 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Reservoir Hill Assessment District Original REVENUES: Budget Final Budget Actual Variance Property Taxes $ 130 $ 150 $ 157 $ 7 From Use of Money and Property 1 5 3 (2) TOTAL REVENUES 131 155 160 5 EXPENDITURES: Current: Non-Departmental 19 19, 18 1 Debt Service: Principal 115 190 295 (105) Interest 35 34 16 18 TOTAL EXPENDITURES 169 243 329 (86) EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (38) (88) (169) (81) FUND BALANCE-BEGINNING OF YEAR 234 234 234 FUND BALANCE-END OF YEAR $ 196 $ 146 $ 65 $ (81) Capital Improvement Original REVENUES: Budget Final Budget Actual Variance From Other Agencies $ 1,774 $ 2,275 $ 2,231 $ (45) TOTAL REVENUES 1,774 2,275 2,231 (45) EXPENDITURES: Current: Building 396 397 108 289 Information Systems 1,159 1,159 198 961 Police 4 2 - 2 Public Works 386 283 161 122 Non-Departmental 2,160 2,160 2,162 (2) Capital Outlay 18,110 10,140 8,015 2,125 Debt Service: - Principal 210 210 208 2 Interest 30 30 30 - TOTAL EXPENDITURES 22,455 14,381 10,882 3,499 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (20,681) (12,106) (8,651) 3,455 OTHER FINANCING SOURCES(USES): Transfers In - 10,830 10,830 - Transfers Out (72) (72) TOTAL OTHER FINANCING SOURCES(USES) - 10,758 10,758 - EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (20,681) (1,348) 2,107 3,455 FUND BALANCE-BEGINNING OF YEAR (1,748) (1,748) (1,748) - FUND BALANCE-END OF YEAR $ (22,429) $ (3,096) $ 359 $ 3,455 74 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Pier Original REVENUES: Budget Final Budget Actual Variance From Use of Money and Property $ 324 $ 387 $ - $ (387) Charges for Current Service 179 - - - TOTAL REVENUES 503 387 - (387) EXPENDITURES: Current: Community Services 130 131 - 131 TOTAL EXPENDITURES 130 131 - 131 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 373 256 - (256) OTHER FINANCING SOURCES(USES): Transfers In - - 1,206 1,206 Transfers Out (986) (406) - 406 TOTAL OTHER FINANCING SOURCES(USES) (986) (406) 1,206 1,612 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (613) (150) 1,206 1,356 FUND BALANCE-BEGINNING OF YEAR (1,206) (1,206) (1,206) - FUND BALANCE-END OF YEAR $ (1,819) $ (1,356) $ - $ 1,356 Holly Seacliff Original REVENUES: Budget Final Budget Actual Variance From Use of Money and Property $ $ 20 $ 10 $ (10) Charges for Current Service 94 94 - TOTAL REVENUES - 114 104 (10) EXPENDITURES: Current: Capital Outlay - 1,066 127 939 TOTAL EXPENDITURES 1,066 127 939 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (952) (23) 929 OTHER FINANCING SOURCES(USES): Transfers In 100 100 - TOTAL OTHER FINANCING SOURCES(USES) 100 100 - EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)EXPENDITURES AND OTHER USES (852) 77 929 FUND BALANCE-BEGINNING OF YEAR 603 603 603 - FUND BALANCE-END OF YEAR $ 603 $ (249) $ 680 $ 929 75 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30,2004 (IN THOUSANDS) Parking in-Lieu REVENUES: Budget Actual Variance From Use of Money and Property $ - $ 9 $ 50 $ 41 EXPENDITURES: Current: Economic Development = 500 250 250 TOTAL EXPENDITURES 500 250 250 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES - (491) (200) 291 FUND BALANCE AS RESTATED 533 533 533 - FUND BALANCE-END OF YEAR $ 533 $ 42 $ 333 $ 291 Sewer Development REVENUES: Budget Actual Variance From Other Agencies - - 6 6 Charges for Current Service 178 200 275 75 TOTAL REVENUES 178 200 281 81 EXPENDITURES: Current: Public Works 200 200 152 48 Capital Outlay 318 319 4 315 TOTAL EXPENDITURES 518 519 156 362 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (340) (319) 125 444 FUND BALANCE AS RESTATED (233) (233) (233) - FUND BALANCE-END OF YEAR $ (573) $ (552) $ (108) $ 444 76