HomeMy WebLinkAbout2001/2002 Comprehensive Annual Financial Report - CAFR - Yea t
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CITY OF HUNTINGTON BEACH
THE PEOPLE
CITY CLERK CITY COUNCIL CITY CITY
Mayor TREASURER ATTORNEY
Records Division Mayor Pro Investments
Elections Council Members
Business License
Passport Services �-CITY Accounts Receivable
ADMINISTRATOR Municipal Services
ORGANIZATIONAL ADMINISTRATIVE COMMUNICATIONS 8 Billing
EFFECTNENESS SERVICES SPECIAL PROJECTS I Central Cashiering
Finance, ASSISTANT CITY
ADMINISTRATOR
Risk Management
Central Services'
W
W
Human'Resources
Real Estate Services
Employee Services
PLANNING BUILDING 8 SAFETY ECONOMIC DEVELOPMENT PUBLIC WORKS COMMUNITY SERVICES LIBRARY SERVICES FIRE POLICE
Current Planning Permit 8 Redevelopment 8 Engineering Beaches,Recreation Operations Fire Prevention Uniform Division
Plan Check Services Housing 8 Facilities Development
Advanced Planning — Water Reference Operations Administration Division
Inspection Services Business Development Human Sernces 8 —
Code Enforcement L Recreation Childrens 1 Media Emergency Services Investigation Division
P Cultural,Historic �� �� p p
Trans ortation Technical Services Telecommunications Special 0 eraUons-
8 Event Services Division
Maintenance Information Systems
July 2002 .
S
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, 2001
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.
? UNITEO STATES y
W ANo H
CANAOA President
6 CORPORATION
Sff
e-Vas"
Executive Director
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Financial Section
,
C&L
Caporicci&Larson
Certified Public Accountants
INDEPENDENT AUDITORS'REPORT
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, 2002, 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 Government Auditing Standards, issued by
the Comptroller General of the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, Evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall 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, 2002, and the respective
changes in financial position and cash flows, where applicable, thereof for the year then ended in
conformity with generally accepted accounting principles in the United States.
As described in Note 1 to the basic financial statements, the City adopted Statements of the
Governmental Accounting Standards Board No. 34, Basic Financial Statements - and Management's
Discussion and Analysis - for State and Local Governments; No. 37, Basic Financial Statements - and
Management's Discussion and Analysis -for State and Local Governments: Omnibus; and, No. 38, Certain
Financial Statement Note Disclosures.
In accordance with Government Auditing Standards, we have also issued our report dated December 20,
2002 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 of 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.
Toll Free Ph:(877)862-2200 Toll Free Fax:(866)436-0927
Oakland Orange County Sacramento San Diego
180 Grand Ave.,Suite 1365 3184-D Airway Avenue 777 Campus Commons Rd.,Suite 200 600"B"Street,Suite 1900
Oakland,California 94612 Costa Mesa,California 92626 Sacramento,California 95825 San Diego,California 92101
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30,2002
(In Thousands)
Public Financing Authority Debt Service Fund
Original
REVENUES: Budget Final Budget Actual Variance
From Use of Money and Property $ 539 $ 539 $ 609 $ 70
EXPENDITURES:
Current:
Non-Departmental - 156 512 (356)
Debt Service:
Principal 1,205 21,923 21,923 -
Interest 2,702 5,345 4,188 1,157
TOTAL EXPENDITURES 3,907 27,424 26,623 801
EXCESS OF REVENUES OVER(UNDER)
EXPENDITURES (3,907) (26,885) (26,014) 871
OTHER FINANCING SOURCES(USES):
Transfers In 9,613 11,632 2,019
Proceeds of Long-Term Debt 31,095 31,095 -
Issuance Discount (156) (156)
Payments to Escrow - (31,071) (31,071) -
Transfers Out (2,771) (2,771) -
TOTAL OTHER FINANCING SOURCES(USES) - 6,710 8,729 2,019
EXCESS OF REVENUES AND OTHER SOURCES
OVER(UNDER)EXPENDITURES AND OTHER USES (3,907) (20,175) (17,285) 2,890
FUND BALANCE-BEGINNING OF YEAR 24,851 24,851 24,851 -
FUND BALANCE-END OF YEAR $ 20,944 $ 4,676 $ 7,566 $ 2,890
Redevelopment Agency Debt Service Fund
Original
REVENUES: Budget Final Budget Actual Variance
Property Taxes $ 6,200 $ 6,200 $ 6,223 $ 23
From Use of Money and Property 260 18,852 18,774 (78)
TOTAL REVENUES 6,460 25,052 24,997 (55)
EXPENDITURES:
Current:
Non-Departmental 931 1,168 648 520
Debt Service:
Principal 1,567 352 352 -
Interest 2,953 2,794 2,712 82
TOTAL EXPENDITURES 5,451 4,314 3,712 602
EXCESS OF REVENUES OVER(UNDER)
EXPENDITURES 1,009 20,738 21,285 547
OTHER FINANCING SOURCES(USES):
Transfers In - 2,715 2,715 -
Proceeds of Long-Term Debt - 20,900 20,900
Premium(Discount)on Issuance of Long-Term Debt - (68) (68) -
Payments to Escrow - (21,602) (21,602) -
Transfers Out - (2,717) (2,761) (44)
TOTAL OTHER FINANCING SOURCES(USES) - (772) (816) (44)
EXCESS OF REVENUES AND OTHER SOURCES
OVER EXPENDITURES AND OTHER USES 1,009 19,966 20,469 503
FUND BALANCE-BEGINNING OF YEAR 3,511 3,511 3,511 -
Prior Period Adjustments - (57,527) (57,527) -
FUND BALANCE AS RESTATED 3,511 (54,016) (54,016) -
FUND BALANCE-END OF YEAR $ 4,520 $ (34,050) $ (33,547) $ 503
81
CITY OF HUNTiNGTON BEACH
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30,2002
(In Thousands)
Redevelopment Agency Capital Projects
Original
REVENUES: Budget Final Budget Actual Variance
Other Taxes $ 822 $ 822 $ 705 $ (117)
From Use of Money and Property 1,171 1,171 568 (603)
Other 77 77 220 143
TOTAL REVENUES 2,070 2,070 1,493 (577)
EXPENDITURES:
Current:
City Attorney 500 550 207 343
Economic Development 1,315 1,503 1,026 477
Capital Outlay 624 7,424 6,578 846
TOTAL EXPENDITURES 2,439 9,477 7,811 1,666
EXCESS OF REVENUES OVER(UNDER)
EXPENDITURES (369) (7,407) (6,318) 1,089
OTHER FINANCING SOURCES(USES):
Transfers In 20 20 - (20)
Proceeds of Long-Term Debt - 6,524 6,524 -
Transfers Out (10) (10) (10) -
TOTAL OTHER FINANCING SOURCES(USES) 10 6,534 6,514 (20)
EXCESS OF REVENUES AND OTHER SOURCES
OVER(UNDER)EXPENDITURES AND OTHER USES (359) (873) 196 1,069
FUND BALANCE-BEGINNING OF YEAR 1,409 14,019 14,019
FUND BALANCE-END OF YEAR $ 1,050 $ 13,146 $ 14,215 $ 1,069
Capital Improvement
Original
REVENUES: Budget__ Final Budget Actual Variance
From Use of Money and Property 150 $ 150 $ 70 $ (80)
From Other Agencies 2,523 2,523 2,523 -
TOTAL REVENUES 2,673 2,673 2,599 (74)
EXPENDITURES:
Current:
Planning 202 202 - 202
Building 1,343 1,325 400 925
Information Systems 3,069 3,120 780 2,340
Community Services 72 72 67 5
Public Works 598 3,224 1,596 1,628
Non-Departmental 571 3,094 2,548 546
Capital Outlay 6,662 32,354 20,881 11,473
Debt Service:
Principal 185 185 185 -
Interest 55 55 55 -
TOTAL EXPENDITURES 12,757 43,631 26,512 17,119
EXCESS OF REVENUES OVER(UNDER)
EXPENDITURES (10,084) (40,958) (23,913) 17,045
OTHER FINANCING SOURCES(USES):
Transfers In 3,102 19,226 19,226 -
Transfers Out - (894) (894) -
TOTAL OTHER FINANCING SOURCES(USES) 3,102 18,332 18,332
EXCESS OF REVENUES AND OTHER SOURCES
OVER(UNDER)EXPENDITURES AND OTHER USES (6,982) (22,626) (5,581) 17,045
FUND BALANCE-BEGINNING OF YEAR 6,813 6,813 6,813 -
FUND BALANCE-END OF YEAR _$ (10,084) $ (34,145) $ 1,232 $ 17,045
82
CITY OF HUN'TINGTON BEACH
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30,2002
(In Thousands)
Public Financing Authority Capital Projects Fund
Original
REVENUES: Budget Final Budget Actual Variance
From Use of Money and Property $ - $ $ 1,493 $ 1,493
OTHER FINANCING SOURCES(USES):
Transfers In - 11 11 -
Transfers Out - (13,476) (13,476) -
TOTAL OTHER FINANCING SOURCES(USES) - (13,465) (13,465) -
FUND BALANCE-BEGINNING OF YEAR 28 701 28,701 28,701
FUND BALANCE-END OF YEAR $ 28,701 $ 15 236 $ 16,729 $ 1,493
83
CITY OF HUNTINGTON BEACH
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED SEPTEMBER 30, 2002
SCHEDULE OF FUNDING PROGRESS
RETIREMENT PLAN- NORMAL
Entry Age Excess
Normal Assets as a
Actuarial Actuarial Percentage of
Actuarial Valuation Accrued Value of Funded Covered Covered
Date Liability (AAL) Assets Excess Assets Ratio Payroll Payroll
1999
Safety $217,230 $257,921 $40,691 118.7% $22,502 180.8%
Non Safety 147,194 210,071 62,877 142.7% 30,622 205.3%
Total $364,424 $467,992 $103,568 128.4% $53,124 195.0%
2000
Safety $258,857 $291,309 $32,452 112.5% $23,270 139.5 %
Non Safety 163,688 230,236 66,548 140.7% 34,683 191.9 %
Total $422,546 $521,545 $99,000 123.4% 57,953 170.8%
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%
SCHEDULE OF FUNDING PROGRESS
RETIREMENT PLAN-SUPPLEMENTAL
Entry Age Actuarial UAAL as a%
Actuarial Valuation Normal Accrued Value of Unfunded AAL Funded Covered of Covered
Date Liability Assets (UAAL) Ratio Payroll Payroll
6/30194 Actual $ 14,673 $ 52 $ 14,725 0.4% $ 53,593 -27.5%
6/30/95 Update 15,776 290 16,066 1.8% 51,779 -31.0%
6/30/96 Actual 16,071 120 16,191 0.7% 54,368 -29.8%
6/30/1997Actual 25,342 2,334 23,008 -10.1% 49,881 -46.1%
6/30/98 Update 26,493 3,251 23,242 -14.0% 48,585 -47.8%
6/30/99 Actual 28,601 4,162 24,439 -17.0% 50,723 -48.2%
6/30/2000 U date 28,844 5,077 23,767 -21.4% 57,674 -41.2%
6/30/2001 Actual 36,453 6,678 29,775 -22.4% 63,345 -47.0%
6/30/2002 Update 35,524 8,775 26,749 -32.8% 65,137 -41.1%
84
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Supplementary Information
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Non-Major Governmental Funds
Special Revenue Funds account for revenues and expenditures legally restricted to a specific purpose.
• The Gas Tax Fund accounts for moneys allocated under the Streets and Highways Code of California.Expenditures may
be made for any street-related purpose allowed under the code.
• The Sewer Development Fund accounts for fees received from developers to construct and maintain sewer facilities.
• The Drainage Fund accounts for fees received from developers to construct and maintain the City's drainage system.
• The Public Communications Fund accounts for revenues from cable television franchises granted within the City's limits
spent on community-oriented television.
• The Narcotics Forfeiture Fund accounts for moneys received from the State of California for special law enforcement
expenditures.
• The Transportation Fund accounts for moneys received from the countywide'/cent sales tax and other specific sources
to be spent on transportation-related expenditures.
• The Air Quality Fund accounts for revenues from the local agencies used to improve local air quality.
• The Traffic Impact Fee Fund accounts for moneys received from the traffic impact fee levied on new developments in
the City.
• The Fourth of July Parade Fund accounts for the activities of the City's annual parade.
• The Library Services Fund accounts for revenues and expenditures related to the expanded Central Library including
some construction.
• The Grants Fund accounts for federal, state and county grants not accounted for in other funds. The granting agency
restricts expenditures to appropriate items.
• The Park Acquisition and Development Fund accounts for fees received from developers to develop and maintain the
City's park system.
Debt Service Funds account for the receipts for and payment of general long-term debt.
• The Reservoir Hill Fund records the debt service activity of the Reservoir Hill Assessment bonds.
• The Civic Improvement Corporation Fund records the debt service activity of the Huntington Beach Civic Improvement
Corporation.
Capital Projects Funds account for the acquisition and construction of capital assets other than those financed by proprietary
fund types.
• The Low-Income Housing Fund accounts for the 20% set-aside of tax increment revenues required by the California
Health and Safety Code.
• The Pier Rebuilding Fund accounts for the rebuilding of the City's pier.
• The Parking In-Lieu Fund records construction activity from developers who pay fees in-lieu of directly providing parking
spaces in certain areas of the City.
• The Holly Seacliffe Fund accounts for capital improvements made to the Holly Seacliffe area.
• The Pier Plaza Fund accounts for capital improvements for the Pier Plaza area.
• The Library Cultural Facilities Fund accounts for the continued costs of the expansion of the City's Library facilities
related to the City's growth.
CITY OF HUNTINGTON BEACH
BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2002
(in thousands)
SPECIAL REVENUE FUNDS
Sewer Public Narcotics
ASSETS: Gas Tax Development Drainage Communications Forfeiture
Cash and Investments $ 2,334 $ 42 $ $ 160 $
Taxes Receivable 612 - -
Other Receivables 22 26 3 130
Advances to Other Funds 1,280 328 621 -
Other Assets
TOTAL ASSETS $ 4,248 $ 396 $ 624 $ 290 $
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts Payable $ 642 $ 236 $ 108 $ 5 $
Accrued Payroll 3 5 - 31
Due to Other Funds - - 37 - 119
Deposits Payable - - - -
Deferred Revenue 780 197 371
TOTAL LIABILITIES 1,425 438 516 36 119
FUND BALANCES:
Reserved for:
Encumbrances 974 588 - 8 -
Advances 500 131 250
Total Reserved Fund Balances 1,474 719 250 8
Unreserved Fund Balances
Unreserved,Designated for Future Expenditures 875 - -
Undesignated 474 (761) (142) 246 (119)
Total Unreserved Fund Balance 1,349 (761) (142) 246 (119)
TOTAL FUND BALANCES 2,823 (42) 108 254 (119)
TOTAL LIABILITES AND FUND BALANCES $ 4,248 $ 396 $ 624 $ 290 $
85
SPECIAL REVENUE FUNDS
Air Traffic Fourth of Library Park Acquisition Total Special
Transportation Quality Impact July Services Grants and Development Revenue Funds
$ 3,836 $ 433 $ 6,885 $ 63 $ 1,137 $ 191 $ 964 $ 16,045
329 - - - - - - 941
26 4 29 5 8 6,579 13 6,845
- - - - - - 4,788 7,017
9,617 1,617
$ 4,191 $ 437 $ 6,914 $ 68 $ 1,145 $ 6,770 $ 7,382 $ 32,465
$ 173 $ 1 $ 16 $ 4 $ 26 $ 550 $ 36 $ 1,797
17 68 - 5 38 - 167
- - - - - 156
9 1,617 1,626
3,260 4,789 9,397
190 69 16 4 31 3,857 6,442 13,143
12 167 12 9 3 2,913 373 5,059
881
12 167 12 9 3 2,913 373 5,940
1,983 201 1,983 55 318 - - 5,415
2,006 4,903 793 567 7,967
3,989 201 6,886 55 1,111 567 13,382
4,001 368 6,898 64 1,114 2,913 940 19,322
$ 4,191 $ 437 $ 6,914 $ 68 $ 1,145 6,770 $ 7,382 $ 32,465
66
1 !
CI7.Y OF HUNTINGTON BEACH
BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2002
(in thousands)
(continued)
DEBT SERVICE FUNDS CAPITAL PROJECTS FUNDS
Reservoir Hill Civic Total Debt
Assessment Improvement Service Low-Income
ASSETS: District Corporation Funds Housing Pier Rebuilding
Cash and Investments $ 41 $ $ 41 $ 4,184 $ 294
Cash and Investments with Fiscal Agent 113 113 - -
Taxes Receivable 55 55 -
Other Receivables - - 2,749
Advances to Other Funds 2,094
Other Assets
TOTALASSETS $ 209 $ $ 209 $ 9,027 $ 294
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts Payable $ - $ $ - $ - $ 4
Accrued Payroll 3 -
Due to Other Funds -
Deposits Payable - - -
Deferred Revenue 24 24 2,720
TOTAL LIABILITIES 24 24 2,723 4
FUND BALANCES:
Reserved for:
Encumbrances - - 3 -
Advances 2,093
Total Reserved Fund Balances 2,096
Unreserved Fund Balances
Unreserved,Designated for Future Expenditures - - 163 -
Undesignated 185 185 4,045 290
Total Unreserved Fund Balance 18 i 185 4,208 290
TOTAL FUND BALANCES 18 i 185 6,304 290
TOTAL LIABILITES AND FUND BALANCES $ 209 $ $ 209 $ 9,027 $ 294
87
CAPITAL PROJECTS FUNDS
Total ota on-
Library Capital Major
Holly Cultural Projects Governmental
Parkin In-Lieu SeacliH Pier Plaza Facilities Funds Funds
$ 470 $ 1,178 $ - $ 886 $ 7,012 $ 23,098
- - 10 - 10 123
- - - - - 996
3 6 4 2,762 9,607
- 2,094 9,111
1,617
$ 473 $ 1,184 $ 10 $ 890 $ 11,878 $ 44,552
$ $ 28 $ 9 $ 41 $ 1,838
- - 3 170
737 737 893
- 1,626
- 2,720 12,141
765 9 3,501 16,668
- 5 8 5,067
2,093 2,974
5 2,101 8,041
- 163 5,578
473 1,184 (755) 876 6,113 14,265
473 1,184 (755) 876 6,276 19,843
473 1,184 (755) 881 8,377 27,884
$ 473 $ 1,184 $ 10 $ 890 $ 11,878 $ 44,552
88
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2002
(IN THOUSANDS)
Special Revenue Funds
Sewer Public Narcotics
REVENUES: Gas Tax Develo ment Drainage Communications Forfeiture Transportation
Other Taxes $ $ $ $ 500 $ $ 2,069
Licenses and Permits - -
From Use of Money and Property 89 5 5 144
From Other Agencies 4,827 25 - 160 42
Charges for Current Service - 81 229 33 - -
Other 26 - 70
TOTAL REVENUES 4,942 111 229 538 160 2,325
EXPENDITURES:
Current:
City Administrator - 392 - -
Planning -
Fire -
Police 21
Economic Development -
Community Services
Library Services - - -
Public Works 446 225 - 672
Non-Departmental - 3 - -
Capital Outlay 3.529 1,491 742 30 1,946
Debt Service:
Principal - - 48
Interest 6 - -
TOTAL EXPENDITURES 3,975 1,716 745 476 21 2,618
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES 967 (1,605) (516) 62 139 (293)
OTHER FINANCING SOURCES(USES):
Transfers In - - - - -
Transfers Out (2.400) - (34) - -
TOTAL OTHER FINANCING SOURCES(USES) (2,400) (34)
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (1,433) (1,605) (516) 28 139 2( 93)
FUND BALANCE-BEGINNING OF YEAR 3,946 1,563 624 226 (258) :.966
Prior Period Adjustments 310 - - 328
FUND BALANCE AS RESTATED 4,266 1,563 624 226 (258) 4,294
FUND BALANCE-END OF YEAR $ 2,823 $ (42) $ 108 $ 254 $ (119) $ 4,001
89
Special Revenue Funds
Park
Acquisiton Total Special .
Air Library and Revenue
Quality Traffic Impact Fourth of July Services Grants Development Funds
$ $ $ $ $ $ - $ 2,569
748 748
15 224 1 333 476 48 1,340
220 - - 7,430 19 12,723
1,142 433 - 1,918
247 10 81 558 992
235 1,366 248 776 7,987 1,373 20,290
- _ - _ - - 392
185 185
166 166
740 761
- 1,258 - 1,258
231 232 502 965
- - - 359 99 458
73 15 - 772 2,203
3
311 394 4,923 1,852 15,218
- - - - 75 - 123
185 191
384 409 231 359 8,635 2,354 21,923
(149) 957 17 417 (648) (981) (1,633)
• 5 - 594 35 634
(84) (705) (5,276) (8,499)
(84) 5 (705) (4,682) 35 (7,865)
(233) 957 22 (288) (5,330) (946) (9,498)
601 5,941 42 1,402 8,243 1,886 28,182
638
601 5941 42 1,402 6243 1,886 28,820
$ 368 $ 6,898 $ 64 $ 1,114 $ 2,913 $ 940 $ 19,322
90
1
CI.I-Y OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2002
(IN THOUSANDS)
(CONTINUED)
Debt Service Funds CAPITAL PROJECTS FUNDS
Reservoir Hill Civic
Assessment Improvement Total Debt
REVENUES: District corporation Service Fund Low-Income Housing Pier Rebuilding Parking In-Lieu
Property Taxes $ 185 $ $ 185 $ $ - $
Other Taxes - 2
Licenses and Permits - - - 17
From Use of Money and Property 5 14 19 195 268 15
From Other Agencies - - -
Charges for Current Service -
Other - 18
TOTAL REVENUES 190 14 204 195 288 32
EXPENDITURES:
Current:
City Administrator - - - - - -
Planning
Fire
Police -
Economic Development 83
Community Services -
Library Services
Public Works -
Non-Departmental 20 20 - -
CapitalOutlay - 984 88
Debt Service:
Principal 190 190 - -
Interest 50 50
TOTAL EXPENDITURES 260 260 1,067 88
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (70) 14 (56) (872) 200 32
OTHER FINANCING SOURCES(USES):
Transfers In - - - 1,245
Transfers Out (2,834) (2,834) (35) (590)
TOTAL OTHER FINANCING SOURCES(USES) (2,834) (2,834) 1,210 (590)
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (70) (2,820) (2,890) 338 (390) 32
FUND BALANCE-BEGINNING OF YEAR 255 2,820 3,075 5,966 680 "1
Prior Period Adjustments - -
FUND BALANCE AS RESTATED 255 2,820 3,075 5,966 680 "1
FUND BALANCE-END OF YEAR $ 185 $ $ 185 $ 6,304 $ 290 $ 473
91
CAPITAL PROJECTS FUNDS
Total Non-Major
Library Cultural Total Capital Governmental
Holly SeacliM Pier Plaza Facilities Projects Funtla Funtla
$ $ $ $ - $ 185
2 2,571
17 765
40 366 32 916 2,275
- - - - 12,723
- 1 571 572 2,490
570 4 592 1,584
610 367 607 2,099 22,593
- - - - 392
185
166
761
- 83 1,341
89 - 89 1,054
- 407 407 865
39 - 39 2,242
- - - 23
5 1,077 16,295
313
241
5 128 407 1,695 23,878
605 239 200 404 (1,285)
- - 1,245 1,879
(335) (960) (12,293)
(335) 285 (10,414)
605 (96) 200 689 (11,699)
579 (659) 681 7,688 38,945
638
579 (659) 681 7,688 39,583
$ 1,184 $ (755) $ 881 $ 8,377 $ 271884
92
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, 2002
(IN THOUSANDS)
Gas Tax
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 40 $ 40 $ 89 $ 49
From Other Agencies 4,901 4,901 4,827 .(74)
Other - - 26 26
TOTAL REVENUES 4,941 4,941 4,942 1
EXPENDITURES:
Current:
Public Works 1,167 1,408 446 962
Capital Outlay 2,591 5,953 3,529 2,424
TOTAL EXPENDITURES 3,758 7,361 3,975 3,386
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES 1,183 (2,420) 967 3,387
OTHER FINANCING SOURCES(USES):
Transfers Out (2,400) (2,400) (2,400) -
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES 1,183 (4,820) (1,433) 3,387
FUND BALANCE-BEGINNING OF YEAR 3,946 3,946 3,946 -
Prior Period Adjustments - 310 310
FUND BALANCE AS RESTATED 3,946 4,256 4,256
FUND BALANCE-END OF YEAR $ 5,129 $ (564) $ 2,823 $ 3,387
Sewer Development
Original Final
REVENUES: Budget Budget Actual Variar-e
From Use of Money and Property S 70 $ 70 $ 5 $ (65)
From Other Agencies - - 25 25
Charges for Current Service 100 100 81 (19)
TOTAL REVENUES 170 170 111 (59)
EXPENDITURES:
Current:
Public Works 379 516 225 291
Capital Outlay 89 2,302 1,491 811
TOTAL EXPENDITURES 468 2,818 1,716 1,102
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (298) (2,648) (1,605) 1,043
FUND BALANCE-BEGINNING OF YEAR 1,563 1,563 1,563 -
FUND BALANCE-END OF YEAR $ 1,265 $ (1,085) $ (42) $ 1,043
93
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 30,2002
(IN THOUSANDS)
(CONTINUED)
Drainage
Original Final
REVENUES: Budget Budget Actual Variance
Charges for Current Service $ - $ 200 $ 229 $ 29
EXPENDITURES:
Current:
Non-Departmental - 3 (3)
Capital Outlay 193 995 742 253
TOTAL EXPENDITURES 193 995 745 250
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (193) (795) (516) 279
FUND BALANCE-BEGINNING OF YEAR 624 624 624
FUND BALANCE-END OF YEAR $ 431 $ (171) $ 108 $ 279
Public Communications
Original Final
REVENUES: Budget Budget Actual Variance
Other Taxes $ 458 $ 458 $ 500 $ 42
From Use of Money and Property - 5 5
Charges for Current Service 40 40 33 (7)
TOTAL REVENUES 498 498 538 40
EXPENDITURES:
Current:
City Administrator 331 361 392 (31)
Capital Outlay 96 70 30 40
Debt Service:
Principal - - 48 (48)
Interest - - 6 (6)
TOTAL EXPENDITURES 427 431 476 (45)
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES 71 67 62 (5)
OTHER FINANCING SOURCES(USES):
Transfers Out (89) (34) (34) -
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (18) 33 28 (5)
FUND BALANCE-BEGINNING OF YEAR 226 226 226
FUND BALANCE-END OF YEAR $ 208 $ 259 $ 254 $ (5)
_ 5
Narcotics Forfeiture
Original Final
REVENUES: Budget Budget Actual Variance
From Other Agencies $ 25 $ 25 $ 160 $ 135
EXPENDITURES:
Police 25 30 21 9
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES - (5) 139 144
FUND BALANCE-BEGINNING OF YEAR (258) (258) (258) -
FUND BALANCE-END OF YEAR $ (258) $ (263) $ (119) $ 1"
94
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, 2002
(IN THOUSANDS)
(CONTINUED)
Transportation
Original Final
REVENUES: Budget Budget Actual Variance
Other Taxes $ 1,718 $ 1,718 $ 2,069 $ 351
From Use of Money and Property 40 40 144 104
From Other Agencies 160 160 42 (118)
Other - - 70 70
TOTAL REVENUES 1,918 1,918 2,325 407
EXPENDITURES:
Current:
Public Works 721 792 672 120
Capital Outlay 3,705 3,798 1,946 1,852
TOTAL EXPENDITURES 4,426 4,590 2,618 1,972
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (2,508) (2,672) (293) 2,379
FUND BALANCE-BEGINNING OF YEAR 3,966 3,966 3,966 -
Prior Period Adjustments - 328 328 -
FUND BALANCE AS RESTATED 3,966 4,294 4,294 -
FUND BALANCE-END OF YEAR $ 1,458 $ 1,622 $ 4,001 $ 2,379
Air Quality
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 20 $ 20 $ 15 $ (5)
From Other Agencies 210 210 220 10
TOTAL REVENUES 230 230 235 5
EXPENDITURES:
Current:
Information Systems 50 50 - 50
Public Works 85 186 73 113
Capital Outlay 397 413 311 102
TOTAL EXPENDITURES 532 649 384 265
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (302) (419) (149) 270
OTHER FINANCING SOURCES(USES):
Transfers Out - (24) (84) (60)
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (302) (443) (233) 210
FUND BALANCE-BEGINNING OF YEAR 601 601 601 -
FUND BALANCE-END OF YEAR $ 299 $ 158 $ 368 $ 210
Traffic Impact
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 40 $ 40 $ 224 $ 184
From Other Agencies 160 160 - (160)
Charges for Current Service 300 300 1,142 842
TOTAL REVENUES 500 500 1,366 866
EXPENDITURES:
Current:
Public Works 50 75 15 60
Capital Outlay 153 526 394 132
TOTAL EXPENDITURES 203 601 409 192
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES 297 (101) 957 1,058
FUND BALANCE-BEGINNING OF YEAR 5,941 5,941 5,941 -
FUND BALANCE-END OF YEAR $ 6,238 $ 5,840 $ 6,898 $ 1,058
95
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, 2002
(IN THOUSANDS)
(CONTINUED)
Fourth of July
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 2 $ 2 $ 1 $ (1)
Other 200 200 247 47
TOTAL REVENUES 202 202 248 46
EXPENDITURES:
Current:
Community Services 253 263 231 32
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (51) (61) 17 78
OTHER FINANCING SOURCES(USES): 5 5
Transfers In -
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (51) (56) 22 78
FUND BALANCE-BEGINNING OF YEAR 42 42 42
FUND BALANCE-END OF YEAR $ (9) $ (14) $ 64 $ 78
Library Services
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 338 $ 338 $ 333 $ (5)
Charges for Current Service 320 320 433 113
Other 6 6 10 4
TOTAL REVENUES 664 664 776 112
EXPENDITURES:
Current:
Library Services 827 386 359 27
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (163) 278 417 139
OTHER FINANCING SOURCES(USES):
Transfers Out (705) (705) (705) -
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (868) (427) (288) 139
FUND BALANCE-BEGINNING OF YEAR 1,402 1,402 1,402
FUND BALANCE-END OF YEAR $ 534 $ 975 $ 1,114 $ 139
96
CITY OF HUNTINGTON BEACH
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,AND
CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
NON-MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2002
(IN THOUSANDS)
Grants
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 1,030 $ 1,030 $ 476 $ (554)
From Other Agencies 14,888 14,888 7,430 (7,458)
Other 81 81
TOTAL REVENUES 15,918 15,918 7,987 (7,931)
EXPENDITURES:
Current:
City Administrator - 50 - 50
Planning 142 143 185 (42)
Fire 43 534 166 368
Police 868 1,119 740 379
Economic Development 803 1,805 1,258 547
Community Services 111 225 232 (7)
Library Services 83 88 99 (11)
Public Works 1,590 3,020 772 2,248
Capital Outlay 15,466 19,726 4,923 14,803
Debt Service:
Principal - 75 75 -
Interest - 185 185
TOTAL EXPENDITURES 19,106 26,785 8,635 18,285
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (3,188) (10,867) (648) 10,219
OTHER FINANCING SOURCES(USES):
Transfers In 594 594 -
Transfers Out - (5,276) (5,276) _ -
TOTAL OTHER FINANCING SOURCES(USES) _ (4,682) (4,682)
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (3,188) (15,549) (5,330) 10,219
FUND BALANCE-BEGINNING OF YEAR 8,243 8,243 8,243
FUND BALANCE-END OF YEAR $ (3,188) $ (7,306) $ 2,913 $ 10,219
Park Acquisition and Development
Original Final
REVENUES: Budget Budget Actual Variance
Licenses and Permits $ 499 $ 499 $ 748 $ 249
From Use of Money and Property - - 48 48
From Other Agencies 19 19
Other - - 558 558
TOTAL REVENUES 499 499 1,373 874
EXPENDITURES:
Current:
Community Services 815 1,504 502 1,002
Capital Outlay 3,485 3,360 1,852 1,508
TOTAL EXPENDITURES 4,300 4,864 2,354 2,510
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (3,801) (4,365) (981) 3,384
OTHER FINANCING SOURCES(USES):
Transfers In 35 35 35 -
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (3,766) (4,330) (946) 3,384
FUND BALANCE-BEGINNING OF YEAR 1,886 1,886 1,886
FUND BALANCE-END OF YEAR $ (1,880) $ (2,444) $ 940 $ 3,384
97
CITY OF HUNTINGTON BEACH
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
NON-MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2002
(IN THOUSANDS)
Reservoir Hill Assessment District
Original Final
REVENUES: Budget Budget Actual Variance
Property Taxes $ 151 $ 151 $ 185 $ 34
From Use of Money and Property 23 23 5 (18)
TOTAL REVENUES 174 174 190 16
EXPENDITURES:
Current:
Non-Departmental 1 18 20 (2)
Debt Service:
Principal 150 220 190 30
Interest - 62 50 12
TOTAL EXPENDITURES 151 300 260 40
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES 23 (126) (70) 56
FUND BALANCE-BEGINNING OF YEAR 255 255 255
FUND BALANCE-END OF YEAR $ 278 $ 129 $ 185 $ 56
Civic Improvement Corporation
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 130 $ 130 $ 14 $ (116)
OTHER FINANCING(USES):
Transfers Out (2,834) (2,834) (2,834) -
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER U£ES (2,704) (2,704) (2,820) (116)
FUND BALANCE-BEGINNING Or YEAR 2,820 2,820 2,820
FUND BALANCE-END OF YEAR $ 116 $ 116 $ - $ (116)
Low-Income Housing
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 110 $ 110 $ 195 $ 85
EXPENDITURES:
Current:
Economic Development 135 149 83 66
Capital Outlay 5,190 5,136 984 4,152
TOTAL EXPENDITURES 5,325 5,285 1,067 4,218
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (5,325) (5,175) (872) 4,303
OTHER FINANCING SOURCES(USES):
Transfers In 1,259 1,259 1,245 (14)
Transfers Out (35) (35) (35) -
TOTAL OTHER FINANCING SOURCES(USES) 1,224 1,224 1,210 (14)
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES (4,101) (3,951) 338 4,289
FUND BALANCE-BEGINNING OF YEAR 5,966 5,966 5,966
FUND BALANCE-END OF YEAR $ (5,325) $ 791 $ 6,304 $ 4,289
98
CITY OF HUNTINGTON BEACH
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,AND
CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
NON-MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2002
(IN THOUSANDS)
Pier Rebuilding
Original Final
REVENUES: Budget Budget Actual Variance
Other Taxes $ 24 $ 24 $ 2 $ (22)
From Use of Money and Property 560 560 268 (292)
Other 24 24 18 (6)
TOTAL REVENUES 608 608 288 (320)
EXPENDITURES:
Capital Outlay - 90 88 2
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES 608 518 200 (318)
OTHER FINANCING SOURCES(USES):
Transfers Out (590) (590) (590) -
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES 18 (72) (390) (318)
FUND BALANCE-BEGINNING OF YEAR 680 680 680
FUND BALANCE-END OF YEAR $ 698 $ 608 $ 290 $ (318)
Parking In-Lieu
Original Final
REVENUES: Budget Budget Actual Variance
Licenses and Permits $ - $ $ 17 $ 17
From Use of Money and Property 15 15
TOTAL REVENUES - - 32 32
FUND BALANCE-BEGINNING OF YEAR 441 441 441
FUND BALANCE-END OF YE,�R $ 441 $ 441 $ 473 $ 32
99
CITY OF HUNTINGTON BEACH
COMBINING SCHEDULE OF REVENUES, EXPENDITURES,AND
CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
NON-MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2002
(IN THOUSANDS)
Holly Seacliff
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ - $ - $ 40 $ 40
Other - - 570 570
TOTAL REVENUES - 610 610
EXPENDITURES:
Capital Outlay 147 147 5 142
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES (147) (147) 605 752
FUND BALANCE-BEGINNING OF YEAR 579 579 579 -
FUND BALANCE-END OF YEAR $ 432 $ 432 $ 1,184 $ 752
Pier Plaza
Original Final
REVENUES: Budget Budget Actual Variance
From Use of Money and Property $ 600 $ 600 $ 366 $ (234)
Charges for Current Service - - 1 1
TOTAL REVENUES 600 600 367 (233)
EXPENDITURES:
Current:
Community Services 90 90 89 1
Public Works 75 98 39 59
TOTAL EXPENDITURES 165 188 128 60
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES 435 412 239 (173)
OTHER FINANCING SOURCES(USES):
Transfers Out (335) (335) (335) -
EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER)
EXPENDITURES AND OTHER USES 100 77 (96) (173)
FUND BALANCE-BEGINNING OF YEAR (659) (659) (659)
FUND BALANCE-END OF YEAR $ (559) $ (582) $ (755) $ (173)
Library Cultural Facilities
REVENUES: Budget Actual Variance
From Use of Money and Property $ 30 $ 30 $ 32 $ 2
Charges for Current Service 477 477 571 94
Other - - 4 4
TOTAL REVENUES 507 507 607 100
EXPENDITURES:
Current:
Library Services 445 445 407 38
EXCESS OF REVENUES OVER(UNDER)EXPENDITURES 62 62 200 138
FUND BALANCE-BEGINNING OF YEAR 681 681 681
FUND BALANCE-END OF YEAR $ 743 $ 743 $ 881 $ 138
100
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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.
• The Emerald Cove Housing Fund accounts for the operations of a senior-citizens apartment complex.
• The Emergency Fire Medical Fund accounts for the user-fee portion of the City's paramedic service.
• The Refuse Collection Fund accounts for the City's refuse collection program.
• The Sewer Service Fund accounts for the City's sewer program to residents and businesses
• The Hazmat Service Fund accounts for user fees charged for City's hazardous material program.
• The Cultural Affairs Fund accounts for the operation of the City's Art Center.
• The Ocean View Estates Fund accounts for the operation of the Ocean View Estates Mobile Home Park owned by the
City
CITY OF HUNTINGTON BEACH
STATEMENT OF NET ASSETS
NON-MAJOR ENTERPRISE FUNDS
SEPTEMBER 30, 2002
(in thousands)
Emerald
Cove Emergency Refuse Sewer Hazmat Cultural Ocean View
ASSETS Housing Fire Medical Collection Service Service Affairs Estates Total
CURRENTASSETS:
Cash and Investments $ 2,198 $ 443 $ - $ 2,756 $ 247 $ 164 $ 671 $ 6,479
General Receivables 16 1,685 461 272 - 2 2,436
Unbilled Receivable 1,241 614 1,855
TOTAL CURRENT ASSETS 2,214 2,128 1,702 3,642 247 164 673 10,770
CAPITAL ASSETS:
Land 1,288 - - - - 759 2,644 4,691
Buildings 4,102 - 1,219 - 1,248 560 7,129
Machinery and Equipment - 1,106 191 20 - - 1,317
Infrastructure 33,796 - - - 33,796
Less Accumulated Depreciation (1.394) (204) (17,742) (20) (175) (30) (19,565)
TOTAL CAPITAL ASSETS 3,996 902 17,464 1,832 3,174 27,368
TOTAL ASSETS 6,210 3,030 1,702 21,106 247 1,996 3,847 38,138
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES:
Accounts Payable - 195 731 1 - 8 2 937
Accrued Payroll 48 9 49 14 7 - 127
Due to Other Funds - 1,292 - - - 1,292
Deposits Payable 27 27
TOTAL CURRENT LIABILITIES 27 243 2,032 50 14 15 2 2,383
NON-CURRENT LIABILITIES:
Capital Leases - 281 - - - - 281
Compensated Absences - 49 35 11 4 99
Advances from Other Funds 243 243
TOTAL NON-CURRENT LIABILITIES 243 330 35 11 4 623
TOTAL LIABILITIES 270 573 2,067 50 25 19 2 3,006
NET ASSETS:
Invested in Capital Assets,Net of Related Debt 3,996 621 - 17,464 1,832 3,174 27,087
Unrestricted 1,944 1,636 (365) 3,592 222 145 671 8,045
TOTAL NET ASSETS $ 5,940 $ 2,457 $ (365) $ 21,056 $ 222 $ 1,977 $ 3,845 $ 35,132
101
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET ASSETS
NON-MAJOR ENTERPRISE FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002
(in thousands)
Emerald
Cove Emergency Refuse Sewer HazmatF
ral Ocean View
Housing Fire Medical Collection Service Servicers Estates Total
OPERATING REVENUES:
Rentals $ 661 $ - $ - $ $ $ $ 170 $ 831
Fees for Service - 4,103 9,073 4,540 - 17,716
Other 46 109 - 145 189 22 511
TOTAL OPERATING REVENUES 707 4,103 9,182 4,540 145 189 192 19,058
OPERATING EXPENSES:
Supplies and Operations 323 3,075 9,178 1,708 139 292 - 14,715
Depreciation 82 97 - 711 4 25 11 930
TOTAL OPERATING EXPENSES 405 3,172 9,178 2,419 143 317 11 16,645
OPERATING INCOME(LOSS) 302 931 4 2,121 2 (128) 181 3,413
NON-OPERATING REVENUES(EXPENSES):
Interest Income 80 12 - 56 11 6 5 170
Gain(Loss)on Sale of Plant,Property,and Equipment - 59 - - - - 59
TOTAL NON-OPERATING REVENUES(EXPENSES) 80 71 56 11 6 5 229
CHANGE IN NET ASSETS BEFORE OPERATING
TRANSFERS AND CAPITAL CONTRIBUTIONS 382 1,002 4 2,177 13 (122) 186 3,642
TRANSFERS AND CAPITAL CONTRIBUTIONS:
Transfers In 35 - - 700 - 85 - 820
Transfers Out (383) (181) - (12) - (576)
Capital Contributions - - 18,179 - - - 18,179
TOTAL TRANSFERS AND CAPITAL CONTRIBUTIONS (348) (181) 18,879 (12) 85 18,423
TOTAL CHANGE IN NET ASSETS 34 821 4 21,056 1 (37) 186 22,065
NET ASSETS OCTOBER 1,2001 5,906 1,63 (369) 221 2,014 3,659 13,067
NET ASSETS SEPTEMBER 30,2002 $ 5,940 $ 2,457 $ (365) $ 21,056 $ 222 $ 1,977 $ 3,845 $ 35,132
102
CITY OF HUNTINGTON BEACH
STATEMENT OF CASH FLOWS
NON-MAJOR ENTERPRISE FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002
(in thousands)
Emerald
Cove Emergency Refuse Sewer Hazmat Cultural Ocean View
Housing Fire Medical Collection Service Service Affairs Estates Total
Cash Flows from Operating Activities:
Cash Received from Customers and Users $ 674 $ 3,712 $ 8,974 $ 3,654 $ 146 $ 194 $ 195 $ 17,549
Cash Paid to Employees for Services - (1,173) (231) (918) (116) (230) (2,668)
Cash Paid to Suppliers of Goods and Services (350) (2,135) (8,972) (736) (10) (117) (1) (12.321)
Other Operating Items 229 229
Net Cash Provided(Used)by Operating Activities 324 404 2,000 20 (153) 194 2,789
Cash Flows from Noncapital Financing Activities:
Transfers In 35 - 700 - 85 820
Transfers Out (383) (181) (12) (576)
Net Cash Provided(Used)by Non Capital Financing
Activities (348) (181) 700 (12) 85 244
Cash Flows from Capital and Related Financing Activities:
Purchase of Plant.Property,and Equipment - (477) - - (477)
Principal Paid on Long-Term Debt (150) (150)
Net Cash Provided(Used)by Capital and Related
Financing Activities (627) (627)
Cash Flows from Investing Activities
Cash Received from Investments 80 12 56 11 6 5 170
Net Increase(Decrease)in Cash and Cash Equivalents 56 (392) 2,756 19 (62) 199 2,576
Cash and Cash Equivalents,October 1,2001 2,142 835 228 226 472 3,903
Cash and Cash Equivalents,September 30,2002 $ 2,198 $ 443 $ $ 2,756 $ 247 $ 164 $ 671 $ 6,479
Reconciliation of Operating Income to Net Cash
provided(used)by Operating Activities
Operating Income(Loss) $ 302 $ 931 $ 4 $ 2,121 $ 2 $ (128) $ 181 $ 3,413
Adjustments to Reconcile Operating income to Net
Cash Provided(Used)by Operating Activities
Depreciation 82 97 - 711 4 25 11 930
Decrease(Increase)in Accounts Receivable 19 (573) (182) (272) 1 3 (1,004)
Decrease(Increase)in Unbilled Receivables - - (26) (610) - - - (636)
Increase(Decrease)in Accounts Payable (84) (59) (26) 1 - (53) (1) (222)
Increase(Decrease)in Accrued Payroll - 5 1 49 13 1 - 69
Increase(Decrease)in Due to Other Funds - 223 - - - 223
Increase(Decrease)in Advances from Other Funds (1) - (1)
Increase(Decrease)in Deposits 6 - - - 6
Increase(Decrease)in Compensated Absences 3 6 2 11
Net Cash Provided(Used)by Operating Activities $ 324 $ 404 $ $ 2,000 $ 20 $ (153) $ 194 $ 2,789
103
Internal Service Funds
Internal Service Funds account for goods and services provided by one City department to another on a cost-reimbursement
basis.
Insurance Reserve Funds:
• The Medical Insurance Fund accounts for self-insurance activities for health costs.
• The Workers'Compensation Fund accounts for self-insurance activities for workers'compensation costs.
CITY OF HUNTINGTON BEACH
STATEMENT OF NET ASSETS
INTERNAL SERVICE FUNDS
SEPTEMBER 30,2002
in thousands
Workers'
ASSETS Medical Insurance Compensation Total
Current Assets:
Other Receivables $ 12 $ - $ 12
Prepaid Insurance 115 67 182
TOTALASSETS 127 67 194
LIABILITIES -
Current Liabilities
Accounts Payable 24 7 31
Accrued Payroll 15 9 24
Due to Other Funds 869 1,945 2,814
Current Portion of Claims Payable 385 3,500 3,885
Total Current Liabilities 1,293 5,461 6,754
Non-Current Liabilities
Compensated Absences 45 - 45
Claims Payable 385 5,065 5,450
Less Current Portion (385) (3,500) (3,885)
Total Non-Current Liabilities 45 1,665 1,610
TOTAL LIABILITIES 1,338 7,026 8,364
NET ASSETS
Unrestricted (1,211) (6,959) (8,170)
TOTALNETASSETS $ (1,211) $ (6,959) $ (8,170)
STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET ASSETS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2002
in thousands
Workers'
Medical Insurance I Compensation Total
OPERATING REVENUES:
Fees for Service $ 4,858 $ 3,145 $ 8,003
Other 15 15
TOTAL OPERATING REVENUES 4,873 3,145 8,018
OPERATING EXPENSES:
Claims and Insurance 6,799 3,941 10,740
Supplies and Operating 598 248 846
TOTAL OPERATING E--PENSES 7,397 4,189 11,586
OPERATING INCOME I.OSS) (2,524) (1,044) (3,568)
TRANSFERS:
Transfers In 746 608 1,354
Transfers Out (178) (550) (728)
TOTALTRANSFERS 568 58 626
TOTAL CHANGE IN NET ASSETS (1,956) (986) (2,942)
NET ASSETS OCTOBER 1,2001 745 (5,973) (5,228)
NET ASSETS SEPTEMBER 30,2002 $ (1,211) $ (6,959) $ (8,170)
STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2002
(in thousands)
Workers'
Medical Insurance Com ensation Total
Cash Flaws from Operating Activities:
Cash Received from Customers and Users $ 4,873 $ 3,145 $ 8,018
Cash Paid to Employees for Services (423) (186) (609)
Cash Paid to Suppliers of Goods and Services (6,364) (3,017) (9,381)
Net Cash Provided by Operating Items (1,914) (58) (1,972)
Cash Flows from Noncapital Financing Activities:
Transfers In 746 608 1,354
Transfers Out (178) (550) (728)
Net Cash Provided(Used)by Non Capital Financing
Activities 568 58 626
Net Increase in Cash and Cash Equivalents (1,346) (1,346)
Cash and Cash Equivalents,October 1,2001 1,346 1,346
Cash and Cash Equivalents,September 30,2002 $ • $ $
Reconciliation of Operating Income to Net Cash provided(used)by Operating Activities
Operating Income(Loss) $ (2,524) $ (1,044) $ (3,568)
Adjustments to Reconcile Operating income to Net
Cash Provided(Used)by Operating Activities
Decrease(Increase)in Accounts Receivable 32 - 32
Decrease(Increase)in Prepaid Insurance (64) (46) (110)
Increase(Decrease)in Accounts Payable (20) 5 (15)
Increase(Decrease)in Accrued Payroll - 2 2
Increase(Decrease)in Accrued Interest Payable (394) (4) (398)
Increase(Decrease)in Due to Other Funds 869 571 1,440
Increase(Decrease)in Claims Payable 185 479 664
Increase(Decrease)in Compensated Absences 2 (21) (19)
Net Cash Provided(Used)by Operating Activities $ (1,914) $ (58) $ (1,972)
104
Capital Assets Used in the Operation of
Governmental Funds
CITY OF HUNTINGTON BEACH
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE BY SOURCE
SEPTEMBER 30,2002
(IN THOUSANDS)
CAPITAL ASSETS:
Land $ 317,391
Buildings 86,469
Machinery&Equipment 50,517
Construction In Progress 22,202
Infrastructure 274,079
TOTAL INVESTMENT IN CAPITAL
ASSETS $ 750,658
INVESTMENTS IN CAPITAL ASSETS
FROM:
General Fund $ 124,908
Special Revenue Funds 60,210
Capital Projects Funds 41,819
Donations 523,721
TOTAL INVESTMENTS IN CAPITAL
ASSETS $ 750,658
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
BY FUNCTION AND ACTIVITY
FOR THE YEAR ENDED SEPTEMBER 30,2002
(IN THOUSANDS)
October 1, September 30,
2001 Additions Retirements 2002
Administrative Services $ 794 $ 53 $ (695) $ 152
Building 289 464 (77) 676
City Attorney 89 - (6) 83
City Administration 748 230 (76) 902
City Clerk 34 6 - 40
City Treasurer 100 125 (27) 198
Community Services 89,184 4,667 (406) 93,445
Economic Development 18,486 (23) 18,463
Fire 13,171 2,614 (2,489) 13,296
Information Systems 5,707 1,955 (130) .532
Library Services 14,491 56 (76) 1•,471
Non-Departmental 12,037 112,037
Planning 124 81 (72) 133
Police 18,024 8,146 (10,125) 16,045
Public Works 538,464 39,921 (5,200) 573,185
TOTAL $ 711,742 $ 58,318 $ (19,402) $ 750,658
CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS
SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY
SEPTEMBER 30,2002
(IN THOUSANDS)
Machinery& Construction in
Land Buildings Equipment Progress Infrastructure Total
Administrative Services $ $ $ 152 $ - $ $ 152
Building 268 408 676
City Attorney 83 - 83
City Administration 902 902
City Clerk 40 40
City Treasurer 198 198
Community Services 47,598 41,005 4,842 93,445
Economic Development 18,412 - 51 18,463
Fire - 5,835 7,461 - 13,296
Information Systems - 7,422 110 7,532
Library Services - 13,667 804 - 14,471
Non-Departmental 1,410 9,981 646 12,037
Planning - - 133 - 133
Police - 785 14,545 715 - 16,045
Public Works 249,971 15,196 12,970 20,969 274,079 573,185
TOTAL $ 317,391 $ 86,469 $ 50,517 $ 22,202 $ 274,079 $ 750,658
105
Statistical Section
CITY OF HUNTINGTON BEACH
GOVERNMENTAL FUND EXPENDITURES
BY FUNCTION AND ACTIVITY
LAST TEN FISCAL YEARS
(IN THOUSANDS)
Administrative Community
City Council City Administrator City Treasurer City Attorney City Clerk Services Development Planning Building
1992-93 S213 $1,480 S709 $1,807 $449 S4,108 S6,097 $ $ -
°1993-94 282 2.691 897 2.168 517 5,140 10,406 - -
1994-95 224 1.672 709 1,866 485 4,200 3,252 - -
1995-96 224 2,140 743 1,466 488 4,181 3,252 - -
1996-97 233 1.856 781 1.738 470 4,208 3,694 -
1997-98 207 1,092 805 2,340 434 3,056 3,919 - -
1998.99 275 1,569 820 1,969 474 2,876 4.067 - -
1999-2000 277 1,799 884 2,227 451 3,559 - 2.180 2,384
2000-2001 231 1,776 916 2,943 559 3,874 - 2,329 2,589
2001-2002 237 2,109 1,108 3,570 676 7,095 - 2,585 2,991
Source.Administrative Services Department-City of Huntington Beach
GOVERNMENTAL FUND REVENUES BY SOURCE
LAST TEN FISCAL YEARS
(IN THOUSANDS)
Licenses and Fines and Use of Money From Other Charges for
Fiscal Year Property Tax Other Taxes Permits Forfeitures and Property Agencies Current Service Other Total
1992-93 $ 33,163 S 36.332 S 4,846 $ 1,354 S 11.382 S 19.334 S 6,453 S 2.493 S 115,357
'1993-94 32,545 46.194 6.579 1,894 17,303 25.894 9,528 6,221 146,158
1994-95 25.265 38,259 5,978 2.134 11,704 19,941 8.706 1,071 113,058
1995-96 29,320 39,879 6,567 2.134 14,291 18,171 13.129 3,579 127,070
1996-97 29,341 42.203 8.121 2.707 12,971 19,810 10.448 743 126.344
1997-98 32,477 44,895 8,848 2.649 12,614 21,539 10,147 3,798 136,967
1998-99 34,345 48,757 10,527 2,744 10,913 24,753 9,557 4,514 146,110
1999-2000 37,645 52.194 8,538 4.018 14,603 32,021 10,077 5,770 164.866
2000-2001 36,860 60.223 6,902 4,092 15,812 31,634 10,459 1,691 167.673
2001-2002 33,204 55.084 7,162 3.797 13,895 28,426 12.597 2,604 156,769
Source:Administrative Services Department-City of Huntington Beach
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(IN THOUSANDS)
SECURED TAXES UNSECURED TAXES
DELINQUENCY DELINQUENCY DELINQUENCY DELINQUENCY
TOTAL LEVY TOTAL COLLECTIONS AMOUNT PERCENT TOTAL LEW TOTAL COLLECTIONS AMOUNT PERCENT
1992-93 S 19,060 S 17,847 S 853 4.48% S 1,542 S 1,205 S 30 1.95%
1993-94' 16612 15,632 572 3.44% 1,205 1,106 56 4,65%
1994-95 16,781 16,300 481 2,87% 1.231 1,299 69 5,61%
1995-96 16,272 16,100 647 3.86% 1,165 1,138 27 2,32%
1996-97 16,722 16,401 320 1,91% 1,102 1.085 17 1.60%
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 33 245%
2001-2002 24,581 24.238 343 1.40% 1,419 1,366 53 3 74%
RESERVOIR HILL MELLO-ROOS
1992-93 $ 191 $ 187 $ 3 1.60% S 264 $ 245 S 19 7.76%
'1993-94 180 175 4 2,29% 264 181 83 45.86%
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%
2000-2002 188 184 4 2.13% 264 258 6 2.27% .
° Fiscal Year 1993-94 is a fifteen month fiscal year.
Source:County of Orange Auditor Controllers Office
Note-Delinquency amount does not always equal levy amount minus collections
amount since there are always amounts collected from prior years
106
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CITY OF HUNTINGTON BEACH
ASSESSED AND ACTUAL VALUATION
OF ALL TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(IN THOUSANDS)
Total Assessed Estimated Full
Fiscal Year Comrnon Property Public Utilities Total Secured Unsecured Valuation Market Valuation Percent Increase
1992-93 $ 11,125.356 $ 2,311 $ 11,127,667 $ 758,178 S 11,885.845 S 11,885,845 0,00%
1993-94 11,313.256 1,964 11.315,220 560,665 11,875,885 11,875,885 -0.08%
1994-95 11,712,153 2,151 11,714,304 599,842 12.314,146 12,314,146 3.69%
1995-96 11,817,571 2,218 11,819.789 538.559 12,358,348 12,358,348 0.36%
1996-97 11,761,075 2,129 11,763,204 542,084 12,305,288 12,305,288 -0.43%
1997-98 12,338,032 2,297 12,340,329 624,469 12,964,798 12,964,798 5.36%
1998-99 12,968,754 2.252 12,971,006 566,077 13,537.083 13,537,083 4.41%
1999-2000 14,698,096 2,026 14,700,124 618,883 15,319,007 15,319.007 13.16%
2000-2001 15,877,065 2,404 15.879,469 646,594 16,526,063 16,526,063 7.88%
2001.2002 17,076,822 2,805 17,079,627 732,334 17.811,961 17,811,961 7.78%
Source:Administrative Services Department-City of Huntington Beach'
PROPERTY TAX RATES
ALL DIRECT AND
OVERLAPPING GOVERNMENTS
TAX RATE 04-001
LARGEST AREA IN CITY
Year Basic Levy City Grange County school Districts Metro Water District Others Total
1992-93 1,00000 0,05325 0.00087 0,00201 0.00890 0.00013 1.06516
1993-94 1.00000 0.05320 0.00081 0.00227 0.00890 0.00019 1.06537
1994-95 1.00000 0.04930 0,00078 0.00046 0.00890 0,00019 1,05963
1995-96 1,00000 0.04930 0,00050 0,00033 0,00890 0,00018 t05921
1996-97 1.00000 0.04930 0,00012 - 0.00890 - 1.05832
1997-98 1,00000 0.04930 0.00010 - 0.00890 - 1,05830
1998-99 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 - - - 000770 1,00770
Note-Rates are per S100 of assessed valuation
Source-County of Orange
GENERAL OBLIGATION
BONDED DEBT RATIOS
LAST TEN FISCAL YEARS
General Fund Debt Service to
General Bonded Debt Assessed Market Percent of Debt to Bonded Debt Per Total Debt Expenditures Total General Fund
(000s) Value(000.) Assessed Value Population Capita Principal(000s) interest(000s) Service(000s) (000.) Expenditures
1992-93 S 860 S 11,885,845 0,007 186,867 S 5 S 395 S 75 $ 470 S 91,650 0.51%
1993-94 S 445 S 11,875.885 0.004 189.159 $ 2 S 415 S 52 S 467 $ 115,757 0.40%
1994-95 $ - $ 12,314,146 0.000 186,587 $ - $ 445 S 13 S 458 $ 92,467 0.50%
1995-96 $ - S 12,358,348 0,000 187,180 S - S - S - $ - S 92,211 0.00%
1996-97 S - S 12,305,288 0.000 188.518 S - S - S - $ - S 96,165 0.00%
1997-98 $ - S 12,964.798 0.000 192.430 $ - $ - $ - $ - S 103,875 0.00%
1998-99 S - S 13,537,083 0.000 196.660 S S - S - $ - $ 103,050 0.00%
1999-2000 S - S 15,319,007 0.000 199.327 S - S - S - S - S 117,863 0.00%
2000-2001 S - S 16.526,063 0.000 191.500 S - S - S - $ - S 122,139 0.00%
2001-2002 S - S 17,811,961 0.000 194,600 S - $ - $ - S - $ 130,326 0.00%
Source-Administrative Services Department,City of Huntington Beach
toe
' CITY OF HUNTINGTON BEACH
CONSTRUCTION ACTIVITY
AND BANK AND
SAVINGS AND LOAN DEPOSITS
LAST TEN FISCALYEARS
Number of Estimated Value of Banks and Savings
Building Percent New Construction and Loan Deposits
Permits Change (OOOs) Percent Change (OOOs) Percent Change
1992-93 10,400 $ 1100,400 $ 2,121,253
1993-94 6,844 (34.2) $ 107,420 6.99 $ 2,141,528 1.0
1994-95 4.471 (34.7) $ 84,388 (21.44) $ 2,579,514 20.5
1995-96 7,594 69.9 $ 110,375 30.79 $ 2,581,844 0.1
1996-97 5,413 (28.7) $ 205,970 86.61 $ 2,737,588 6.0
1997-98 6,368 17.6 $ 206,035 0.03 .$ 2,684,384 (1.9)
1998-99 6,735 5.8 $ 308,319 49.64 $ 2,908,376 8.3
1999-2000 5,474 (18.7) $ 207,509 (32.70) $ 3,554,438 22.2
2000-2001 5,106 (6.7) $ 153,279 (26,13) (100.0)
2001-2002 5,429 6.3 $ 190,873 24.53
Source-Community Development Department,City of Huntington Beach and the Findley
Reports on California Institutions,Information is the most recent available
COMPUTATION OF LEGAL DEBT MARGIN
September 30, 2002
(IN THOUSANDS)
ASSESSED VALUATION $ 17,811,961
DEBT LIMIT:12%OF ASSESSED VALUATION 2,137,435
DEBT APPLICABLE TO LIMITATION:
LEGAL DEBT MARGIN $ 2,137,435
Source-Administrative Services Department,City of Huntington Beach
STATEMENT OF DIRECT AND
OVERLAPPING BONDED DEBT
SEPTEMBER 30, 2002
2001-2002 Assessed Valuation$16,674.320,585(alter deducing$568,820,737)o1 incremental redevelopment vatuation)
O`.ERLAPPING TAX AND ASSESSMENT DEBT x Applic,le o ix@ snonx
0.:.Teeter Plan Obligations 7.442% $ 9,259,709
Metropolitan Water District 1,574% 7,910,294
Huntington Beach City School District 95.854% 19,166,029
Los Alamitos Unified School District Community Facilities District 1.328% 162,946
City of Huntington Beach Comm Fac.Dist No 1990-1 100.000% 2,155,000
City of Huntington Beach Comm Fac.Dist No 2000-01 100.000% 16,000,000
City of Huntington Beach Comm Fac.Dist No 2002-01 100.000% 4,900,000
City of Huntington Beach 1915 Act Bonds 100.000% 440.000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT S 59.993,978
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT
O.C.General Fund Obligations 7.442% 73,622,887
O.C.Pension Obligations 7.442% 8,987.889
O.C.Board of Education Certificates of Participation 7.442% 1,488,400
O.C.Transit Authority 7.442% 459,544
MWD of Orange County Water Facilities Corp 11.179% 5,353.064
O.C_Sanitation District No.3,COPS 12,331% 6.533.248
O.C.Sanitation District No.11,COPS 99.956% 3,304,206
OCWD Certificates of Participation 12.331% 25,506,674
Coast Community College COPS 30.909% 4,732.168
Los Alamitos Unified School District COPS 1.328% 56,706
Htg Beach Union High School District COPS 95.854% 4,414,077
Ocean View School District COPS 94.095% 9,879.975
City of Huntington Beach General Fund Obligations 100.000% 85,104,398
TOTAL DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $ 229,443,236
Less: OC Transit Authority(80%self supporting) (367,635)
OC Water District COPS(100%self supporting) (25,506,674)
M WDOC Water Facilities Corporation(100%Self Supporting) (5,353,064)
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT S 198,215,863
GROSS COMBINED DEBT $ 289 437,214
NET COMBINED TOTAL DEBT $ 258,209,841
Excludes Tax and Revenue Anticipation Notes,revenue,mortgage revenue and tax allocation bonds,
and non-bonded capital lease obligations
Ratios to Assessed Valuation:
Total Overlapping Tax and Assessment Debt 0,35%
Combined Direct Debt(S46,733,006) 0.51%
Gross Combined Total Debt 1.74%
Net Combined Total Debt 1.55%
State School Building Aid Repayable as of 9/30/02$8,191,270
Source-California Municipal Statistics
109
CITY OF HUNTINGTON BEACH
DEMOGRAPHIC STATISTICS
City Population
as a Percent of
Square Orange County County
_ Year Population Percent Increase Miles Population Population
1910 815 3.57 34,436
1920 1,687 107.0% 3.57 61,375 2.75%
1930 3,690 118.7% 3.57 62,451 5.91
1940 3,738 1.3% 3,57 130,760 2.86%
1950 5,158 38.0% 4.72 216,224 2.39%
1960 11,492 122.8% 23.47 703,995 1.63%
1970 116,400 912.9% 26.73 1,420,386 8.19%
1980 172,200 47.9% 27.20 1,931,570 8.92%
1990 188,701 9.6% 27.20 2,362,211 7.99%
1995 186,587 -1.1% 27.20 2,627,949 7.10%
2000 199,326 6.8% 27.20 2,828,400 7.05%
2001 191,500 -3.9% 27.20 2,846,289 6.73%
2002 194,600 1.6% 27.20 2,939,500 6.62%
Source-Administrative Services Department,City of Huntington Beach
TOP TEN PROPERTY TAX PAYERS
SEPTEMBER 30, 2002
Percent of Estimated Tax
Assessed Valuation(000s) Toat [000s)" Percent of Total
Duke Solutions Huntington $ 416.963 2.34% $ 627 1.89%
Huntington Center 52,466 0.29% 346 1.04%
Waterfront Construction(1) 36,828 0,21% 328 0.99% -
Essex Huntington Breakers 28,399 0.16% 253 0.76%
Kyray LLC 21,429 0.12% 206 0.62%
Atlanta HB LLC 27,853 0.16% 206 0.62%
LIU Corporation 23,581 0.13% 170 0.51%
AES Huntington Beach LLC 101.865 0.57% 158 0.48%
McDonnel Douglas Corporation 63,632 0.36% 143 0,43%
Bentall US Partners 15,905 0,09% 104 0.31%
Total Top Ten 788,921 4A3% 2.541 7.65% _
All Diner Properties 17,023.040 95.57% 30.663 92.35%
Total $ 17,811,961 10000%1$ 33,204 100,00%
Source-HDL Coren,Cone(number of parcels in parenthesis)
"The estimated total tax includes only the portion of the total tapaid to the City's reporting
entity.Properties in different lax areas or in a redevelopment agency project area pay a different
percentage of tax to the City's reporting entity.
MISCELLANEOUS STATISTICS
SEPTEMBER 30, 2002
Year of Incorporation 1909
Charter City-City Council-City
Form of Government Administrator
Area 27.2 Square Miles
Population 194,600
Miles of Streets and Alleys 463
Number of City Trees 54,563
Fire Protection:
Number of Stations 7
Number of Firefighters 139
Police Protection:
Number of Stations 4
Number of Sworn Police Officers 223
Municipal Water Department:
Number of Customers 49,000
Average Daily Consumption Total 32.0 Million Gallons
Average Daily Consumption Per Person 163
Miles of Water Mains 522
Public Works:
Sanitary Sewers 352 Miles
Storm Sewers 136 Miles
Recreation and Culture:
Number of Parks 57
Park Acreage Developed 529
Miles of Beach 3.4
Annual Beach Visitors 7,000,000
Number of Libraries 4
Volumes in Libraries 370,945
Full-Time Employees 1.039
Source-Administrative Services Department,City of Huntington Beach
110
CITY OF HUNTINGTON BEACH
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
WITH REPORT ON AUDIT BY
INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
FOR THE YEAR ENDED
SEPTEMBER 30, 2002
Prepared by Administrative Services Department
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
YEAR ENDED SEPTEM ER 30, 2002
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents
Letter of Transmittal iii-vi
City Officials vii
Organizational Chart viii
Financial Reporting Certificate ix
FINANCIAL SECTION
independent Auditors' Report 1-2
Management Discussion and Analysis 3-16
Basic Financial Statement::
Government-wide Financial Statements:
Statement of Net Assets 17
Statement of Activities and Changes in Net Assets 18
Fund Financial Statements:
Balance Sheet—Governmental Funds 19
Reconciliation of the Balance of Governmental Funds to the Statement of Net
Assets 20
Statement of Revenues, Expenditures and Changes in Fund Balances—
Governmental Funds 21
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 22
Statement of Net Assets—Proprietary Funds 23
Statement of Revenues, Expenses and Changes in Fund Net Assets—
Proprietary Funds 24
Statement of Cash Flows—Proprietary Funds 25
Statement of Fiduciary Fund Net Assets 26
Statement of Changes in Fiduciary Fund Net Assets-Trust Funds 26
Notes to Financial Statements 27-78
Required Supplementary Information:
Budgetary Information 79
Schedule of Revenues, Expenditures and and Changes in Fund Balances— 80
Budget and Actual—General Fund
Schedule of Revenues, Expenditures and and Changes in Fund Balances—
Bud et and Actual— Public Financing Authority Debt Service Fund 81
Schedule of Revenues, Expenditures and and Changes in Fund Balances—
Bud et and Actual—Redevelopment Agency Debt Service Fund 81
i
Schedule of Revenues, Expenditures and and Changes in Fund Balances—
Bud et and Actual—Redevelopment Agency Capital Projects Fund 82
Schedule of Revenues, Expenditures and and Changes in Fund Balances—
Bud et and Actual—Capital Improvement Fund 82
Schedule of Revenues, Expenditures and and Changes in Fund Balances— 83
Budget and Actual— Public Financing Authority Capital Projects Fund
Schedule of Funding Progress Normal and Supplemental Retirement Plans 84
Supplementary Information:
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet—Nonmajor Governmental Funds 85-88
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances— Nonmajor Governmental Funds 89-92
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Bud et and Actual— Non Major Governmental Funds 93-100
Combining Statement of Net Assets— Nonmajor Enterprise Funds 101
Combining Statement of Revenues, Expenses, and Changes in Net Assets-
Nonmajor Enterprise Funds 102
Combining Statement of Cash Flows— Nonmajor Enterprise Funds 103
Combining Statement of Net Assets— Internal Service Funds 104
Combining Statement of Revenues, Expenses, and Changes in Net Assets-
Nonmajor Internal Service Funds 104
Combining Statement of Cash Flows—Nonmajor Internal Service Funds 104
Capital Assets Used in the Operation of Governmental Funds:
Schedule by Source 105
Schedule by Function and Activity 105
Schedule of Changes by Function and Activity 105
Statistical Section (Unaudited)
General Governmental Expenditures by Function and Activity— Last Ten Fiscal Years 106-107
General Governmental Revenues by Function and Activity— Last Ten Fiscal Years 106-107
Property Tax Levies and Collections— Last Ten Fiscal Years 106-107
Assessed and Actual Valuations of Property— Last Ten Fiscal Years 108
Property Tax Rates—All Direct and Overlapping Governments 108
General Obligation Bonded Debt Ratios—All Overlapping Governments 108
Construction Activity and Bank and Savings and Loan Activity— Last Ten Fiscal Years 109
Computation of Legal Debt Margin 109
Statement of Direct and Overlapping Bonded Debt 109
Demographic Statistics 110
Top Ten Secured Property Owners 110
Miscellaneous Statistics 110
H
s :Pty
Huntin -.�ech,
March 31, 2003
Honorable Mayor, City Councilmembers and Citizens of Huntington Beach:
This letter transmits the Comprehensive Annual Financial Report for the City of
Huntington Beach, California for the year ending September 30, 2002.
The intent of this report is to provide a firm
understanding of the City's financial position. The
Administrative Services Department is
responsible for the accuracy of the information.
Management has established an internal control
system that provides reasonable, but not absolute
assurance that these financial statements do not
have material misstatements. This system allows
for the presentation of financial statements that
comply with generally accepted accounting Huntington Beach Municipal Pier
principles. An important part of this system is that the cost of any control should not
exceed its expected benefit. We believe that this financial report is complete and
reliable in all material respects.
The financial statements comply with the standards of the Government Accounting
Standards Board and include the report of our auditors, Caporicci and Larsen. This
year the City implemented Government Accounting Standards Board Statement No. 34
which has significantly modified the statements and disclosures of this report. See
note 1 of the Notes to the Basic Financial Statements for further information.
The independent audit of these financial statements was part of a broader, federally
mandated "Single Audit" designed for the Federal Government. This single audit
requires the auditor to not only report on the fair presentation of the City's financial
statements, but also on internal controls and compliance with legal requirements. This
report if available from the Finance Division of the Administrative Services Department.
This year for the first time an additional narrative introduction and overview is required
to accompany the City's basic financial statements (Management Discussion and
Analysis). This letter complements the Management Discussion and Analysis and
should be read in conjunction with it.
About the City of Huntington Beach
Huntington Beach was incorporated in 1909 and is a full-service City including Police,
Fire, Public Works, Community and Library Services, Economic Development,
Planning, Building, and related
Administration. It is located in the
southwest portion of Orange
County approximately 37 miles
south of Los Angeles.
K£
This report includes the financial
j � wr activity of separate legal entities
.. .m ,,.. _....n�N." whose activities the City controls.
Hyatt Regency Huntington Beach Resort& Spa These entities are:
within the Main Pier Sub-Area Redevelopment Project Area
• 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 Improvementat
District
Component unit reports (stand-alone reports) are
available for the Redevelopment Agency and Public •
Financing Authority.
Auto Business Improvement District
The City Council adopts the annual budget by assists with the
September 30th of a prior fiscal year and may amend it Beach Blvd of Cars campaign
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 of the
same department. The City Administrator must approve changes to capital outlay
requests. The City utilizes an encumbrance system as a management control
technique. Encumbrances are orders, or contracts, for goods or services not
completed or received. The City reports these as reservations of fund balance in
governmental funds.
Local Economy:
The City is located in Orange County, California. Despite the slower than desired
economic growth nationwide, Orange County remains one of the economic leaders of
the nation in jobs and economic potential. Huntington Beach is the third largest City in
Orange County with a population of just under 200,000.
iv
Future Priorities:
• Maintain a healthy and safe community
• Establish a sound financial foundation 't
for the City's finances.
• Assure the long-term adequacy of the
City's infrastructure, facilities, and
transportation network.
• Achieve development that maintains
and improves the city's fiscal viability
and reflects economic demands while
maintaining and improving quality of life
for current and future residents. -
• Maintain and continually improve
organizational effectiveness.
• Build and maintain a sense of place The old Huntington Center
and an exceptional quality of life within will be reborn av BeUtt Terra
a sustainable urban environment.
• Ensure that Huntington Beach's local government is open, accessible,
responsive, nurturing, and respectful to all the citizens it serves.
• Enhance the community's environmental quality and its unique natural
resources.
Maior Capital Projects:
• The Huntington Beach Sports Complex
• Major improvements to the South Beach
• Completion of the Beach Maintenance Facility
• Completed rehabilitation of 37 miles of deteriorated sewer pipes
PENSION OBLIGATIONS:
The City participates in the California Public Employee's Retirement System. The City
also maintains a supplemental retirement plan. Information on these pensions can be
found in notes 6 and 7 to the financial statements.
CASH MANAGEMENT:
The City Treasurer invests surplus cash in authorized investments allowed by the
government code and City policy. The City forecasts revenues and expenditures to
meet current obligations and to maximize interest income. The City Treasurer earned
a return of 4.4% 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 General Purpose Financial Statements shows
further information on the City's cash and investments.
V
RISK MANAGEMENT:
The City is self-insured for liability, workers ` ` 4
compensation and employee health claims.
The City is a member of the Big
Independent Cities Excess Pool (BiCEP)
which provides coverage for liability claims
in excess of $1 million through pooling and
private insurance. The City also maintains xl ;
private insurance coverage for workers' >-. 3
compensation and employee health claims
over a certain amount. +;
FINANCIAL REPORTING CERTIFICATES: Huntington Beach Pier Plaza
The City prepares easily readable and
efficiently organized Comprehensive Annual Financial Reports. The Government
Finance Officer's Association (GFOA) awarded the City a Certificate of Achievement
for Excellence in Financial Reporting for its September 30, 2001 report. The GFOA
awards the certificate to governmental agencies whose reports conform with high
standards of public financial reporting. The City has received this certificate for 16
consecutive years and plans on submitting this report for another award. This
certificate is valid for one year only.
ACKNOWLEDGEMENTS:
We wish to thank the City Council and the City departments for responsibility
conducting the fiscal affairs of Huntington Beach. We would also like to thank Robert
Sedlak, Principal Accountant, who prepared this report.
Clay rtin Dan T. Villella
Director of Administrative Services Finance Officer
vi
CITY OF HUNTINGT N BEACH
PRINCIPAL CITY OFFICALS
City Council
Connie Boardman, Mayor
Cathy Green, Mayor Pro-Tern
Gil Coerper, Councilmember
Debbie Cook, Councilmember
Jill Hardy, Councilmember
Pam Houchen, Councilmember
Dave Sullivan, Councilmember
Other Elected Officials
Connie Brockway, City Clerk
Jennifer McGrath, City Attorney
Shari Freidenrich, City Treasurer
Administrative Officials
Ray Silver, City Administrator
William P. Workman, Assistant City Administrator
Robert Beardsley, Director of Public Works
David Biggs, Director of Economic Development
Ross Cranmer, Director of Building & Safety
Jim Engle, Director of Community Services
Ron Hayden, Director of Library Services
Janis Ingles, Director of Information Services
Clay Martin, Director of Administrative Services
Duane Olsen, Acting Fire Chief
Kenneth Small, Police Chief
Howard Zelefsky, Director of Planning
Vii
To the Honorable Mayor and Members of City Council
of the City of Huntington Beach
Huntington Beach,California
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.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The accompanying supplementary
information is presented for purpose of additional analysis and is not a required part of the basic
financial statements. The supplementary information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole. The Introductory Section and
Statistical 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.
e
Costa Mesa,California
December 20,2002
2
r i
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
SO iv
H=tin
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, 2002.
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-vi of this report.
Financial Highlights
This is the first year that government-wide financial statements have been
prepared. Prior year comparative statements were not prepared so no
comparisons have been made. Next year full comparisons will be made.
• The total assets of the City of Huntington Beach exceeded its liabilities at
the close of the most recent fiscal year by $607,633,000. Of this amount,
$12,761,000 may be used to meet the City's ongoing obligations to
citizens and creditors.
• The City's total debt increased by $9,554,000 to $168,673,000 largely as a
result of the issuance of new leases and additional Redevelopment
Agency operative agreements.
Overview Of The Financial Statements:
This discussion and analysis are intended to serve as an introduction to the City
of Huntington Beach basic financial statements. The City of Huntington Beach's
basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial
statements. This report also contains certain other supplementary information in
addition to the basic financial statements themselves.
3
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
Government-wide Financial Statements. The government-wide financial
statements are designed to provide readers with a broad overview of the City's
financial condition and are prepared similarly to those in the private sector.
The statement of net assets presents information on all of the City's assets and
liabilities, with the difference between the two reported as net assets. Over time,
continued increases or decreases in net assets may indicate whether the City's
financial condition is improving or deteriorating.
The statement of activities presents information on how the City's net assets
changed during the most recent fiscal year. These changes are reported on the
accrual basis (when the economic event occurs), not when the cash is received
or paid.
The government-wide financial statements separate functions that are primarily
supported by taxes and intergovernmental revenues (governmental activities)
from functions that are supported by user fees (business activities).
Governmental activities include public safety, public works, general government,
and community-related activities. Business activities include the Water, Sewer,
Refuse, FireMed, Hazmat Service, Ocean View Estates, and Art Center
activities.
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 17-18 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 spendable resources
as well as on balance of spendable resources available at the end of the fiscal
year.
4
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
It is useful to compare information presented for the governmental funds to
information presented for governmental activities in the government-wide
financial statements. A reconciliation shows the reader the differences in
financial reporting between the governmental activities section and the
governmental funds section.
The City maintains twenty-seven 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 Debt Service,
Redevelopment Agency Capital Projects, Huntington Beach Public Financing
Authority Debt Service Fund, Huntington Beach Public Financing Authority
Capital Projects Fund, and Capital Improvement Fund, all of which are
considered to be major funds. Data from the other twenty-one funds are
combined into a single, aggregated presentation. Individual fund data for each of
these nonmajor governmental funds is provided in a combining statement else
where in this report.
The City provides an annual appropriated budget for its governmental funds.
Budgetary comparison schedules on page '30-83, and 93-100 demonstrate
compliance.
The basic governmental fund financial statements can be found on pages 19-22
of this report.
Proprietary Funds. The City maintains two types of proprietary funds
(enterprise and internal service). 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, FireMed, Hazmat Service, Ocean View Estates, and Art Center
activities. Internal service funds are an accounting device used to accumulate
and allocate costs among the various City departments. The City uses these
funds to account for its employee health and workers compensation insurance
programs. Since these programs primarily benefit governmental operations they
have been included within the governmental activities section of the government-
wide financial statements.
5
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
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 operations, which is considered to be major funds
of the City. The remaining proprietary funds noted above are combined into a
single, aggregated presentation. All internal service funds are also combined
into a single, aggregated presentation in the proprietary fund financial
statements. Individual fund data for the nonmajor proprietary funds and the
internal service funds is provided in the form of combining statements elsewhere
in this report.
The basic proprietary fund financial statements can be found on pages 23-25 of
this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the
benefit of parties outside the government. Fiduciary funds are not reflected in the
government-wide financial statement because the resources of those funds are
not available to support the City of Huntington Beach's own programs. The
accounting used for fiduciary funds is much like that used for proprietary funds
The basic fiduciary fund financial statements can be found on page 26 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 27-78 of this report.
Other information. In addition to the basic financial statements and
accompanying notes, this report also present certain required supplementary
information concerning the City's progress in funding its obligation to provide
pension benefits to its employees and General Fund budget to actual
comparisons. Required supplementary information can be found on pages 79-84
of this report.
The combining statements referred to earlier in connection with nonmajor
government funds and internal service funds are presented immediately following
the required supplementary information on pensions. Combining and individual
fund statements and schedules can be found on page 85-105 of this report.
6
t
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a
government's financial position. This is the City's first year of implementing the
new reporting model and prior year amounts were not prepared. Thus, no
comparison is available this year. In subsequent years, however, comparisons
will be prepared.
Below is a summary schedule of the City's net assets at September 30, 2002 (in
thousands):
Governmental Business
Activities Activities Total
Current and Other Assets $ 113,185 $ 61,888 $ 175,073
Capital Assets 565,017 80,376 645,393
Total Assets 678,202 142,264 820,466
Current Liabilities 35,957 7,118 43,075
Long-Term Liabilities 168,672 1,086 169,758
Total Liabilities 204,629 8,204 212,833
Net Assets:
Invested in Capital Assets, Net of Related Debt 425,697 79,781 505,478
Restricted 58,351 31,043 89,394
Unrestricted (10,475) 23,236 12,761
Total Net Assets $ 473,573 $ 134,060 $ 607,633
By far the largest portion of the City's net assets ($505,478,000 or 83.9% of the
total net assets) reflects its investment in capital assets (e.g., land, buildings,
machinery, equipment, and infrastructure), less any related debt used to acquire
those assets that is still outstanding. The City uses capital assets to provide
services to citizens; consequently, these assets are not available for future
spending. Although the City's investment in its capital assets is reported net of
related debt, it should be noted that 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
($89,394,000 or 14.7% of the total net assets) is subject to external restrictions.
The remaining amount of$12,761,000 or 2.1% of total net assets is unrestricted.
7
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
The unrestricted assets for governmental activities was a negative $10,475,000.
This was caused primarily from the activities of the Redevelopment Agency,
which is a blended component unit of the City. The Agency exists to finance
improvements that remediate blight within the City. The Statement of Net Assets
reflects the debt obligation of the Redevelopment Agency, that will be repaid
through future tax revenues, without an offsetting asset. This is typical of
Redevelopment Agencies in California.
The City's net assets from business activities increased by $37,751,000, or
39.1%. The largest reasons for this increase were developer contributions of
infrastructure of $26,090,000 and capital contributions for the Water Master Plan
of $6,886,000.
A condensed summary of activities (in thousands) follows:
Governmental Business
Activities Activities Total
Revenues:
Program Revenues:
Charges for Current Services $ 23,556 $ 45,106 $ 68,662
Operating Grants and Contributions 5,063 - 5,063
Capital Grants and Contributions 13,039 33,056 46,095
General Revenues: -
Property Taxes 38,106 - 38,106
Other Taxes 55,084 - 55,084
Use of Money and Property 13,895 2,240 16,135
From Other Agencies 20,359 - 20,359
Other 2,604 - 2,604
Total Revenues 171,705 80,402 252,107
8
1 r
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
City Council 262 - 262
City Administrator 2,214 - 2,214
City Treasurer 1,160 - 1,160
City Attorney 3,634 - 3,634
City Clerk 698 - 698
Administrative Services 7,230 - 7,230
Planning 2,658 - 2,658
Building 3,101 - 3,101
Fire 19,361 - 19,361
Information Systems 4,464 - 4,464
Police 42,187 - 42,187
Economic Development 3,080 - 3,080
Community Services 12,440 - 12,440
Library Services 4,801 - 4,801
Public Works 28,237 - 28,237
Non-Departmental 19,725 - 19,725
Interest on Long-Term Debt 9,438 - 9,438
Water Utility - 27,250 27,250
Emerald Cove Housing - 405 405
Emergency Fire Medical - 3,172 3,172
Refuse Collection - 9,178 9,178
Sewer - 2,419 2,419
Hazmat Service - 143 143
Cultural Affairs - 317 317
Ocean View Estates - 11 11
Total Expenses 164,690 42,895 207,585
Increase in Net Assets Before Transfers 7,015 37,507 44,522
Transfers (244) 244 -
Net Assets - Beginning of Year(as Restated) 466,802 96,309 563,111
Net Assets -End of Year $ 473,573 $ 134,060 $ 607,633
Since no prior year comparable financial statements were prepared, no trend
information is presented. This information will be made available in next year's
report.
9
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
The cost of all governmental activities this year was $164,690,000. However, as
shown in the Statement of Activities, the amount that the taxpayers ultimately
financed for these activities was only $123,032,000 because some of the cost
was paid by those who directly benefited from the programs ($23,556,000), or by
other governments and organizations that subsidized certain programs with
operating grants and contributions ($5,063,000), and capital grants and
contributions ($13,039,000). Overall, the City's governmental program revenues
were $41,658,000. The City paid for the remaining "public benefit" portion of
governmental activities with $129,803,000 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 $633,256,000, consisting of net assets at October 1, 2001 of $466,802,000,
program revenues of $41,658,000, general revenues of $130,048,000, and
transfers of $244,000. Total expenses for governmental activities during the year
were $164,690,000; thus, net assets were increased by $6,771,000, to
$476,573,000.
The cost of all Proprietary (Business Type) activities this year was $42,895,000.
As shown in the Statement of Activities and Changes in Net Assets, the amount
paid by users of the systems was $45,106,000, capital grants and contributions
were $33,056,000 other revenue was $2,240,000, and transfers were $244,000.
Beginning net assets were $96,309,000 and ending net assets were
$134,060,000. Of the ending net asset amount, $79,785,000, or 59.5% was
invested in capital assets, $31,043,000, or 23.2% was restricted for expenditures
for the Water Master Plan, and $23,232,000, or 17.3% was unrestricted.
10
r
City of Huntington Beach
r
Management's Discussion and Analysis
For the Year Ended September 30, 2002
The City's programs for governmental activities include General Government,
Fire, Police, Public Works, Redevelopment, Community Services and Library.
The programs for the business type activities include the Water, Sewer, Refuse,
FireMed, Hazmat Service, Ocean View Estates, and Art Center activities. A
listing of each program's revenues and expenses (in thousands) for the current
year is presented below.
Funded by
Taxes and
Less Program Other General
Expenses Revenues Revenues
Governmental Activities:
City Council $ 262 $ - $ 262
City Administrator 2,214 (33) 2,181
City Treasurer 1,160 - 1,160
City Attorney 3,634 - 3,634
City Clerk 698 (46) 652
Administrative Services 7,230 - 7,230
Planning 2,658 (580) 2,078
Building 3,101 (3,940) (839)
Fire 19,361 (605) 18,756
Information Systems 4,464 - 4,464
Police 42,187 (5,424) 36,763
Economic Development 3,080 (1,777) 1,303
Community Services 12,440 (8,655) 3,785
Library Services 4,801 (266) 4,535
Public Works 28,237 (15,921) 12,316
Non-Departmental 19,725 (4,411) 15,314
Interest on Long-Term Debt 9,438 - 9,438
Total Governmental Activities $ 164,690 $ (41,658) $ 123,032
Business Activities
Water Utility 27,250 (26,048) 1,202
Emerald Cove Housing 405 (707) (302)
Emergency Fire Medical 3,172 (4,103) (931)
Refuse Collection 9,178 (9,182) (4)
Sewer 2,419 (4,540) (2,121)
Hazmat Service 143 (145) (2)
Cultural Affairs 317 (189) 128
Ocean View Estates 11 (192) (181)
Total Business Activities $ 42,895 $ (45,106) $ (2,211)
11
a
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
The City's revenue sources were as follows for both governmental and business
activities:
Governmental Percent of Business Percent of
Revenues: Activities Total Activities Total
Property Taxes $ 38,106 14.4% $ - 0.0%
Other Taxes 55,084 20.8% - 0.0%
Use of Money and Property 13,895 5.2% 2,240 2.8%
From Other Agencies 20,359 7.7% - 0.0%
Other 2,604 1.0% - 0.0%
Charges for Current Service 23,556 8.9% 45,106 56.1%
Operating Grants 5,063 1.9% - 0.0%
Capital Grants 13,039 4.9% 33,056 41.1%
Total $ 264,896 100.0% $ 80,402 100.0%
Financial Analysis Of The City's Governmental Funds
® As of the close of the current fiscal year, the City's governmental fund
balances reported combined ending balance of $75,822,000, a decrease
of $35,654,000 in comparison to the prior year, largely a result of
expenditure of bond proceeds from prior years. $8,785,000, or 11.5 % of
the total is considered unreserved fund balance and is available for
spending at the City's discretion.
• The total fund balance at year-end for the City's General fund was
$41,745,000, which is an overall decrease of $9,780,000 over last year. It
was primarily due to a reduction in sales and utility taxes. At the end of
the current fiscal year, unreserved fund balance for the general fund was
$15,974,000, or 12.1% of the total general fund expenditures. The
amount designated for economic uncertainties was $6,088,000.
• The fund balance of the Redevelopment Agency Debt Service Fund
increased $20,467,000 from a deficit of $57,527,000 to a deficit of
$33,549,000. This fund normally operates at a deficit since the
Redevelopment Agency incurs debt (in this case, largely interfund debt) to
finance operations and capital improvements. By California law, this is
how Redevelopment Agencies operate. This increase was largely due to
a refunding bond issue, which repaid loans owed to the Huntington Beach
Public Financing Authority.
12
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
Financial Analysis of the City's Proprietary Funds
Unrestricted net assets of the Water Fund and non-major enterprise funds
increased $15,686,000 and $22,065,000 respectively. The factors affecting this
were discussed in the section on the City's business activities.
Unrestricted net assets of the City's internal service funds decreased by
$2,942,000 to a deficit of$8,170,000. This was a result of increased medical and
workers compensation costs. Staff will develop a plan to eliminate these deficits
over the next several years.
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 11 to the
financial statements.
Balance Balance
October 1, Incurred or Satisfied or September
Governmental Activities: 2001 Issued Matured 30, 2002
Certificates of Participation $ 47,590 $ - $ (30,295) $ 17,295
Revenue Bonds 58,400 31,095 (23,370) 66,125
Tax Allocation Bonds 9,770 20,900 (300) 30,370
Special District Bonds 605 - (190) 415
Claims 10,177 11,939 (9,503) 12,613
Compensated Absences 8,075 3,342 (2,467) 8,950
Leases 2,007 3,219 (1,119) 4,107
Pension Obligation 8,337 256 - 8,593
Loans 9,402 - (477) 8,925
Other Redevelopment Obligations 4,756 6,524 - 11,280
Total Debt-Governmental Activities 159,119 77,275 (67,721) 168,673
Business Activities:
Compensated Absences 554 - (14) 540
Leases 431 345 (182) 594
Total Long-Term Obligations -Business
Activities 985 345 (196) 1,134
Total Debt $ 160,104 $ 77,620 $ (67,917) $ 169,807
13
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
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 108 of the
financial statements. The City's total debt for governmental activities increased
$9,554,000, or 6.0% from its beginning amount largely due to additional claims
and Redevelopment Agency operative agreements. Debt for business activities
increased $149,000 due largely to additional leases.
Certain long-term obligations of the City are rated by independent agencies for
their relative safety as an investment. The City received AAA ratings on the
following recently issued obligations:
■ Public Financing Authority 2000 Certificates of Participation
■ Public Financing Authority 2001 (a) Lease Revenue Bonds
■ Public Financing Authority 2001 (b) Lease Revenue Bonds
Cash Management
The City pools its cash and investments. Idle cash is invested in certain eligible
securities as restricted by law and further limited by the City's Investment Policy.
The goals of the City's Investment Policy are safety, liquidity and yield. For the
year, the City Treasurer earned a return of 4.44%.
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. At September
30, 2002, net capital assets of the governmental activities totaled $565,017,000,
an increase of $26,649,000, or 4.9%. This increase is largely due to new
infrastructure and the construction of new facilities at the Beach and Sports
Complex. The net capital assets of the business-type activities totaled
$80,376,000, an increase of $34,033,000, or 73.1%. This is primarily due to the
new Sewer enterprise fund and capital improvements in the Water Fund .
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.
14
r
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
Below is a schedule of the City's capital assets, net of accumulated depreciation
(in thousands):
Balance Balance
September 30, September 30,
Government Activities: 2002 2001
Land $ 317,391 $ 313,142
Buildings 64,277 55,765
Machinery and Equipment 22,986 23,111
Construction In Progress 22,202 8,509
Infrastructure 138,161 137,841
Total Governmental Activities 565,017 538,368
Business Activities:
Land 8,598 8,598
Buildings 23,631 10,230
Machinery and Equipment 4,194 3,395
Construction In Progress 7,845 5,593
Infrastructure 36,108 18,527
Total Business Activities 80,376 46,343
Total Capital Assets $ 645,393 $ 584,711
Beginning balances have been restated to comply with GASB Statement 34.
Additional information on the City's capital assets is shown in note 12 of the
financial statements.
General Fund Budgetary Highlights
Comparing the fiscal year 2001/2002 original budget (or adopted) General Fund
(expenditures and transfers) amount of $148,272,000 to the final budget of
$156,302,000 shows a net increase of $8,030,000. Included in original budget
amount is $2,448,000 of prior year encumbrance carryover into fiscal year
2001/2002.
The largest supplemental General Fund budget changes were:
• Civic Center Repairs $136,000
• Outside legal counsel for the City Attorney's $625,000
• Fiscal Policy Transfer to Capital Improvement Fund $1,395,500
• United States Department of Justice Fingerprint Charges $90,000
• National Pollutant Discharge Elimination System Permit $350,892
• Recreational and Instructional Class Amendment $310,000
• Employee Medical Insurance Charges $375,000
• Additional Equipment Replacement $1,625,000
15
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended September 30, 2002
Economic Factors And Next Year's Budgets And Rates
The key assumptions in the General Fund revenue forecast for fiscal year
2001/2002 were:
1. While the City experienced a 8.8% increase in assessed valuation, property
tax revenues decreased by 3.1% due to the City no longer collecting a voter
approved Debt Service Property Tax to fund employee retirement costs, a
revenue reduction of$10 million per year.
2. After the tragic events of September 11th the City was forced to revaluate its
original sales tax projection from an increase of 6.0%, which was based on
the anticipated growth in the retail base, to an actual decrease of 16.5%.
Also effected by the events of September 11th was the City's Transient
Occupancy Tax, which experience a 12.3% decrease.
3. Increased utility cost in California resulted in the City's Utility Users Tax
increasing 5.7%.
4. Revenue for City issued license and permits increased 8.5% due to
increased building activity.
5. Based upon increased debt repayment from the Redevelopment Agency to
the General Fund use of Money and Property revenue increased 15.5%.
6. Increasing demands for service increased changes for service revenue by
3.8%.
Contacting the City's Financial Management
This financial report is designed to provide our citizens, taxpayers, customers,
and investors and creditors with a general overview of the City's finances and to
show the City's accountability for the money it receives. If you have questions
about this report, separate reports of the City's component units or need any
additional financial information, contact the Administrative Services Department,
Finance Division at 2000 Main Street, Huntington Beach, California, 92648,
phone (714) 374-5358 or e-mail kreed@surfcity-hb.org.
16
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Basic Financial Statements
CITY OF HUNTINGTON BEACH
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2002
(IN THOUSANDS)
Business-
Governmental Type
ASSETS: Activities Activities Total
Cash and Investments $ 37,381 $ 40,578 $ 77,959
Receivables 35,475 10,298 45,773
Internal Balances (2,775) 2,775 -
Inventories 806 1,119 1,925
Land Held for Resale 9,139 - 9,139
Other Assets 3,407 - 3,407
Restricted Assets: -
Cash and Investments - 7,118 7,118
Cash with Fiscal Agent 29,752 - 29,752
Capital Assets (Net of Accumulated Depreciation) 565,017 80,376 645,393
TOTAL ASSETS 678,202 142,264 820,466
LIABILITIES:
Accounts Payable 9,210 5,218 14,428
Accrued Payroll 3,997 319 4,316
Accrued Interest Payable 821 - 821
Deposits 3,289 1,581 4,870
Deferred Revenue 18,640 - 18 640
Long-Term Obligations:
Due Within One Year 13,720 230 13,950
Due in More than One Year 154,952 856 155,808
TOTAL LIABILITIES 204,629 8,204 212,833
NET ASSETS:
Investment in Capital Assets, Net of Related Debt 425,697 79,781 505,478
Restricted for:
Debt Service 7,967 - 7,967
Capital Projects 37,691 - 37,691
Other Purposes 12,693 31,043 43,736
Unrestricted (10,475) 23,236 12,761
TOTAL NET ASSETS $ 473,573 $ 134,060 $607,633
See independent auditors' report and notes to financial statements 17
CITY OF HUNTINGTON BEACH
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED SEPTEMBER 30,2002
(In Thousands)
Net(Expense)Revenue and Changes in
Program Revenues Net Assets
Charges for Operating
Current Grants and Capital Grants and Governmental Business-Type
Expenses Services Contributions Contributions Activities Activities Total
Functions/Programs
Governmental Activities:
City Council $ 262 $ - $ $ $ (262) $ $ (262)
City Administrator 2,214 33 (2,181) (2,181)
City Treasurer 1,160 - (1,160) (1,160)
City Attorney 3,634 - (3,634) (3,634)
City Clerk 698 46 (652) (652)
Administrative Services 7,230 - (7,230) (7,230)
Planning 2,658 580 (2,078) (2,078)
Building 3,101 3,940 839 839
Fire 19,361 500 56 49 (18,756) (18.756)
Information Systems 4,464 - - - (4,464) (4,464)
Police 42,187 4,433 679 312 (36,763) (36,763)
Economic Development 3,080 - 1,777 - (1,303) (1,303)
Community Services 12,440 8,510 145 - (3,785) (3,785)
Library Services 4,801 - 87 179 (4,535) (4,535)
Public Works 28,237 1,103 2,319 12,499 (12,316) (12,316)
Non-Departmental 19,725 4,411 - - (15,314) (15,314)
Interest on Long-Term Debt 9,438 - (9,438) (9,438)
Total Governmental Activities 164,690 23,556 6,063 13,039 (123,032) (123,032)
Business-type Activities:
Water Utility 27,250 26,048 - 33,056 31,854 31,854
Emerald Cove Housing 405 707 - 302 302
Emergency Fire Medical 3,172 4,103 931 931
Refuse Collection 9,178 9,182 4 4
Sewer 2,419 4,540 2,121 2,121
Hazmat Service 143 145 2 2
Cultural Affairs 317 189 (128) (128)
Ocean View Estates 11 192 - 181 181
Total Business Type Activities 42 395 45,106 33,056 36,267 35,267
Total Business and Government Type Activities S 207,686 $ 68,662 $ 5,063 $ 46,096 (123,032) 35,267 (87,765)
General Revenues:
Taxes:
Property Taxes 38,106 38,106
Other Taxes 55,084 55,084
Total Taxes 93,190 93,190
Other General Revenue:
Use of Money and Property 13,895 2,240 16,135
From Other Agencies 20,359 - 20,359
Other 2,604 2,604
Total Other General Revenue 36,857 2,240 39,097
Transfers (244) 244
Total General Revenues and Transfers 129,803 2,484 132,287
Change in Net Assets 6,771 37,751 44,522
Net Assets-Beginning of Year(as Restated) 466,802 96,309 563,111
Net Assets-End of Year $ 473,573 $ 134,060 $607,633
See independent auditors'report and notes to financial statements 18
CITY OF HUNTINGTON BEACH
BALANCE SHEET
GOVERNMENTALFUNDS
SEPTEMBER 30,2002
Debt Service Funds Capital Projects Funds
Public Capital Public Total Major Other
General Redevelopment Financing Redevelopment Improvement Financing Governmental Governmental
ASSETS Fund Agency Authority Agency Fund Authority Funds Funds Total
Cash and Investments $ 5,375 $ 2,241 $ - $ 4,733 $ 1,934 $ - $ 14,283 $ 23,098 $ 37,381
Cash and Investments with Fiscal Agent - 2,473 7,571 - 1,072 18,513 29,629 123 29,752
Taxes Receivable 18,278 2,324 - 55 - - 20,657 996 21,653
Acccounts Receivable 1,168 121 1,981 67 53 3,390 9,607 12,997
Unbilled Receivable 813 - - - - 813 - 813
Due from Other Funds 5,544 5,544 5,544
Inventories 806 - 806 806
Land Held for Resale - 9,139 9,139 - 9,139
Advances to Other Funds 26,662 - 466 27,128 9,111 36,239
Other Assets 1,608 1,608 1,617 3,22
5_
TOTAL ASSETS $ 60,254 $ 7,159 $ 7,571 $ 15,908 $ 3,539 $ 18,566 $ 112,997 $ 44,552 $ 157,549
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts Payable $ 3,449 $ 336 $ 5 $ 1,515 $ 2,036 $ $ 7,341 $ 1,838 $ 9,179
Accrued Payroll 3,760 - 38 5 3,803 170 3,973
Due to Other Funds - - - 1,837 1,837 893 2,730
Deposits Payable 1,523 - 140 - 1,663 1,626 3,289
Advances from Other Funds - 39,014 39,014 39,014
Deferred Revenue 9,777 1,358 266 - 11,401 12 141 23,542
TOTAL LIABILITIES 18,509 40,708 5 1,693 2,307 1,837 65,059 16,668 81,727
FUND BALANCES
Reserved for:
Encumbrances 4,557 - - 571 1,032 - 6,160 5,067 11,227
Long-Term Receivables 20,410 - 1,981 200 22,591 2,974 25,565
Debt Service 7,566 - - 7,566 - 7,566
Inventory 806 - - 806 806
Capital Projects - - 16,729 16,729 16,729
Land Held for Resale 9,139 - 9,139 9,139
Total Reserved Fund Balance 25,773 7,566 11,691 1,232 16,729 62,991 8,041 71,032
Unreserved,Designated:
Designated for Claims Payable 7,162 - - - - - 7,162 - 7,162
Designated for Future Expenditures 2,722 2,722 5,578 8,300
Designated for Economic Uncertainties 6,088 - - - - - 6,088 - 6,088
Unreserved,Undesignated(Reported in)
Special Revenue Funds - 7,967 7,967
Debt Service Funds (33,549) - (33,549) 185 (33,364)
Capital Projects Funds - 2,524 2,524 6,113 8,637
Total Unreserved 15,972 (33,549) 2,524 [15,053) 19,843 4,790
TOTAL FUND BALANCES 41,745 (33,549) 7,566 14,215 1,232 16,729 47,938 27,884 75,822
TOTAL LIABILITIES AND FUND BALANCES $ 60,254 $ 7,159 $ 7,571 $ 15,908 $ 3,539 $ 18,566 $ 112,997 $ 44,552 $ 157,549
See independent auditors'report and notes to financial statements 79
CITY OF HUNTINGTON BEACH
RECONCILIATION OF THE BALANCE OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2002
(in thousands)
Amounts reported for governmental activities in the
statement of net assets are different because:
Total Fund Balances Governmental Funds $ 75,822
Capital assets used in governmental activities are not financial
resources and,therefore, are not reported in the funds 565,017
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are deferred in the funds 4,902
Long-term Liabilities, including bonds and certificates of
participation payable are due and payable and therefore are not
reported in the funds. This amount excludes$5,450,000 of long-
term claims recorded in internal service funds (163,998)
Internal Service funds are used by management to charge the
costs of certain insurance to individual funds. The assets and
liabilities of these funds are included in the governmental
activities section in the Statement of Net Assets. This amount
includes certain long-term claims payable. (8,170)
Net Assets of Governmental Activities $ 473,573
See independent auditors'report and notes to financial statements 20
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES, EXPENDITURES,AND
CHANGES IN FUND BALANCE
GOVERNMENTALFUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2002
(IN THOUSANDS)
Debt Service Funds Capital Projects Funds
Public Capital Public Total Major Other
General Redevelopment Financing Redevelopment Improvement Financing Governmental Governmental
REVENUES: Fund A enc Authors A enc Fund Authors Funds Funds Total
Property Taxes $26,796 $ 6,223 $ $ $ $ $ 33,019 $ 185 $ 33,204
Other Taxes 51,808 - 705 52,513 2,571 55,084
Licenses and Permits 6,397 - 6,397 765 7,162
Fines and Forfeitures 3,797 - - 3,797 - 3,797
From Use of Money and Property 8,576 304 609 568 70 1,493 11,620 2,275 13,895
From Other Agencies 13,180 - - - 2,523 - 15,703 12,723 28,426
Charges for Current Service 10,107 - - 10,107 2,490 12,597
Other 794 220 6 1,020 1,584 2,604
TOTAL REVENUES 121,455 6,527 609 1,493 2,599 1,493 134,176 22,593 156,769
EXPENDITURES
Current:
City Council 237 - - - - - 237 - 237
City Administrator 1,717 1,717 392 2,109
City Treasurer 1,108 - 1,108 - 1,108
City Attorney 3,363 - - 207 - - 3,570 - 3,570
City Clerk 676 - 676 676
Administrative Services 7,095 7,095 7,095
Planning 2,400 2,400 185 2,585
Building 2,591 400 2,991 - 2,991
Fire 17,858 - - - - - 17,858 166 18,024
Information Systems 2,720 - - - 780 - 3,500 - 3,500
Police 37,229 - - 37,229 761 37,990
Economic Development 706 - - 1,026 - - 1,732 1,341 3,073
CommurntyServices 9,944 - - - 67 - 10,011 1,054 11,065
Library Services 3,485 - - - - - 3,485 865 4,350
Public Works 17,727 - - - 1,596 - 19,323 2,242 21,565
Non-Departmental 9,676 648 512 - 2,548 - 13,384 23 13,407
Capital Outlay 10,602 - - 6,578 20,881 38,061 16,295 54,356
Debt Service
Principal 1,071 517 3,455 - 185 5,228 313 5,541
Interest 121 2,547 4,188 55 6,911 241 7,152
TOTAL EXPENDITURES 130,326 3,712 8,155 7,811 26,512 176,516 23,878 200,394
EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER)
EXPENDITURES (8,871) 2,815 (7,546) (6,318) (23,913) 1,493 (42,340) (1,285) (43,625)
OTHER FINANCING SOURCES(USES)
Transfers In 5,017 21,183 11,632 - 19,226 11 57,069 1,879 58,948
Proceeds of Long-Term Debt 3,219 20,900 31,095 6,524 - - 61,738 - 61,738
Premium(Discount)on Issuance of Long-Term Debt - (68) (156) - - - (224) - (224)
Payments to Escrow - (21,602) (31,071) - - (52,673) (52,673)
Transfers Out _ (9,145) (2,761) (21,239) (10) (894) (13,476) (47.525) (12,293) (59,818)
TOTAL OTHER FINANCING SOURCES(USES) (909) 17,652 (9,739) 6,514 18,332 (13,466) 18,385 (10,414) 7,971
INCREASE(DECREASE)IN FUND BALANCES (9,780) 20,467 (17,285) 196 (5,581) (11,972) (23,955) (11,699) (35,654)
FUND BALANCE-BEGINNING OF YEAR 35,418 3,511 24,851 14,019 6,813 28,701 113,313 38,945 152,258
Prior Period Adjustments 16,107 (57,527) - (41,420) 638 (40,782)
FUND BALANCE AS RESTATED 51,525 (54,016) 24,851 14,019 6,813 28,701 71,893 39,583 111,476
FUND BALANCE-SEPTEMBER 30,2002 $41,745 $ (33,549) $ 7,566 $ 14,215 $ 1,232 $ 16,729 $ 47,938 $ 27,884 $ 75,822
See independent auditors'report and notes to financial statements 21
CITY OF HUNTINGTON BEACH
RECONC4LIATION 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, 2002
(in thousands)
Net Changes in Fund Balances-Total Governmental funds $ (35,654)
Amounts reported for governmental activities in the Statement of
Activities are different because:
CAPITAL EXPENDITURES AND DEPRECIATION - Governmental
funds report capital outlays as expenditures. However,in the Statement
of Activities, the cost of these assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount
by which capital outlays exceed depreciation in the current period. 46,052
ACCRUAL OF REVENUES - Certain revenues in the Statement of
Activities do not meet the "availability"criteria for revenue recognition in
the governmental funds and are not reported in the governmental funds
as revenue. 4,902
LONG-TERM DEBT-Issuances and changes in long-term debt(bonds,
leases,certificates of participation,compensated absences,etc)provide
current financial resources to governmental funds, while repayments of
this debt consumes the current financial resources of governmental
funds. Neither transaction, however, has any effect on net assets.
Also,governmental funds report the effect of issuance costs,premiums,
discounts, etc. when debt is first issued. These amounts are deferred
and amortized in the Statement of Activiti(s. This amount is the net
effect of the differences in the treatment of long-term debt and related
items (5,587)
INTERNAL SERVICE FUNDS - These are used by management to
charge the costs of certain activities to individual funds. The net
revenue of the Internal Service Funds is reported with Governmental
Activities. (2,942)
Change in Net Assets of Governmental Activities $ 6,771
See independent auditors'report and notes to financial statements 22
1:ITY OF HUNTINGTON BEACH
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30,2002
(in thousands)
ENTERPRISE FUNDS
Governmental
Non-Major Activities-
Enterprise Internal
ASSETS Water Fund Funds Total Service Funds
Current Assets:
Cash and Investments $ 41,217 $ 6,479 $ 47,696 $ -
Other Receivables 1,699 2,436 4,135 12
Inventories 1,119 - 1,119 -
Unbilled Receivable 4,308 1,855 6,163
Due from Other Funds 1,292 - 1,292 -
Other Assets - - - 182
Total Current Assets 49,635 10,770 60,405 194
Non-Curret Assets:
Advances to Other Funds 3,018 - 3,018 -
Capital Assets:
Land 3,907 4,691 8,598
Buildings 23,751 7,129 30,880
Machinery and Equipment 5,890 1,317 7,207
Infrastructure 49,911 33,796 83,707
Construction in Process 7,845 - 7,845
Less Accumulated Depreciation (38,296) (19,565) (57,861)
Total Capital Assets 53,008 27,368 80,376 -
TOTAL ASSETS 105,661 38,138 143,799 194
LIABILITIES
Current Liabilities:
Accounts Payable 4,281 937 5,218 31
Accrued Payroll 192 127 319 24
Due to Other Funds - 1,292 1,292 2,814
Deposits Payable 1,554 27 1,581 -
Current Portion of Leases and Claims 129 101 230 3,885
Total Current Liabilities 6,156 2,484 8,640 6,754
Liabilities Payable from Restricted Assets -
Non-Current Liabilities:
Capital Leases 314 281 595 -
Claims Payable - - - 5,450
Compensated Absences 392 99 491 45
Advances from Other Funds - 243 243
Less Current Portion of Claims and Leases (129) (101) (230) (3,885)
Total Non-Current Liabilities 677 522 1,099 1,610
TOTAL LIABILITIES 6,733 3,006 9,739 8,364
NET ASSETS
Invested in Capital Assets,Net of Related Debt 52,694 27,087 79,781 -
Restricted for:
Other Purposes 31,043 - 31,043
Unrestricted 15,191 8,045 23,236 (8,170)
TOTAL NET ASSETS $ 98,928 $ 35,132 $ 134,060 $ (8,170)
See independent auditors'report and notes to financial statements 23
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET ASSETS
PROPRIETARY FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002
(in thousands)
Governmental
Non-Major Activities-
Enterprise Internal
Water Fund Funds Total Service Funds
OPERATING REVENUES:
Sales $ 24,145 $ - $ 24,145 $ -
Rentals - 831 831 -
Fees for Service - 17,716 17,716 8,003
Other 1,903 511 2,414 15
TOTAL OPERATING REVENUES 26,048 19,058 45,106 8,018
OPERATING EXPENSES:
Water Purchases 9,132 - 9,132 -
Supplies and Operations 3,004 14,715 17,719 11,586
Engineering 1,638 - 1,638 -
Production 2,010 2,010
Maintenance 3,397 3,397
Water Meters 1,301 1,301
Water Quality 239 239
In-Lieu Taxes to General Fund 4,433 4,433
Depreciation 2,096 930 3,026
TOTAL OPERATING EXPENSES 27,250 15,645 42,895 11,586
OPERATING INCOME(LOSS) (1,202) 3,413 2,211 (3,568)
NON-OPERATING REVENUES(EXPENSES):
Interest Income 2,011 170 2,181 -
Capital Improvement Fees 6,886 - 6,886
Loss on Sale of Plant,Property,and Equipment - 59 59
TOTAL NON-OPERATING REVENUES(EXPENSES) 8,897 229 9,126
CHANGE IN NET ASSETS BEFORE TRANSFERS
AND CAPITAL CONTRIBUTIONS: 7,695 3,642 11,337 (3,568)
TRANSFERS AND CAPITAL CONTRIBUTIONS:
Transfers In - 820 820 1,354
Transfers Out - (576) (576) (728)
Capital Contributions 7,991 18,179 26,170 -
TOTAL TRANSFERS AND CAPITAL
CONTRIBUTIONS 7,991 18,423 26,414 626
TOTAL CHANGE IN NET ASSETS 15,686 22,065 37,751 (2,942)
NET ASSETS-BEGINNING OF YEAR 83,242 13,067 96,309 (5,228)
NET ASSETS-END OF YEAR $ 98,928 $ 35,132 $ 134,060 $ (8,170)
See independent auditors'report and notes to financial statements 24
CITY OF HUNTINGTON BEACH
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2002
(in thousands)
Governmental
Non-Major Activities-
Enterprise Internal
Water Fund Funds Total Service Funds
Cash Flows from Operating Activities:
Cash Received from Customers and Users $ 24,200 $ 17,549 $ 41,749 $ 8,018
Cash Paid to Employees for Services (4,411) (2,668) (7,079) (609)
Cash Paid to Suppliers of Goods and Services (19,255) (12,321) (31,576) (9,381)
Other Operating Items 553 229 782
Net Cash Provided(Used)by Operating Items 1,087 2,789 3,876 (1,972)
Cash Flows from Noncapital Financing Activities:
Transfers In - 820 820 1,354
Transfers Out (576) (576) (728)
Net Cash Provided(Used)by Non Capital Financing
Activities 244 244 626
Cash Flows from Capital and Related Financing Activities:
Purchase of Plant,Property,and Equipment (7,222) (477) (7,699) -
Principal Paid on Long-Term Debt (72) (150) (222)
Capital Surcharge 6,886 - 6,886
Net Cash Provided(Used)by Capital and Related
Financing Activities (408) (627) (1,035)
Cash Flows from Investing Activities
Cash Received from Investments 1,393 170 1,563
Net Increase in Cash and Cash Equivalents 2,072 2,576 4,648 (1,346)
Cash and Cash Equivalents,Beginning of Year 39,145 3,903 43,048 1,346
Cash and Cash Equivalents,End of Year $ 41,217 $ 6,479 $ 47,696 $
Reconciliation of Operating Income to Net Cash
Provided(used)by Operating Activities
Operating Income(Loss) $ (1,202) $ 3,413 $ 2,211 $ (3,568)
Other Nonoperating Items
Adjustments to Reconcile Operating income to Net
Cash Provided(Used)by Operating Activities
Depreciation 2,096 930 3,026 -
Decrease(Increase)in Accounts Receivable 348 (1,004) (656) 32
Decrease(Increase)in Unbilled Receivables (293) (636) (929) -
Decrease(Increase)in Advances to Other Funds (124) - (124)
Decrease(Increase)in Due from Other Funds (1,292) (1,292) -
Decrease(Increase)in Prepaid Insurance - - (110)
Decrease(Increase)in Inventory (15) (15) -
Increase(Decrease)in Accounts Payable 1,488 (222) 1,266 (15)
Increase(Decrease)in Accrued Payroll 31 69 100 2
Increase(Decrease)in Accrued Interest Payable - - (398)
Increase(Decrease)in Due to Other Funds - 223 223 1,440
Increase(Decrease)in Advances from Other Funds - (1) (1) -
Increase(Decrease)in Deposits 44 6 50 -
Increase(Decrease)in Claims Payable - - - 664
Increase(Decrease)in Compensated Absences 6 11 17 (19)
Net Cash Provided(Used)by Operating Activities $ 1,087 $ 2,789 $ 3,876 $ (1,972)
See independent auditors'report and notes to financial statements 25
CI Y OF HUNTINGTON BEACH
STATEMENT OF FIDUCIARY FUND NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30,2002
Agency Funds Trust Funds
Business Central Net Employee Retirement
Community Improvement Operations Deterred Retiree Medical Supplement
Assets: General Deposit Facilities Districts District Authority Tax Overide Compensation Insurance Fund
Cash and Investments $ 528 $ 833 $ - $ - $ 2,318 $ 200 $ 4,781 $ 8,737
Cash with Fiscal Agent - 6,509 17 1,292 - - - -
Accounts Receivable,Net - 127 - - - - - -
Interest Receivable 12 37 42
Total Assets $ 528 $ 7,469 $ 17 $ 1,292 $ 2,330 $ 200 $ 4,818 $ 8,779
Liabilities:
Accounts Payable - - 2 8 - - - 3
Due to Bondholders 7,469
Total Liabilities 7,469 2 8 3
Net Assets:
Held in Trust for Pension Benefits and Other Purposes $ 528 $ $ 15 $ 1,284 $ 2,330 $ 200 S 4,818 $ 8,776
CITY OF HUNTINGTON BEACH
STATEMENT OF CHANGES IN FIDUCIARY FUND NET ASSETS
TRUSTFUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2002
Employee Retirement
Deferred Retiree Medical Supplement
Additions: Compensation Insurance Fund
Employer Contributions S - $ 578 S 2,746
Interest Income 6 166 266
Total Additions $ 6 $ 7" $ 3,012
Deductions:
Benefits 133 654 1,040
Administration 45
Total Deductions 133 654 1,085
Change in Net Assets (127) 90 1,927
Net Assets-Beginning of Year 327 4,728 6.849
Net Assets-End of Year S 200 $ 4,818 $ 8,776
See independent auditors'report and notes to financial statements 26
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Notes to Financial Statement
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Implementation of New Pronouncements:
This is the first year the City of Huntington Beach has adopted the following new financial
reporting requirements of Government Accounting Standards Board.
■ Statement No. 34, Basic Financial Statements and Management's Discussion
and Analysis for State and Local Governments.-
■ Statement No. 37, Basic Financial Statements and Management's Discussion
and Analysis for State and Local Governments: Omnibus
® Statement No. 38, Certain Financial Statement Note Disclosures
GASB Statement No. 34 is a new financial reporting requirement for local governments in
the United States. The City has implemented this pronouncement and has restructured
much of the information that it has presented in the past. The main goal is to make the
reports more comprehensive and easier to understand and use.
GASB Statement No. 37 addresses selected issues and amends, GASB Statement No.
21, Accounting for Escheat Property, and No. 34, Basic Financial Statements and
Management's Discussion and Analysis for State and Local Governments. These
Statements make selective changes including accounting for Escheat Property,
Management's Discussion and Analysis, Capitalization of Construction—Period Interest,
Modified Approach for Reporting Infrastructure, Program Revenues and Major Fund
Criteria.
GASB Statement No. 38 establishes and modifies disclosure requirements related to
Summary of Significant Accounting Policies, actions taken to address violations of
significant finance— related legal and contractual provisions, debt and lease obligations,
short-term debt, disaggregation of receivable and payable balances, and interfund
balances and transfers.
b. Government-Wide Financial Statements:
The Government-Wide Financial Statements include a Statement of Net Assets, a
Statement of Activities, and Changes in Net Assets. These statements present
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
27
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
b. Government-Wide Financial Statements:
capital assets, as well as infrastructure assets, and long-term liabilities, are included in the
accompanying Statement of Net Assets. The Statement of Activities presents changes in
net assets. Under the accrual basis of accounting, revenues are recognized in the period
in which they are earned while expenses are recognized in the period in which the liability
is incurred.
The statement of activities demonstrates the degree with which the direct expenses of a
given function or segment are offset by program revenues. Direct expenses are those
that are clearly identifiable with a specific function or segment. Indirect expenses are
allocated to the various functions based on a proportionate use of services. The types of
transactions reported as program revenues for the City are reported in three categories:
1) charges for current services, 2) operating grants and contributions, and 3) capital
grants and contributions. Taxes and other items not properly included among program
revenues are reported as general revenues.
Government-vvide 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.
In prior years, the non-current assets and liabilities were recorded in the General Fixed-
Assets Account Group and the General Long-Term Debt Account Group which are no
longer reported.
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 reduces 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.
28
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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 the modified accrual basis of accounting. Only current assets
and current liabilities are included on the Balance Sheets. The Statement of Revenues,
Expenditures and Changes in Fund Balances present increases (revenues and other
financing sources) and decreases (expenditures and other financing uses) in net current
assets. Under modified accrual basis of accounting, revenues are recognized in the
accounting period in which they become both measurable and available to finance
expenditures of the current period. Revenues are recorded when received in cash, except
that revenues subject to accrual (generally 60 days after year-end) are recognized when
due. The primary revenue sources,which have been treated as susceptible to accrual by
the City, are property tax, sales tax, intergovernmental revenues and other taxes.
Expenditures are recorded in the accounting period in which the related fund liability is
incurred.
In the Fund financial statements, reserves and designations segregate portions of fund
balance that are either not available or have been earmarked for specific purposes. The
various reserves and designations are established by actions of the City Council and
Management and can be increased, reduced or eliminated by similar actions.
29
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c. Fund Financial Statements:
The City reports the following major funds:
Governmental Funds:
• General Fund is used to account for activity not required to be accounted for in
another fund.
Debt Service Funds:
• The Redevelopment Agency Fund records the property tax increment revenues
received from Redevelopment projects. The tax increment repays the debt of the
Redevelopment Agency.
• The Public Financing Authority Fund records the debt service activity of the
Huntington Beach Public Financing Authority.
• Capital Projects Funds:
• The Public Financing Authority Fund accounts for expenditures relating to capital
improvements funding by Public Financing Authority bond issues.
• The Redevelopment Agency Fund accounts for acquisiti m and construction in the
five project areas.
• The Capital Improvement Fund accounts for major capital improvements not made
by other capital projects funds or proprietary funds.
Proprietary Funds
• The Water Fund is used to account for sale of water to businesses and customers.
Governmental Fund Financial Statements:
Governmental Fund Financial Statements include a Balance Sheet and a Statement of
Revenues, Expenditures and Changes in Fund Balances for all major governmental funds
and non-major funds aggregated. An accompanying schedule is presented to reconcile
and explain the differences in net assets as presented in these statements to the net
assets presented in the Government-Wide Financial Statements. The City presents all
major funds that met those qualifications.
Proprietary Fund Financial Statements:
Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of
Revenues, Expenses and Changes in Fund Net Assets, and a Statement of Cash Flows
for each major proprietary fund and non-major funds aggregated.A column representing
Internal Service Funds (used to report workers compensation and employee indemnity
plan health insurance activity) are also presented in these statements. However, Internal
Service balances and activities have been combined with the governmental activities in
the Government-Wide financial statements.
30
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
c. Fund Financial Statements:
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 a
spending or "current financial resources" measurement focus and the modified accrual
basis of accounting as are the governmental funds explained above. Benefits paid from
the pension trust funds are recognized when paid. 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.
Prior-Year Restatements:
In order to facilitate the implementation of GASB 34,the classification of certain funds has
been changed for the current year (see note 14c).
31
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
d. Cash and Investments:
The City records investments at fair value. The City pools cash resources of its various
funds to facilitate cash management. Cash in excess of current requirements is invested
and reported as investments. It is the City's intent to hold investments until maturity.
However, the City may, in response to market conditions, sell investments prior to
maturity in order to improve the quality, liquidity or yield of the portfolio. Interest earnings
are apportioned among funds based on ending accounting period cash and investment
balances.
The City's cash and cash equivalents are considered to be cash on hand, demand
deposits, and highly liquid investments with original maturities of three months or less at
the time of acquisition.
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for
Certain Investments and for External Investment Pools, highly liquid market investments
with maturities of one year or less at time of purchase are stated at amortized cost. All
other investments are stated at fair value. Market value is used as fair value for those
securiti�s for which market quotations are readily available.
The City participates in the Local Agency Investment Fund (LAIF), an investment pool
managed by the State of California. LAIF has invested a portion of the pool funds in
Structured Notes and Asset-Backed Securities. LAIF's investments are subject to credit
risk with the full faith and credit of the State of California collateralizing these investments.
In addition, these Structured Notes and Asset-Backed Securities are subject to market
risk as a result of changes in interest rates.
e. Capital Assets:
Capital assets, which include property, plant, equipment, and infrastructure, are reported
in the applicable governmental or business-type activities columns in the government-
wide financial statements. Capital assets have an acquisition cost of $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.
32
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Capital Assets:
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:
Inventories are recorded in governmental funds by the consumption method. Inventories
are capitalized and recorded as expenditures when used and are valued using the
average cost method. This amount is offset with a reservation of fund balance. Proprietary
inventories are valued at weighted-average cost.
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. In the Statement of Activities, internal service fund
transactions have been eliminated; however, those transactions between governmental
and business-type activities have not been eliminated.
33
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
g. Interfund Transactions:
Numerous transactions occur between funds of the City resulting in operating transfers,
amounts due to or from other funds and amounts advanced 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.
• Amounts that are classified as advances from other funds are the long-term portion of
moneys, which will be repaid to other funds.
• Amounts classified as advances to other funds represent the long-term portion of
amounts to be received from other funds. In governmental funds, amounts advanced
to other funds are also offset equally by a fund balance reserve account (net of
deferred interest on long-term advances), indicating that they are not spendable
financial resources.
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 another financing source or use. Issuance costs are recorded a current
year expenditure.
i. Employee Compensated Absences:
The Agency 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.
34
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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 A:;tivities 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
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
• Balance of First Installment February 1
• Payments of Second Installment March to April
• Balance of Second Installment July 26
35
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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.
I. Cash Flow Statements:
For purposes of the Statement of Cash Flows, the Proprietary Fund types consider all
cash and investments to be cash equivalents, as these funds participate in the citywide
cash and investment pool.
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. REPORTING ENTITY:
The City of Huntington Beach is the primary government. It was incorporated in 1909, is a
charter, full-service city. The form of government is Council-Manager. Component units are
legally separate organizations for which the City Council is financially accountable, or
organizations that if excluded from the accompanying financial statements,would make them
misleading. The component units described below are blended (presented as if they are part
of the primary government) with the primary government for financial reporting purposes
because either the component units have governing bodies identical to the City's (the City
Council) or provide services exclusively to the City. Financial accountability means the
appointment of a voting majority of the component unit's board and either the ability to
impose will by the City or the possibility that the component unit will provide a financial benefit
or impose a financial burden on the City.
• Redevelopment Agency of the City of Huntington Beach (the Redevelopment
Agency)—This entity was formed in 1967 to renovate older areas in the City. The City
Council serves as its governing body and adopts its annual budget. The
Redevelopment Agency is financially dependent on the City for all of its operations.
Separately prepared financial statements are available for the Redevelopment Agency
from the City's Administrative Services Department.
36
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
2. REPORTING ENTITY:
• Huntington Beach Civic Center Improvement Corporation (Civic Improvement
Corporation)—This corporation was formed to provide funds for capital improvements.
The City Council serves as the corporation's governing body. There are no separate
financial statements prepared for the Civic Improvement Corporation. During the year
all of the bonds for the Civic Center were defeased and the lease with the City was
terminated.
• Huntington Beach Public Financing Authority (Public Financing Authority) —This
corporation was formed in March, 1988 to issue debt to finance public improvements
and other capital purchases for the City and Redevelopment Agency. The Public
Financing Authority's governing body is the City Council,which also adopts the annual
budget.The Public Financing Authority is financially dependent on the City. There are
separately prepared financial statements available for the Public Financing Authority
available from the City's Administrative Services Department.
• The City of Huntington Beach Community Facilities Districts 1990-1, 2000-1 .
and Boeing (Community Facilities Districts), and the Reservoir Hill Assessment
District (the Assessment District) were formed to construct public improvements
within the City boundaries. The governing board of these districts is the City Council.
The proceeds of debt issued and the 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 (the 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.
3. CASH AND INVESTMENTS:
The City Treasurer's Office administers a pooled investment program. This program enables
the City Treasurer to combine available cash from all funds and to invest cash that exceeds
current needs. The City has an agreement with a bank to maintain a minimum cash balance
to compensate the bank for services and uncleared checks that are deposited in the City's
accounts in-lieu of interest earnings.
37
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
3. CASH AND INVESTMENTS (CONTINUED):
Cash and investments at year-end totaled (in thousands):
Statement of Net Assets:
Cash and Investments $ 77,959
Restricted Assets (Cash and Cash Equivalents) 7,118
Cash with Fiscal Agent- Restricted 29,752
Total Per Statement of Net Assets 114,829
Fiduciary Funds:
Cash and Investments 17,397
Cash with Fiscal Agent- Restricted 7,818
Total Fiduciary Funds 25,215
Total Cash and Investments $140,044
Cash and investments were categorized as follows (in thousands)
Category
Fair
Non Bank Value/Carrying
DEPOSITS: 1 2 3 Categorized Balance Amount
Demand Accounts $ 100 $ 339 $ - $ - $ 3,357 $ 439
INVESTMENTS:
Commercial Paper 1,992 - 1,992
Investment in L.A.I.F. 37,814 37,814
Federal Agency Issues 52,954 - - - 52,954
Treasury Securities 5,053 - - - 5,053
Medium Term Notes 7,906 - - - 7,906
Investments with Fiscal Agent:
Guaranteed Investment Contracts - - - 19,542 19,542
Investment in L.A.I.F. - - - 1,109 1,109
Federal Agency Issues - - - 3,110 3,110
Money Market Funds - - 9,707 9,707
U.S. Treasury Obligations - - 351 - 351
Subtotal of Investments 67,905 - 351 71,282 - 139,538
Total Deposits and Investments $ 68,005 $ 339 $ 351 $ 71,282 $ 3,357 139,977
Petty Cash 67
Totals $ 140,044
38
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
3. CASH AND INVESTMENTS (CONTINUED):
The City's investment policy and Section 53601 of the California Government Code allows
the following investments:
• Bankers acceptances
• Negotiable certificates of deposit
• Commercial paper
• Bonds issued by the City or an Agency within the State of California
• Obligations of the United States Treasury
• Federal Agency Obligations of:
Federal Intermediate Credit Bank
Federal Land Bank
Federal Home Loan Bank
Federal National Mortgage Association
Small Business Administration
Government National Mortgage Association
Tennessee Valley Authorities
Student Loan Association Notes
Federal Home Loan Corporation Notes
• Medium Term Corporate Notes
• Time Deposits — Certificates of Deposit
• Obligations of the State of California
• Mutual Funds
• Repurchase Agreements
Throughoutthe year, the City utilized overnight repurchase agreements fortemporary
investment of idle cash. Such agreements were used 20 to 22 times per month and
generally did not exceed 5% of the City's investment portfolio.
• Reverse-Repurchase Agreements:
Although the City's investment policy allows reverse-repurchase agreements with
specific City Council approval, the City did not borrow through the use of reverse-
repurchase agreements at any time during the year.
Classification of Deposits and Investments by Credit Risk:
The City categorizes its balance of deposits and investments with financial institutions
under the following risk categories:
39
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
3. CASH AND INVESTMENTS (CONTINUED):
DEPOSITS:
Category 1 - Deposits insured or collateralized with securities held by the City or the City's
agent in the City's name.
Category 2 - Deposits collateralized with securities held by the pledging financial institution's
trust department or agent in the City's name.
Category 3 - Uncollateralized deposits, or collateralized with securities held by the pledging
financial institution or by its trust department or agent, but not in the City's
name.
INVESTMENTS:
Category 1 - Insured or registered investments, or securities held by the City or its agent in
the City's name.
,ategory 2 - Uninsured and unregistered investments with securities held by the
counterparty's trust department or agent in the City's name.
Category 3 - Uninsured and unregistered investments with securities held by the
counterparty or by its trust department or agent but not in the City's name.
® Investments Not Subject to Categorization:
Investments in the California Local Agency Investment Fund (LAIF), Guaranteed Investment
Contracts and Money Market Mutual Funds are not categorized, as GASB 3 does not require
categorization of investment pools managed by another government.
• Local Agency Investment Fund (LAIF):
The LAIF is a special fund of the California State Treasury through which local governments
may pool investments. Each city may invest up to $30,000,000 each in the Fund for the city
and redevelopment agency and may also invest without limitation in special bond proceeds
accounts. Investments in LAIF are highly liquid, as deposits can be converted to cash within
twenty-four hours without loss of interest. Included in LAIF's investment portfolio are certain
derivative securities or similar products such as structured notes totaling$1,343,538,000 and
asset-backed securities totaling $811,131,000. LAIF's, and the City's, exposure to credit,
market or legal risk is not available. The City's proportionate share of its fair value in LAIF
was $38,923,000.
40
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
4. 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.
A portion of the assets in the plan was still held by the City at year-end. The accompanying
financial statements show the amounts held by the City as an expendable trust fund.The City
has the duty of care of an ordinary prudent investor..
5, DEFERRED REVENUE:
Certain revenues in governmental funds are deferred until received. The property tax
amounts are recognized in the year as revenue in the government-wide financial statements,
but are recorded as deferred revenue in the fund financial statements. The amounts are as
follows (in thousands):
Other
Property Deferred Interest on Deferred
Taxes Interfund Loans Revenue Total
General Fund $ 3,520 $ 6,257 $ - $ 9,777
Redevelopment Agency Debt Service Fund 1,358 - - 1,358
Capital Improvement Fund - 266 - 266
Non-Major Governmental Funds 24 8,857 3,260 12,141
Total $ 4,902 $ 15,380 $ 3,260 $ 23,542
41
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
6. RETIREMENT PLAN — NORMAL:
a. Plan Description:
The City contributes to the California Public Employees' Retirement System (CALPERS),
an agent, multiple-employer public employee defined benefit pension plan. CALPERS
provides retirement and disability benefits, annual cost-of-living adjustments, and death
benefits to plan members and beneficiaries. CALPERS acts as a common investment and
administrative agent for participating public entities within California. Benefit provisions
and all other requirements are established by state statute and city ordinance. Copies of
CALPERS annual financial report may be obtained from their executive office: 400 P
Street, Sacramento, CA 95814.
b. Employer and Employee Contribution Obligations:
The City makes two types of contributions for covered employees. The first contribution
represents the amount required to be made by the City (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 ra'e 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 and member rates for the fiscal year ending September
30, 2002 are:
Rate
Local Miscellaneous 0.0000%
Local Safety 0.0000%
c. Annual Pension Cost:
The City's annual pension cost of$5,085,000 was equal to the City's required and actual
contributions. The required contribution was determined as part of a June 30, 2001
actuarial valuation using the entry age normal actuarial cost method.
CALPERS conducted an actuarial valuation using the entry-age actuarial cost method
using a level percent of payroll to determine the City's net pension obligation as of June
30, 2002. Significant assumptions were:
42
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
6. RETIREMENT PLAN — NORMAL (CONTINUED):
c. Annual Pension Cost:
• Average remaining period — 19 Years as of the Valuation Date — closed end
• Asset valuation method — 3 years smoothed market
• Investment Rate of Return — 8.25%
• Projected salary increases — 4.27% to 11.59% (safety) and 3.75% to 14.2%
(miscellaneous) depending on age, service, and type of employment
• Inflation — 3.50%
• Payroll growth — 3.75%
• Individual salary growth —A merit scale varying by duration of employment coupled
with an assumed annual inflation component of 3.50% 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 yea 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:
Annual Pension Cost Percentage of APC Net Pension
Fiscal Year (In Thousands) Funded Obligation
9/30/2000 $5,516 100% $0
9/30/2001 $4,642 100% $0
9/30/2002 $5,085 100% $0
43
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
7. 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
which 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 1,000 active employees
reported on the July 1, 2002 data, only 747 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.
b. Employer Obligations and Funding Status and Progress:
The City annually transfers amounts from the various City funds to a pension trust fund.
The City is required to contribute an actuarially determined rate of 4.33% of total payroll
for all permanent employees. Administrative costs of this plan are financed through
investment earnings.
c. Annual Pension Cost and Net Pension Obligation:
The City's annual pension cost and net pension obligation for this plan at June 30, 2002
were (in thousands):
Annual required contribution $3,228
Interest on net pension obligation 458
Adjustment to annual required contribution (594)
Annual pension cost 3,092
Contributions made (2,836)
Increase (decrease) in net pension obligation 256
Net Pension Obligation — Beginning of Year 8,337
Net Pension Obligation — End of Year 8 593
44
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
7. RETIREMENT PLAN — SUPPLEMENTAL (CONTINUED):
c. Annual Pension Cost and Net Pension Obligation:
The annual required contribution was determined as part of an independent actuarial
valuation using the Entry Age Normal Actuarial Cost Method which is a projected benefit
full-cost method which takes into account those benefits that are expected to be earned in
the future as well as those already accrued. The actuarial assumptions used were:
• Rate of return on present and future assets — 5.5% per annum
• Projected salary increases for covered employees due to inflation —3.0% per annum
• Projected salary increases due to merit — 0%
• Inflation rate — 3.0%
• Post employment benefit increases —0%
• Amortization of unfunded liability — level percentage of pay ending in 2027
• Actuarial value of assets — market value
d. Trend Information:
Below is the required three-year trend information (dollar amounts in thousands):
Fiscal Year Annual Pension Percentage of Net Pension
Cost APC Funded Obligation
6/30/00 $2,536 64% $8,150
6/30/01 2,455 88% 8,337
6/30/02 3,092 92% 8,593
Below is other required trend information (dollar amounts in thousands):
Fiscal Year Annual Percentage of
Ending June Required ARC
30, Contribution Contributed
1992 $1,391 17%
1993 1,546 16%
1994 1,697 14%
1995 1,790 22%
1996 1,968 41%
1997 1,952 155%
1998 2,151 70%
1999 2,613 60%
2000 2,638 62%
2001 2,578 88%
2002 2,836 88%
45
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
7. RETIREMENT PLAN — SUPPLEMENTAL (CONTINUED):
e. Accounting for Plan:
Since the City is required to adopt GASB 25 for the supplemental pension plan, the
difference between the ARC and the amount of pension cost funded forthe years in which
there was an actuarial study must be recorded as a liability in the government-wide
financial statements. The amount of this liability is $8,593,000. Actuarial studies and
updates were performed since 1991 and there is a substantial amount of unfunded
pension benefit liability that would have been recorded as a liability in the government-
wide financial statements if the studies would have been performed (see Note 12).
8. POST-EMPLOYMENT MEDICAL INSURANCE:
a. Plan Description:
The City agreed via contract with each employee association to provide post-employment
medical insurance to retirees. The benefits are based on years of service and are
available to all retiree who meet all three of the following criteria:
• At the time of retirement the employe; is employed by the City.
• At the time of retirement the employee has a minimum often years of service creditor
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 occur:
• During any period the retiree is eligible to receive health insurance at the expense of
another employer.
• The retiree becomes eligible to enroll automatically or voluntarily in Medicare.
If a retiree dies, the benefits that would be payable for his or her insurance are 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.
46
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
8. POST-EMPLOYMENT MEDICAL INSURANCE (CONTINUED):
b. Accounting and Funding:
The Retiree Medical Insurance Fund is an agency fund. Other funds contribute on a
periodic basis. Employees do not contribute. The actuarial assumptions for the plan are
identical to the assumptions used for the Retirement Supplement Plan (see Note 7).
Below are the required disclosures for this plan (in thousands):
Number of active participants 1,065
Employer's actuarially required contributions $ 744
Employer's actual contributions $ 579
Below is a summary of the Unfunded Actuarial Accrued Liability for the plan (in
thousands)
Actuarial accrued liability $11,441
Net assets available for plan benefits (4,818)
Unfunded Actuarial Accrued Liability $6,623
Under current generally accepted accounting principles, unfunded liabilities on other post-
employment benefits, are not required to be recorded in the financial statements.
9. RISK MANAGEMENT:
The City is exposed to various risks of losses related to torts; theft of, damage to and
destruction of assets; errors and omissions; injuries to employees; natural disasters and
employee health insurance claims.
Liability Claims:
The City records liability 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. 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.
47
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
9. RISK MANAGEMENT (CONTINUED):
Health and Workers Compensation Claims:
The City established separate reserve funds to account for workers compensation, and
employee health. These funds are recorded as internal service funds and finance uninsured
risks of loss.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 Workers'
Insurance Compensation Liability
Reserve Reserve Insurance Total
Balance October 1, 2000 $ 210 $ 6,408 $ 3,125 $ 9,743
Additions -2000-2001 3,261 2,999 3,861 10,121
Reductions -2000-2001 (3,271) (4,821) (1,595) (9,687)
Net Increase (Decrease) 2000-2001 (10) (1,822) 2,266 434
Balance September 30, 2001 200 4,586 5,391 10,177
Additions 2001-2002 6,138 3,400 2,400 11,938
Reductions-2001-2002 (5,953) (2,921) (629) (9,503)
Net Increase (Decrease) 2001-2002 185 479 1,771 2,435
Balance September 30, 2002 $ 385 $ 5,065 $ 7,162 $ 12,612
48
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
10. INTERFUND TRANSACTIONS:
a. Interfund Advances:
The amounts at September 30, 2002 were (in thousands):
Advances Advances
To From
Governmental Funds $ 36,239 $ 39,014
Enterprise Funds 3,018 243
Total $ 39,257 $ 39,257
Advances to:
Capital Non-Major Total Total
General Improvemen Governmental Governmental Advances
Advances from: Fund Fund Funds Funds water Fund From
Governmental Funds:
Debt Service Funds:
Redevelopment Agency $ 26,662 $ 466 $ 8,868 $ 35,996 $ 2,775 $ 38,771
Non-Major Enterprise Funds - - - - 243 243
Internal Service Funds - -
Total Advances to $ 26,662 $ 466 $ 8,868 $ 35,996 $ 3,018 $ 39,014
b. Due To/From Other Funds:
The amounts at September 30, 2002 were (in thousands):
Due To Other Funds
Total Due to
Due From Other Funds General Fund water Fund Other Funds
Public Financing Authority Capital Projects Fund $ 1,837 $ - $ 1,837
Non-Major Governmental Funds 893 - 893
Non-Major Enterprise Funds - 1,292 1,292
Internal Service Funds 2,814 - 2,814
Total Due From Other Funds $ 5,544 $ 1,292 $ 6,836
49
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
10. INTERFUND TRANSACTIONS (CONTINUED):
c. Transfers In/Out:
The amounts at September 30, 2002 were (in thousands):
Transfers
Transfers In Out
Governmental Funds $ 58,948 $ 59,818
Enterprise Funds 820 576
Internal Service Funds 1,354 728
Total $ 61,122 $ 61,122
Transfers Out
Debt Service Funds Capital Projects Funds
Transfers Public Capital Total Major
Redevelopment Financing Public Financing Governmental
I n: General Fund Agency Authorig Redevelopment Improvement
Agency Fund Authority Funds
Governmental
Funds:
General Fund $ - $ - $ 3,468 $ - $ 3,490 $ $ 6,958
Debt Service Funds:
Redevelopment
Agency 98 1,418 - 1,516
Public Financing
Authority - 21,183 - - 11 21,194
Capital Projects
Funds: -
Redevelopment
Agency 10 - 10
Capital
Improvement
Fund 713 - - - - 713
Public Financing
Authority - - 2,392 - 11,084 - 13,476
Non-Major
Governmental
Funds 3,503 - 3,971 4,202 - 12,126
Non-Major
Enterprise Funds 193 - 383 - - 576
Internal Service
Funds 500 - - - - - 500
Total Transfers In $ 5,017 $ 21,183 $ 11,632 $ - $ 19,226 $ 11 $ 57,089
50
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
10. INTERFUND TRANSACTIONS:
d. Transfers In/Out:
Transfers Out
Non-Major Total Non-Major
Governmental Governmental Enterprise Internal Service Total Transfers
Transfers In: Funds Funds Funds Funds Out
Governmental
Funds:
General Fund $ 361 $ 7,319 $ 700 $ 1,126 $ 9,145
Debt Service Funds:
Redevelopment
Agency 1,245 2,909 - - 2,761
Public Financing
Authority 45 21,239 - 21,239
Capital Projects
Funds: -
Redevelopment
Agency - 10 10
Capital
Improvement
Fund 181 894 - - 894
Public Financing
Authority - 13,476 - - 13,476
Non-Major
Governmental
Funds 47 11,723 120 - 12,293
Non-Major
Enterprise Funds - 576 - - 576
Internal Service
Funds - 500 - 228 728
Total Transfers In $ 1,879 $ 58,948 $ 820 $ 1,354 $ 61,122
51
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11.LONG-TERM OBLIGATIONS:
Below is a schedule of changes in long-term obligations for the year (in thousands).
Principal
October 1, September Due Within
Governmental Activities: Note 2001 Additions Retirements 30,2002 Accrued Interest One Year
Civic Improvement Corporation:
Refunding Certificates of Participation(Civic
Center)- 1993 11(a)(1) $ 16,655 $ $ (16,655) $ $ - $
Refunding Certificates of Participation(Police
Administration Building)-1993 11(a)(2) 13,095 - (13,095) -
Total Civic Improvement Corporation 29,750 - (29,750) -
Public Financing Authority:
1992 Revenue Bonds 11(b)(1) 20,460 (20,460) - - -
1997 Leasehold Revenue Bonds 11(b)(2) 6,580 (510) 6,070 88 555
2000 Certificates of Participation 11(b)(3) 17,840 (545) 17,295 73 560
2001-a Lease Revenue Bonds 11(b)(4) 31,360 - (580) 30,780 117 560
2001-b Lease Revenue Bonds 11(b)(5) - 31,095 (1,820) 29,275 191 1,475
Total Public Financing Authority 76,240 31,095 (23,915) 83,420 468 3,150
Redevelopment Agency:
1999 Tax Allocation Refunding Bonds 11(c)(1) 9,770 - (300) 9,470 72 $ 310
2002 Tax Allocation Refunding Bonds 11(c)(2) - 20,900 - 20,900 155 685
Mayer Disposition and Development Agreement 11(c)(3) 4,756 6,524 - 11,280
Section 108 Loan 11(c)(4) 8,130 - (240) 7,890 100 260
Note Payable 11(c)(5) 345 - (52) 293 - 293
Total Redevelopment Agency 23,001 27,424 (592) 49,833 327 1,548
Other Long-Term Obligations:
Reservoir Hill Assessment Bonds 11(d)(1) 605 - (190) 415 3 $ 55
Energy Financing Loan 11(d)(2) 927 - (185) 742 10 197
Leases Payable 11(d)(3) 2,007 3,219 (1,119) 4,107 13 -
Compensated Absences 11(d)(4) 8,075 3,342 (2,467) 8,950 -
Claims Payable 11(d)(5) 10,177 11,938 (9,503) 12,612 - 4,885
Net Pension Obligation 11(d)(6) 8,337 256 - 8,593 - -
Total Other Long-Term Obligations $ 30,128 $ 18,755 $ (13,464) $ 35,419 $ 26 $ 5,137
Total Long-Term Obligations-Governmental
Activities $ 159,119 $ 77,274 $ (67,721) $ 168,672 $ 821 $ 9,835
52
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM( OBLIGATIONS:
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 $ 61,738
Items Not Recorded as Proceeds of Long-Term Debt:
Increase in Compensated Absences 3,342
Increase in Claims Payable 11,938
Interest in Net Pension Obligation 256
Increases in Above Schedule $ 77,274
Principal Paid in Governmental Fund Financial Statements $ 5,541
Decrease in Claims Payable 9,503
Decrease in Compensated Absences 2,467
Defeasance of Bonds (Note 15) 50,210
Decreases in Above Schedule $ 67,721
a. Civic Improvement Corporation:
(1). Huntington Beach Civic Improvement Corporation Refunding Certificates of
Participation (Civic Center Project):
Year of Issuance 1993
Type of Debt Refunding Certificates of
Participation
Original Principal Amount $21,895,000
-Security Lease on Civic Buildings
Interest Rates 2.75% to 5.8%
Interest Payment Dates February 1 st and August 1S
Principal Payment Dates August 1S
Purpose of Debt Refinance 1986 Civic
Improvement Corporation
Certificates of Participation
These certificates were defeased during the year (see note 14).
53
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
a. Civic Improvement Corporation:
(2) Huntington Beach Civic Improvement Corporation Refunding Certificates of
Participation (Police Administration Project):
Year of Issuance 1993
Type of Debt Refunding Certificates of
Participation
-Original Principal Amount $16,350,000
Security Lease on Civic Buildings
Interest Rates 4.0% to 5.7%
Interest Payment Dates February 1S and August 15
Principal Payment Dates August 1 s
Purpose of Debt Refinance 1989 Civic
Improvement Corporation
Certificates of Participation
These certificates were defeased during the year (see note 14).
b. Public Financing Authority
(1.) 1992 Huntington Beach Public Financing Authority Revenue Bonds:
Year of Issuance 1992
-Type of Debt Revenue Bonds
Original Principal Amount $33,495,000 with $10,835,000
defeased in 1999
Security Loan Agreements with
Redevelopment Agency
Interest Rates 7.0%
Interest Payment Dates Februa 1 S and August 1 s
Principal Payment Dates August 1S
Purpose of Debt Provide funds for Waterfront
Development and Remove
Restrictive Covenants on 1988
Revenue Bonds
These certificates were defeased during the year (see note 14).
54
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
b. Public Financing Authority
(2.) 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 15 In
Purpose of Debt Construct Pier Plaza and
Purchase 800 MHZ System
Debt service requirements to maturity are (in thousands):
Year Ending
September
30 Principal Interest Total
2003 $ 555 $ 303 $ 858
2004 575 278 853
2005 610 245 855
2006 640 214 854
2007 665 171 836
2008-2012 450 769 1,219
2013-2017 580 631 1,211
2018-2022 760 449 1,209
2023-2027 1,000 207 1,207
2028 235 7 242
Total $ 6,070 $ 3,274 $ 9,344
55
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
b. Public Financing Authority
(3.) 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 1S and March 1s'
Principal Payment Dates September 1"
Purpose of Debt Capital improvements and
defeasance of Emerald Cove
Certificates of Participation (see
note 14)
Debt service requirements to maturity are (in thousands):
Year Ending
September 30 Principal Interest Total
2003 $ 565 $ 875 $ 1,440
2004 590 852 1,442
2005 615 827 1,442
2006 640 801 1,441
2007 670 773 1,443
2008-2012 3,190 3,404 6,594
2013-2017 2,960 2,708 5,668
2018-2022 3,450 1,816 5,266
2023-2027 2,650 993 3,643
2028-2030 1,965 218 2,183
Total $ 17,295 $ 13,267 $ 30,562
56
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
b. Public Financing Authority
(4). 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 1st and September 1S
Principal Payment Dates September 1st
Purpose of Debt Construct Sports Complex and
South Beach Phase II
Improvements
Debt service requirements to maturity are (in thousands):
Year Ending
September
30, Principal Interest Total
2003 $ 560 $ 1,423 $ 1,983
2004 585 1,401 1,986
2005 605 1,378 1,983
2006 630 1,354 1,984
2007 650 1,333 1,983
2008-2012 3,635 6,297 9,932
2013-2017 4,445 5,483 9,928
2018-2022 5,565 4,360 9,925
2023-2027 7,070 2,854 9,924
2028-2031 7,035 902 7,937
Total $ 30,780 $ 26,785 $ 57,565
57
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
b. Public Financing Authority
(5). 2001(b) Public Financing Authority Lease Revenue Bonds:
Year of Issuance 2001
Type of Debt Lease Revenue Bonds
Original Principal Amount $31,095,000
Security Lease on Civic Center Buildings
Interest Rates 4.0% to 5.0%
Interest Payment Dates August 1, February 1
Principal Payment Dates August 1
Purpose of Debt Defease Civic Improvement
Corporation Certificates
Year Ending
September
30, Principal Interest Total
2003 $ 1,475 $ 1,143 $ 2,618
2004 1,535 1,084 2,619
2005 1,595 1,023 2,618
2006 1,640 975 2,615
2007 1,690 926 2,616
2008-2012 9,410 3,681 13,091
2013-2017 9,905 1,649 11,554
2018-2019 2,025 148 2,173
Total $ 29,275 $ 10,627 $ 39,902
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 Februa 1 S and August 1 S
Principal Payment Dates August 1s
Purpose of Debt Prepay Agency's 1992 Loans to
Public Financing Authority
58
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
c. Redevelopment Agency:
(1.) 1999 Redevelopment Agency Tax Allocation Refunding Bonds:
Debt service requirements to maturity are (in thousands):
Year Ending
September 30 Principal Interest Total
2003 $ 310 $ 303 $ 613
2004 320 278 598
2005 335 245 580
2006 350 214 564
2007 365 171 536
2008-2012 2,060 769 2,829
2013-2017 2,575 631 3,206
2018-2023 2,795 512 3,307
2024 360 53 413
Total $ 9,470 $ 3,176 $ 12,646
(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 1S and August 1s'
Principal Payment Dates August 1s'
Purpose of Debt Prepay Agency's 1992 Loans to
Public Financing Authority and
fully defease 1992 Public
Financing Authority bonds
59
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
c. Redevelopment Agency:
(2.) 2002 Redevelopment Agency Tax Allocation Refunding Bonds:
Debt service requirements to maturity are (in thousands):
Year Ending
September
30, Principal Interest Total
2003 $ 685 $ 928 $ 1,613
2004 750 860 1,610
2005 765 841 1,606
2006 790 822 1,612
2007 815 798 1,613
2008-2012 4,565 3,542 8,107
2013-2017 5,650 2,540 8,190
2018-2022 5,180 1,134 6,314
2023-2024 1,700 124 1,824
Total $ 20,900 $ 11,589 $ 32,489
(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, 2002, the Agency obligation under the agreement amounted to
$11,280,000. The beginning balance of this obligation was $4,756,000. During the year
an additional $6,524,000 was advanced. Project-generated revenues as available will
repay these amounts over the time needed to fully amortize the advance.
60
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
c. Redevelopment Agency:
(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
Interest Rates 7.7%
Interest Payment Dates February 1st and August 1S
Principal Payment Dates August 1S
Purpose of Debt Capital Improvements
Debt service requirements to maturity are (in thousands):
Year Ending
September 30 Principal Interest Total
2003 $ 260 $ 600 $ 860
2004 280 581 861
2005 300 561 861
2006 315 540 855
2007 340 518 858
2008-2012 2,085 2,180 4,265
2013-2017 2,870 1,276 4,146
2018-2019 1,440 173 1,613
Total $ 7,890 $ 6,429 $ 14,319
(5). Notes Payable:
Year of Issuance 1988
Type of Debt First Trust Deed Mortgage
-Original Principal Amount $881,000
Security Real Property
Interest Rates Variable
Interest Payment Dates Monthly
-Principal Payment Dates Monthly
Purpose of Debt Purchase or Property
The principal ($293,000) and interest ($42,000) are due during 2002-2003.
61
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
d. Other Long-Term Obligations:
(1). Reservoir Hill Assessment Bonds:
Year of Issuance 1989
-Type of Debt 1915 Improvement Act Bonds
Original Principal Amount $1,653,905
Security Property tax assessments
Interest Rates 6.00% to 8.15%
Interest Payment Dates March 2 nd and September 1"
Principal Payment Dates September 2"
Purpose of Debt Capital Improvements
Debt service requirements to maturity are (in thousands):
Year
Ending
September
30 Principal Interest Total
2003 $ 55 $ 65 $ 155
2004 55 58 153
2005 65 51 156
2006 70 42 157
2007 170 33 158
Total $ 415 $ 249 $ 779
(2.) 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 22" and June 22"
Principal Payment Dates December 22" and June 22"
Purpose of Debt Capital Improvements
62
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
d. Other Long-Term Obligations:
(2.) Energy Financing Loan:
Debt service requirements to maturity are (in thousands):
Year Ending
September 30, Principal Interest Total
2003 $197 $42 $239
2004 209 30 239
2005 221 18 239
2006 115 10 125
Total $742 $100 $ 842
(3). Leases Payable:
The City entered into capital leases for various items.-
Year of Issuance 1993 through 2002
Type of Debt Capital Leases
Original Principal Amount Various ($93,000 to $1,200,000)
Security Lease Agreement
Interest Rates 5.0% to 6.9%
Interest Payment Dates Monthly, Quarterly, Semi-
Annually
Principal Payment Dates Monthly, Quarterly, Semi-
Annually
Purpose of Debt Equipment Financing
Future minimum lease payments to maturity are (in thousands):
Year Ending
September 30, Amount
2003 $1,440
2004 1,247
2005 1,069
2006 562
2007 132
Total minimum
lease payments 4,450
Less interest (343)
Total $4,107
63
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
d. Other Long-Term Obligations:
(4) Compensated Absences:
There is no repayment schedule to pay the compensated absences amount of$8,950,000
relating to governmental operations.
(5). Claims Payable:
There is no repayment schedule for the claims payable of$12,613,000 described in note
9. The City pays the claims upon final settlement.
(6) Net Pension Obligation:
There is no fixed repayment schedule to fund the unfunded net pension obligation totaling
$8,593,000 for the City's Retirement Supplement Plan described in Note 7. The amount
will be funded through a contribution rate determined by an independent actuarial study.
This amount is significantly less than the total unfunded liability 'or this plan since
actuarial studies only began in 1991, which was after the plan was ir, place.
e. Long-Term Obligations — Business Activities:
Principal
October 1, September Accrued Due Within
Long-Term Obligations-Business Activities: 2001 Additions Retirements 30,2002 Interest One Year
Compensated Absences 11(e)(1) $ 472 $ 34 $ (15) $ 491 $ - $ 236
Leases Payable 11(e)2 432 345 (182) 595 - 230
Total Long-Term Obligations-Business
Activities $ 904 $ 379 $ (197) $ 1,086 $ - $ 466
(1.) Compensated Absences:
There is no repayment schedule for the compensated absences amount of $540,000
relating to business activities.
64
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
e. Long-Term Obligations -- Business Activities:
(2.) Leases Payable:
The City entered into capital leases for various items:
Year of Issuance 1993 through 2002
Type of Debt Capital Leases
Original Principal Amount Various
-Security Lease Agreement
Interest Rates 5.0% to 6.9%
Interest Payment Dates Monthly, Quarterly, Semi-
Annually
Principal Payment Dates Monthly, Quarterly, Semi-
Annually
Purpose of Debt Equipment Financing
Future minimum lease payments to maturity are (in thousands):
Year Ending
September 30, Amount
2003 $246
2004 203
2005 77
2006 77
2007 39
Total minimum
lease payments 642
Less interest (48)
Total $594
65
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
11(f). Long-Term Obligations Not Recorded in Financial Statements:
Obligations Not Recorded in Financial
Statements:
October 1, September
Community Facilities Districts: 2001 Additions Retirements 30,2002
Community Facilities District 1990-1 Special
Assessment Tax Bonds 11(f)(1) $ 2,100 $ - $ (2,100) $ -
Community Facilities District No. 1990-1
Special Tax Refunding Bonds 11(f)(2) - 2,155 - 2,155
Community Facilities District 2000-1 Special
Assessment Tax Bonds 11(f)(3) 16,000 16,000
Community Facilities District NO.2002-1 - 4,900 -
Special Assessment Tax Bonds 11(f)(4) 4,900
Total Community Facilities Districts 2,100 23,055 (2,100) 23,055
No-Commitment Debt 11(f)(5) 51,695 - - 51,695
Defeased Debt Outstanding 11(f)(6) 13,580 - (13,580) -
Total Obligations Not Recorded in Financial
Statements $ 67,375 $ 23,055 $ (15,680) $ 74,750
(1.) Community Facilities District 1990/91 Special Assessment Tax Bonds:
Year of Issuance 1990
Type of Debt Community Facilities District
Assessment Bonds
Original Principal Amount $2,400,000
-Security Special Tax Levies
Interest Rates 6.35% to 7.60%
Interest Payment Dates April 1st and October 1s'
Principal Payment Dates October 1s'
Purpose of Debt Public Improvements and Police
and Fire services
These bonds were defeased during the year.
66
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
11(fl. Long-Term Obligations Not Recorded in Financial Statements:
(2). Community Facilities District 1990-1 2001 Special Tax Refunding Bonds:
Year of Issuance 2001
Type of Debt Community Facilities District
Assessment Bonds
-Original Principal Amount $2,155,000
Security Special Tax Levies
Interest Rates 4.00% to 5.40%
Interest Payment Dates April 1 st and October 1 st
Principal Payment Dates October 1 st
Debt service requirements to maturity are (in thousands):
Year Ending
September
30, Princip 31 Interest Total
2003 $ 85 $ 93 $ 178
2004 75 103 178
2005 80 100 180
2006 85 96 181
2007 85 93 178
2008-2012 490 407 897
2013-2017 625 274 899
2018-2022 630 87 717
Total $ 2,155 $ 1,253 $ 3,408
(3) Community Facilities District 2000-2001 Special Tax Bonds:
Year of Issuance 2001
Type of Debt Community Facilities District
Assessment Bonds
Original Principal Amount $16,000,000
-Security Special Tax Levies
Interest Rates 3.80% to 6.40%
Interest Payment Dates September 1st and March 1S
Principal Payment Dates September 1st
Purpose of Debt Public Improvements for Grand
Coast Resort
67
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
11(fl. Long-Term Obligations Not Recorded in Financial Statements:
(3) Community Facilities District 2000-2001 Special Tax Bonds:
Debt service requirements to maturity are (in thousands):
Year Ending
September
30, Principal Interest Total
2003 $ - $ 988 $ 988
2004 245 988 1,233
2005 255 979 1,234
2006 265 968 1,233
2007 280 956 1,236
2008-2012 1,625 4,554 6,179
2013-2017 2,155 4,026 6,181
2018-2022 2,930 3,248 6,178
2023-2027 4,010 2,174 6,184
2028-2031 4,235 704 4,939
Total $ 16,000 $ 19,585 $ 35,585
(4.) Community Facilities District Boeing:
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 1 S and September 1st
Principal Payment Dates September 1st
68
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
11. LONG-TERM OBLIGATIONS (CONTINUED):
11(f). Long-Term Obligations Not Recorded in Financial Statements:
(4.) Community Facilities District Boeing:
Debt service requirements to maturity are (in thousands):
Year Ending
September
30, Principal Interest Total
2003 $ - $ 339 $ 339
2004 - 303 303
2005 5 303 308
2006 10 303 313
2007 15 302 317
2008-2012 190 1,490 1,680
2013-2017 445 1,415 1,860
2018-2022 815 1,246 2,061
2023-2027 1,335 933 2,268
2028-2032 2,085 421 2,506
Total $ 4,900 $ 7,055 $ 11,955
(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):
Outstanding
September 30, Original Issue
Bond Issue 2002 Amount
Five Points Senior Project Multi-Family Housing $ 9,500 $ 9,500
Revenue Bonds — Series A — 1991
Seabridge Villas Project Multi-Family Housing Revenue 25,000 25,000
Bonds — Series A— 1985
Huntington Village Senior Apartments 1997 - Revenue 4,895 4,895
Bonds
Huntington Breakers Mortgage Revenue Bonds 16,000 16,000
Refunding Issue — 1996 Series A
69
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
12. CAPITAL ASSETS:
a. Changes in Capital Assets:
Capital asset activity for the year was (in thousands):
Balance, Beginning of Balance, End of
Governmental Activities: Year(Restated) Additions Dispositions Year
Land $ 313,142 $ 4,273 $ (24) $ 317,391
Buildings 76,297 11,325 (1,153) 86,469
Machinery & Equipment 45,398 15,736 (10,617) 50,517
Construction in Progress 8,509 21,302 (7,609) 22,202
Infrastructure 268,397 5,682 - 274,079
Subtotal 711,743 58,318 (19,403) 750,658
Less Accumulated
Depreciation (173,375) (12,576) 310 (185,641)
Capital Assets c f
Governmental Activities -
Net $ 538,368 $ 45,742 $ (19,093) $ 565,017
Balance, Beginning of Balance, End of
Business Activities: Year(Restated) Additions Dispositions Year
Land $ 8,598 $ - $ - $ 8,598
Buildings 16,478 14,516 (112) 30,882
Machinery and Equipment 5,983 2,376 (1,151) 7,208
Construction in Progress 5,593 4,140 (1,888) 7,845
Infrastructure 48,372 35,339 - 83,711
Total Cost 85,024 56,371 (3,151) 138,244
Less Accumulated
Depreciation (38,681) (19,187) - (57,868)
Capital Assets of Business
Activities - Net $ 46,343 $ 37,184 $ (3,151) $ 80,376
Of the total additions of ($19,187,000) to the accumulated depreciation amount for
business activities, ($3,005,000) represented current year depreciation expense and
($16,182,000) represented beginning accumulated depreciation on the capital assets of
Sewer Enterprise Fund which began operations at the beginning of the year.
70
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
12. CAPITAL ASSETS (CONTINUED):
b. Depreciation Expense:
Depreciation in governmental activities was charged to the following functions/programs
in the Statement of Activities (in thousands)
Administrative Services $ 10
Building 39
City Attorney 4
City Administration 62
City Clerk 4
City Treasurer 19
Community Services 1,102
Economic Development 7
Fire 675
Information SystF,ms 944
Library Services 360
Non-Departmental 245
Planning 11
Police 2,719
Public Works 6,375
TOTAL $ 12,576
Depreciation in business activities was charged to the following functions/programs in the
Statement of Activities (in thousands):
DEPRECIATION EXPENSE FOR BUSINESS
ACTIVITIES:
Water Fund $ 2,096
Emerald Cove Housing 82
Emergency Fire Medical 97
Refuse Collection -
Sewer Service 711
Hazmat Service 4
Cultural Affairs 4
Ocean View Estates 11
Total $ 3,005
71
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
12. CAPITAL ASSETS (CONTINUED):
c. Capital Assets Acquired via Capital Leases:
At year-end the City's assets acquired through outstanding capital leases (see note 11)
were (in thousands):
Governmental
Activities Business Activities
Machinery and Equipment $4,472 $824
Less Accumulated Depreciation (1,007) (48)
Net Book Value 3,465 776
13.COMMITMENTS AND CONTINGENCIES:
a. Legal Actions:
There are legal actions pending against the City resulting f-om 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. Property Tax Lawsuits:
In February, 2001, an independent taxpayer group won a lawsuit against the City
regarding the legality of a type of property tax levied by the City. Pending appeal, refunds
may be due for fiscal years 1997-98 through 1999-2000 that may amount to
approximately $15.2 million, which does not include any potential refund for fiscal year
2000-2001. The City recorded all revenue attributable to property tax earned afterApril 1,
2001 in a trust and agency fund.All property taxes relating to this levy earned prior to that
date are recorded as revenue. At year-end, the amount in this trust and agency fund
totaled $2,330,000.
72
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
13.COMMITMENTS AND CONTINGENCIES (CONTINUED):
c. Property Tax Lawsuits:
During the year a taxpayer in Orange County filed and won a lawsuit claiming that the
County reassessed his property greater than the 2% allowed under California law. This
only affects the property of this homeowner and the court has not ruled whether this will
extend to other property owners. Until there is a final court settlement, the County
Assessor will continue to value property under the existing practice. If the court rules that
this applies to all homeowners in Orange County, there is a possibility of refunds of an
undetermined amount that will be due to property owners in Huntington Beach.
d. Disposition and Development Agreements:
In June 1999, the Redevelopment Agency entered into a disposition and development
agreement with the CIM Group, LLC to allow development of a hotel, retail and restaurant
improvements and a public parking facility. The project costs are to be paid initially by the
developer with the Agency reimbursing the developer a maximum of$7.9 million pursuant
to a Third Implementation Agreement approved on October 21, 2002.
During the year the Redevelopment Agency entered into a Disposition and Development
Agreement with a private developer regarding the development of the Huntington Center
Mall. This agreement will require payments by the Agency pending certain actions by the
developer. At year-end, no Agency liability had been incurred.
On January 2, 2002 the Redevelopment Agency entered into an Owner Participation
Agreement with Fountains Huntington Beach, LLC, to provide$2 million to meet the cost
of providing and maintaining 80 affordable housing units for a period of 60 years. At year-
end no liability had been incurred. The expectation is that the amount will be disbursed in
fiscal year 2002-2003
73
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
14. OTHER INFORMATION:
a. Expenditures Exceeding Appropriations:
Expenditures exceeded appropriations at the departmental level in the funds shown (in
thousands):
General Fund:
Current:
City Treasurer $ (66)
Debt Service:
Principal (1,071)
Public Financing Authority Debt Service Fund:
Current:
Non-Departmental (356)
Non-Major Governmental Funds
Drainage
Current:
Non-Departmental (3)
Public Communications
Current:
City Administrator (31)
Debt Service:
Principal (48)
Interest (6)
Grants
Current:
Planning (42)
Community Services (7)
Library Services (11)
Reservoir Hill Assessment District
Current:
City Council (2)
74
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
14. OTHER INFORMATION (CONTINUED):
b. Fund and Accumulated Deficits:
The following funds had total fund deficits at year-end (in thousands):
Governmental Funds:
Redevelopment Agency Debt Service Fund $ (33,549)
Non-Major Governmental Funds:
Sewer Development (42)
Narcotics Forfeiture (119)
Pier Plaza (755)
Non-Major Enterprise Funds:
Refuse Collection (365)
Internal Service Funds:
Medical Insurance (1,211)
Workers' Compensation (6,959)
The deficits in funds other than the Redevelopment Agency Debt Service Fund will be
eli ninated through monitoring of expenditures and increasing charges to other funds.
The Redevelopment Agency Debt Service Fund normally operates at a deficit since the
Redevelopment Agency incurs debt to finance operations and capital improvements. By
California law, this is how Redevelopment Agencies operate. This deficit primarily caused
the negative unrestricted net assets for governmental operations in the Statement of Net
Assets of$10,475,000.
c. Restatement of Beginning Fund Balances and Net Assets:
The City changed the method of recording certain transactions at October 1, 2001. For
fiscal year 2001-2002, the Equipment Replacement and Liability Reserve activity will be
reported as part of the General Fund. Below is a restatement of the beginning fund
balances due to the changes (in thousands):
75
City of Huntington Beach
(Votes to Financial Statements
For the Year Ended September 30, 2002
14. OTHER INFORMATION (CONTINUED):
c. Restatement of Beginning Fund Balances and Net Assets:
Capital Assets
Used in the
Liability Equipment Redevelopment Non-Major Operation of
Fund Financial General Reserve Replacement Agency Debt Govenmental Governmental
Statements: Fund Fund Fund Service Fund Funds Funds
Fund Equity(Beginning
Balance)-October 1,
2001 $ 35,418 $ 1,342 $ 26,871 $ 3,511 $ 38,945 $ 146,785
a.)Changes in Recording
of Internal Service Funds 15,122 (1,342) (26,871) - - 48,749
b.)GASB 33 Revenue
Accruals 985 - 638 -
c.)Revenues Improperly
Accrued in Prior Year 2,581 -
d.)Changes in Recording
of Redevelopment Agency
Advances (1,596) - (57,527) - -
e.)Restatements to
Include Infrastructure - - 342,834
Total Restatements 17,092 (1,342) (26,871) (57,527) 638 391,583
Fund Equity(Beginning
Balance)as Restated $ 52,510 $ - $ - $ (54,016) $ 39,583 $ 538,368
a) The Equipment Replacement and Liability Insurance Reserve Fund were recorded as
Internal Service Funds in prior years and now are recorded as part of the General
Fund.
b) The City recorded additional revenue relating to GASB 33 that had not been
accrued in prior years.
Amounts recorded in error in prior years.
c) Changes in reporting long-term advances from the City to the Redevelopment Agency
from GASB 34
d) Restatements to include net book value of infrastructure .
Below is a calculation of how the beginning amount for Net Assets in the Government-
Wide Financial Statements was computed (in thousands):
Total Governmental Fund Balance -October 1, 2001 (Restated) $ 111,476
Capital Assets 518,965
Long-Term Debt (157,190)
Accrued Interest (1,222)
Other (5,227)
Net Assets -Governmental Activities -October 1, 2001 $ 466,802
76
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
14. OTHER INFORMATION (CONTINUED):
d. Bond Defeasance - Civic Improvement Corporation Refunding Certificates of
Participation - 1993:
In November, 2001, the City defeased Huntington Beach Civic Improvement Corporation
Refunding Certificates of Participation (Civic Center), and Huntington Beach Civic
Improvement Corporation Refunding Certificates of Participation (Police Administration
Project) by the issuance of $31,095,000 of Public Financing Authority 2001-b Lease
Revenue Bonds (see note 12(b)(5)). Below is a schedule of the required information for
this defeasance (in thousands):
Sources:
Total of Lease Revenue Bonds $31,095
Premium on Bonds 334
Cash Available from Existing Civic Improvement Corporation Certificates
of Participation 2,835
Total Sources $34,264
Uses:
Deposit to Refunding Escrow $31,071
Deposit to Debt Service Reserve 2,620
Costs of Issuance 196
Underwriter Discount 157
Bond Insurance Premium 220
Total Uses $34,264
The net present value benefit due to this refunding was $1,761,908 and the effective
interest rate on the new borrowing was 4.145%. The total decrease in cash flows related to
this refunding was $3,165,000
77
City of Huntington Beach
Notes to Financial Statements
For the Year Ended September 30, 2002
14. OTHER INFORMATION (CONTINUED):
e. Bond Defeasance — Public Financing Authority 1992 Revenue Bonds:
In July, 2002, the City defeased the Huntington Beach Public Financing Authority 1992
Revenue Bonds by issuing $20,900,000 of Redevelopment Agency 2002 Tax Allocation
Bonds (see note 12(c)(2)). Below is a schedule of the required information for this
defeasance (in thousands):
Sources:
Principal Amount of Bonds $20,900
Premium on Bonds 124
Cash Available from Existing Public Financing Authority Bonds 2,716
Total Sources $23,740
Uses:
Deposit to Refunding Escrow $21,602
Deposit to Debt Service Reserve 1,649
Costs of Issuance 420
Underwriter Discount 69
Total Uses $23,740
The net present value benefit due to this refunding was $3,699,571 and the effective
interest rate on the new borrowing was 4.58%. The total decrease in cash flows related to
this refunding was $6,719,000.
78
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Required Supplementary Information
City of Huntington Beach
Required Supplementary Information
September 30, 2002
Budgetary Information
The City Council must annually adopt a budget by September 30 of the prior fiscal year. The
budgeted expenditures become the appropriations to the various departments. The budget includes
estimates for revenue that, along with the appropriations, compute the budgetary fund balance. The
appropriated budget covers substantially all governmental fund expenditures with the exception of
capital improvement projects (capital projects funds) carried forward from prior years, which
constitute a legally authorized non-appropriated budget. The City Council may amend the budget at
any time. The City Administrator may transfer funds from between object purposes (personal
services, operating expenditures or capital outlay expenditures)within the same department without
changing the total departmental budget. Department heads may transfer funds from like object
categories of the same department. The City Council must approve any changes to departmental
budgets. Expenditures may not exceed appropriations at the departmental level. All unused
appropriations lapse at year-end. During the year the City Council made several supplemental
appropriations with included carryovers of prior year encumbrances all of which were within available
fund balance and estimated revenue amounts.
The City Council adopts governmental fund budgets consistent with generally accepted principles as
legally required. There are no significant non-budgeted financial activities. Revenues for special
revenue funds are budgeted by entitlements, grar is 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 Fund's Revenues, and
Expenditures:
79
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-
BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30,2002
(In Thousands)
General Fund
Original
REVENUES: Budget Final Budget Actual Variance
Property Taxes $28,578 $28,578 $26,796 $ (1,782)
Other Taxes 57,676 57,676 51,808 (5,868)
Licenses and Permits 6,650 6,650 6,397 (253)
Fines,Forfeitures and Penalties 3,765 3,765 3,797 32
From Use of Money and Property 7,821 7,821 8,576 755
From Other Agencies 12,026 12,026 13,180 1,154
Charges for Current Service 11,853 11,853 10,107 (1,746)
Other 885 885 794 (91)
TOTAL REVENUES 129,254 129,254 121,455 (7,799)
EXPENDITURES:
Current:
City Council 260 261 237 24
City Administrator 2,189 2,228 1,717 511
City Treasurer 1,047 1,042 1,108 (66)
City Attorney 1,912 3,499 3,363 136
City Clerk 603 743 676 67
Administrative Services 8,383 7,860 7,095 765
Planning 2,942 3,573 2,400 1,173
Building 2,733 2,806 2,591 215
Fire 19,033 18,900 17,858 1,042
Information Systems 3,670 3,758 2,720 1,038
Police 40,536 39,746 37,229 2,517
Economic Development 958 980 706 274
Community Services 9,765 10,267 9,944 323
Library Services 3,647 3,689 3,485 204
Public Works 19,413 20,060 17,727 2,333
Non-Departmental 14,352 12,194 9,676 2,518
Capital Outlay 7,360 12,979 10,602 2,377
Debt Service: -
Principal - - 1,071 (1,071)
Interest 860 860 121 739
TOTAL EXPENDITURES 139,663 145,445 130,326 15,119
EXCESS OF REVENUES OVER(UNDER)
EXPENDITURES (10,409) (16,191) (8,871) 7,320
OTHER FINANCING SOURCES(USES):
Transfers In 7,412 7,412 5,017 (2,395)
Proceeds of Long-Term Debt - - 3,219 3,219
Transfers Out (8,609) (10,857) (9,145) 1,712
TOTAL OTHER FINANCING SOURCES(USES) (1,197) (3,445) (909) 2,536
EXCESS OF REVENUES AND OTHER SOURCES
OVER(UNDER)EXPENDITURES AND OTHER USES (11,606) (19,636) (9,780) 9,856
FUND BALANCE-BEGINNING OF YEAR 35,418 35,418 35,418 35,418
Prior Period Adjustment 16,107 16,107 16,107 -
FUND BALANCE AS RESTATED 51,525 51,525 51,525 35,418
FUND BALANCE-END OF YEAR $ 39,919 $ 31,889 $ 41,745 $ 9,856
80