HomeMy WebLinkAbout2018/19 Comprehensive Annual Financial Report - CAFR - for
CITY OF HUNTINGTON BEACH
INTER-DEPARTMENTAL COMMUNICATION
FINANCE DEPARTMENT
TO: Honorable Mayor and City Council Members
VIA: Oliver Chi, City Manager
FROM: Dahle Bulosan, Acting Chief Financial Officer
DATE: December 20, 2019
SUBJECT: COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FY 2018/19
Attached, please find the City’s Comprehensive Annual Financial Report (CAFR)
for Fiscal Year 2018/19. Please note the CAFR is also available on the City’s
website at https://www.huntingtonbeachca.gov/government/budget-information/.
We are pleased to report that the City received an unmodified or “clean” opinion
from Davis Farr LLP, Certified Public Accountants. This is the highest audit opinion
possible. The CAFR shows the City’s financial operations for all funds and entities
under the City Council.
Please feel free to contact me at ext. 5630 if you have any questions or need
additional information.
Cc: Executive Team
Department Heads
Finance Commission
CITY OF
HUNTINGTON BEACH
For The Fiscal
Year Ended
June 30, 2019
California
Comprehensive Annual Financial Report
CITY OF HUNTINGTON BEACH, CALIFORNIA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
JUNE 30, 2019
Prepared by the Finance Department
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INTRODUCTORY SECTION
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City of Huntington Beach
Comprehensive Annual Financial Report
For the Year Ended June 30, 2019
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents ........................................................................................................................................ i-ii
Letter of Transmittal .................................................................................................................................... iii-xi
City Officials ................................................................................................................................................ xii
Organizational Chart ................................................................................................................................... xiii
Certificate of Achievement in Excellence in Financial Reporting ................................................................. xiv
FINANCIAL SECTION
Independent Auditor’s Report...................................................................................................................... 1-3
Management’s Discussion and Analysis (Required Supplementary Information) ....................................... 4-21
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position .................................................................................................................. 25
Statement of Activities ....................................................................................................................... 26
Fund Financial Statements:
Balance Sheet – Governmental Funds .............................................................................................. 27
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ......... 28
Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ...... 29
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances
of Governmental Funds to the Statement of Activities ....................................................................... 30
Statement of Net Position – Proprietary Funds .................................................................................. 31
Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds ............ 32
Statement of Cash Flows – Proprietary Funds ................................................................................... 33
Statement of Fiduciary Fund Net Position – Fiduciary Funds ............................................................ 34
Statement of Changes in Fiduciary Fund Net Position – Fiduciary Funds ......................................... 34
Notes to Financial Statements .............................................................................................................. 36-121
Required Supplemental Information:
Notes to Required Supplementary Information .................................................................................. 124
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget
And Actual – General Fund ............................................................................................................. 125
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget
And Actual – Grants Special Revenue Fund ................................................................................... 126
Schedule of Changes in the Net Pension Liability and Related Ratios .............................................. 127-129
Schedule of Changes in the Net OPEB Liability and Related Ratios ................................................. 130
Schedule of Contributions .................................................................................................................. 131-133
Schedule of Money Market Weighted Rate of Return ........................................................................ 133
Schedule of Contributions for the OPEB Plan .................................................................................... 134
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FINANCIAL SECTION (Continued)
Supplementary Information:
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet – Other Governmental Funds .................................................................. 139-142
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Other Governmental Funds ............................................................................................................ 143-146
Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual – Other Governmental Funds ........................................................................... 147-153
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget
And Actual – LMIHAF Capital Projects Fund .................................................................................. 154
Statement of Net Position – Internal Service Funds ........................................................................... 158
Statement of Revenues, Expenses, and Changes in Fund Net Position
Internal Service Funds .................................................................................................................. 159
Statement of Cash Flows – Internal Service Funds ........................................................................... 160
Combining Statement of Fiduciary Fund Assets and Liabilities.......................................................... 164
Combining Statement of Changes in Fiduciary Assets and Liabilities ................................................ 165-166
STATISTICAL SECTION
Net Position by Component – Last Ten Fiscal Years .................................................................................. 169-170
Changes in Net Position – Last Ten Fiscal Years ....................................................................................... 171-172
Fund Balances – Governmental Funds – Last Ten Fiscal Years ................................................................ 173
Changes in Fund Balances – Governmental Funds – Last Ten Fiscal Years ............................................. 175-176
Assessed and Actual Valuation of All Taxable Property (Excluding Redevelopment Agency) -
Last Ten Fiscal Years .............................................................................................................................. 177
Property Tax Rates – All Direct and Overlapping Government Tax Rate 04-001
Largest Area in City – Last Ten Fiscal Years ........................................................................................... 177
Property Tax Levies and Collections – Last Ten Fiscal Years .................................................................... 178
Top Ten Property Tax Payers – Current Year and Nine Years Ago ............................................................ 179
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ..................................................................... 181-182
Legal Debt Margin – Last Ten Fiscal Years ................................................................................................ 183
Statement of Direct and Overlapping Bonded Debt .................................................................................... 184
Principal Private Employers – Current Year and Nine Years Ago ............................................................... 185
Full-Time Actual and Budgeted City Employees by Program/Function – Last Ten Fiscal Years ................. 186
Operating Indicators by Function/Activity – Last Ten Fiscal Years .............................................................. 187-188
Capital Assets Statistics by Function/Activity .............................................................................................. 189
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CITY OF HUNTINGTON BEACH
December 17, 2019
Honorable Mayor, City Council and Citizens of the City of Huntington Beach:
In accordance with the requirements of the City Charter, and the City of Huntington Beach’s
ongoing commitment to transparent financial reporting, I am pleased to present the
Comprehensive Annual Financial Report (CAFR) for the year ended June 30, 2019.
As required by the City Charter, and to ensure the reliability of the information contained herein,
the City of Huntington Beach contracted with the independent auditing firm of Davis Farr LLP.
The goal of the audit was to provide reasonable assurance that the City’s financial statements
are free from material misstatement. In addition, Davis Farr LLP audits the City’s major program
expenditures of federal grants for compliance with Title 2 of the United States Code of Federal
Regulations Part 200 (Uniform Guidance). The report of the Single Audit is published separately
from this CAFR and may be obtained upon request from the City’s Finance Department.
This report consists of management’s representations concerning the City’s finances. As such,
management assumes full responsibility for the completeness and accuracy of the information
presented in this document and that it is reported in a manner that fairly presents the financial
position and operations of the various funds of the City. To provide a reasonable basis for
making these representations, and assurance that the financial statements will be free from
material misstatement, management has established a comprehensive internal control
framework that is designed to both protect the government’s assets from theft, loss, or misuse
and to compile sufficient reliable information for financial statement conformity with GAAP. As
the cost of internal controls should not outweigh their benefits, the City’s comprehensive
framework of internal controls has been designed to provide reasonable rather than absolute
assurance that the financial statements will be free from material misstatement.
We are pleased to report that Davis Farr LLP granted the City an unmodified (clean) opinion for
the financial statements of the City for the year ended June 30, 2019. The auditor’s opinion can
be found in the Financial Section of this report. GAAP requires that management provide a
narrative introduction, overview and analysis to accompany the financial statements in the form
of a Management Discussion and Analysis (MD&A). This transmittal letter is designed to
complement and should be read in conjunction with it. The MD&A can be found immediately
following the independent auditor’s report.
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Profile of the City of Huntington Beach
The City of Huntington Beach is home to a thriving beach community, located on the Orange
County coast, 35 miles south of Los Angeles and 90 miles north of San Diego. With a population
of 202,265 residents, it is known as Surf City due to its abundance of beaches; the year-around
sunny and warm Mediterranean climate; and its casual lifestyle. With over 10 miles of coastline
to boast of, Huntington Beach plays host to over 16 million visitors annually. In FY 2018/19, the
City’s pristine, inviting beaches and iconic 1,856 foot long pier – the longest recreational pier on
the West Coast – have received accolades from numerous sources, including #1 Best California
Beach by USA Today and “Best Beach” by the Orange County Register’s Best of OC.
In addition to its award-winning beaches, Huntington Beach was hailed as one of the top five
“Happiest Cities” in the U.S. (March 2019) and one of the top 10 “Safest Large Cities” in
California by WalletHub (March 2019), and one of the top three “Best Cities to Live In” by the
Orange County Register for past four consecutive years. The City was also recently ranked as
one of the top 100 places to live in America by Livability.com (2018). Demographically, the City
benefits from higher education levels, median incomes, and home values as compared with the
State. The City boasts an annual median household income of $93,658, 47% higher than the
United States, 25% higher than the State of California, and 5% higher than Orange County. In
addition, more than half of its residents, or 53 percent, have a college degree.
Founded in the late 1880s, Huntington Beach was incorporated as a Charter City in 1909.
Huntington Beach has a Council/Manager form of government wherein seven City Council
members are elected to four-year terms, and the Mayor is filled on a rotating basis from the
incumbent Council Members. The City Attorney, City Clerk and City Treasurer positions are
also elected and serve four-year terms.
In 2011, the unincorporated oceanfront community of Sunset Beach was officially annexed by
the City of Huntington Beach. Sunset Beach is a small beachfront community with
approximately 1,000 residents and 1.5 square miles of land. Beachfront properties with high
property values make this community a valuable addition to the City. Sunset Beach features
one of the widest and most pristine beaches in Southern California and is home to the historic
Sunset Beach Arts Festival, held annually for over 50 years.
A thriving beach community, Huntington Beach is home to numerous national events, including
the U.S. Open of Surfing which attracts over 360,000 visitors annually, and the Surf City USA
Marathon, which includes 24,500 participants and spectators. The annual AVP Beach
Volleyball Tour also commands a strong presence with 7,500 visitors annually.
Huntington Beach is also proud to be the destination for the Great Pacific Airshow – the only
beachfront air show on the West Coast, featuring three international jet teams: the Air Force
Thunderbirds, United Kingdom Red Arrows, and Canada’s Snowbirds. Also performing in the
event are dueling jetpack riders, the Special Operations Command parachute team, and
demonstrations for the Air Force F-35 Lighting II and A-10C Thunderbolt II. This unique airshow
has gained tremendous popularity since premiering in October 2016 and now attracts a crowd
of over 1.2 million from all over the world to view the two-day event.
In May 2019, the City also hosted its inaugural NCSFest, held by the National Cartoonists
Society featured over 100 comics and cartoon artists from around the world such as Charlie
Adlard, Cathy Guisewhite, and Stephan Pastis. Over 5,300 attendees participated in the three-
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day event held in Downtown Huntington Beach, complete with seminars, exhibitions, panel
discussions and signing sessions. The City also hosts a variety of other exciting events for
families and visitors such as the annual Concours d’Elegance, Pacific Islander Festival, Cherry
Blossom Festival, Annual Blessing of the Waves, Civil War Days, and the City’s most iconic
event- the Fourth of July Fireworks Show and Parade. A proud tradition for over a century, the
City’s Fourth of July Celebration has over 1 million television viewers and 450,000 in-person
attendees and is known nationally as “the largest Fourth of July Parade west of the Mississippi.”
As the fourth largest city in Orange County, and the 23rd largest in California by population,
there are over 112,251 people employed by public and private entities in Huntington Beach.
With an unemployment rate of 2.9 percent, well below the national and state levels, the City’s
labor force is well positioned to maintain the City’s strong tax base.
The City of Huntington Beach’s assessed valuations are also very strong, reflecting both new
development and increased property values. In FY 2019/20, the City’s assessed property
value grew 5.6% to $43.8 billion. This solid performance, coupled with steady year-over-year
growth, reflects a stable property tax base that can weather steep declines in real estate
markets. For FY 2018/19, secured property tax revenue collections totaled $57.1 million. For
FY 2019/20, secured property taxes are estimated at $58.5 million.
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Factors Affecting Financial Condition
U.S. Economy: The United States economy is in the 11th year of expansion, the longest
economic expansion in history. Real Gross Domestic Product (GDP) increased at an annual
rate of 2.1 percent in the third quarter of 2019, slowing from the Real GDP increase of 2.9
percent in 2018. The increase in real GDP is due to increased consumer spending and
government spending. The GDP was adversely affected by decreases in exports, residential
investment, and private inventory investment. Another positive note is that the national
unemployment rate reached a nearly 50-year low of 3.7% in July of 2019. The U.S. economy
is expected to grow about 1.7 and 1.9 percent annually through 2020 and 2021, respectively;
however, changes at the Federal level will continue to be monitored closely for any local
impacts.
State Economy: The California economy is the largest in the United States and the sixth largest
across the world. Job growth in California has been increasing, with year-over-year job gains
at 1.5 percent. Since 2010, California has gained nearly 3.4 million jobs during its record job
expansion for 116 consecutive months, surpassing the longest all time record and accounting
for more than 15 percent of the nation’s job gains over the same timeframe. During the last
fiscal year alone, the State achieved strong gains in the professional and business services,
educational and health services, leisure and hospitality, and construction industry, adding
78,600, 82,800, 40,900, and 37,100 jobs, respectively. The unemployment rate in California is
at a modern era low of 3.9 percent.
Orange County Forecast: The sixth most populous county in the United States, Orange County
is a hub of economic activity. Labor markets remain tight, housing demand remains strong, and
hotel occupancy continues to be high throughout the county. All leading economic indicators
such as employment, consumer confidence, housing starts, and new hotels remain positive.
Orange County has added more than 250,000 jobs during the post-Great Recession period and
enjoys a robust and diverse economy well-distributed among many sectors with an
unemployment rate of 2.5 percent, well below that of the state and nation.
Local Economy: Huntington Beach has numerous economic and demographic factors in its
favor including higher personal median incomes than the State or the County; a stable property
tax base; a well-diversified sales tax base; and a strong tourism and leisure industry. These
factors have helped the City achieve and maintain its AAA underlying credit rating from Fitch
Ratings, most recently affirmed in June 2018. In April 2019, the 1999 RDA bonds also received
a credit ratings increase of two tiers by Moody’s Investor Services, from A2 to Aa3. Consistent
high credit ratings provide independent confirmation from Wall Street of the financial discipline
and stewardship displayed by the City Council and leadership team. The Fiscal Times also
ranked Huntington Beach #4 out of 116 cities nationwide for “Best Financial Shape.” The City
also ranked #14 in a WalletHub poll as the “Best-Run City in America,” the only California city
in the top 50 out of 150 cities. The City also scored #1 in the nation for “Quality of City Services”
and is considered to be one of the top 10 cities to raise a family in the country by WalletHub.
The motto for Huntington Beach’s FY 2019/20 Adopted Budget is “Shaping the Future,”
reflecting the City Council’s implementation of thoughtful strategies that promote the City’s long-
term financial sustainability. FY 2018/19 was the first, full twelve-month July to June fiscal year.
The new June 30 fiscal year end aligns the City’s financial period with that of the State, Orange
County, over 487 California municipalities, and with CalPERS. The City’s General Fund
revenue is projected to increase by $4.7 million or 2.1 percent in FY 2019/20, largely due to
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property tax increases from year-over-year growth in assessed valuations and modest growth
in areas such as Transient Occupancy Taxes, Utility Users’ Tax Revenues, and Licenses and
Permits. The City’s expenses are also rising, primarily due to the increases in CalPERS pension
costs, employee health benefit costs, and mandatory contractual increases such as the Metro
Cities Joint Powers Authority. The City continues to practice financial discipline through
controlled spending and maintenance of flat staffing levels, with minor exceptions. With a total
of 987.25 FTEs, the City is 156 positions below its all-time high of 1,143 FTEs in FY 2008/09.
Huntington Beach’s business community is well-diversified with no single industry or business
dominating the local economy. Local businesses include aerospace and high technology,
petroleum, manufacturing, computer hardware and software, financial and business services,
hotel and tourism, automobile services, large-scale retailers, and surf apparel. The City’s
diverse sales tax base makes it a stable source of revenue and mitigates the impact of industry-
specific downturns as shown below.
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Transient Occupancy Tax (TOT), a 10 percent tax applied to hotel stays within the City remains
strong as Huntington Beach remains a prime tourist destination and the hotel industry continues
to thrive. The City collected an impressive $14M in TOT revenues during FY 2018/19, affirming
Huntington Beach’s status as a premier vacation destination.
Budget Development and Monitoring
The City operates on a fiscal year basis. The budget is prepared under the supervision of the
City Manager and transmitted to the City Council for deliberation at least 30 days prior to the
end of the fiscal year. Pursuant to the City’s Charter, the City Council must adopt the annual
budget by June 30th and may amend it or revise it at any time at a properly noticed meeting.
Budgetary control is at the Department level within each fund and a Department Head, with the
Chief Financial Officer’s approval, may transfer funds within like categories (operating and
capital expenditures) of the same Department. The transfer of funds for salaries and benefits
requires additional approval by the City Manager or his designee.
Cash Management Policies and Practices
Surplus cash is invested by the elected City Treasurer, in investments allowed by the City’s
Investment Policy. The Investment Policy is adopted annually by the City Council after approval
by the Investment Advisory Board. It outlines guidelines to meet the daily cash flow needs of
the City, maximize the efficiency of the City’s cash management system, and identifies prudent
investment vehicles for cash balances. The rate of return earned for the year ended June 30,
2019 was 2 percent. The City Treasurer, as required by California Government Code 53601,
has prepared an annual Statement of Investment Policy which allows the City to meet current
obligations while earning a market rate of return. Further information regarding the City’s cash
and investments can be found in Note 2 of the financial statements.
Long-Term Financial Planning
The Strategic Plan provides the framework for the goals and objectives of the City for the next
three years. The City Council has five Strategic Plan goals:
Improve quality of life;
Enhance and maintain infrastructure;
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Strengthen economic and financial sustainability;
Enhance and maintain public safety; and,
Enhance and maintain city service delivery.
The Plan drives both short and long-term budgetary decisions and the daily operations of the
City by ensuring everyone is consistently working to achieve the goals outlined in the Plan. To
meet the goal of strengthening economic and financial sustainability, the City has implemented
plans to reduce its unfunded liabilities by prepaying its obligations.
Debt Management and Forecasting
The City has a strong commitment to prudent financial management. As a result, the City has
a remarkably low debt burden of 1.88 percent direct and overlapping bonded debt. Significant
debt service reductions are anticipated in the next three to five years allowing the City to
reallocate resources to other high-priority needs in the General Fund. Huntington Beach also
has no variable rate exposure, eliminating volatility in its debt service projections and ensuring
reliable forecasting for future budgets.
Major Initiatives
Pension Obligation Bonds
The greatest long-term fiscal challenge facing Huntington Beach, as well as the vast majority of
the government agencies throughout California, is related to its CalPERS Unfunded Accrued
Liability (UAL) pension costs, which have increased violently since FY 2008/09. Despite the
steps the City has taken to date to manage its pension costs, including the establishment of a
Section 115 Trust and prepayment of its annual UAL costs, Huntington Beach expects steep
increases in pension costs that could severely impact services in the future if ongoing, proactive
management of its UAL is not maintained. The most recent actuarial valuation reports from
June 2018 calculate the City’s projected CalPERS UAL at $436.2 million. CalPERS has
instituted aggressive funding schedules in order to reach 100% funded status within the next
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20-30 years, resulting in dramatic increases to the City’s UAL payments from $4.58 million in
FY 2008/09, $24.93 million in FY 2018/19, up to a staggering $46.02 million in FY 2029/30. In
order to contain these costs, the City is considering refinancing its UAL through the issuance of
a Pension Obligation Bond (POB). By taking advantage of the current low-interest rate
environment and issuing POBs, the City could achieve significant cost savings by fixing the
interest rate on the City’s current UAL from the 7 percent determined by CalPERS to a much
lower rate. On November 18, 2019, City Council approved staff to move forward with the
Pension Obligation Bond process by approving a resolution to start a 90-day judicial validation
process, which is required prior to the issuance of the POBs. The City is also concurrently in
the process of establishing a UAL Payoff Policy and the possible formation of a Pension
Reserve account, to proactively manage future UAL costs. Formal City Council approval of the
POBs issuance is anticipated to be requested in March or April 2020, after the completion of
the judicial validation process.
Energy Conservation
Huntington Beach is known as a regional leader for its innovative and groundbreaking energy
conservation efforts. The City acquired close to 11,000 streetlights from Southern California
Edison (SCE) and retrofitted the aged high-pressure sodium luminaries with LED luminaries.
Completed in 2019, the project is anticipated to save taxpayers an estimated $10 million dollars
over the next 20 years due to reduced energy costs. In late 2018, the City also installed its first
artificial intelligence (AI)-powered energy storage systems that work in tandem with 2.13
megawatts of solar power and enable the city to purchase energy from SCE during off peak
hours. The 235-kilowatt hour-size battery created by Stem, Inc. will help save an estimated
amount of $82,000 in energy costs over ten years.
Fiber and Communications Master Plan
Huntington Beach is forward thinking and adaptive to the changing technology and digital
landscape in our communities. The City has formed an internal Telecommunication Committee
and embarked on a multi-year fiber initiative to examine the City’s fiber network to support
additional municipal and community needs. As a part of this initiative, the City recently
completed a Fiber and Communications Master Plan to guide fiber optic network infrastructure
deployment in the City. This plan includes information about the City’s current municipal
communications infrastructure and the future needs of the network expansion and services.
The capital improvement project to provide a connection from City Hall to the Lifeguard
Headquarters is underway and will be the basis for future connectivity to other city facilities.
Business Development
The Office of Business Development’s (OBD) Economic Development Strategy contains a
diverse range of core objectives and goals that support the City's vision to focus on the retention,
attraction and expansion of the business community. OBD serves as business advocates for
the expansion of not only retail, restaurant and hospitality offerings, but also manufacturing and
research and development firms seeking to expand in or relocate to Huntington Beach. This is
consistent with the City’s strategic goal to “strengthen economic and financial sustainability.”
Pierside Pavilion Expansion
The iconic Pierside Pavilion, recently rebranded as the Huntington Surf and Sport Building, is
in the final stages of the expansion and remodeling of the building. This last phase will add a
four-story, 30,000 square foot mixed-use building with high-end retail, an upscale restaurant
with a rooftop terrace, and two floors of office space with balconies. The project is expected to
be completed in early 2020.
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Boeing Site Sale and Huntington Gateway
Property owner and developer Sares-Regis purchased a part of Boeing’s 120 acre campus in
September 2018 and began construction of three new industrial buildings on a 30-acre site near
Bolsa Chica Street and Bolsa Avenue. The project, known as Huntington Gateway, consists of
610,000 square feet of flexible office, warehouse and industrial space. Demolition of the existing
eight-story office building is completed and project construction is underway, with an anticipated
completion in the first quarter of 2020. The project is expected to result in over 500 construction
jobs and 1,300 operations jobs in the City.
The Garden at Bella Terra
A premier outdoor shopping and dining destination for residents and visitors, the Bella Terra
shopping center recently underwent a two-year redesign of its inner courtyard. The more than
one-million-square-foot mixed-use space features a concert stage for live music and
entertainment, open-air beer and wine garden, and children’s play area.
Awards and Acknowledgements
The City of Huntington Beach has once again received the “Certificate of Achievement for
Excellence in Financial Reporting” award bestowed by the Government Finance Officers’
Association (GFOA) of the United States and Canada for the 33rd consecutive year. Receipt of
the award requires government entities to publish transparent, easily readable and efficiently
organized Comprehensive Annual Financial Reports, conforming to program, accounting, and
legal standards.
The Certificate of Achievement earned for the nine-month period ended June 30, 2018, is valid
for one year only. The City believes that this Comprehensive Annual Financial Report continues
to conform to the Certificate of Achievement Program requirements and will be submitted to the
GFOA for its consideration for another award.
I wish to thank the City Council, City Manager, and City Departments for their continued
diligence in their role as fiscal stewards for the City of Huntington Beach. Without their
leadership and support, the favorable financial results contained in this report would not have
been possible. I would also like to thank the Finance Commission, a seven member body
appointed by the City Council, which has been instrumental in helping the City maintain its long
term goal of financial sustainability.
The preparation of this report would also not have been possible without the professional
dedicated staff of the Finance Department. Specifically, I would like to thank Sunny Rief, Ian
Wuh, Ming Zhai, Leslie Zimmer, Yvonne Delo, Paulina Flores, Serena Bubenheim, and Thuy Vi
for their hard work and dedication.
Respectfully,
Dahle Bulosan
Acting Chief Financial Officer
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City of Huntington Beach
City Council
Lyn Semeta, Mayor
Jill Hardy, Mayor Pro Tem
Patrick Brenden, Councilmember
Kim Carr, Councilmember
Barbara Delgleize, Councilmember
Mike Posey, Councilmember
Erik Peterson, Councilmember
Executive Team
Oliver Chi, City Manager
Travis Hopkins, Assistant City Manager
Marie Knight, Director of Organizational Learning & Engagement
Elected Department Heads
Alisa Backstrom, City Treasurer
Robin Estanislau, City Clerk
Michael Gates, City Attorney
Department Directors
Stephanie Beverage, Library Services
Dahle Bulosan, Finance
Chief Robert Handy, Police
Tom Herbel, Public Works
Ursula Luna-Reynosa, Community Development
Chris Slama, Community Services
Chief David Segura, Fire
Behzad Zamanian, Information Services
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FINANCIAL SECTION
Independent Auditor’s Report
City Council
City of Huntington Beach
Huntington Beach, California
Report on the Financial Statements
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, as of June 30, 2019, and the related notes to the
financial statements, which collectively comprise the City’s basic financial statements as
listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States
of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinions.
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Opinions
In our opinion, the 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 of
Huntington Beach, California, as of June 30, 2019, and the respective changes in financial
position and, where applicable, cash flows thereof for the year then ended in accordance
with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, budgetary comparison information for the General
Fund and each major special revenue fund, schedule of changes in net pension liability and
related ratios, schedule of pension contributions, schedule of money market weighted rate
of return, schedule of changes in net OPEB liability and related ratios, and schedule of OPEB
contributions be presented to supplement the basic financial statements. Such information,
although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting
for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with
management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not
express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the City of Huntington Beach’s basic financial statements. The
combining and individual fund financial statements and schedules, the introductory section
and the statistical section are presented for purposes of additional analysis and are not a
required part of the basic financial statements. The combining and individual fund financial
statements and schedules are the responsibility of management and were derived from and
relates directly to the underlying accounting and other records used to prepare the basic
financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting
and other records used to prepare the basic financial statements or to the basic financial
statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the combining
and individual fund financial statements and schedules are fairly stated, in all material
respects, in relation to the basic financial statements as a whole. The introductory section
and the statistical section have not been subjected to the auditing procedures applied in the
audit of the basic financial statements, and accordingly, we do not express an opinion or
provide any assurance on it.
2
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 17, 2019 on our consideration of the City of Huntington Beach's internal control
over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters. The purpose of that report
is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on internal control
over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering City of
Huntington Beach’s internal control over financial reporting and compliance.
Irvine, California
December 17, 2019
3
4
MANAGEMENT DISCUSSION
AND
ANALYSIS
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
5
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 year ended June 30, 2019. The City changed its fiscal year end
from September 30th to June 30th effective October 1, 2017, resulting in a nine-month
fiscal year for 2017/18. Fiscal Year 2018/19 is the first, full twelve-month July to June
fiscal year. 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-xi of this report.
Financial Highlights
Below is a summary of the City’s government-wide financial information (in thousands):
The total assets of the City of Huntington Beach exceeded its liabilities at the close
of the most recent fiscal year by $682,944,000. Net position increased $31,137,000
or 4.8 percent. This increase is primarily due to the additions made to capital assets
for infrastructure improvements for the City’s water, sewer, and residential streets.
The increase is also due to reductions in the City’s net pension and other
postemployment benefits (OPEB) liabilities. Unrestricted net position increased by
$12,761,000 or 5.6 percent for the same reason.
Long-term obligations decreased by $22,124,000 or 4.0 percent. This decrease is
primarily due to decreases in the City’s workers’ compensation, general liability,
pension, and OPEB liabilities.
Deferred outflows of resources decreased by $29,431,000 or 29.4 percent due to
the actuarially determined amortization of changes in assumptions and differences
between expected and actual investment earnings used to determine the City’s net
pension liability. Deferred inflows of resources decreased by $3,789,000 or 22.0
percent primarily due to the net difference between the projected and actual
earnings on pension plan investments.
June 30, 2019 June 30, 2018
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Assets 1,177,879$ 1,143,648$ 34,231$ 3.0%
Deferred Outflows of Resources 70,705 100,136 (29,431) -29.4%
Liabilities 552,239 574,787 (22,548) -3.9%
Deferred Inflows of Resources 13,401 17,190 (3,789) -22.0%
Total Net Position 682,944 651,807 31,137 4.8%
Unrestricted Net Position (214,275) (227,036) 12,761 5.6%
Long-Term Obligations 527,500 549,624 (22,124) -4.0%
Program Revenues 144,865 106,092 38,773 36.5%
Taxes 175,576 123,926 51,650 41.7%
Other General Revenues 16,027 7,511 8,516 113.4%
Expenses 305,331 186,842 118,489 63.4%
Total Governmental and Business-Type Activities
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
6
Program revenues increased by $38,773,000 or 36.5 percent largely due to the
nine-month fiscal year for 2017/18. City Council approved the change in the City’s
fiscal year end from September 30 to June 30 effective October 1, 2017. This
truncated fiscal year excluded the peak summer months from the City’s program
revenues. Taxes increased by $51,650,000 or 41.7 percent largely due to the
twelve-month 2018/19 fiscal year and growth in the City’s transient occupancy tax
revenue due to rising occupancy rates in the City’s hotels.
Expenses increased by $118,489,000 or 63.4 percent primarily due to comparison
of the twelve-month fiscal year to the prior nine-month reporting period. Since fiscal
year 2017/18 covered the period of October 1 to June 30, expenditures for the
summer months of July through September were not included. These months
represent the peak season for the City when demand for services and overtime
requirements to maintain essential levels of service are significantly higher than the
rest of the year.
Overview of the Financial Statements
This discussion and analysis serves as an introduction to the City of Huntington Beach’s
basic financial statements. The City of Huntington Beach’s basic financial statements
comprise three components: 1) government-wide financial statements; 2) fund financial
statements; and 3) notes to the financial statements. This report also contains certain
other supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad
overview of the City’s financial condition and are prepared similarly to those in the private
sector.
The Statement of Net Position presents information on all of the City’s assets, liabilities,
deferred outflows and inflows with the difference between them reported as net position.
Over time, continued increases or decreases in net position may indicate whether the
City’s financial condition is improving or deteriorating.
The Statement of Activities presents information on how the City’s net position changed
during the most recent fiscal year. These changes are reported on the full 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-type activities). Governmental activities include the City
Council, City Manager, City Treasurer, City Attorney, City Clerk, Finance, Human
Resources, Community Development, Fire, Information Services, Police, Community
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
7
Services, Library Services, and Public Works departments. Business-type activities
include Water, Sewer, Refuse, and Hazmat Service.
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.
The government-wide financial statements can be found on pages 25-26 of this report.
Fund Financial Statements
The City separates financial activities into funds to maintain control over resources that
have been legally separated. All of the funds of the City can be divided into three
categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental Funds
Governmental funds are used to account for the same functions reported in governmental
activities in the government-wide financial statements. However, the focus in the
governmental fund section of these financial statements is on near-term resource inflows
and outflows available for spending, as well as balances of resources available for
spending at the end of the fiscal year.
It is useful to compare information presented for the governmental funds to information
presented for governmental activities in the government-wide financial statements. The
reconciliations indicate to the reader the differences in financial reporting between the
governmental activities section and the governmental funds section.
The City maintains 23 individual governmental funds. Information is presented separately
in the governmental funds Balance Sheet and in the governmental funds Statement of
Revenue, Expenditures, and Changes in Fund Balances for the General Fund, Grants
Special Revenue Fund, and Low and Moderate Income Housing Asset Fund (LMIHAF)
Capital Projects Fund all of which are considered to be major funds. Data from the other
20 smaller funds are combined into a single, aggregated presentation. Individual fund data
for each of these other governmental funds is provided in combining statements elsewhere
in this report.
The City provides an annual appropriated budget for its governmental funds. Budgetary
comparison schedules for the General Fund and the major special revenue fund (Grants)
are required to be presented and are included on pages 125 and 126 of this report and
demonstrate compliance with the budget.
The basic governmental fund financial statements can be found on pages 27 and 29 of
this report.
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
8
Proprietary Funds
The City maintains two different types of proprietary funds, which are used to account for
the same activities as the business-type activities in the government-wide financial
statements. Enterprise funds are used to report the same functions presented as
business-type activities in the government-wide financial statements. The City uses
enterprise funds to account for its Water, Sewer Service, Refuse, and Hazmat Service
activities. Internal Service funds are an accounting device used to accumulate and
allocate costs internally among the City's various functions. The City uses internal service
funds to account for its self-insurance worker’s compensation activities, self-insurance
general liability activities, and equipment replacement needs. Because these services
predominantly benefit governmental rather than business-type functions, they have been
included with governmental activities in the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial
statements, only in more detail. The proprietary fund financial statements provides
information for Water, Sewer Service, Refuse, Hazmat Service, Self-Insurance Workers’
Compensation, Self-Insurance General Liability, and Equipment Replacement Funds.
The basic proprietary fund financial statements can be found on pages 31-33 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
statements 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 34 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 36-121 of this report.
Other information
In addition to the basic financial statements and accompanying notes, this report also
presents certain required supplementary information concerning the City’s progress in
funding its obligation to provide pension and OPEB benefits to its employees and General
Fund and major special revenue funds budget-to-actual comparisons. Required
supplementary information can be found on pages 124-134 of this report.
The combining statements and schedules referred to earlier in connection with other
governmental funds is presented immediately following the required supplementary
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
9
information on pensions. Combining and individual fund statements and schedules can
be found on pages 139-146 of this report.
Government-wide Financial Analysis
As noted earlier, net position may serve, over time, as a useful indicator of a government’s
financial position. At the end of the current fiscal year, the City reported positive net
position balances for both governmental and business-type activities, with total assets plus
deferred outflows exceeding liabilities plus deferred inflows by $682,944,000.
Below is a summary schedule of the City’s net position at June 30, 2019 (in thousands):
Analysis of the City’s Net Position
Current and Other Assets: The increase in current and other assets of $17,186,000 for
governmental activities is due to an increase in the cash balance as a result of one-time
Governmental Activities June 30, 2019 June 30, 2018
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Current and Other Assets 230,456$ 213,270$ 17,186$ 8.1%
Capital Assets 708,469 698,732 9,737 1.4%
Total Assets 938,925 912,002 26,923 3.0%
Deferred Outflows of Resources 67,019 93,640 (26,621) -28.4%
Current and Other Liabilities 15,137 15,717 (580) -3.7%
Long-Term Obligations 498,810 519,147 (20,337) -3.9%
Total Liabilities 513,947 534,864 (20,917) -3.9%
Deferred Inflows of Resources 12,649 16,303 (3,654) -22.4%
Net Position:
Net Investment in Capital Assets 664,281 650,466 13,815 2.1%
Restricted 66,089 58,537 7,552 12.9%
Unrestricted (251,022) (254,528) 3,506 1.4%
Total Net Position 479,348$ 454,475$ 24,873$ 5.5%
Business-Type Activities June 30, 2019 June 30, 2018
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Current and Other Assets 93,258$ 87,692$ 5,566$ 6.3%
Capital Assets 145,696 143,954 1,742 1.2%
Total Assets 238,954 231,646 7,308 3.2%
Deferred Outflows of Resources 3,686 6,496 (2,810) -43.3%
Current and Other Liabilities 9,602 9,446 156 1.7%
Long-Term Obligations 28,690 30,477 (1,787) -5.9%
Total Liabilities 38,292 39,923 (1,631) -4.1%
Deferred Inflows of Resources 752 887 (135) -15.2%
Net Position:
Net Investment in Capital Assets 145,696 143,954 1,742 1.2%
Restricted 21,153 25,886 (4,733) -18.3%
Unrestricted 36,747 27,492 9,255 33.7%
Total Net Position 203,596$ 197,332$ 6,264$ 3.2%
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
10
General Fund revenues including strike team reimbursements and back payments of sales
taxes, increases in Gas Tax revenues related to Road Maintenance and Rehabilitation
Account (RMRA) funding, and an increase in the Park Development Impact Fee Fund cash
balance related to fees collected for various park and community center improvement
projects. The increase in current and other assets of $5,566,000 for business-type
activities is due to an increase in the cash and year-end receivable balances related to
increases in revenues from water and sewer operations.
Current and Other Liabilities: Current and other liabilities for governmental activities
decreased by $580,000 and increased by $156,000 for business-type activities due to
normal fluctuations in the accounts payable and payroll cycles.
Deferred Outflows and Inflows of Resources: The decrease in deferred outflows of
$26,621,000 and $2,810,000 for governmental activities and business-type activities,
respectively, and the decrease in deferred inflows of resources of $3,654,000 and
$135,000 for governmental activities and business-type activities, respectively, is mainly
due to the actuarially determined amortization of changes in assumptions and differences
between projects and actual earnings on pension plan investments used to determine the
net pension and other postemployment benefits liabilities. See Notes 6, 7, and 8 for
additional information.
Long-Term Obligations: Long-term obligations for governmental activities decreased by
$20,337,000 due to a decrease in the City’s workers’ compensation, general liability,
pension, and OPEB liabilities. Long-term obligations for business-type activities
decreased by $1,787,000 due to decreases in the net pension and other postemployments
benefits liabilities.
Net Investment in Capital Assets: The largest portion of the City’s net position reflects
investment in capital assets (e.g., land, buildings, machinery, equipment, and
infrastructure), less any related debt used to acquire those assets that is still outstanding.
The City uses capital assets to provide services to citizens; consequently, these assets
are not available for future spending. Although the City’s investment in its capital assets
is reported net of related debt, the resources needed to repay this debt must be provided
from other sources, since capital assets themselves cannot be used to liquidate these
liabilities. Net position invested in capital assets net of related debt from governmental
activities increased $13,815,000 or 2.1 percent, primarily due to residential street
improvements. Net position invested in capital assets net of related debt from business-
type activities increased $1,742,000 or 1.2 percent primarily due to Peck Reservoir and
Well No. 9 Improvement projects.
Restricted Net Position: An additional portion of the City’s net position is subject to
external (legally imposed or statutory) restrictions ($66,089,000 for governmental
activities, and $21,153,000 for business-type activities). These amounts represent 13.8
percent and 10.4 percent of net position for governmental activities and business-type
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
11
activities, respectively. Restricted net position from governmental activities increased
$7,552,000 or 12.9 percent. The increase is largely due to restricted fund balance
increases in the City’s Development Impact Fee and Gas Tax Funds of $3,942,000 and
$3,420,000, respectively, related to increased RMRA and developer impact fees received.
Restricted net position from business-type activities decreased by $4,733,000 or 18.3
percent primarily due to a decrease in restricted water master plan funds available for
capital projects as funds are spent.
Unrestricted Net Position: The unrestricted net position (negative $251,022,000 for
governmental activities and $36,747,000 for business-type activities) represent negative
52.4 percent and 18 percent, respectively, of net position for governmental activities and
business-type activities. Unrestricted net position for governmental activities increased
$3,506,000 largely due to a decrease in the net pension and other postemployment
benefits liabilities. Unrestricted net position for business-type activities increased by
$9,255,000 or 33.7 percent during the year due to an increase in revenue from water and
sewer operations in fiscal year 2018/19.
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
12
A condensed summary of governmental activities (in thousands) follows:
Revenues: June 30, 2019 June 30, 2018
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Program Revenues:
Charges for Current Services 61,736$ 49,324$ 12,412$ 25.2%
Operating Grants and Contributions 6,644 3,976 2,668 67.1%
Capital Grants and Contributions 8,361 6,055 2,306 38.1%
Total Program Revenues 76,741 59,355 17,386 29.3%
General Revenues:
Property Taxes 89,124 61,185 27,939 45.7%
Sales Taxes 47,437 33,844 13,593 40.2%
Utility Taxes 18,788 14,014 4,774 34.1%
Franchise Taxes 6,225 6,073 152 2.5%
Transient Occupancy Tax 14,002 8,810 5,192 58.9%
Use of Money and Property 8,746 2,158 6,588 305.3%
From Other Agencies - Unrestricted 4,046 2,263 1,783 78.8%
Other - 2,811 (2,811) -100.0%
Total General Revenues 188,368 131,158 57,210 43.6%
Total Revenues 265,109 190,513 74,596 39.2%
Expenses:
City Council 360 218 142 65.1%
City Manager 4,501 2,063 2,438 118.2%
City Treasurer 246 101 145 143.6%
City Attorney 2,886 1,536 1,350 87.9%
City Clerk 976 475 501 105.5%
Finance 6,245 3,455 2,790 80.8%
Human Resources 6,261 4,760 1,501 31.5%
Planning and Building 6,144 4,301 1,843 42.9%
Fire 56,494 26,688 29,806 111.7%
Information Services 7,530 4,375 3,155 72.1%
Police 87,355 42,109 45,246 107.4%
Community Services 13,369 6,768 6,601 97.5%
Library Services 5,206 2,890 2,316 80.1%
Public Works 40,803 23,898 16,905 70.7%
Non-Departmental - 18,164 (18,164) -100.0%
Interest on Long-Term Debt 1,823 1,467 356 24.3%
Total Expenses 240,199 143,268 96,931 67.7%
Change in Net Position Before Transfers 24,910 47,245
Transfers (37) (332)
Change in Net Position 24,873 46,913
Net Position - Beginning of Year 454,475 425,350
Prior Period Adjustment - (17,788)
Net Position - Beginning of Year as Restated 454,475 407,562
Net Position - End of Year 479,348$ 454,475$
Governmental Activities
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
13
The cost of all governmental activities this year was $240,199,000. However, as shown
in the Statement of Activities, the amount that the taxpayers ultimately financed for these
activities was $163,458,000, because costs of $61,736,000 were paid by those who
directly benefited from the programs, or by other governments and organizations that
subsidized certain programs with operating grants and contributions of $6,644,000, and
capital grants and contributions of $8,361,000. Overall, the City’s governmental program
revenues were $76,741,000. The City paid for the remaining “public benefit” portion of
governmental activities with $188,368,000 in taxes and general revenue (some of which
may only be used for certain programs) and with other revenues, such as interest and
general entitlements. Due to the full, twelve-month fiscal year, Charges for Current
Services increased by $12,412,000 or 25.2 percent.
Operating Grants and Contributions increased by $2,668,000 or 67.1 percent primarily due
to an increase in Bridge Preventative Maintenance Program, Community Development
Block Grant, and Office of Traffic Safety grant reimbursements from the prior year. Capital
Grants and Contributions have increased by $2,306,000 or 38.1 percent primarily due to
increases in Gas Tax revenues related to Road Maintenance and Rehabilitation Account
(RMRA) funding.
Program expenses increased by $96,931,000 or 67.7 percent due to the twelve-month
fiscal year. The change from the September 30 year-end to June 30 year-end resulted in
a nine-month fiscal year for 2017/18, which excluded the months of July to September.
These months represent the peak season for the City due to increased number of visitors
and events held during the summer. Related overtime costs typically incurred by Public
Safety in order to maintain essential levels of service during this period were also avoided
due to the nine-month fiscal year.
Total resources available during the year to finance governmental operations were
$719,584,000 consisting of net position at July 1, 2018 of $454,475,000, program
revenues of $76,741,000, and general revenues of $188,368,000. Total expenses for
governmental activities during the year were $240,199,000 plus transfers of $37,000.
Thus, net position increased by $24,873,000 or 5.5 percent, to $479,348,000.
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
14
A condensed summary of business-type activities (in thousands) follows:
The City’s net position from business-type activities increased by $6,227,000 before
transfers. This is mainly due to increases in Water and Sewer Fund revenues relative to
expenditures.
The cost of all business-type activities this year was $65,132,000. As shown in the
Statement of Activities, the amount paid by users of the systems was $68,124,000, other
revenue was $3,235,000, and transfers were $37,000. Beginning net position was
$197,332,000 and ending net position was $203,596,000, an increase of $6,264,000 or
3.2 percent. Of the ending net position amount, $145,696,000, or 71.6 percent, was
invested in capital assets, $21,153,000 or 10.4 percent was restricted for expenses for the
Water Master Plan, and $36,747,000, or 18.0 percent was unrestricted.
Transfers in for business-type activities were $37,000 for the current year and $332,000
for the prior year.
June 30, 2019 June 30, 2018
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Program Revenues:
Charges for Current Services 68,124$ 46,737$ 21,387$ 45.8%
Total Program Revenues 68,124 46,737 21,387 45.8%
Use of Money and Property 3,235 279 2,956 1059.5%
Total Revenues 71,359 47,016 24,343 51.8%
Expenses:
Water Utility 43,405 28,414 14,991 52.8%
Sewer Service 9,442 6,127 3,315 54.1%
Refuse Collection 12,051 8,916 3,135 35.2%
Hazmat Service 234 117 117 100.0%
Total Expenses 65,132 43,574 21,558 49.5%
Increase (Decrease) in Net Position Before
Transfers 6,227 3,442
Transfers 37 332
Total Change In Net Position 6,264 3,774
Net Position - Beginning of Year 197,332 193,150
Prior Period Adjustment - 408
Net Position - Beginning of Year as Restated 197,332 193,558
Net Position - End of Year 203,596$ 197,332$
Business-Type Activities
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
15
Financial Analysis of the City’s Major Governmental Funds
Below is an analysis of the City’s major governmental fund activities for the year (in
thousands):
The General Fund Balance increased by $10,379,000 due to one-time revenues for sales
tax back payments, strike team reimbursements, and vacancies in personnel as a result
of turnover and time required to recruit new positions.
The Grants Special Revenue Fund Balance increased by $523,000 primarily due to Public
Works grant reimbursements related to the rehabilitation of City bridges.
The LMIHAF Capital Projects Fund Balance increased by $58,000 as a result of
repayments received from loans issued by the City for down payment assistance and the
acquisition and construction of developments for low and moderate-income residents.
Financial Analysis of the City’s Major Proprietary Funds
Below is an analysis of the fund equity of the City’s proprietary funds (in thousands):
The Water Fund total net position increased by $2,709,000 and unrestricted net position
increased by $5,912,000 due to a decrease in water purchases. The shortened fiscal year
June 30, 2019 June 30, 2018
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Total Fund Equity:
General Fund 79,013$ 68,634$ 10,379$ 15.1%
Grants Special Revenue Fund 6,069 5,546 523 9.4%
LMIHAF Capital Projects Fund 5,541 5,483 58 1.1%
Total Fund Equity 90,623$ 79,663$ 10,960$ 13.8%
GOVERNMENTAL FUNDS
June 30, 2019 June 30, 2018
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Net Position:
Water Fund 127,391$ 124,682$ 2,709$ 2.2%
Sewer Fund 76,266 72,774 3,492 4.8%
Refuse Fund (105) (128) 23 18.0%
Hazmat Service Fund 44 4 40 1000.0%
Total Net Position 203,596$ 197,332$ 6,264$ 3.2%
Unrestricted Net Position:
Water Fund 11,528$ 5,616$ 5,912$ 105.3%
Sewer Fund 25,457 22,199 3,258 14.7%
Refuse Fund (282) (327) 45 13.8%
Hazmat Service Fund 44 4 40 1000.0%
Total Unrestricted Net Position 36,747$ 27,492$ 9,255$ 33.7%
Enterprise Funds
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
16
excludes the period July 1, 2018 to September 30, 2018, when water usage and related
maintenance is at its peak. The Sewer Fund net position increased by $3,492,000 and
unrestricted net position increased by $3,258,000 due to planned sewer projects being
deferred to the following year.
Long-Term Obligations
Below is a schedule of the changes to the City’s long-term obligations (in thousands):
Additional information on the City’s long-term debt is shown in Note 11 to the financial
statements. The City of Huntington Beach is legally restricted to issuing general obligation
bonds to 12 percent of its assessed valuation. Since the City has no general obligation
bonds outstanding, the limit does not apply. The City’s total long-term obligations
decreased $11,283,000 or 10.1 percent from the prior fiscal year primarily due to a
decrease in workers’ compensation and general liability claims payable and normal debt
service payments.
Governmental Activities:
Balance July 1,
2018 Additions Retirements
Balance June
30, 2019
Revenue Bonds 42,505$ -$ (3,355)$ 39,150$
Compensated Absences 11,831 4,126 (4,662) 11,295
Claims Payable 40,282 7,077 (12,333) 35,026
Pollution Remediation 2,000 - - 2,000
Section 108 Loan City 430 - (430) -
LED Lighting Phase I 763 - (107) 656
I-Bank CLEEN Loan 2,730 - (276) 2,454
CEC Loan 3,000 - (182) 2,818
Leases Payable 6,079 - (996) 5,083
Total Long-Term Obligations - Governmental
Activities 109,620 11,203 (22,341) 98,482
Business-Type Activities:
Compensated Absences 1,561 55 (200) 1,416
Business-Type Activities: 1,561 55 (200) 1,416
Total Long-Term Obligations 111,181$ 11,258$ (22,541)$ 99,898$
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
17
The City continues to maintain strong credit ratings on all of its debt issues. Most notably,
on August 27, 2014 Fitch Ratings issued an AAA Implied General Obligation Bond rating
to the City of Huntington Beach and that same rating was reaffirmed in June 2018.
Additionally, in April 2019, the 1999 RDA bonds received a credit ratings increase from
Moody’s Investor Service of two tiers, from A2 to Aa3.
The following are the ratings as determined by Moody’s Investors Service and Standard
and Poor’s as of June 30, 2019.
Capital Assets
The capital assets of the City are those assets which are used in the performance of the
City’s functions including infrastructure assets. The City has elected to use the “Basic
Approach” as defined by GASB Statement No. 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.
Below is a schedule of the City’s capital assets, net of accumulated depreciation (in
thousands):
Debt Instrument Moody's S & P
1999 Tax Allocation Refunding Bonds Aa3 AA
2002 Tax Allocation Refunding Bonds N/A AA-
2010 Lease Revenue Bonds, Series A Aa2 AA
2011 Lease Revenue Bonds, Series A Aa2 AA
2014 Lease Revenue Bonds, Series A N/A AA
Governmental Activities: June 30, 2019 June 30, 2018
Amount
Increase
(Decrease)
Percent
Increase
(Decrease)
Land 362,534$ 361,901$ 633$ 0.2%
Buildings 128,628 130,152 (1,524) -1.2%
Machinery and Equipment 13,267 12,806 461 3.6%
Construction in Progress 7,631 11,745 (4,114) -35.0%
Infrastructure 196,409 182,128 14,281 7.8%
Total Governmental Activities 708,469 698,732 9,737 1.4%
Business-Type Activities:
Land 3,907 3,907 - 0.0%
Buildings 63,356 65,657 (2,301) -3.5%
Machinery and Equipment 7,776 3,803 3,973 104.5%
Construction in Progress 5,701 3,907 1,794 45.9%
Infrastructure 64,956 66,680 (1,724) -2.6%
Total Business-Type Activities 145,696 143,954 1,742 1.2%
Total Capital Assets 854,165$ 842,686$ 11,479$ 1.4%
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
18
Capital assets from governmental activities increased $9,737,000 or 1.4 percent. This
increase is largely due to street replacement infrastructure costs. Capital assets from
business-type activities increased $1,742,000 or 1.2 percent largely due to increased
spending on projects such as the Peck Reservoir and Well No. 9 project. Further
information on the City’s capital assets can be found in Note 12 of the financial statements.
General Fund Budgetary Highlights
Changes to Original Budget
Comparing the FY 2018/19 General Fund Original (i.e. Adopted) Budget expenditures
amount of $209,474,000 to the final budgeted amount of $223,370,000 shows a net
increase of $13,896,000, or 6.6 percent. This overall increase was largely the result of
budget carryovers from the previous year.
Final budgeted revenues for the General Fund increased $10,393,000 or 4.6 percent from
the original (adopted) budget for the fiscal year ended June 30, 2019. The change from
original to final budget occurred primarily as a result of adjustments made to budgeted
property, sales tax, investment income, and revenues received from the State.
Variance with Final Budget
General Fund actual revenues were less than the final budget by $199,000 for the fiscal
year ended June 30, 2019.
General Fund expenditures were $7,901,000 less than the final budget. The favorable
budget variance is due in large part to the following:
The Police and Fire Departments realized $2,358,000 in savings primarily due to
vacancies in personnel as a result of turnover and time required to recruit new
positions.
The Community Services and Library Services Departments realized $2,799,000 in
savings primarily due to the deferral of the Senior Center Fitness and other senior
and library program expenditures.
The Public Works and Community Development Departments realized $1,139,000
in savings primarily due to differences in the projected versus actual timing of
design, construction, and maintenance contracts for projects, as well as the deferral
of various building and planning contracts.
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
19
Analysis of City’s Other Major Governmental Funds
Grants Special Revenue Fund
The fund balance in the Grant Special Revenue Fund increased by $523,000. Significant
grant expenditures in the current year were for police, city manager, and street
improvement grants and projects.
LMIHAF Capital Projects Fund
The fund balance in the LMIHAF Capital Projects Fund increased by $58,000 as a result
of repayments received for loans issued by the City for down payment assistance and the
acquisition and construction of developments for low and moderate-income residents.
Economic Factors and Next Year’s Budget
The Adopted FY 2019/20 Budget is structurally balanced, totaling $381.0 million in All
Funds. This reflects a $7.9 million, or 2.1 percent, increase from the FY 2018/19 Adopted
All Funds Budget.
The General Fund, which provides the majority of public services to the community, totals
$231.6 million, reflecting a $3.2 million, or 1.4 percent increase from the FY 2018/19
budget. Major highlights are as follows:
Public Safety: Funding for Public Safety represents 55 cents for every dollar spent in the
General fund. With half of the General Fund Budget committed to the Police and Fire
Departments, the City has dedicated the greatest share of its resources, or $127.7 million
to these core services.
In the Police Department, the budget adds $60,000 for false alarm program billing and
management services.
In the Fire Department, the Adopted Budget adds $55,000 for the All-Day Junior Lifeguard
Option and Sand Crab Program and a $140,000 increase for emergency dispatching
services provided by the Metro Cities Joint Powers Authority. In CIP, $880,000 is included
for the Lake Fire Station renovations.
Preparing Today for Higher Pension Costs Tomorrow: In December 2016, the CalPERS
Board of Administration voted to lower the annual expected rate of return for the over $300
billion Statewide portfolio from the existing rate of 7.5 percent to 7.0 percent. While this is
a practical and financially sound response to the mounting pressure that PERS’ investment
projections have gone largely unmet for years, this change will regrettably be fully borne
by cities and counties throughout the State, not by CalPERS itself.
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
20
For the City of Huntington Beach, the increased pension costs have been significant. In
FY 2019/20, CalPERS costs are about $39.5 million in the General Fund. This cost will
increase by approximately $3.5 million to $5.4 million every year, for the next four years,
due to variables outside the City’s control. It is anticipated the City will incur an additional
$22 to $25 million per year in pension costs by FY 2022/23, bringing the City’s total
CalPERS pension costs to approximately $57 million. While the City Council and staff
work diligently to mitigate the effects, these dramatic cost increases have real world
impacts. They limit the City’s ability to invest in its infrastructure, enhance services, restore
service level reductions made during the Great Recession, or to add staffing to meet ever-
increasing workload demands.
The FY 2019/20 Adopted Budget balances the City’s priorities in a fiscally conservative
manner by limiting expenditure growth and addressing long-term needs, such as capital
infrastructure and long-term actuarial liabilities.
Long-term Financial Sustainability: The City’s CalPERS costs are expected to total $43.3
million in FY 2019/20. This reflects a $4.6 million, or 11.8 percent increase to last year’s
Adopted Budget. The City’s unfunded pension liability is currently $414.4 million,
representing a 68.8 percent funded status.
The FY 2019/20 Adopted Budget does include a $1 million contribution to the Section 115
Trust, funded by one-time savings from the previous year. The City Council adopted a
Pension Rate Stabilization Plan, otherwise known as a Section 115 Trust, to provide an
additional alternative investment vehicle to CalPERS, providing the ability to select a
portfolio based on the City’s own distant risk tolerance, and the desire to achieve a one-
for-one reduction in its liabilities.
On November 18, 2019, City Council authorized staff to move forward with preparing for
the potential issuance of a Pension Obligation Bond to “refinance” the City’s unfunded
pension liability through the approval of a resolution to begin a judicial validation process
that takes approximately 90 days to complete. Should the City move forward with the
issuance of Pension Obligation Bonds, tremendous cost savings may be realized by taking
advantage of the current low interest rate environment. Concurrently, the City is in the
process of developing a formal Unfunded Pension Liability payoff policy to plan for any
additional unfunded pension liabilities that may arise through changes in the discount rate
and other actuarial assumptions used by CalPERS.
Paying down these liabilities, controlling the City’s pension costs through various
mechanisms including the issuance of Pension Obligation Bonds, funding a Section 115
trust, and creating a Unfunded Pension Liability Policy helps build capacity to manage
future pension cost increases. While the impact of higher CalPERS costs will not be
entirely mitigated, this proactive strategy has placed Huntington Beach in a stronger
financial position than many other cities.
City of Huntington Beach
Management’s Discussion and Analysis
For the Year Ended June 30, 2019
21
General Fund Revenue
General Fund revenue is projected to reach $230.8 million, a $4.7 million or 2.1 percent
increase from the FY 2018/19 Adopted Budget. General Fund revenue is stable and
continues to perform modestly, although it is experiencing signs of minimal growth in
certain key areas such as Utility Users’ Tax revenues and parking citations.
Property Taxes are estimated at $89.7 million, reflecting an increase of 4.5 percent due
to the year-over-year growth in assessed valuations.
Sales Tax revenues are projected to be $41.2 million, a decrease of 4.2 percent from
fiscal year 2018/19. The adopted estimate is attributable to the loss of one-time
revenues that the City received in FY 2018/19 from recently completed construction
projects and from one-time corrections paid by the CDTFA.
Licenses and Permits are estimated to be $7.9 million, reflecting a 3.5 percent increase
due to steady, continued development in the City.
Transient Occupancy Taxes are anticipated to reach $14.3 million, a 6.4 percent
increase due to steady growth in occupancy in both large hotels as well as small
hotels/motels.
Utility Users’ Taxes, budgeted at $17.9 million, is decreasing by 2.5 percent due to
conservation efforts and bundled telecommunication packages.
Contacting the City’s Financial Management Team
This financial report is designed to provide our citizens, taxpayers, customers, and
investors and creditors with a general overview of the City’s finances and to show the City’s
accountability for the money it receives. If you have questions about this report, separate
reports of the City’s component units or need any additional financial information, contact
the Finance Department at 2000 Main Street, Huntington Beach, California, 92648-2702,
phone (714) 536-5630 or e-mail tvi@surfcity-hb.org.
22
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23
BASIC FINANCIAL STATEMENTS
24
See Notes to Financial Statements
ASSETS
Governmental
Activities
Business-Type
Activities Total
Cash and Investments 186,401$ 81,833$ 268,234$
Cash and Investments with Fiscal Agent 5,973 - 5,973
Receivables, Net 32,502 8,146 40,648
Advances to Successor Agency 1,363 - 1,363
Inventories - 1,418 1,418
Prepaids 1,505 - 1,505
Joint Venture 2,712 1,861 4,573
Subtotal 230,456 93,258 323,714
Capital Assets:
Non-Depreciable 370,165 9,608 379,773
Depreciable, Net 338,304 136,088 474,392
Total Capital Assets 708,469 145,696 854,165
Total Assets 938,925 238,954 1,177,879
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 64,591 3,397 67,988
Deferred Outflows Related to Other Postemployment Benefits 2,428 289 2,717
Total Deferred Outflows of Resources 67,019 3,686 70,705
LIABILITIES
Accounts Payable 6,181 7,533 13,714
Accrued Payroll 4,416 398 4,814
Unearned Revenue 1,840 - 1,840
Accrued Interest Payable 630 - 630
Deposits 2,070 1,671 3,741
Subtotal 15,137 9,602 24,739
Long-Term Obligations:
Long-Term Obligations Due Within One Year 16,698 386 17,084
Long-Term Obligations Due in More than One Year 81,784 1,030 82,814
Net Pension Liability 394,422 26,571 420,993
Net Other Postemployment Benefits Liability 5,906 703 6,609
Total Long-Term Obligations 498,810 28,690 527,500
Total Liabilities 513,947 38,292 552,239
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 12,649 752 13,401
NET POSITION
Net Investment in Capital Assets 664,281 145,696 809,977
Restricted for:
Debt Service 9,030 - 9,030
Capital Projects 6,856 21,153 28,009
Public Works and Community Services Projects 50,203 - 50,203
Total Restricted Net Position 66,089 21,153 87,242
Unrestricted (251,022) 36,747 (214,275)
Total Net Position 479,348$ 203,596$ 682,944$
CITY OF HUNTINGTON BEACH
STATEMENT OF NET POSITION
JUNE 30, 2019
(In Thousands)
25
See Notes to Financial Statements
Program Revenues
Functions/Programs Expenses
Charges for
Current
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Governmental
Activities
Business-
Type
Activities Total
Governmental Activities:
City Council 360$ 149$ -$ -$ (211)$ -$ (211)$
City Manager 4,501 3,300 1,404 - 203 - 203
City Treasurer 246 135 - - (111) - (111)
City Attorney 2,886 7 - - (2,879) - (2,879)
City Clerk 976 327 - - (649) - (649)
Finance 6,245 2,899 - - (3,346) - (3,346)
Human Resources 6,261 751 - - (5,510) - (5,510)
Community Development 6,144 7,459 - - 1,315 - 1,315
Fire 56,494 9,831 84 - (46,579) - (46,579)
Information Services 7,530 628 - - (6,902) - (6,902)
Police 87,355 6,044 1,699 - (79,612) - (79,612)
Community Services 13,369 23,530 410 - 10,571 - 10,571
Library Services 5,206 308 110 - (4,788) - (4,788)
Public Works 40,803 6,368 2,937 8,361 (23,137) - (23,137)
Interest on Long-Term Debt 1,823 - - - (1,823) - (1,823)
Total Governmental Activities 240,199 61,736 6,644 8,361 (163,458) - (163,458)
Business-type Activities:
Water Utility 43,405 43,958 - - - 553 553
Sewer Service 9,442 11,868 - - - 2,426 2,426
Refuse Collection 12,051 12,022 - - - (29) (29)
Hazmat Service 234 276 - - - 42 42
Total Business-Type Activities 65,132 68,124 - - - 2,992 2,992
Total Governmental and Business
Type Activities 305,331$ 129,860$ 6,644$ 8,361$ (163,458) 2,992 (160,466)
General Revenues:
Taxes:
Property Taxes 89,124 - 89,124
Sales Taxes 47,437 - 47,437
Utility Taxes 18,788 - 18,788
Franchise Taxes 6,225 - 6,225
Transient Occupancy Tax 14,002 - 14,002
Total Taxes 175,576 - 175,576
Other:
Use of Money and Property 8,746 3,235 11,981
From Other Agencies - Unrestricted 4,046 - 4,046
Total General Revenues 188,368 3,235 191,603
Transfers (37) 37 -
Total General Revenues and Transfers 188,331 3,272 191,603
Change in Net Position 24,873 6,264 31,137
Net Position - Beginning of Year 454,475 197,332 651,807
Net Position - End of Year 479,348$ 203,596$ 682,944$
Net (Expense) Revenue and Changes in
Net Position
CITY OF HUNTINGTON BEACH
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
26
See Notes to Financial Statements
CITY OF HUNTINGTON BEACH
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30, 2019
(In Thousands)
ASSETS General Fund
Grants
Special
Revenue
LMIHAF Capital
Projects
Other
Governmental
Funds Total
Cash and Investments 74,657$ 5,962$ 4,176$ 65,380$ 150,175$
Cash and Investments with Fiscal Agent - 428 - 5,545 5,973
Taxes Receivable 10,607 - - 1,175 11,782
Other Receivables, Net 7,783 3,208 9,183 380 20,554
Due from Other Funds - - - 30 30
Advances to Successor Agency - - 1,363 - 1,363
Prepaids 23 - - 64 87
TOTAL ASSETS 93,070$ 9,598$ 14,722$ 72,574$ 189,964$
LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts Payable 4,102$ 675$ 8$ 899$ 5,684$
Accrued Payroll 4,286 55 9 46 4,396
Due to Other Funds - - - 30 30
Unearned Revenue 1,840 - - - 1,840
Deposits Payable 2,070 - - - 2,070
Total Liabilities 12,298 730 17 975 14,020
Deferred Inflows of Resources:
Unavailable Revenue 1,759 2,799 9,164 10 13,732
Total Deferred Inflows of Resources 1,759 2,799 9,164 10 13,732
Fund Balances:
Nonspendable
Prepaids 23 - - 64 87
Restricted
Underground Utilities 364 - - - 364
Restitution 282 - - - 282
Senior Center Donations 365 - - - 365
Section 115 Trust 6,250 - - - 6,250
Pollution Remediation - - - 332 332
Debt Service - - - 9,030 9,030
Highways, Streets and Transportation - - - 14,284 14,284
Low Income Housing - - 5,541 899 6,440
Air Quality - - - 1,071 1,071
Other Capital Projects - - - 21,447 21,447
Other Purposes 893 6,069 - 540 7,502
Committed
Economic Uncertainties 25,011 - - - 25,011
Parks - - - 3,107 3,107
Other Capital Projects - - - 17,201 17,201
Assigned
Capital Improvement Reserve 8,046 - - 3,614 11,660
Equipment Replacement 8,295 - - - 8,295
General Plan Maintenance 546 - - - 546
General Liability Plan Migration 2,801 - - - 2,801
Cityview Replacement 1,028 - - - 1,028
Section 115 Trust 2,500 - - - 2,500
Triple Flip 1,113 - - - 1,113
Strategic Initiatives 15,998 - - - 15,998
Housing Agreement 1,580 - - - 1,580
Year-End Market Value 1,184 - - - 1,184
Other Purposes 2,734 - - - 2,734
TOTAL FUND BALANCES 79,013 6,069 5,541 71,589 162,212
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES 93,070$ 9,598$ 14,722$ 72,574$ 189,964$
27
See Notes to Financial Statements
Amounts reported for governmental activities in the statement of net position are
different because:
Total Fund Balances Governmental Funds 162,212$
Net capital assets used in governmental activities are not current financial resources and,
therefore, are not reported in the governmental funds. Amounts exclude net Capital Assets
of the Internal Service Funds.
Capital Assets 1,059,825
Accumulated Depreciation (353,530)
Total Capital Assets 706,295 706,295
Joint Venture 2,712
Internal Services funds are used by management to charge the cost of various city
activities to individual governmental and business-like funds. The assets and
liabilities of the Internal Service fund must be added to the S tatement of Net Position. 3,211
Revenues that are measurable but not available are not recogniz ed as revenue in
governmental funds. Such amounts are recorded as unavailable revenue under the
modified accrual basis of accounting.13,732
Deferred outflows related to pensions 64,426
Deferred outflows related to Other Postemployment Benefits (OPE B) 2,415
Governmental funds report all pension contributions as expenditures; however, in the
statement of net position, the excess of the total pension liability over the plan
fiduciary net position is reported as a net pension liability. (393,138)
Deferred inflows related to pensions (12,612)
Governmental funds report all OPEB contributions as expenditures; however, in the
statement of net position, the excess of the total OPEB liability over the plan fiduciary
net position is reported as a net pension liability. (5,874)
Other long-term liabilities are not due in the current period and, therefore, are not recorded
in the governmental funds.
Accrued Interest Payable (630)
Long-term Liabilities, including bonds and certificates of participation payable, are not due
and payable in the current period and therefore are not reported in the governmental funds.
Amounts exclude Long-Term Obligation of the Internal Service Fund.
Long-Term Obligations Due in One Year (9,507)
Long-Term Obligations Due in More than One Year (53,894)
Net Position of Governmental Activities 479,348$
(In Thousands)
CITY OF HUNTINGTON BEACH
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30, 2019
28
See Notes to Financial Statements
REVENUES
General
Fund
Grants
Special
Revenue
LMIHAF
Capital
Projects
Other
Governmental
Funds Total
Property Taxes 89,367$ -$ -$ -$ 89,367$
Sales Taxes 43,942 - - 3,495 47,437
Utility Taxes 18,788 - - - 18,788
Other Taxes 20,227 - - 6,969 27,196
Licenses and Permits 8,292 - - 282 8,574
Fines and Forfeitures 4,300 - - - 4,300
From Use of Money and Property 19,859 481 748 2,188 23,276
Intergovernmental 4,974 6,880 - 1,218 13,072
Charges for Current Services 25,390 - - 6,612 32,002
Other 1,492 6 - 287 1,785
Total Revenues 236,631 7,367 748 21,051 265,797
EXPENDITURES
Current:
City Council 369 - - - 369
City Manager 2,656 2,704 311 927 6,598
City Treasurer 248 - - - 248
City Attorney 2,874 - - - 2,874
City Clerk 981 - - - 981
Finance 6,467 - - 17 6,484
Human Resources 6,362 - - - 6,362
Community Development 7,960 178 - - 8,138
Fire 53,547 125 - 759 54,431
Information Services 7,938 - - 404 8,342
Police 82,098 1,448 - - 83,546
Community Services 9,414 308 - 1,998 11,720
Library Services 4,710 108 - 126 4,944
Public Works 28,289 1,347 - 17,242 46,878
Debt Service:
Principal 1,379 612 - 3,355 5,346
Interest 177 14 - 1,699 1,890
Total Expenditures 215,469 6,844 311 26,527 249,151
Excess (Deficiency) Of Revenues Over
(Under) Expenditures 21,162 523 437 (5,476) 16,646
OTHER FINANCING SOURCES (USES)
Transfers In 13 - 26 11,151 11,190
Transfers Out (10,796) - (405) (26) (11,227)
Total Other Financing Sources (Uses) (10,783) - (379) 11,125 (37)
Net Change In Fund Balances 10,379 523 58 5,649 16,609
Fund Balances - Beginning Of Year 68,634 5,546 5,483 65,940 145,603
Fund Balances - End Of Year 79,013$ 6,069$ 5,541$ 71,589$ 162,212$
(In Thousands)
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
29
See Notes to Financial Statements
Amounts reported for governmental activities in the
Statement of Activities are different because:
Net Changes in Fund Balances - Total Governmental funds 16,609$
Depreciable Assets Purchased 26,799
Non-Depreciable Assets Purchased 4,159
Non-Depreciable Assets Disposition (7,840)
Capital Asset Dispositions (4)
Capital Asset Depreciation (14,686)
Joint Venture (157)
Prior Year Property and Sales Tax Accrual (243)
Current Year Grant and Other Revenue Accrual 2,289
Prior Year Grant and Other Revenue Accrual (2,734)
(608)
Pension expenses reported in the statement of activities includes the change in the
net pension liability and related changes in pension amounts for deferred outflows and
deferred inflows of resources. (14,020)
303
Internal service funds are used by management to charge the cos ts of certain
activities, such as self insurance workers' compensation charges. The net
revenue of this internal service fund is reported as government al activities. 9,045
Current Year Interest Accrual (630)
Prior Year Interest Accrual 697
5,346
548
Change in Net Position of Governmental Activities 24,873$
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
CITY OF HUNTINGTON BEACH
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF ACTIVITIES
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.
Capital Expenditures - Governmental funds report capital outlays as
expenditures. However, in the Statement of Activities, the cos t of these
assets are allocated over their estimated useful lives and reported as
depreciation expense.
Liabilities not liquidated with current resources - Some expenses reported in
the Statement of Activities do not require the use of current financial
resources and, therefore, are not reported as expenditures in governmental
funds.
The issuance of long-term debt provides current financial resources to governmental
funds, while the repayment of some expenses such as compensated absences,
claims, and pension expenses, reported in the Statement of Act ivities, do not
require the use of current resources, and therefore are not reported as expenditures
in the governmental funds.
Repayment of long-term debt principal is an expenditure in the governmental funds,
but the repayment reduces long-term liabilities in the Statement of Net Position.
Other Postemployment Benefits Payments - Expenses reported in the Statement of
Activities do not require the use of current financial resources and therefore are not
reported as expenditures in governmental funds (expenses).
Repayments on long-term receivables provide current financial resources to
governmental funds, while loans provided consume the current financial
resources of governmental funds. These transactions, however, have no
effect on net position.
30
See Notes to Financial Statements
Governmental
Activities
Water
Fund
Sewer
Service
Fund
Refuse
Fund
Hazmat
Service
Fund Total
Internal Service
Funds
ASSETS
Current Assets:
Cash and Investments 27,741$ 32,213$ 313$ 413$ 60,680$ 36,226$
Restricted Cash and Investments 21,153 - - - 21,153 -
Other Receivables, Net 4,374 552 438 8 5,372 166
Prepaids - - - - - 1,418
Joint Ventures 1,861 - - - 1,861 -
Inventories 1,418 - - - 1,418 -
Unbilled Receivables 1,759 491 524 - 2,774 -
Total Current Assets 58,306 33,256 1,275 421 93,258 37,810
Capital Assets:
Land 3,907 - - - 3,907 -
Buildings and Improvements 52,642 39,925 - - 92,567 -
Machinery and Equipment 16,362 3,737 215 - 20,314 2,262
Infrastructure 101,868 43,803 - - 145,671 -
Construction in Progress 3,611 2,090 - - 5,701 208
Less Accumulated Depreciation (83,680) (38,746) (38) - (122,464) (296)
Total Capital Assets 94,710 50,809 177 - 145,696 2,174
Total Assets 153,016 84,065 1,452 421 238,954 39,984
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 2,377 889 79 52 3,397 165
Deferred Outflows Related to Other Postemployment Benefits 208 71 7 3 289 13
Total Deferred Outflows of Resources 2,585 960 86 55 3,686 178
LIABILITIES
Current Liabilities:
Accounts Payable 5,612 997 924 - 7,533 497
Accrued Payroll 277 106 8 7 398 20
Deposits Payable 1,671 - - - 1,671 -
Current Portion of Claims Payable - - - - - 7,175
Current Portion of Compensated Absences 279 90 16 1 386 15
Total Current Liabilities 7,839 1,193 948 8 9,988 7,707
Non-Current Liabilities:
Compensated Absences 743 240 43 4 1,030 40
Net Pension Liability 18,597 6,956 617 401 26,571 1,284
Net Other Postemployment Benefits Liability 505 173 18 7 703 32
Claims Payable - - - - - 27,851
Total Non-Current Liabilities 19,845 7,369 678 412 28,304 29,207
Total Liabilities 27,684 8,562 1,626 420 38,292 36,914
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 526 197 17 12 752 37
NET POSITION
Investment in Capital Assets 94,710 50,809 177 - 145,696 2,174
Restricted for:
Capital Projects 21,153 - - - 21,153 -
Unrestricted 11,528 25,457 (282) 44 36,747 1,037
Total Net Position 127,391$ 76,266$ (105)$ 44$ 203,596$ 3,211$
(In Thousands)
JUNE 30, 2019
PROPRIETARY FUNDS
STATEMENT OF NET POSITION
CITY OF HUNTINGTON BEACH
Business-Type Activities - Enterprise Funds
31
See Notes to Financial Statements
Governmental
Activities
Water
Fund
Sewer
Service
Fund
Refuse
Fund
Hazmat
Service
Fund Total
Internal Service
Funds
OPERATING REVENUES
Sales 38,846$ -$ -$ -$ 38,846$ -$
Fees and Charges for Service - 11,865 11,961 276 24,102 17,152
Other 5,112 3 61 - 5,176 -
Total Operating Revenues 43,958 11,868 12,022 276 68,124 17,152
OPERATING EXPENSES
Water Purchases 16,435 - - - 16,435 -
Supplies and Operations 9,680 7,423 12,029 234 29,366 4,198
Engineering 1,867 - - - 1,867 -
Production and Distribution 6,928 - - - 6,928 -
Water Meters 3,355 - - - 3,355 -
Water Quality 946 - - - 946 -
Water Use Efficiency 282 - - - 282 -
Claims and Judgments - - - - - 4,735
Depreciation 3,912 2,019 22 - 5,953 226
Total Operating Expenses 43,405 9,442 12,051 234 65,132 9,159
Operating Income (Loss)553 2,426 (29) 42 2,992 7,993
NON-OPERATING REVENUES (EXPENSES)
Interest Income 2,156 1,066 2 11 3,235 1,052
Income (Loss) Before Transfers 2,709 3,492 (27) 53 6,227 9,045
TRANSFERS
Transfers In - - 50 - 50 -
Transfers Out - - - (13) (13) -
Total Transfers - - 50 (13) 37 -
Change in Net Position 2,709 3,492 23 40 6,264 9,045
Net Position - Beginning Of Year 124,682 72,774 (128) 4 197,332 (5,834)
Net Position- End Of Year 127,391$ 76,266$ (105)$ 44$ 203,596$ 3,211$
Business-Type Activities - Enterprise Funds
(In Thousands)
FOR THE YEAR ENDED JUNE 30, 2019
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
CITY OF HUNTINGTON BEACH
32
See Notes to Financial Statements
Governmental
Activities
Water
Fund
Sewer
Service
Fund
Refuse
Fund
Hazmat
Service
Fund Total
Internal Service
Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers and Users 41,949$ 11,783$ 12,019$ 275$ 66,026$ 17,078$
Cash Paid to Employees for Services (9,316) (3,579) (286) (221) (13,402) (691)
Cash Paid to Suppliers of Goods and Services (31,059) (2,927) (11,718) (3) (45,707) (13,686)
Net Cash and Investment Provided (Used) by
Operating Activities 1,574 5,277 15 51 6,917 2,701
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers In - - 50 - 50 -
Transfers Out - - - (13) (13) -
Net Cash and Investments Used by
Noncapital Financing Activities - - 50 (13) 37 -
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of Capital Assets (5,442) (2,253) - - (7,695) (1,535)
Net Cash and Investments Used by
Capital and Related Financing Activities (5,442) (2,253) - - (7,695) (1,535)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received 2,156 1,066 2 11 3,235 1,052
Net Cash and Investments Provided (Used) by
Investing Activities 2,156 1,066 2 11 3,235 1,052
Net Increase (Decrease) in Cash
and Investments (1,712) 4,090 67 49 2,494 2,218
Cash and Investments -
Beginning of Year 50,606 28,123 246 364 79,339 34,008
Cash and Investments - End of Year 48,894$ 32,213$ 313$ 413$ 81,833$ 36,226$
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET CASH AND INVESTMENTS
PROVIDED (USED) BY OPERATING ACTIVITIES
Operating Income (Loss) 553$ 2,426$ (29)$ 42$ 2,992$ 7,993$
Adjustments to Reconcile Operating
Income (Loss) to Net Cash and Investments
Provided (Used) by Operating Activities
Depreciation 3,912 2,019 22 - 5,953 226
(Increase) Decrease in Other Receivables, Net (1,848) (1) 48 (1) (1,802) (74)
(Increase) in Unbilled Receivables (230) (84) (51) - (365) -
Decrease in Prepaids - - - - - 105
(Increase) in Joint Ventures (996) - - - (996) -
Decrease in Inventory 91 - - - 91 -
Increase (Decrease) in Accounts Payable (604) 737 (1) - 132 (359)
Increase (Decrease) in Accrued Payroll (38) (7) - - (45) 3
Increase in Deposits Payable 69 - - - 69 -
(Decrease) in Claims Payable - - - - - (5,256)
Increase (Decrease) in Compensated Absences (56) (84) 3 (8) (145) 13
Decrease in Deferred Pension Outflow 1,829 684 60 40 2,613 126
Increase in Deferred Pension Inflow (94) (35) (4) (2) (135) (6)
(Decrease) in Net Pension Liability (987) (369) (33) (19) (1,408) (68)
Decrease in Deferred Other Postemployment Benefits Outflow 141 49 5 2 197 9
(Decrease) in Net Other Postemployment Benefits Liability (168) (58) (5) (3) (234) (11)
Net Cash and Investments Provided
by Operating Activities 1,574$ 5,277$ 15$ 51$ 6,917$ 2,701$
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
There were no noncash investing, capital, or financing activities during the year ended June 30, 2019.
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
Business-Type Activities - Enterprise Funds
CITY OF HUNTINGTON BEACH
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
33
See Notes to Financial Statements
ASSETS
Total Agency
Funds
Pension Trust
Fund - Retirement
Supplemental
Fund
Huntington Beach
Redevelopment
Successor Agency
Private Purpose
Trust
Cash and Investments 10,579$ 16$ 9,776$
Cash and Investments with Fiscal Agent 3,451 - 2,522
Commodities and Real Estate - 2,376 -
Mutual Funds - 55,718 -
Money Market Funds - 760 -
Accounts Receivable, Net 670 - 55
Total Assets 14,700$ 58,870$ 12,353$
LIABILITIES
Accounts Payable 2,290$ -$ 567$
Accrued Payroll 8 - 7
Due to Bondholders 6,204 - -
Advances from City of Huntington Beach - - 1,363
Held for Others 6,198 - -
Long-Term Obligations
Long-Term Obligations Due Within One Year - - 5,444
Long-Term Obligations Due in More than One Year - - 33,709
Total Liabilities 14,700$ -$ 41,090$
NET POSITION
Restricted for Pension Benefits 58,870$
Held in Trust For Other Purposes (28,737)$
ADDITIONS
Pension Trust
Fund - Retirement
Supplemental
Fund
Huntington Beach
Redevelopment
Successor Agency
Private Purpose
Trust
Employer Contributions 4,148$ -$
Property Taxes - 8,047
Total Additions Before Investment Income 4,148 8,047
Investment Income:
Investment Income 2,694 371
Less Investment Expense (111) -
Net Investment Income 2,583 371
Total Additions 6,731 8,418
DEDUCTIONS
Benefits 4,767 -
Administrative Costs 191 -
Economic Development - 250
Interest and Fiscal Agency Expenses - 2,297
Total Deductions 4,958 2,547
Change in Net Position 1,773 5,871
Net Position - Beginning of Year 57,097 (34,608)
Net Position - End of Year 58,870$ (28,737)$
STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
CITY OF HUNTINGTON BEACH
STATEMENT OF FIDUCIARY FUND NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2019
(In Thousands)
CITY OF HUNTINGTON BEACH
34
THIS PAGE INTENTIONALLY LEFT BLANK
35
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
36
Footnote
Number Description Page
1. Summary of Significant Accounting Policies ................ 37-53
2. Cash and Investments ..................................................... 54-61
3. Other Receivables ............................................................ 62-63
4. Unearned Revenue ........................................................... 64
5. Unavailable Revenue ....................................................... 64
6. Retirement Plan – Normal ............................................... 65-74
7. Retirement Plan – Supplemental ................................... 75-82
8. Other Post Employment Benefits .................................. 83-89
9. Risk Management ..................................................... 90-91
10. Interfund Transactions ............................................................ 92-93
11. Long-Term Obligations ..................................................... 94-105
12. Capital Assets .................................................................... 105-107
13. Investment in Joint Ventures ........................................... 107
14. Successor Agency Trust for Assets of the Former
Redevelopment Agency of the City of Huntington
Beach ........................................................................ 108-115
15. Commitments and Contingencies .................................. 116-120
16. Other Information ............................................................. 120
17. Subsequent Events .......................................................... 120-121
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
37
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Reporting Entity
The City of Huntington Beach is the primary government. It was incorporated in
1909 as 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) or
presented as a fiduciary trust fund with the primary government for financial
reporting purposes. The criteria used in determining the scope of the reporting
entity are based on the provisions of GASB Statement 14, The Financial Reporting
Entity, as amended by GASB Statement 39, Determining Whether Certain
Organizations Are Component Units, and GASB Statement 61, The Financial
Reporting Entity: Omnibus an amendment of GASB Statements No. 14 and No. 34.
A legally separate, tax exempt organization should be reported as a blended
component unit of the City if all of the following criteria are met:
1. The governing board is substantively the same as the primary government and
there is a financial benefit or burden relationship between the primary
government and the component unit;
2. The component unit provides services entirely, or almost entirely, to the primary
government or otherwise exclusively, or almost exclusively, benefits the primary
government even though it does not provide services directly to it; and
3. The component unit’s total debt outstanding, including leases, is expected to be
repaid entirely or almost entirely with the resources of the primary government.
Based on the application of the criteria listed above, the following component units
have been included.
Huntington Beach Housing Authority
The Housing Authority (the Authority) was established in March 2011 pursuant to
Housing Authority Laws of California to provide rental assistance programs to low-
income families and senior citizens, and to operate a Housing Rehabilitation Loan
Program and other approved programs. The Authority is governed by a commission
of seven members comprised of the City Council, which appoints management and
has full accountability for the Authority's fiscal affairs. The Authority's financial data
and transactions are included within the capital projects Low and Moderate Income
Housing Asset Fund (LMIHAF). On January 9, 2012, the City adopted a resolution
designating the Housing Authority of the City of Huntington Beach to serve as the
Housing Successor Agency. The Housing Successor Agency's financial data and
transactions are included within the LMIHAF Capital Projects Fund. There is no
separate Component Unit Financial Report (CUFR) prepared for the Authority.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
38
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 the former
Redevelopment Agency. The Public Financing Authority’s governing body is the
City Council, which also adopts its annual budget. The Public Financing Authority
is financially dependent on the City. There are no separately issued financial
statements available for the Public Financing Authority.
The City of Huntington Beach Supplemental Retirement Plan and Trust
(Supplemental Retirement Plan and Trust) – The Trust was formed to provide a
supplemental retirement plan for all employees hired prior to 1997 (exact dates
differed for various associations). The governing board of the Supplemental
Retirement Plan consists of the City Treasurer, Chief Financial Officer, and the City
Manager (or designee). The Retirement Board is responsible for supervising all
investments, resolving benefit disputes, and ensuring that contributions are made
in order to pay the required benefits. There are no separate financial statements
for this plan and trust.
b. Government-wide Financial Statements
The government-wide financial statements include a Statement of Net Position and
a Statement of Activities. 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, deferred inflows/outflows of
resources, and liabilities, including capital assets, as well as infrastructure assets,
and long-term liabilities, are included in the accompanying Statement of Net
Position. The Statement of Activities presents changes in Net Position. 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.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
39
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Statement of Activities demonstrates the degree to which the direct expenses
of a given function or segment is offset by program revenues. Direct expenses are
those that are clearly identifiable with a specific function or segment. Indirect
expenses are allocated to the various functions based on a proportionate use of
services. The types of transactions reported as program revenues for the City are
reported in three categories: 1) charges for current services; 2) operating grants
and contributions; and, 3) capital grants and contributions. Taxes and other items
not properly included among program revenues are reported as general revenues.
When both restricted and unrestricted resources are available for use, it is the
government’s policy to use restricted resources first, then unrestricted resources as
they are needed.
Financial Statement Classification
In the government-wide financial statements, net position is classified in the
following categories:
Net Investment in Capital Assets – This category groups all capital assets,
including infrastructure, into one component of net position. Accumulated
depreciation and the outstanding balances of debt that are attributable to the
acquisition, construction, or improvement of these assets reduce this category.
Restricted Net Position – 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. The
government-wide Statement of Net Position reports $66,089,000 of governmental
activities restricted net position, of which $42,556,000 is restricted by enabling
legislation. The government-wide Statement of Net Position reports $21,153,000
of business-type activities restricted net position, of which all is restricted by
enabling legislation. This category presents restrictions placed on the categories
of Capital Projects, Debt Service, and Specific Projects and Programs.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
40
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Unrestricted Net Position – This category represents the net position of the City,
not restricted for any project or other purpose. The government-wide Statement of
Net Position reports a deficit unrestricted net position of $251,022,000 of
governmental activities unrestricted net position, which is largely a result of the
recent implementation of GASB Statement Nos. 68 and 75 that requires the City to
report Net Pension Liabilities and Net Other Post-Employment Benefits (OPEB)
Liability. The City’s Net Pension Liability at June 30, 2019 is $420,993,000 and Net
OPEB Liability is $6,609,000, respectively, of which $394,422,000 and $5,906,000,
respectively, is payable from Governmental Activities. The government-wide
Statement of Net Position reports $36,747,000 of business-type activities
unrestricted net position.
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.
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, current liabilities, and deferred inflows 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 the 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, use of money and property, intergovernmental revenues,
charges for current services, and other taxes. Expenditures are recorded in the
accounting period in which the related fund liability is incurred. However, debt
service expenditures as well as expenditures related to compensated absences and
claims are recorded only when payment is due.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
41
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Governmental Funds Financial Statements
Governmental Funds 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. Accompanying schedules
are presented to reconcile and explain the differences in fund balances and
changes in fund balances as presented in these statements to the net position and
changes in net position presented in the government-wide financial statements.
The City presents all major funds that meet those qualifications.
The City’s Governmental Fund Balances are comprised of the following
components:
Nonspendable fund balance includes amounts that are not in spendable form
and typically includes inventories, prepaid items, and other items that by
definition cannot be appropriated.
The restricted fund balance category includes amounts that can be spent only
for the specific purposes stipulated by constitution, external resource providers,
or through enabling legislation.
The committed fund balance classification includes amounts that can be used
only for the specific purposes determined by a formal action of the City Council.
The City Council has authority to establish, modify, or rescind a fund balance
commitment by formal action as specified by the City’s Fund Balance Policy.
Commitments to fund balance are made through adoption of a resolution by City
Council.
Amounts in the assigned fund balance classification are intended to be used by
the City for specific purposes but do not meet the criteria to be classified as
restricted or committed. The City Manager or designee has the authority to
establish, modify, or rescind a fund balance assignment as specified by the
City’s Fund Balance Policy.
Unassigned fund balance is the residual classification for the City’s General
Fund and includes all spendable amounts not contained in the other
classifications. Unassigned fund balance in other governmental funds is limited
to any negative residual fund balance after fund balance has been classified as
restricted, committed, or assigned.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
42
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In the government-wide statements, the City considers restricted funds to be spent
first then unrestricted amounts when expenditures are incurred for purposes for
which both restricted and unrestricted fund balance is available. In the
governmental fund statements, when expenditures are incurred, the City uses the
most restrictive funds first. The City would use the appropriate funds in the following
order: committed, assigned, and lastly unassigned amounts.
The City establishes encumbrances to record the amount of purchase orders,
contracts, and other obligations, which have not yet been fulfilled, cancelled, or
discharged. Encumbrances outstanding at year-end are recorded as part of
restricted or assigned fund balance.
Encumbrances outstanding as of June 30, 2019, by major fund (in thousands):
Economic Uncertainties Reserve
The City Council established an Economic Uncertainties Reserve in the General
Fund through a resolution with a goal to commit the value of two months of the
General Fund expenditure adopted budget amount. Appropriations from the
Economic Uncertainties Reserve commitments can only be made by formal City
Council action. Generally, appropriations and access to these funds will be reserved
for emergency situations. Examples of such emergencies include, but are not
limited to:
An unplanned, major event such as catastrophic disaster requiring expenditures
over 5% of the General Fund adopted budget;
Budgeted revenue in excess of $1 million taken by another government entity;
Drop in projected/actual revenue of more than 5% of the General Fund adopted
revenue budget; and,
Should the Economic Uncertainties Reserve be used, and its level falls below
the minimum amount of two months of General Fund expenditures adopted
budget, the goal is to replenish the fund within three fiscal years.
General Fund 6,286$
Grants Special Revenue 4,276
LMIHAF Capital Projects 45
Other Governmental Funds 16,317
Total Encumbrance All Funds 26,924$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
43
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Proprietary Fund Financial Statements
The City’s enterprise and internal service funds are proprietary funds. Proprietary
Fund Financial Statements include a Statement of Net Position, a Statement of
Revenues, Expenses, and Changes in Fund Net Position, and a Statement of Cash
Flows for each major proprietary fund.
Proprietary funds are accounted for using the "economic resources" measurement
focus and the accrual basis of accounting. Accordingly, all assets, deferred
inflows/outflows, and liabilities (whether current or non-current) are included on the
Statement of Net Position. The Statement of Revenues, Expenses, and Changes
in Fund Net Position present increases (revenues) and decreases (expenses) in
total Net Position. 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.
The internal service funds, which provide services to the other funds of the City, are
presented in a single column in the proprietary funds financial statements. Because
the principal users of the internal services funds are the City’s governmental
activities, the assets and liabilities of the internal service funds are consolidated into
the governmental activities column of the government-wide Statement of Net
Position. The costs of the internal service fund services are spread to the
appropriate function or program on the government-wide Statement of Activities and
the revenues and expenses within the internal service funds are eliminated from the
government-wide financial statements to avoid any doubling effect of these
revenues are expenses.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
44
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fiduciary Funds Financial Statements
Fiduciary Funds Financial Statements include a Statement of Net Position and a
Statement of Changes in Net Position for Trust Funds. The City's fiduciary funds
include Agency and Trust Funds. Agency Funds are custodial in nature (assets
equal liabilities) and do not involve measurement of results of operations. The
agency funds are accounted for on the accrual basis of accounting. Trust Funds
present results of operations and include net position. The Retirement
Supplemental Trust Fund accounts for the activities of the supplemental retirement
plan for all employees hired prior to 1997, which accumulates resources for pension
benefits to qualified employees. Contributions are made to the Supplemental Plan
based on the City’s policy to fund the required contributions as determined by the
Plan’s actuary and are recognized when they are made. The Retiree Medical
Insurance Trust Fund accounts for the activities of the City’s Other Post-
Employment Benefits plans, which provide postemployment medical insurance to
retirees.
The Huntington Beach Redevelopment Successor Agency Private Purpose Trust
Fund accounts for the Successor Agency for the former Redevelopment Agency
pursuant to Assembly Bill X1 26. Fiduciary funds are not presented in the
government-wide financial statements because these funds do not represent net
position available to the City.
The City reports the following major funds:
Governmental Funds
General Fund – accounts for activity not required to be accounted for in another
fund.
Grants Special Revenue – accounts for grant revenues received from federal,
state, and local agencies restricted for related project expenditures.
LMIHAF Capital Projects – accounts for the activity related to the development of
affordable housing.
Proprietary Funds
Water Fund – used to account for water sales to customers.
Sewer Service Fund – accounts for user fees charged to residents and businesses
for sewer service.
Refuse Fund – used to account for activities related to refuse collection and
disposal.
Hazmat Service Fund – accounts for user fees charged for the City’s hazardous
waste material program.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
45
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The City’s fund structure also includes the following fund types:
Special Revenue Funds are used to account for and report the proceeds of specific
revenue sources that are restricted or committed to expenditure for specified
purposes other than debt service or capital projects.
Debt Service Funds are used to account for and report financial resources that are
restricted, committed, or assigned to expenditure for principal and interest.
Capital Projects Funds are used to account for and report financial resources that
are restricted, committed, or assigned to expenditure for capital outlays, including
the acquisition or construction of capital facilities and other capital assets.
Internal Service Funds
Self Insurance Workers’ Comp Fund – accounts for the City’s self insurance
workers’ compensation program in an internal service fund
Self Insurance General Liability Fund – accounts for the City’s self insurance
general liability program in an internal service fund.
Equipment Replacement Fund – accounts for the City’s equipment replacement
needs in an internal service fund.
Fiduciary Funds
Agency Funds – accounts for assets temporarily held by the City as trustee, agent,
or custodian. Agency funds are custodial in nature and do not involve measurement
of results of operations.
Pension Trust Fund – Retirement Supplemental Fund - accounts for the City’s
supplemental retirement plan.
Huntington Beach Redevelopment Successor Agency Private Purpose Trust
Fund – accounts for the Successor Agency of the former Redevelopment Agency
in accordance with the State’s Dissolution Act.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
46
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Cash and Investments
The City pools cash resources of its various funds to facilitate cash management.
Cash in excess of daily needs 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 month-end cash and investment balances. The City’s cash and
cash equivalents are considered to be cash on hand, demand deposits, and highly
liquid investments, such as money market funds, and any investment with a maturity
of 90 days or less at the time of purchase.
For financial reporting purposes, investments are adjusted to their fair value
whenever the difference between fair market value and the carrying amount is
material.
Changes in fair value that occur during the fiscal year are recognized as
investments income reported for that fiscal year. Investment income includes
interest earnings, changes in fair value and any gains or losses realized upon the
liquidation or sale of investments.
The City participates in the Local Agency Investment Fund (LAIF), an investment
pool managed by the State Treasurer of 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. In addition, these structured notes and asset-
backed securities are subject to interest rate risk as a result of changes in interest
rates. The City’s investment policy is further discussed in Note 2 on page 54.
The City pools all non-restricted cash for investment purchases and allocates
interest income to the funds based on month-end cash balances. Funds that have
restricted cash record interest income in the respective fund.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
47
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 and in the proprietary funds financial
statements. Capital assets have an acquisition cost of $50,000 or greater
($100,000 for infrastructure) and a useful life of one year 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 acquisition
value at the time received, or in the case of infrastructure assets, at City Council
acceptance date. Capital assets acquired through annexation are recorded at net
book value.
In the government-wide and proprietary funds financial statements, depreciation is
recorded on the straight-line method over the estimated useful life of the assets as
shown below and charged to the respective activity or fund. No depreciation is
recorded in the governmental funds of the fund financial statements.
Buildings 20 to 50 years
Machinery and Equipment 5 to 30 years
Infrastructure 50 Years
f. Unearned Revenue
In the government-wide and the fund-level financial statements, unearned revenues
are those where the asset recognition (availability criteria) has been met, but the
revenue recognition criteria have not been met.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
48
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a
separate section for deferred outflows of resources. This separate financial
statement element, deferred outflows of resources, represents a consumption of
net position that applies to future periods and so will not be recognized as an outflow
of resources (expense/expenditure) until then. The City reports deferred outflows
related to pensions and OPEB which are the result of the implementation of GASB
Statement Nos. 68 and 75.
In addition to liabilities, the statement of financial position will sometimes report a
separate section for deferred inflows of resources. This separate financial statement
element, deferred inflows of resources, represents an acquisition of net position
that applies to a future periods and so will not be recognized as an outflow of
resources (revenue) until that time. The City reported the following in this category:
1. Unavailable revenues (which include revenues, notes, and long-term
receivables) measured under the modified accrual basis of accounting reported
in governmental funds. These amounts are deferred and will be recognized as
an inflow of resources in the period that the amounts become available.
2. Changes in the net pension liability not included in pension expense.
h. Inventories
Proprietary fund inventories are valued at weighted-average cost and consist of
expendable supplies and repair parts. The cost of such inventories is recorded as
expenditures/expenses when consumed rather than when purchased.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
49
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. 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 activities and the City’s
governmental activities. 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 Position have been eliminated except those
representing balances between the governmental activities and the business-type
activities, which are presented as internal balances and eliminated in the total
primary government column.
Numerous transactions occur between funds of the City resulting in transfers and
amounts due to or from other funds. Amounts due to or from are the current (due
within one year) portion of monies that are to be paid or to be received from other
funds.
j. Long-Term Obligations
In the government-wide and proprietary funds financial statements, long-term
obligations are recorded as liabilities in the applicable governmental activities,
business-type activities, or proprietary fund-type statement of net position. Bond
premiums and discounts are deferred and amortized over the life of the debt. In the
governmental fund financial statements, bond discounts and premiums are
recognized as another financing source or use. Issuance costs are recorded as a
current year debt service expenditure.
k. Employee Compensated Absences
The City records the cost of all accumulated and unused leave time (vacation, sick,
and comp) as a liability when earned in the government-wide and proprietary funds
financial statements. In the governmental funds financial statements these
amounts are recorded as expenditures when due and payable.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
50
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
l. 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. City property tax revenues are
recognized when levied in the governmental funds to the extent that they result in
current receivables collectible within 60 days after year-end.
The County acts as a collection agent for property tax for all of the local
governmental units. Property taxes are normally collected twice per year. The
property tax calendar is as follows:
Lien Date, January 1 - Prior Fiscal Year
Levy Date, July 1 - Levy Fiscal Year
Due Date, First Installment - November 1
Due Date, Second Installment - February 1
Delinquent Date, First Installment - December 10
Delinquent Date, Second Installment - April 10
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
51
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
m. Redevelopment Property Tax Trust Funds
Under ABX1 26, revenues that were previously distributed to redevelopment
agencies (prior to their dissolution) in the form of property tax increment will no
longer be received. Instead, revenues are deposited by County Auditors into
Redevelopment Property Tax Trust Funds (RPTTF) created in the County Treasury
for each Successor Agency. The County Auditor administers the RPTTF and
disburses twice annually from this fund pass-through payments to affected taxing
entities, an amount equal to the total of obligation payments that are required to be
paid from tax increment as denoted on the Recognized Obligation Payment
Schedules (ROPS) to Recognized Obligation Retirement Funds (RORF)
established in the treasury of the Successor Agencies, and various allowed
administrative fees and allowances. Any remaining balance is then distributed by
the County Auditor back to affected taxing entities under a prescribed method that
accounts for pass-through payments.
The calendar for distribution of RPTTF funds is as follows:
Annual ROPS submission due to Department of Finance, February 1
Distribution of RPTTF to Successor Agencies for the July-December ROPS
period, June 1
Distribution of RPTTF to Successor Agencies for the January-June ROPS
period, January 2
n. Cash Flow Statements
For purposes of the Statement of Cash Flows, the Proprietary Funds consider all
cash and investments to be cash equivalents, as these funds participate in the
citywide cash and investment pool.
o. Estimates
The accompanying financial statements require management to make estimates
and assumptions that effect certain reported amounts and disclosures. Actual
results could differ from those estimates.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
52
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
p. Pensions and OPEB
For purposes of measuring the net pension liability, net OPEB liability, related
deferred outflows of resources and deferred inflows of resources, pension/OPEB
expense, information about the fiduciary net position of the Plan and additions
to/deductions from the Plan’s fiduciary net position have been determined on the
same basis as they are reported by the CalPERS’ Financial Office and the City’s
Defined Benefit Pension Plan. For this purpose, benefit payments (including
refunds of employee contributions) are recognized when currently due and payable
in accordance with the benefit terms. Investments are reported at fair value.
GASB Statement Nos. 68 and 75 require reported results to pertain to liability and
asset information within certain defined timeframes. For this report, the following
timeframes are used.
Supplemental
Employee
Retirement Plan
CalPERS
Pension Plans
Other
Post-Employment
Benefit Plan
Valuation Date (VD) September 30, 2017 June 30, 2017 June 30, 2017
Measurement Date (MD) June 30, 2019 June 30, 2018 June 30, 2018
Measurement Period (MP) July 1, 2018 to
June 30, 2019
July 1, 2017 to
June 30, 2018
July 1, 2017 to
June 30, 2018
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
53
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
q. Fair Value Measurements
Certain assets and liabilities are required to be reported at fair value. The fair value
framework provides a hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3
measurements). The three levels of fair value hierarchy are described as follows:
Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for
identical assets or liabilities in active markets.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly and fair value is determined
through the use of models or other valuation methodologies including:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in markets that are
inactive;
Inputs other than quoted prices that are observable for the asset or liability;
Inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
Level 3 - Inputs to the valuation methodology are unobservable and significant to
the fair value measurement. These unobservable input reflect the City’s own
assumptions about the inputs market participants would use in pricing the asset or
liability (including assumptions about risk). These unobservable inputs are
developed based on the best information available in the circumstances and may
include the City’s own data.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
54
2. CASH AND INVESTMENTS
Investments Authorized by the California Government Code and the City’s
Investment Policy
The table below identifies the investment types that are authorized for the City by the
California Government Code (or the City’s investment policy, where more restrictive).
The table also identifies certain provisions of the California Government Code Section
53601 (or the City’s investment policy, where more restrictive) that address interest
rate risk and concentration of credit risk. This table does not address investments of
debt proceeds held by bond trustees that are governed by the provisions of debt
agreements of the City, rather than the general provisions of the California Government
Code or the City’s investment policy.
INVESTMENT TYPE MAXIMUM MATURITY
MAXIMUM SPECIFIED % OF
PORTFOLIO / MAXIMUM
MINIMUM RATING
REQUIREMENTS
Bankers' Acceptances 180 days
25% (up to 40% with
Council approval) / 10%A1/P1, "A" Rating
Negotiable Certificates of Deposit 3 years (Up to 5 years
with Council approval 30% / 10% A1/P1, "A" Rating
Commercial Paper 270 days 25% / 10% A1, "A" Rating
State Obligations‐‐ CA And Others 5 years None / 10% "A" Rating
City/Local Agency of CA Obligations 5 years None / 10% "A" Rating
U.S. Treasury Obligations 5 years None None
U.S. Government Agency Obligations 5 years None None
IBRD, IFC, IADB 5 years 10% "AA" Rating
Repurchase Agreements 3 Months None None
Reverse Repurchase Agreements 92 days
20% of the base value of
the portfolio. Requires City None
Medium‐Term Corporate Notes 5 years 30% / 10% "A" Rating
Non‐negotiable Certificates of Deposit 3 years None / 10% A1/P1, "A" Rating
Money Market Mutual Funds 60 days 15% / 10% "AAA" Rating
Local Agency Investment Fund (LAIF) N/A Up to $65,000,000 None
Joint Powers Authority N/A None / $20,000,000 None
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
55
2. CASH AND INVESTMENTS (Continued)
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the
debt agreements, rather than the general provisions of the California Government Code
or the City’s investment policy. The table below identifies the investment types that are
authorized for investments held by a bond trustee, but bond indentures do allow for
other forms of investments if approved in writing by the bond insurer that are not
identified below. The table also identifies certain provisions of these debt agreements
that address interest rate risk and concentration of credit risk.
Authorized Investment Type Maximum Maturity
Maximum
Percentage
of Portfolio
Maximum
Investment
in One Issuer
U.S. Treasury Securities 5 Years No Limit No Limit
Federal Agency Securities 5 Years No Limit No Limit
Bankers' Acceptances 180 Days No Limit No Limit
Time CDs 360 Days No Limit No Limit
Negotiable CDs 360 Days No Limit No Limit
LAIF N/A No Limit No Limit
Commercial Paper 270 Days No Limit No Limit
Municipal Bonds from Any State Life of Bond No Limit No Limit
Money Market Funds N/A No Limit No Limit
Investment Agreements Life of Bond No Limit No Limit
Corporate Bonds 5 Years No Limit No Limit
California Asset Mgmt. Program N/A No Limit No Limit
Forward Purchase/Delivery Agreements Life of Bond No Limit No Limit
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
56
2. CASH AND INVESTMENTS (Continued)
Investment of the Pension Trust Fund – Retirement Supplemental Fund
The Investment Policy Statement (IPS) of the Huntington Beach Supplemental Pension
Trust is established in accordance with the assignment of fiduciary duties by the State
of California Constitution and State and Local Government Codes. The purpose of the
Investment Policy is to set guidelines for a prudent investment-making process. The
policy was established with the assumption that the longer-term nature of the portfolio
provides for higher risk tolerance and short-term volatility, but more potential for capital
growth. The Investment Manager will be responsible for carrying out the activities
related to the portfolio in accordance with the IPS to meet the goals of an agreed upon
risk/return profile, and in accordance with the mix of parameters outlined below:
Authorized Investment Type Minimum
Allocation
Target Asset
Allocation
Maximum
Allocation
Cash or Equivalents 0% 0% 8%
Money Market 0% 0% 8%
Fixed Income 12% 20% 28%
Short‐Term Bond 0% 0% 8%
Long‐Term Bond 0% 0% 8%
High Yield Bond 0% 0% 8%
Inflation Protected Bond 0% 0% 8%
World Bond 0% 0% 8%
Domestic Equity 33% 41% 49%
Large Cap Equity (Value, Blend, Growth) 20% 28% 36%
Mid Cap Equity (Value, Blend, Growth) 0% 9% 17%
Small Cap Equity (Value, Blend, Growth) 0% 4% 12%
Foreign Equity 26% 34% 42%
Foreign Large Equity (Value, Blend, Growth) 19% 27% 35%
Foreign Sm / Mid Equity (Value, Growth) 0% 0% 8%
Emerging Markets 0% 7% 15%
Real Estate 0% 3% 11%
Real Estate 0% 3% 11%
Commodities 0% 2% 10%
Natural Resources 0% 2% 10%
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
57
2. CASH AND INVESTMENTS (Continued)
At year-end, the City had the following deposits and investments (amounts in
thousands):
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect
the fair value of an investment. Generally, the longer the maturity of an investment, the
greater the sensitivity of its fair value is to changes in market interest rates. One of the
ways that the City manages its exposure to interest rate risk is by purchasing a
combination of shorter term and longer term investments and by timing cash flows from
maturities so that a portion of the portfolio is maturing or coming close to maturity evenly
over time as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City’s investments, including
investments held by bond trustees, to market interest rate fluctuations is provided by
the following table that shows the distribution of the City’s investments by maturity (in
thousands).
Primary Government:
Cash and Investments 268,234$
Cash and Investments with Fiscal Agent 5,973
Total Primary Government 274,207
Fiduciary Funds:
Cash and Investments 20,371
Cash and Investments with Fiscal Agent 64,827
Total Fiduciary Funds 85,198
Total Deposits and Investments 359,405$
INVESTMENTS: Fair Value Less than 1 1 to 3 3 to 5
More than
5 Total
US Treasuries 14,988$ 14,988$ -$ -$ - 14,988$
US Agency Securities* 127,674 7,994 84,742 34,938 - 127,674
Mutual Funds 58,094 58,094 - - - 58,094
Money Market Funds 1,836 1,836 - - - 1,836
Medium Term Notes - IADB 16,319 6,986 - 9,333 - 16,319
Corporate Bonds 54,954 15,969 25,671 13,314 - 54,954
Local Agency Investment Fund 62,359 62,359 - - - 62,359
California Asset Mgmt Program 2,802 2,802 - - - 2,802
Total Investments 339,026$ 171,028$ 110,413$ 57,585$ -$ 339,026
Total Deposits 20,379
Total Deposits and Investments 359,405$
* Security is callable, but classified above according to original maturity date
Investment Maturities (In Years)
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
58
2. CASH AND INVESTMENTS (Continued)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation
to the holder of the investment. This is measured by the assignment of a rating by a
nationally recognized statistical rating organization. Presented below are the minimum
ratings required by, where applicable, the California Government Code or the City’s
investment policy, or debt agreements, and the actual rating as of the year-end for each
investment type (in thousands):
Remaining as of Year End
INVESTMENTS: Minimum
Legal Rating Total AAA AA A Not Rated
US Treasuries N/A 14,988$ 14,988$ -$ -$ -$
US Agency Securities* N/A 127,674 127,674 - - -
Mutual Funds N/A 58,094 - - - 58,094
Money Market Funds AAA 1,836 1,836 - - -
Medium Term Notes - IADB AA 16,319 16,319 - - -
Corporate Bonds A 54,954 - 13,256 41,698 -
Local Agency Investment Fund N/A 62,359 - - - 62,359
California Asset Mgmt Program N/A 2,802 2,802 - - -
Total Investments 339,026$ 163,619$ 13,256$ 41,698$ 120,453$
Note: All US Agencies are rated AAA by Moody's and AA by S&P
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
59
2. CASH AND INVESTMENTS (Continued)
Concentration of Credit Risk
The City’s investment policy limits investments in any one issuer, except for U.S.
Treasury Securities, U.S. Government Agencies and the Local Agency Investment
Fund, to no more than 10% of the portfolio. In addition, no more than 50% can be
invested in a single security type or with a single financial institution and every security
type has a specific limit. This is in addition to the limits placed on investments by State
law. Investments in any one issuer (other than U.S. Treasury Securities, external
investment pools, or Money Market Funds) that represent 5% or more of the City’s total
investments are as follows (in thousands):
Fair Value
Issuer Investment Type Amount
Federal Home Loan Bank U.S. Government Sponsored
Enterprise Securities $37,703
Federal Home Loan Mortgage Corporation U.S. Government Sponsored
Enterprise Securities $51,773
Federal National Mortgage Association U.S. Government Sponsored
Enterprise Securities $28,143
Inter-American Development Bank IBRD, IFC, IADB $16,319
US Treasury Notes Obligations of the United $14,988
States Treasury
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
60
2. CASH AND INVESTMENTS (Continued)
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository
financial institution, a government will not be able to recover its deposits or will not be
able to recover collateral securities that are in the possession of an outside party. The
custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty (e.g., broker-dealer) to a transaction, a government will not be able to
recover the value of its investment or collateral securities that are in the possession of
another party. The California Government Code and the City’s investment policy do
not contain legal or policy requirements that would limit the exposure to custodial credit
risk for deposits or investments, other than the following provisions for deposits: The
California Government Code requires that a financial institution secure deposits made
by state or local governmental units by pledging securities in an undivided collateral
pool held by a depository regulated under state law (unless so waived by the
governmental unit). The market value of the pledged securities in the collateral pool
must equal at least 110 percent of the total amount deposited by the public agencies.
California law also allows financial institutions to secure City deposits by pledging first
trust deed mortgage notes having a value of 150 percent of the secured public deposits.
As of June 30, 2019, the City’s deposits with financial institutions were covered by FDIC
up to $250,000, and the remaining amounts were collateralized as described above.
None of the City’s investments were subject to custodial credit risk. Per the Investment
Policy’s statement, the City of Huntington Beach is the registered owner of all
investments in the portfolio.
Investment in State Investment Pool
The City is a voluntary participant in LAIF, which is regulated by California Government
Code Section 16429 under the oversight of the Treasurer of the State of California.
The fair value of the City’s investment in this pool is reported in the accompanying
financial statements at amounts based upon the City’s pro-rata share of the fair value
provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that
portfolio). The balance available for withdrawal is based on the accounting records
maintained by LAIF, which are recorded on an amortized cost basis. Currently, LAIF
does not have an investment rating.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
61
2. CASH AND INVESTMENTS (Continued)
Investment in California Asset Management Program Pool
The City is a voluntary participant in the California Asset Management Program
(CAMP). CAMP is an investment pool offered by the California Asset Management
Trust (the Trust). The Trust is a joint powers authority and public agency created by
the Declaration of Trust and established under the provisions of the California Joint
Exercise of Powers Act (California Government Code Sections 6500 et seq., or the
“Act”) for the purpose of exercising the common power of its Participants to invest
certain proceeds of debt issues and surplus funds. The Trust’s activities are directed
by a Board of Trustees, all of whom are employees of the California public agencies
which are participants in the Trust. The City reports investments in CAMP at the fair
value amounts provided by CAMP, which is the same as the value of the pool share.
The Pool is managed to maintain a dollar-weighted average portfolio maturity of 60
days or less and seeks to maintain a constant net asset value (NAV) per share of $1.00.
The Pool invests in obligations of the United States Government and its agencies, high-
quality, short-term debt obligations of U.S. companies and financial institutions. The
Pool is a permitted investment for all local agencies under California Government Code
Section 53601(p). CAMP is rated AAAm by Standard & Poor's.
Fair Value Measurement
The City categorizes its fair value investments within the fair value hierarchy
established by generally accepted accounting principles. The City has the following
recurring fair value measurements as of June 30, 2019 (in thousands):
INVESTMENTS: Level 1 Level 2 Level 3 Total
U.S. Treasuries $ - $ 14,988 $ - $ 14,988
U.S. Agency Securities - 127,674 - 127,674
Mutual Funds - 58,094 - 58,094
Medium Term Notes - IADB - 16,319 - 16,319
Corporate Bonds - 54,954 - 54,954
Total Investments $ - $ 272,029 $ - $ 272,029
Fair Value Hierarchy
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
62
3. OTHER RECEIVABLES
A summary of Other Receivables as of June 30, 2019 is as follows (in thousands):
a. Developer Loans
Loans made to developers to construct or rehabilitate certain facilities under
deferred loan agreements total $43,043,000 at year-end. These loans are allowed
until a future event occurs. Loans to the Low and Moderate Income Housing Asset
Fund total $25,093,000, loans made under the Home Program total $15,794,000,
and loans made under the Affordable Housing In-Lieu Program total $2,156,000.
Interest rates on these loans range from 0% to 6.5%. The allowance for
uncollectible developer loans is $43,043,000 due to the terms of the agreement to
forgive the balance of loans after a specified time period if all the conditions of loan
forgiveness are met.
Description Amount
Developer Loans Receivable 43,043$
Emerald Cove Loan Receivable 7,393
Housing Rehabilitation Loans Receivable 2,279
First Time Homebuyers Receivable 1,771
Emergency Medical Fee Receivable 1,735
CDBG Program Receivable 146
Infrastructure Fund 10
Other Grants Receivable 768
Other Receivable 6,452
Total Other Receivables 63,597$
Allowance for Uncollectible Developer Loans (43,043)
Net Other Receivables on Governmental Fund Financial Statements 20,554$
Other Receivables Reconciliation
Net Receivable on Government-wide Financial Statements 32,502$
Taxes Receivable on Governmental Fund Financial Statements (11,782)
Other Receivables on Internal Service Fund (166)
Net Other Receivables on Governmental Fund Financial Statements 20,554$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
63
3. OTHER RECEIVABLES (Continued)
b. Emerald Cove Loan
On June 15, 2010, the former Redevelopment Agency loaned Emerald Cove, LP
$8,000,000 to acquire and rehabilitate Emerald Cove Senior Apartments. The loan
has an interest rate of 3% and is to be repaid annually from residual receipts over
60 years. The loan was transferred to the Low and Moderate Income Housing Asset
Fund in fiscal year 2011-12. The loan balance as of June 30, 2019 is $7,393,000.
c. Housing Rehabilitation Loans
Loans made to qualified homeowners and landlords in the City of Huntington Beach
to rehabilitate certain single-family homes or multifamily rental housing under
deferred loan agreements total $2,279,000 at year-end. These loans are deferred
until a future event occurs. The interest rates on these loans range from 0% to 6%.
d. Deferred Loans – First Time Homebuyers and Down Payment Assistance
Loans made for down payment assistance of qualified first time homebuyers under
deferred loan agreements total $1,771,000 at year-end. These loans are deferred
until a future event occurs.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
64
4. UNEARNED REVENUE
Governmental and enterprise funds defer revenue recognition in connection with
resources that have been received as of year-end, but not yet earned (unearned
revenue). The amounts are as follows (in thousands):
5. UNAVAILABLE REVENUE
Certain revenues in governmental funds are considered unavailable revenue until
received. All revenues including property and sales tax are recognized in the year
earned or levied in the government-wide financial statements, but are recorded as
unavailable revenue in the fund financial statements to the extent they are not collected
within 60 days after year-end. The amounts are as follows (in thousands):
Deferred Loans to developers and qualified individuals for housing rehabilitation and to
first time homebuyers are discussed in Note 3.
General
Fund
Community Services Unearned Revenue (Classes) 1,840$
General Fund
Grants
Special
Revenue LMIHAF
Other
Governmental
Funds
Total
Unavailable
Revenue
Grants -$ 520$ -$ -$ 520$
Deferred Loans:
Emerald Cove - - 7,393 - 7,393
Housing Rehabilitation - 2,279 - - 2,279
First Time Homebuyers - - 1,771 - 1,771
Other Unavailable Revenue 1,759 - - 10 1,769
Total 1,759$ 2,799$ 9,164$ 10$ 13,732$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
65
6. RETIREMENT PLAN – NORMAL
a. Summary
Net Pension Liability
Net Pension Liability is reported in the accompanying statement of net position as
follows:
Deferred Outflows of Resources
Deferred Outflows of Resources are reported in the accompanying statement of net
position as follows:
Deferred Inflows of Resources
Deferred Inflows of Resources are reported in the accompanying statement of net
position as follows:
Net Pension
Liability
CalPERS Miscellaneous Plan 156,357$
CalPERS Safety Plan 258,045
Supplemental Plan (Note 7) 6,591
Total 420,993$
Deferred employer
Investment earnings Differences between pension contributions
less than Changes Expected and made after
expected earnings in assumptions Actual Experience measurement date Total
CalPERS Miscellaneous Plan 1,168$ 5,127$ -$ 14,819$ 21,114$
CalPERS Safety Plan 1,649 19,659 2,504 23,062 46,874
Total 2,817$ 24,786$ 2,504$ 37,881$ 67,988$
Investment earnings Differences between
less than Changes Expected and
expected earnings in assumptions Actual Experience Total
Miscellaneous Plan -$ 2,180$ 2,750$ 4,930$
Safety Plan - 2,669 5,271 7,940
Supplemental Plan (Note 7) 531 - 531
Total 531$ 4,849$ 8,021$ 13,401$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
66
6. RETIREMENT PLAN – NORMAL (Continued)
Pension Expense
Pension expenses are included in the accompanying financial statements as
follows:
b. Plan Description
Substantially all City employees working the equivalent of 1,000 hours per fiscal
year are eligible to participate in the Safety Plan and Miscellaneous Plan Agent
multiple-employer defined benefit plans administered by California Public
Employees Retirement System (CalPERS), which acts as a common investment
and administrative agent for its participating member employers. Benefit Provisions
under the Plans are established by State statutes within the Public Employee’s
Retirement Law. Following the passage of AB340, Public Employees’ Pension
Reform Act (PEPRA) by the California Legislature, employees hired on or after
January 1, 2013, who were not previously enrolled in the PERS system elsewhere,
or who have had a break in service of at least six months are required to be enrolled
in this retirement program which provides a benefit level that is lower than the
benefits provided for CalPERS employees that do not meet the PEPRA
qualifications previously described. CalPERS issues publicly available reports that
include a full description of the pension plans regarding benefit provisions,
assumptions and membership information that can be found on the CalPERS
website. Copies of the CalPERS annual financial report may be obtained from the
CalPERS Executive Office – 400 P Street, Sacramento, CA 95814.
Net Pension
Expense
Miscellaneous Plan 23,217$
Safety Plan 33,558
Supplemental Plan (Note 7) 1,219
Total 57,994$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
67
6. RETIREMENT PLAN – NORMAL (Continued)
Benefits Provided
CalPERS provides retirement and disability benefits, annual cost-of-living
adjustments, and death benefits to plan members and beneficiaries. Benefits are
based on years of credited service, equal to one year of full time employment.
Benefit provisions and all other requirements are established by State statute and
may be amended by city contracts with employee bargaining groups.
Participant is eligible for non-industrial disability retirement if becomes disabled and
has at least 5 years of credited service. There is no special age requirement. The
standard non-industrial disability retirement benefit is a monthly allowance equal to
1.8 percent of final compensation, multiplied by service.
Industrial disability benefits are not offered to miscellaneous employees. The City
provides industrial disability retirement benefit to safety employees. The industrial
disability retirement benefit is a monthly allowance equal to 50 percent of final
compensation.
An employee's beneficiary may receive the basic death benefit if the employee dies
while actively employed. The employee must be actively employed with the City to
be eligible for this benefit. An employee's survivor who is eligible for any other pre-
retirement death benefit may choose to receive that death benefit instead of this
basic death benefit. The basic death benefit is a lump sum in the amount of the
employee's accumulated contributions, where interest is currently credited at 7.5
percent per year, plus a lump sum in the amount of one month's salary for each
completed year of current service, up to a maximum of six months' salary. For
purposes of this benefit, one month's salary is defined as the member's average
monthly full-time rate of compensation during the 12 months preceding death.
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to
the retiree's designated survivor(s), or to the retiree's estate.
Benefit terms provide for annual cost-of-living adjustments to each employee’s
retirement allowance. Beginning the second calendar year after the year of
retirement, retirement and survivor allowances will be annually adjusted on a
compound basis by 2 percent.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
68
6. RETIREMENT PLAN – NORMAL (Continued)
The Plans’ provisions and benefits in effect at June 30, 2019 are summarized as
follows:
Classic PEPRA
Hire date Prior to January 1, 2013 January 1, 2013 and after
Benefit formula 2.5% @ 55 2% @ 62
Benefit vesting schedule 5 years of service 5 years of service
Benefit payments monthly for life monthly for life
Retirement age minimum 50 years minimum 52 years
Monthly benefits, as a % of eligible compensation
2.0% - 2.5%, 50 years - 63+
years, respectively
1.0% - 2.5%, 52 years - 67+
years, respectively
Required employee contribution rates 8.000% 6.250%
Required employer contribution rates
July 1, 2018 - June 30, 2019 32.179% 32.179%
Classic PEPRA
Hire date Prior to January 1, 2013 January 1, 2013 and after
Benefit formula 3% @ 50 2.7% @ 57
Benefit vesting schedule 5 years of service 5 years of service
Benefit payments monthly for life monthly for life
Retirement age minimum 50 years minimum 52 years
Monthly benefits, as a % of eligible compensation 3%, 50+ years
2.0% - 2.7%, 50 years - 57+
years, respectively
Required employee contribution rates 9.000% 11.000%
Required employer contribution rates
July 1, 2018 - June 30, 2019 51.009% 51.009%
Miscellaneous Agent Plans
Safety Agent Plans
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
69
6. RETIREMENT PLAN – NORMAL (Continued)
c. Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (“PERL”)
requires that the employer contribution rates for all public employers be determined
on an annual basis by the actuary and shall be effective on the July 1 following
notice of a change in the rate. The total plan contributions are determined through
CalPERS’ annual actuarial valuation process. The actuarially determined rate is the
estimated amount necessary to finance the costs of benefits earned by employees
during the year, with an additional amount to finance any unfunded accrued liability.
The employer is required to contribute the difference between the actuarially
determined rate and the contribution rate of employees. For the measurement
period ended June 30, 2018, miscellaneous participants under the Classic and
PEPRA plans are required to contribute 8% and 6.25% of their annual covered
salary, respectively. Safety participants under the Classic and PEPRA plans are
required to contribute 9% and 11.75% of their annual covered salary, respectively.
In addition, the City is required to make employer contributions at the actuarially
determined rates of 32.179% and 51.009% for the miscellaneous and safety plans,
respectively, for the period July 1, 2018 through June 30, 2019.
At June 30, 2017, the valuation date, the following employees were covered by the
benefit terms for each Plan:
For the year ended June 30, 2019, the contributions were:
Miscellaneous Safety
Active members 598 371
Transferred members 390 70
Terminated members 294 56
Retired members and beneficiaries 938 590
Aggregate
Miscellaneous Safety Total
Contributions - employer 14,819$ 23,062$ 37,881$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
70
6. RETIREMENT PLAN – NORMAL (Continued)
d. Net Pension Liability
The City’s net pension liability is measured as the total pension liability, less the
pension plan’s fiduciary net position. The net pension liability of the Plan is
measured as of June 30, 2018, using an annual actuarial valuation as of June 30,
2017 rolled forward to June 30, 2018 using standard update procedures. A
summary of principal assumptions and methods used to determine the net pension
liability is illustrated below:
Actuarial Assumptions – The total pension liabilities in the June 30, 2017 actuarial
valuation, rolled forward to June 30, 2018 using standard update procedures, were
determined using the following actuarial assumptions:
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
Actuarial Cost Method Entry Age Normal in accordance with the requirement of GASB Statement No. 68
Actuarial Assumptions:
Discount Rate
Inflation
Salary Increases
Investment Rate of Return
Mortality Rate Table*
Post Retirement Benefit Increase
*The mortality table used was developed based on CalPERS' specific data. The table includes 15 years of mortality improvements using Society of
Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report on the CalPERS
website.
7.15% Net of Pension Plan Investment and Administrative Expenses; includes
Inflation
Derived using CalPERS’ Membership Data for all Funds.
Contract COLA up to 2.0% until Purchasing Power Protection Allowance Floor on
Purchasing Power applies, 2.5% thereafter
7.15%
2.75%
Varies by Entry Age and Service
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
71
6. RETIREMENT PLAN – NORMAL (Continued)
Long-term Expected Rate of Return – The long-term expected rate of return on
pension plan investments was determined using a building-block method in which
expected future real rates of return (expected returns, net of pension plan investment
expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account
both short-term and long-term market return expectations as well as the expected
pension fund cash flows. Using historical returns of all of the funds’ asset classes,
expected compound (geometric) returns were calculated over the short-term (first 10
years) and the long-term (11+ years) using a building-block approach. Using the
expected nominal returns for both short-term and long-term, the present value of
benefits was calculated for each fund. The expected rate of return was set by
calculating the rounded single equivalent expected return that arrived at the same
present value of benefits for cash flows as the one calculated using both short-term
and long-term returns. The expected rate of return was then set equal to the single
equivalent rate calculated above and adjusted to account for assumed administrative
expenses.
The expected real rates of return by asset class are as follows:
Current Target Real Return Real Return
Allocation Years 1-10
2 Years 11+3
Global Equity 50.00% 4.80% 5.98%
Global Fixed Income 28.00% 1.00% 2.62%
Inflation Assets 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
1In the System's CAFR, Fixed Income is included in Global Debt Securities; Liquidity is included in Short-term
Investments; Inflation Assets are included in both Global Equity Securities and Global Debt Securities.
1An expected inflation of 2.5% used for this period
2An expected inflation of 3.0% used for this period.
Asset Class 1
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
72
6. RETIREMENT PLAN – NORMAL (Continued)
Discount Rate – The discount rate used to measure the total pension liability at
June 30, 2018 was 7.15 percent. The projection of cash flows used to determine the
discount rate assumed that contributions from plan members will be made at the
current member contribution rates and that contributions from employers will be
made at statutorily required rates, actuarially determined. Based on those
assumptions, the Plan’s fiduciary net position was projected to be available to make
all projected future benefit payments of current plan members. Therefore, the long-
term expected rate of return on plan investments was applied to all periods of
projected benefit payments to determine the total pension liability.
Subsequent Events – There were no subsequent events that would materially
affect the results presented in this disclosure.
e. Changes in the Net Pension Liability
The following table shows the changes in net pension liability recognized over the
measurement period:
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability
Balance at June 30, 2017 (Valuation Date) 557,090$ 393,812$ 163,278$
Changes in the year:
Service cost 8,314 - 8,314
Interest on the total pension liabilities 38,769 - 38,769
Changes of Assumptions (3,634) - (3,634)
Differences between expected and actual experience (2,042) - (2,042)
Benefit payments, including refunds of members contributions (26,685) (26,685) -
Plan to Plan Resource Movement - 1 (1)
Contributions - employer - 13,495 (13,495)
Contributions - employee - 3,649 (3,649)
Net investment income - 32,963 (32,963)
Administrative expenses - (614) 614
Other Miscellaneous Income/Expense - (1,166) 1,166
Net changes 14,722 21,643 (6,921)
Balance at June 30, 2018 (Measurement Date) 571,812$ 415,455$ 156,357$
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability
Balance at June 30, 2017 (Valuation Date) 729,281$ 472,474$ 256,807$
Changes in the year:
Service cost 13,509 - 13,509
Interest on the total pension liabilities 51,223 - 51,223
Changes of Assumptions (3,657) - (3,657)
Differences between expected and actual experience 2,584 - 2,584
Plan to Plan Resource Movement - (3) 3
Benefit payments, including refunds of members contributions (37,128) (37,128) -
Contributions - employer - 21,058 (21,058)
Contributions - employee - 4,164 (4,164)
Net investment income - 39,336 (39,336)
Administrative expenses - (736) 736
Other Miscellaneous Income/Expense - (1,398) 1,398
Net changes 26,531 25,293 1,238
Balance at June 30, 2018 (Measurement Date) 755,812$ 497,767$ 258,045$
Miscellaneous Plan
Safety Plan
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
73
6. RETIREMENT PLAN – NORMAL (Continued)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The
following presents the City’s net pension liability, calculated using the discount rate,
as well as what the City’s net pension liability would be if it were calculated using a
discount rate that is one percentage point lower or one percentage point higher than
the current rate:
Pension Plan Fiduciary Net Position – Detailed information about each pension
plan’s fiduciary net position is available in the separately issued CalPERS financial
reports.
Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions
For the measurement period ending June 30, 2018 (the measurement date), the
City incurred pension expense in the amounts of $23,217,000 and $33,558,000 for
the miscellaneous and safety plans, respectively.
The amortization period differs depending on the source of the gain or loss. The
difference between projected and actual earnings is amortized over 5-years straight
line. All other amounts are amortized straight-line over the average expected
remaining service lives of all members that are provided with benefits (active,
inactive and retired) as of the beginning of the measurement period.
The Expected Average Remaining Service Lifetime (“EARSL”) is calculated by
dividing the total future service years of active employees by the total number of
plan participants (active, inactive, and retired) in the risk pool. For the 2017-18
measurement period, the EARSL for each plan is as follows:
Miscellaneous Safety
Expected Average Remaining Service Lifetime 2.5 3.7
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
Miscellaneous Plan 231,013$ 156,357$ 94,649$
Safety Plan 358,176$ 258,045$ 175,612$
Aggregate Total 589,189$ 414,402$ 270,261$
Plan's Aggregate Net Pension Liability/(Asset)
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
74
6. RETIREMENT PLAN – NORMAL (Continued)
At June 30, 2019 the City reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
For the Miscellaneous Plan and Safety Plan, $14,819,000 and $23,062,000,
respectively, was reported as deferred outflows of resources related to pensions
resulting from City’s contributions subsequent to the measurement date will be
recognized as a reduction of the net pension liability in the year ended June 30,
2020. Other amounts reported as deferred outflows of resources and deferred
inflows of resources related to pensions will be recognized in pension expense as
follows:
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual earning on
pension plan investments 1,168$ -$
Changes in assumptions 5,127 (2,180)
Difference between expected and actual experience - (2,750)
Contributions made subsequent to the
measurement date 14,819 -
Total 21,114$ (4,930)$
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual earning on
pension plan investments 1,649$ -$
Changes in assumptions 19,659 (2,669)
Difference between expected and actual experience 2,504 (5,271)
Contributions made subsequent to the
measurement date 23,062 -
Total 46,874$ (7,940)$
Miscellaneous Plan
Safety Plan
Measurement Periods
Ended June 30,Miscellaneous Safety
2019 6,444$ 14,088$
2020 26 7,985
2021 (4,037) (4,981)
2022 (1,068) (1,220)
2023 - -
Thereafter - -
1,365$ 15,872$
Deferred Outflows/ (Inflows) of Resources
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
75
7. RETIREMENT PLAN – SUPPLEMENTAL
a. Plan Description and Benefits
The City administers a supplemental single-employer defined benefit retirement
plan (Supplemental Plan) for all employees hired prior to 1997 (exact dates are
different for various associations). The Plan is governed by a three-member
Supplemental Employee Retirement Plan and Trust Board consisting of the City
Treasurer, Director of Finance, and the City Manager, or his/her designee. The
Board has the authority, under the terms of the Trust agreement, to control and
manage the operation and administration of the Plan. Benefit provisions are
established and may be amended through negotiations between the City and
employee bargaining associations during each bargaining period, which are then
approved through resolutions of the City Council. In fiscal year 2008-09, the City
established the Supplemental Employee Retirement Plan and Trust, and
transferred $24,918,000 to an irrevocable trust from the prefunded amounts. The
plan and trust are reported as a pension trust fund in the City’s financial statements
on a full accrual basis.
The Supplemental Plan will pay the retiree an additional amount to his or her
CalPERS retirement benefit for life. In order to be eligible for the benefit, the retiree
must retire from the City. The amount that is computed as a factor of an employee’s
normal retirement allowance is computed at retirement and remains constant for his
or her life. This benefit is payable by the City for the duration of the life of the
member, and shall cease upon the employee’s death. As of September 30, 2017,
the date of the Plan’s most recent actuarial valuation, the average monthly benefit
received by inactive plan members and beneficiaries receiving benefits is $494.
Effective in 1998 (exact dates are different for various associations), new City
employees are ineligible to participate in the Supplemental Employee Retirement
Plan.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
76
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
Employees Covered: At June 30, 2019, the measurement date, the following
employees were covered by the benefit terms for the Plan:
b. Employer Contributions
The City’s policy is to make required contributions as determined by the
Supplemental Plan’s actuary. The required contributions were determined as part
of the September 30, 2015 actuarial valuation. The City is required to contribute
the actuarially determined rate of 2.7% of total payroll for all permanent employees
for the year ended June 30, 2019. There are no employee contributions required
for the plan. Survivor and termination benefits are not included in the plan.
Administrative costs of this plan are financed through investment earnings.
For the year ended June 30, 2019, the contributions were (in thousands):
Contributions - employer 4,962$
Inactive employees receiving benefits 738
Active employees 129
Inactive employees not receiving benefits -
Total 867
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
77
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
c. Investments
Investments of the Supplemental Plan are held separately from those of other City
funds by investment custodians. The Supplemental Employee Retirement Plan and
Trust Board is responsible for supervising all investments. Changes to the
Investment Policy require approval by the Board. The policy was reviewed at
updated by the Board during the year ended June 30, 2019. Please refer to Note
2 for a detailed description of the Supplemental Plan’s Investment Policy. The
major asset class allocation for the Supplemental Plan as of June 30, 2019 is listed
below:
Asset Class
Strategic
Allocation
Allocation as of
June 30, 2019
Long Term
Expected Rate
of Return
Fixed Income 20.00% 20.19% 1.55%
Equities 41.00% 74.49% 5.35%
Real Estate 3.00% 4.04% 0.00%
Commodities 2.00% 0.00% 0.00%
Cash and Equivalents 0.00% 1.28% 0.45%
Total 66.00% 100.00%
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
78
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
Quoted market prices have been used to value investments as of June 30, 2019.
These investments are held by the Trust or by an agent in the Trust’s name. A
portion of these investments is subject to credit risk (including custodial credit risk
and concentrations of credit risk), interest rate risk and/or foreign currency risk. The
Governmental Accounting Standards Board (GASB) Statement No. 40 requires the
disclosure of such risk. Please see below for a list of investments held in any one
organization that represents five percent or more of the Plan’s investment portfolio
at June 30, 2019:
All Supplemental Plan investments are reflected in the schedule included in Section
c of the Note, with the exception of amounts held in the City’s investment pool
account. The City maintains an investment pool account for City funds. Monthly
contributions for the Plan are held in the City’s investment pool account and are
used to pay recurring expenditures. Refer to Note 2 for a description of the City’s
investments.
For the year ended June 30, 2019, the annual money-weighted rate of return on the
Plan’s investments, net of pension plan investment expenses, was 4.79%. The
money-weighted rate of return expresses investment performance, net of
investment expenses, adjusted for the changing amounts actually invested.
d. Net Pension Liability
The City’s net pension liability is measured as the total pension liability, less the
pension plan’s fiduciary net position. The net pension liability of the Plan is
measured as of June 30, 2019, using an annual actuarial valuation as of
September 30, 2017 rolled forward to June 30, 2019 using standard update
procedures. A summary of principal assumptions and methods used to determine
the net pension liability is shown on the following page.
T Rowe Price Inst S C Stock 5.17%
T Rowe Price Mid Cap Equity Growth 5.22%
Vanguard Equity Income Fund Admiral Shares 8.97%
Harbor Capital Appreciation Inst 9.01%
Parnassus Core Equity Income Inst 9.28%
Ishare Core Msci Eafe ETF 9.71%
Concentration of Investments Equaling or Exceeding 5%
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
79
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
Actuarial Assumptions – The total pension liabilities in the September 30, 2017
actuarial valuations for the June 30, 2019 measurement date were determined
using the following actuarial assumptions:
There were no changes in assumptions, benefit terms or other inputs that affected
the measurement of the net pension liability. There were no changes between the
measurement date of the net pension liability and the reporting date.
e. Discount Rate & Sensitivity
The discount rate is used in the measurement of the Total Pension Liability. This
rate considers the ability of the fund to meet benefit obligations in the future. To
make this determination, employee contributions, benefit payments, expenses, and
investment returns are projected into the future. The Plan Net Position (assets) in
future years can then be determined and compared to its obligation to make benefit
payments in those years. As long as assets are projected to be on hand in a future
year, the assumed valuation discount is used. For this valuation, the discount rate
is 6.25%, based on the inflation assumption of 2.75% and a long-term asset
allocation of 70% equities and 30% fixed income. The geometric real rates of return
were assumed to be 5.35% for equities and 1.55% for fixed income. The long-term
expected rate of return is applied to all future projected benefit payments.
According to Paragraph 30 of Statement 68, the long-term discount rate should be
determined without reduction for pension plan administrative expense. An
investment return excluding administrative expenses would have been 6.25
percent.
The long-term expected rate of return on pension plan investments was determined
using a building-block method in which best-estimate ranges of expected future real
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
Actuarial Cost Method Entry Age Normal, Level Percentage of Payroll
Actuarial Assumptions:
Discount Rate 6.25%
Inflation 2.75%
Salary Increases CalPERS 1997-2011 Experience Study plus 3% aggregate increase
Investment Rate of Return 6.25% Net of Investment Expenses
Mortality Rate Table
Retirement, Disability, Withdrawal CalPERS 1997-2011 Experience Study plus 15% load on future service
retirement liability added to reflect recent benefits experienc e.
CalPERS 1997-2011 Experience Study, mortality projected fully
generational with Scale MP-2017
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
80
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
rates of return (expected returns, net of pension plan investment expense and
inflation) are developed for each major asset class.
In determining the long-term expected rate of return, both short-term and long-term
market return expectations were taken into account along with expected pension
fund cash flows. Such cash flows were developed assuming that both members and
employers will make their required contributions on time and as scheduled in all
future years. Using historical returns of all the funds’ asset classes, expected
compound (geometric) returns were calculated over the short-term (first 10 years)
and the long-term (11-60 years) using a building-block approach. Using the
expected nominal returns for both short-term and long-term, the present value of
benefits was calculated for each fund. The expected rate of return was set by
calculating the single equivalent expected return that arrived at the same present
value of benefits for cash flows as the one calculated using both short-term and
long-term returns. The expected rate of return was then set equivalent to the single
equivalent rate calculated above and rounded down to the nearest one quarter of
one percent.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
81
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
Changes in the Net Pension Liability
The following table shows the changes in net pension liability recognized over the
measurement period (in thousands):
Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The
following presents the City’s net pension liability, calculated using the discount rate,
as well as what the City’s net pension liability would be if it were calculated using a
discount rate that is one percentage point lower or one percentage point higher than
the current rate:
Total
Pension
Plan
Fiduciary
Net Pension
Liability
Balance at June 30, 2018 65,827$ 56,271$ 9,556$
Changes in the year:
Service cost 398 - 398
Interest on the total pension liabilities 3,990 - 3,990
Benefit payments, including refunds of members contributions (4,771) (4,771) -
Contributions - employer - 4,962 (4,962)
Net investment income - 2,582 (2,582)
Administrative expenses - (191) 191
Net changes (383) 2,582 (2,965)
Balance at June 30, 2019 65,444$ 58,853$ 6,591$
Supplemental Plan
Discount Rate - 1%
(5.25%)
Current Discount
Rate (6.25%)
Discount Rate + 1%
(7.25%)
13,124$ 6,591$ 1,019$
Plan's Aggregate Net Pension Liability/(Asset)
(in thousands)
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
82
7. RETIREMENT PLAN – SUPPLEMENTAL (Continued)
f. Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions
For the year ended June 30, 2019, the City recognized pension expense in the
amount of $1,219,000 for the Supplemental Plan.
At June 30, 2019, the City reported deferred inflows of resources related to the
supplemental pension plan from the following source (in thousands):
For the Supplemental Plan, $531,000 was reported as deferred inflows of resources
related to pensions which will be recognized in pension expense as follows (in
thousands):
Deferred Inflows
of Resources
Difference between projected and actual earnings on (531)$
pension plan investments
Deferred Inflows
Year Ended June 30,of Resources
2020 (639)$
2021 (349)
2022 270
2023 187
2024 -
Thereafter -
(531)$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
83
8. OTHER POST EMPLOYMENT BENEFITS
a. Plan Description
The City administers the following two other post employment benefit (OPEB) plans:
Postemployment Medical Insurance
The City agreed, via contract, with each employee association to provide
postemployment medical insurance to retirees. These Other Postemployment
Benefits (OPEB) are based on years of service and are available to all retirees who
meet all three of the following criteria:
At the time of retirement, the employee is employed by the City.
At the time of retirement, the employee has a minimum of ten years of service
credit or is granted a service connected disability retirement.
Following official separation from the City, CalPERS grants a retirement
allowance.
The City’s obligation to provide the benefits to a retiree ceases when either of the
following occurs:
During any period the retiree is eligible to receive health insurance at the
expense of another employer; and/or
The retiree becomes eligible to enroll automatically or voluntarily in Medicare.
The subsidy a retiree is entitled to receive is based on the retiree’s years of service
credit and is limited to $344 per month after 25 years of service. If a retiree dies,
the benefits that would be payable for his or her insurance are provided to the
spouse or family for 12 months. The retiree may use the subsidy for any of the
medical insurance plans that the City’s active employees may enroll in. Employees
hired on or after October 1, 2014 are not eligible for this benefit.
PEMHCA
The City provides an agent multiple-employer defined benefit healthcare plan to
retirees through CalPERS under the California Public Employees Medical and
Hospital Care Act (PEMHCA), commonly referred to as PERS Health. PEMHCA
provides health insurance through a variety of Health Maintenance Organization
(HMO) and Preferred Provider Organization (PPO) options. The PEMHCA benefits
are applied to all safety employee groups, based on retirement plan election. The
benefits continue to the surviving spouse for one year. The Huntington Beach
Firefighters’ Association (HBFA) joined PEMHCA in 2011. All other safety groups
(Fire Management Association (FMA), Marine Safety Management Association
(MSOA), Police Management Association (PMA), and Police Officers’ Association
POA) joined in 2004.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
84
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
Safety employees are eligible for PEMHCA benefits if they retire from the City on or
after age 50 with at least five years of service or disability, and are eligible for a
PERS pension.
As of the June 30, 2018 measurement date, the following current and former
employees were covered by the benefit terms under the plan:
b. Accounting and Funding
The City utilizes the California Employers’ Retiree Benefit Trust (CERBT), an agent
multiple-employer plan, for the postemployment medical insurance benefit.
Benefits paid from the CERBT were $773,000 for year ended June 30, 2019. The
assets of the CERBT are excluded from the accompanying financial statements
since they are in an irrevocable trust administered by CalPERS. Copies of
CalPERS’ annual financial report may be obtained from their executive office: 400
P Street, Sacramento, CA, 95814 or on their website: www.calpers.ca.gov. The
City’s policy is to make 100% of each year’s ARC, with an additional amount to
prefund benefits as determined annually by City Council in order to improve the
funded status of the plan.
For PEMHCA, the City selected the “unequal” method for the contribution. Under
this method, the City offered a lesser contribution for retirees than for active
employees. The City paid the PEMHCA minimum for actives ($128 in 2017, $133
in 2018, and $136 in 2019). Beginning in 2008, Assembly Bill 2544 changed the
computation for annual increases to annuitant health care under the unequal
method. Under the new provisions, the City increases annuitant health care
contributions equal to an amount not less than five percent of the active employee
contributions, multiplied by the number of years in PEMHCA. The City’s contribution
for retirees is $54.40 per employee for the Huntington Beach Firefighter’s
Association (HBFA) and $102 for all other Safety groups in 2019. The annual
increase in minimum PEMHCA contribution to CalPERS will continue until the time
that the City contribution for retirees equals the City contribution paid for active
employees.
Postemployment
Medical Insurance PEMHCA
Retirees and beneficiares receiving benefits 247 171
Inactive employees not yet receiving benefits 4 -
Active Plan Members 720 375
Total Plan Participants 971 546
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
85
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
The City’s net OPEB liability was measured as of June 30, 2018 and the total OPEB
liability used to calculate the net OPEB liability was determined by an actuarial
valuation dated June 30, 2017, based on the following actuarial methods and
assumptions:
Actuarial Cost Method – Entry Age Normal
Discount rate – 5.50%
Projected salary increases for covered employees due to inflation – aggregate
increases of 3.00% per annum
Investment Rate of Return – 5.50%, assuming actuarially determined
contributions funded into CERBT Investment Strategy 3
Mortality Rate1 – Derived using CalPERS’ membership data for all funds
Pre-Retirement Turnover2 – Derived using CalPERS’ membership data for all
funds
PEMCHA minimum increases for actives - $136 in 2019, with 4.25% annual
increases thereafter
Healthcare Trend Rate – The medical trend rate represents the long-term
expected growth of medical benefits paid by the plan, due to non-age-related
factors such as general medical inflation, utilization, new technology, and the
like. The following table sets for the inflation trend assumption used for the
valuation:
1 Pre-retirement mortality information was derived from data collected during 1997 to 2011 CalPERS Experience Study
dated January 2014 and post-retirement mortality information was derived from the 2007 to 2011 CalPERS Experience
Study. The Experience Study Reports may be accessed on the CalPERS website www.calpers.ca.gov under Forms
and Publications. Post-retirement mortality rates include mortality projected fully generational with Scale MP-17.
2. The pre-retirement turnover information was developed based on CalPERS’ specific data. For more details, please
refer to the 2007 to 2011 Experience Study Report. The Experience Study Report may be accessed on the CalPERS
website www.calpers.ca.gov under Forms and Publications.
Calendar Calendar
Year Non-Medicare Medicare Year Non-Medicare Medicare
2019 7.50% 6.50% 2028 5.60% 5.00%
2020 7.50% 6.50% 2029 5.40% 4.85%
2021 7.25% 6.30% 2030 5.20% 4.70%
2022 7.00% 6.10% 2031-35 5.05% 4.60%
2023 6.75% 5.90% 2036-45 4.90% 4.50%
2024 6.50% 5.70% 2046-55 4.75% 4.45%
2025 6.25% 5.50% 2056-65 4.60% 4.40%
2026 6.00% 5.30% 2066-75 4.30% 4.20%
2027 5.80% 5.15% 2076+ 4.00% 4.00%
Annual Rate Annual Rate
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
86
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
Long-Term Expected Rate of Return
The long-term expected rate of return on OPEB plan investments was determined using a
building-block method in which expected future real rates of return (expected returns, net
of OPEB plan investment expense and inflation) are developed for each major asset class.
These ranges are combined to produce the long-term expected rate of return by weighting
the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation.
The target allocation and best estimates of arithmetic real rates of return for each major
asset class are summarized in the following table:
Discount Rate
The discount rate used to measure the total OPEB liability was 5.50 percent. The
projection of cash flows used to determine the discount rate assumed that City
contributions will be made at rates equal to the actuarially determined contribution
rates. Based on those assumptions, the OPEB plan’s fiduciary net position was
projected to be available to make all projected OPEB payments for current active
and inactive employees and beneficiaries. Therefore, the long-term expected rate
of return on OPEB plan investments was applied to all periods of projected benefit
payments to determine the total OPEB liability.
Changes Subsequent to the June 30, 2018 Measurement Date
All assets were transferred from CERBT Strategy 3 to Strategy 2 in March 2019.
The long-term expected investment return on Strategy 2 is 6.25%.
Asset Class
Target
Allocation
Long-Term
Expected Real
Rate of Return
Global Equity 24% 4.82%
Fixed Income 39% 1.47%
Treasury Inflation-Protected Securities ("TIPS") 26% 1.29%
Commodities 3% 0.84%
Real Estate Investment Trusts ("REITS") 8% 3.76%
Total 100%
* Long-term expected rate of return is 5.50%
CERBT Strategy 3
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
87
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
The changes in the net OPEB Liability for the plan are as follows (in thousands):
Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
The following presents the net OPEB liability of the City if it were calculated using a
discount rate that is one percentage point lower or one percentage point higher than
the current rate, for the measurement period ended June 30, 2018 (in thousands):
Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB Liability
/ (Asset)
(a) (b) (c) = (a) - (b)
Balance at June 30, 2018 32,125$ 23,322$ 8,803$
(Measurement Date June 30, 2017)
Changes recognized for the measurement period:
Service Cost 1,205 - 1,205
Interest 1,787 - 1,787
Contributions - Employer - 4,191 (4,191)
Net Investment Income - 1,126 (1,126)
Benefit Payments (1,683) (1,683) -
Administrative Expenses - (131) 131
Net Changes 1,309 3,503 (2,194)
Balance at June 30, 2019 33,434$ 26,825$ 6,609$
(Measurement Date June 30, 2018)
Increase / (Decrease)
1% Decrease Current Discount Rate 1% Increase
(4.50%) (5.50%) (6.50%)
Net OPEB Liability 10,926$ 6,609$ 3,064$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
88
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
Sensitivity of the Net OPEB Liability to Changes in the Health Care Cost Trend
Rates
The following presents the net OPEB liability of the City if it were calculated using health
care cost trend rates that are one percentage point lower or one percentage point
higher than the current rate, for the measurement period ended June 30, 2018 (in
thousands):
OPEB Plan Fiduciary Net Position
The CERBT issues a publicly available financial report that includes financial
statements and required supplementary information. That report may be obtained from
the California Public Employees’ Retirement System, CERBT, P.O. Box 942703,
Sacramento, CA 94429-2703.
Recognition of Deferred Outflows and Deferred Inflows of Resources
Gains and losses related to changes in total OPEB liability and fiduciary net position
are recognized in OPEB expense systematically over time.
Amount are first recognized in OPEB expense for the year the gain or loss occurs. The
remaining amounts are categorized as deferred outflows and deferred inflows of
resources related to OPEB and are to be recognized in future OPEB expense.
The recognition period differs depending on the source of the gain or loss:
1% Decrease Current Discount Rate 1% Increase
(6.50% Non-Medicare /
5.50% Medicare,
decreasing to 3.0%
Non-Medicare /
3.0% Medicare)
(7.50% Non-Medicare /
6.50% Medicare,
decreasing to 4.0%
Non-Medicare /
4.0% Medicare)
(8.50% Non-Medicare /
7.50% Medicare,
decreasing to 5.0%
Non-Medicare /
5.0% Medicare)
Net OPEB Liability 2,797$ 6,609$ 11,451$
5 Years
Net difference between projected and actual
earnings on OPEB plan investments
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
89
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
As of June 30, 2019, the City recognized OPEB expense of $1,928,000. As of June
30, 2019, the City reported deferred outflows of resources related to OPEB from the
following sources:
The $2,270,000 reported as deferred outflows of resources related to contributions
subsequent to the June 30, 2018 measurement date will be recognized as a reduction
of the net OPEB liability during the fiscal year ending June 30, 2020. Other amounts
reported as deferred outflows of resources related to OPEB will be recognized as
expense as follows (in thousands):
Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB Contributions subsequent to the measurement date 2,270$ -$
Net difference between projected and actual earnings on
OPEB Plan Investments 447 -
2,717$ -$
Measurement Periods
Ended June 30,
2019 135$
2020 135
2021 137
2022 40
2023 -
Thereafter -
447$
Deferred
Outflows/ (Inflows)
of Resources
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
90
9. RISK MANAGEMENT
The City is exposed to various risks of losses related to torts; theft of, damage to and
destruction of assets; errors and omissions; injuries to employees; and natural
disasters. The City records the liability claims as expenditures in the Self Insurance
General Liability Internal Service Fund and the workers’ compensation claims in the
Self Insurance Workers’ Compensation Internal Service Fund.
BICEP was created in 1988 by a joint powers agreement between the City of
Huntington Beach and four other local entities including Oxnard, Ventura, Santa Ana,
and West Covina, for the purpose of providing joint insurance coverage and related risk
management services for member cities. BICEP allows member entities to finance a
claims payment pool for certain liability claims in excess of $1,000,000 to a maximum
coverage limit of $27,000,000 for claims incurred through June 30, 2015, and
$24,000,000 thereafter. BICEP’s governing board has one representative from each
city, typically a Risk Manager, or a designee. 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. Claims that exceed
the maximum limit are covered by the City’s Self Insurance General Liability Internal
Service Fund. There were no liability claims in the last three years that exceeded the
coverage limit.
Effective July 1, 2019, the member agencies of BICEP agreed to dissolve the Joint
Powers Authority. BICEP shall continue to exist for the purpose of disposing of all
claims, the distribution of assets, and any other functions necessary to conclude the
affairs of BICEP as provided in the Bylaws of the Authority. Upon dissolution of BICEP,
the City purchased liability insurance in the open marketplace, which provides
insurance for claims costs exceeding the City’s self-insured retention of $1,000,000.
The maximum coverage limit is $30,000,000, which is inclusive of the self-insured
retention. Claims that exceed the maximum limit of liability are covered by the City’s
Self-Insurance General Liability Internal Service Fund.
Liability Claims
Claims up to $1,000,000 are paid from the City’s Self Insurance General Liability
Internal Service Fund. Payments for claims from $1,000,000 to the maximum limit
discussed above are covered by the excess liability coverage purchased by the City.
Any claims exceeding the maximum limit are covered by the Self Insurance General
Liability Internal Service Fund. The liability for these claims is recorded as part of long-
term obligations in the Self Insurance General Liability Fund and government-wide
financial statements. Liabilities include amounts incurred, but not reported.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
91
9. RISK MANAGEMENT (Continued)
Workers’ Compensation Claims
Workers’ compensation claims of up to $1,000,000 per claim are paid from the Self
Insured Workers’ Comp Internal Service Fund. Excess workers’ compensation
coverage is purchased through the CSAC-Excess Insurance Authority. Payments for
claims from $1,000,000 to statutory limits are covered by CSAC-Excess Insurance
Authority.
The Self Insurance Workers’ Comp Internal Service Fund has a $12.2 million deficit at
year-end at the 55 percent confidence level. The City has established plans to help
reduce the deficit in this fund. This will be accomplished by additional transfers from
the General Fund, Proprietary funds, and other governmental funds in which
employees are charged over the next nine years.
Claims activity and liabilities relating to the current and prior year are (in thousands):
Workers'
Compensation
General
Liability Total
Balance September 30, 2017 27,493$ 11,893$ 39,386$
Additions 6,322 2,559 8,881
Reductions (5,004) (2,981) (7,985)
Net Increase (Decrease)1,318 (422) 896
Balance June 30, 2018 28,811 11,471 40,282
Additions 4,855 2,222 7,077
Reductions (7,036) (5,297) (12,333)
Net Increase (Decrease)(2,181) (3,075) (5,256)
Balance June 30, 2019 26,630$ 8,396$ 35,026$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
92
10. INTERFUND TRANSACTIONS
a. Due To/From Other Funds
The amounts at year-end were (in thousands):
These outstanding balances result mainly from year-end accruals for payments for
goods and services.
b. Advances to/from Other Funds
The amounts at year-end were (in thousands):
There is a $1,363,000 advance from the LMIHAF Capital Projects Fund to the
Redevelopment Agency Private Purpose Trust Fund as of June 30, 2019 for Main
Pier property acquisitions prior to the dissolution of the Redevelopment Agency on
February 1, 2012.
Redevelopment
Agency Private
Purpose Trust
Advances from (Receivable):
Major Governmental Funds
LMIHAF Capital Projects 1,363$
Advances to
(Payable):
Lease Capital Project
Fund
Due from (Receivable):
Other Governmental Funds
Infrastructure Fund 30$
Total Due to (Payable):30$
Other Governmental
Funds
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
93
10. INTERFUND TRANSACTIONS (Continued)
c. Transfers In/Out
The amounts at year-end were (in thousands):
The following is a summary of the significant transfers:
$10,746,000 was transferred from the General Fund to Other Governmental
Funds for debt service payments of $4,637,000, aging technology system
upgrades of $850,000, and infrastructure related projects including road repairs,
police facility repairs and enhancement, equipment, and other capital
improvement projects of $5,259,000.
$50,000 was transferred from the General Fund to the Refuse Enterprise Fund
to fund the senior citizen rate reduction on refuse charges.
$405,000 was transferred from the LMIHAF Fund to Other Governmental Funds
for debt service payments.
$26,000 was transferred from Other Governmental Funds to the LMIHAF Fund
for loan repayments in the prior fiscal year.
$13,000 was transferred from the Hazmat Service Enterprise Fund to the
General Fund to cover administrative and overhead expenditures.
Transfers In General Fund
LMIHAF
Capital
Projects
Other
Governmental
Funds
Total
Governmental
Funds
Hazmat
Service
Fund
Total
Transfers In
General Fund -$ -$ -$ -$ 13$ 13$
LMIHAF Capital Projects - - 26 26 - 26
Other Governmental Funds 10,746 405 - 11,151 - 11,151
Total Governmental Funds 10,746 405 26 11,177 13 11,190
Refuse Fund 50 - - 50 - 50
Total Enterprise Funds 50 - - 50 - 50
Total Transfers Out 10,796$ 405$ 26$ 11,227$ 13$ 11,240$
Transfers Out
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
94
11. LONG-TERM OBLIGATIONS
Below is a schedule of changes in long-term governmental obligations for the year (in
thousands):
Governmental Activities:
June 30,
2018 Additions Retirements
June 30,
2019
Accrued
Interest
Due Within
One Year
Public Financing Authority:
2010(a) Lease Revenue Bonds 9,030$ -$ (795)$ 8,235$ 135$ 825$
2011(a) Lease Revenue Bonds 19,735 - (1,965) 17,770 239 2,045
2014(a) Lease Revenue Bonds 13,740 - (595) 13,145 155 615
Total Public Financing Authority 42,505 - (3,355) 39,150 529 3,485
Other Long-Term Obligations:
Compensated Absences 11,831 4,126 (4,662) 11,295 - 4,400
Claims Payable 40,282 7,077 (12,333) 35,026 - 7,175
Pollution Remediation 2,000 - - 2,000 - -
Section 108 Loan City 430 - (430) - - -
LED Lighting Phase I 763 - (107) 656 4 111
I-Bank CLEEN Loan 2,730 - (276) 2,454 23 283
CEC Loan 3,000 - (182) 2,818 - 230
Leases Payable 6,079 - (996) 5,083 74 1,014
Total Other Long-Term Obligations 67,115 11,203 (18,986) 59,332 101 13,213
Total Long-Term Obligations -
Governmental Activities 109,620$ 11,203$ (22,341)$ 98,482$ 630$ 16,698$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
95
11. LONG-TERM OBLIGATIONS (Continued)
Below are reconciliations from amounts in the above table to amounts in the
accompanying governmental fund financial statements (in thousands):
Decrease in Compensated Absences (536)$
Decrease in Claims Payable (5,256)
Decrease in Above Schedule (5,792)
Internal Service Fund:
Increase in Current Portion of Compensated Absences (3)
Increase in Non-Current Portion of Compensated Absences (10)
Decrease in Current Portion of Claims Payable 3,736
Decrease in Non-Current Portion of Claims Payable 1,521
Changes in Long-term Obligations reported in the Reconciliation to the
Government-wide Financial Statements (548)$
Principal Paid in Governmental Fund Financial Statements (5,346)$
Decreases in Above Schedule (5,346)$
Long-Term Obligations Due Within One Year in Above Schedule 16,697$
Internal Service Fund:
Current Portion of Compensated Absences (15)
Current Portion of Claims Payable (7,175)
Reconciliation of the Long-Term Obligation Due Within One Year
to the Statement of Net Position 9,507$
Long-Term Obligations Due in More than One Year in Above Schedule 81,785$
Internal Service Fund:
Non-Current Portion of Compensated Absences (40)
Non-Current Portion of Claims Payable (27,851)
Reconciliation of the Long-Term Obligation Due in More than One Year
to the Statement of Net Position 53,894$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
96
11. LONG-TERM OBLIGATIONS (Continued)
a. Public Financing Authority
(1) 2010(a) Public Financing Authority Lease Revenue Bonds
Year of Issuance 2010
Type of Debt Lease Revenue Bonds
Original Principal Amount $14,745,000
Security Lease with City
Interest Rates 2.0% to 5.0%
Interest Payment Dates March 1st, September 1st
Principal Payment Dates September 1st
Purpose of Debt Defease 1997 Leasehold Revenue Bonds
(Construct Pier Plaza and Purchase 800
MHz System) and 2000 Lease Revenue
Bonds (Capital Improvements and
defeasance of Emerald Cove Certificates of
Participation)
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2020 825$ 391$ 1,216$
2021 865 349 1,214
2022 905 305 1,210
2023 550 268 818
2024 580 240 820
2025-2029 3,340 726 4,066
2030-2031 1,170 59 1,229
Total 8,235$ 2,338$ 10,573$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
97
11. LONG-TERM OBLIGATIONS (Continued)
(2) 2011(a) Public Financing Authority Lease Revenue Bonds
Year of Issuance 2011
Type of Debt Lease Revenue Bonds
Original Principal Amount $36,275,000
Security Lease with City
Interest Rates 2.0% to 5.0%
Interest Payment Dates March 1st, September 1st
Principal Payment Dates September 1st
Purpose of Debt Defease 2001(a) Leasehold Revenue
Bonds (Construct Sports Complex and
South Beach Phase II Improvements) and
2001(b) Lease Revenue Bonds (Defease
Civic Improvement Corporation Certificates)
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2020 2,045$ 674$ 2,719$
2021 1,060 607 1,667
2022 1,095 564 1,659
2023 1,150 519 1,669
2024 1,185 482 1,667
2025-2029 6,600 1,691 8,291
2030-2032 4,635 311 4,946
Total 17,770$ 4,848$ 22,618$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
98
11. LONG-TERM OBLIGATIONS (Continued)
(3) 2014(a) Public Financing Authority Lease Revenue Bonds
Year of Issuance 2014
Type of Debt Lease Revenue Bonds
Original Principal Amount $15,295,000
Security Lease with City
Interest Rates 3.0% to 5.0%
Interest Payment Dates March 1st, September 1st
Principal Payment Dates September 1st
Purpose of Debt Finance the construction of a new Senior
Center
Debt service requirements to maturity are (in thousands):
b. Other Long-Term Obligations
(1) Compensated Absences
There is no repayment schedule to pay the compensated absences amount
of $11,295,000 relating to governmental operations. The General Fund
typically liquidates the vacation and sick leave liability.
Year Ending
June 30 Principal Interest Total
2020 615$ 456$ 1,071$
2021 650 431 1,081
2022 665 411 1,076
2023 685 384 1,069
2024 720 352 1,072
2025-2029 4,040 1,328 5,368
2030-2034 4,725 636 5,361
2035 1,045 21 1,066
Total 13,145$ 4,019$ 17,164$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
99
11. LONG-TERM OBLIGATIONS (Continued)
(2) Claims Payable
There is no repayment schedule for the claims payable for governmental
activities of $35,026,000 described in Note 9. The City pays the claims upon
final settlement. The General Fund typically liquidates the claims payable
liability.
(3) Pollution Remediation
The City plans to remediate hazardous materials contamination of land
located within Huntington Central Park used as a gun range facility prior to
its close in 1997. The City is voluntarily planning to remediate the site in
order to use the area for park purposes. The cost of the gun range
remediation is estimated to be $2,000,000 and is reported as a long-term
liability in the government-wide financial statements. The liability was
measured by estimating a reasonable range of potential outlays and
multiplying those outlays by their probability of occurring.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
100
11. LONG-TERM OBLIGATIONS (Continued)
(5) LED Lighting Phase I
Year of Issuance 2016
Type of Debt Leaseback from Capital One
Public Funding, LLC
Principal Amount Original $1,062,924
Security Loan Agreement with Capital One
Public Funding, LLC
Interest Rates Original 2.32%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt To purchase and upgrade street,
area and pole lighting to energy
efficient LED light sources
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2020 111$ 21$ 132$
2021 114 18 132
2022 118 14 132
2023 122 10 132
2024 126 5 131
2025 65 2 67
Total 656$ 70$ 726$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
101
11. LONG-TERM OBLIGATIONS (Continued)
(6) I-Bank CLEEN Loan
Year of Issuance 2016
Type of Debt CLEEN Loan from the California
Infrastructure and Economic
Development Bank (I-Bank)
Principal Amount Original $3,000,000
Security Edwards Fire Station
Interest Rates Original 2.32%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt To purchase and upgrade street
pole lighting to energy efficient
LED light sources
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2020 283$ 54$ 337$
2021 289 47 336
2022 296 40 336
2023 303 33 336
2024 310 26 336
2025-2027 973 34 1,007
Total 2,454$ 234$ 2,688$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
102
11. LONG-TERM OBLIGATIONS (Continued)
(7) California Energy Commission (CEC) Loan
Year of Issuance 2016
Type of Debt Loan from the California Energy
Commission (CEC)
Principal Amount Original $3,000,000
Security Loan Agreement with CEC
Interest Rates Original 1.00%
Interest Payment Dates June 22nd and December 22nd
Principal Payment Dates June 22nd and December 22nd
Purpose of Debt To upgrade street pole lighting to
energy efficient LED light sources
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2020 230$ 56$ 286$
2021 261 25 286
2022 264 22 286
2023 266 20 286
2024 269 17 286
2025-2029 1,386 46 1,433
2030-2030 142 1 143
Total 2,818$ 187$ 3,005$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
103
11. LONG-TERM OBLIGATIONS (Continued)
(8) Leases Payable
Year of Issuance 2016
Type of Debt Capital Leases
Principal Amount Various
Security Master Lease Agreement
Interest Rates 1.54% and 1.71%
Interest Payment Dates Semi-Annually
Principal Payment Dates Semi-Annually
Purpose of Debt Equipment Financing
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2020 1,014$ 97$ 1,111$
2021 1,033 78 1,111
2022 906 59 965
2023 924 42 965
2024 942 24 966
2025 264 6 270
Total 5,083$ 306$ 5,389$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
104
11. LONG-TERM OBLIGATIONS (Continued)
c. Long-Term Obligations – Business-Type Activities
Below is a schedule of the long-term obligations of business-type activities (in
thousands):
(1) Compensated Absences
There is no repayment schedule for the compensated absences amount of
$1,416,000 relating to business-type activities. The balance for the
outstanding business-type compensated absences is predominately related
to the Water and Sewer funds.
d. Long-Term Conduit Debt Obligations
Below is a schedule of the conduit debt obligations for which the City is not liable in
any manner (in thousands):
June 30,
2018 Additions Retirements
June 30,
2019
Community Facilities District No. 1990-1
Special Tax Refunding Bonds 485$ -$ (155)$ 330$
Community Facilities District No. 2000-1
2013 Special Tax Refunding Bonds 10,850 - (575) 10,275
Community Facilities District No. 2002-1
Special Assessment Tax Bonds 4,220 - (130) 4,090
Community Facilities District No. 2003-1
2013 Special Tax Refunding Bonds 18,025 - (790) 17,235
Total Community Facilities Districts 33,580 - (1,650) 31,930
Residential Redevelopment Bonds 4,200 - (1,300) 2,900
Total Obligations Not Recorded in
Financial Statements 37,780$ -$ (2,950)$ 34,830$
Community Facilities Districts:
June 30,
2018 Additions Retirements
June 30,
2019
Due Within
One Year
Compensated Absences 1,561$ 55$ (200)$ 1,416$ 386$
Total Long-Term Obligations -
Business-Type Activities 1,561$ 55$ (200)$ 1,416$ 386$
Long-Term Obligations - Business-Type
Activities:
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
105
11. LONG-TERM OBLIGATIONS (Continued)
(1) Residential Development Bonds
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):
12. CAPITAL ASSETS
a. Changes in Capital Assets
Capital asset activity for the year was (in thousands):
Governmental Activities
June 30,
2018 Additions Dispositions
June 30,
2019
Capital Assets, Not Depreciated:
Land 361,901$ 633$ -$ 362,534$
Construction in Progress 11,745 3,734 (7,848) 7,631
Total Capital Assets -Not Depreciated 373,646 4,367 (7,848) 370,165
Capital Assets Being Depreciated
Buildings 205,893 2,878 - 208,771
Machinery and Equipment 61,590 3,282 (834) 64,038
Infrastructure 398,029 21,974 (682) 419,321
Total Capital Assets Being Depreciated 665,512 28,134 (1,516) 692,130
Less Accumulated Depreciation:
Buildings (75,741) (4,402) - (80,143)
Machinery and Equipment (48,784) (2,817) 830 (50,771)
Infrastructure (215,901) (7,693) 682 (222,912)
Total Accumulated Depreciation (340,426) (14,912) 1,512 (353,826)
Total Depreciated - Net 325,086 13,222 (4) 338,304
Total Capital Assets 1,039,158 32,501 (9,364) 1,062,295
Total Accumulated Depreciation (340,426) (14,912) 1,512 (353,826)
Capital Assets of Governmental Activitites - Net 698,732$ 17,589$ (7,852)$ 708,469$
Bond Issue
Outstanding
Year-end
Original Issue
Amount
Five Points Senior Project Multi-Family
Housing Revenue Bonds - Series A - 1991 $ 2,900 $ 9,500
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
106
12. CAPITAL ASSETS (Continued)
b. Depreciation Expense
Depreciation in governmental activities was charged to the following
functions/programs in the Statement of Activities (in thousands):
Department:
City Council 3$
City Manager 206
City Treasurer 2
City Attorney 20
City Clerk 7
Finance 70
Human Resources 45
Community Development 58
Fire 720
Information Services 59
Police 820
Community Services 1,822
Library Services 320
Public Works 10,534
Internal Service Fund depreciation charged to functions 226
Total 14,912$
Business-Type Activities:
June 30,
2018 Additions Dispositions
June 30,
2019
Capital Assets, Not Depreciated:
Land 3,907$ -$ -$ 3,907$
Construction in Progress 3,907 5,662 (3,868) 5,701
Total Capital Assets -Not Depreciated 7,814 5,662 (3,868) 9,608
Capital Assets Being Depreciated
Buildings 92,567 - - 92,567
Machinery and Equipment 15,215 5,098 - 20,313
Infrastructure 144,932 802 (63) 145,671
Total Capital Assets Being Depreciated 252,714 5,900 (63) 258,551
Less Accumulated Depreciation:
Buildings (26,910) (2,301) - (29,211)
Machinery and Equipment (11,412) (1,125) - (12,537)
Infrastructure (78,252) (2,526) 63 (80,715)
Total Accumulated Depreciation (116,574) (5,952) 63 (122,463)
Total Depreciated - Net 136,140 (52) - 136,088
Total Capital Assets 260,528 11,562 (3,931) 268,159
Total Accumulated Depreciation (116,574) (5,952) 63 (122,463)
Capital Assets of Business Activitites - Net 143,954$ 5,610$ (3,868)$ 145,696$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
107
12. CAPITAL ASSETS (Continued)
Depreciation in business-type activities was charged to the following
functions/programs in the Statement of Activities (in thousands):
13. Investment in Joint Ventures
The City participates in two joint powers agreements with neighboring Cities. The
Public Cable Television Authority (PCTA) manages the cable television and video
provider franchising for the Cities of Huntington Beach, Fountain Valley, Stanton
and Westminster. The Central Net Operations Authority (CNOA) is a firefighter
training center shared with the City of Fountain Valley. The City of Huntington
Beach records 66.32% of PCTA and 76.00% of CNOA net assets as Joint Venture
Investments. PCTA financial statements for the year ended June 30, 2019 can be
obtained from Public Cable Television Authority. CNOA does not issue separate
financial statements.
Effective July 22, 2019, the City withdrew its membership in PCTA. Additional
information can be found in Note 17.
Fund:
Water 3,912$
Sewer Service 2,019
Refuse 22
Total 5,953$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
108
14. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
a. General Discussion
On December 29, 2011, the California Supreme Court upheld ABX1 26 that provided
for the dissolution of all redevelopment agencies in the State of California. This action
impacted the reporting entity of the City of Huntington Beach that previously had
reported a redevelopment agency within the reporting entity of the City as a blended
component unit.
ABX1 26 provides that upon dissolution of a redevelopment agency, either the city or
another unit of local government will agree to serve as the “successor agency” to hold
the assets until they are distributed to other units of state and local government. On
January 9, 2012, the City Council elected to become the Successor Agency for the
former Redevelopment Agency in accordance with ABX1 26 as part of City resolution
number 2012-01.
After enactment of the law, effective June 28, 2011, redevelopment agencies in the
State of California generally cannot enter into new projects, obligations or
commitments. Subject to the control of a newly established oversight board, remaining
assets can only be used to pay enforceable obligations in existence at the date of
dissolution (including the completion of any unfinished projects that were subject to
legally enforceable contractual commitments).
In future fiscal years, successor agencies will only be allocated revenue in the amount
that is necessary to pay the estimated annual installment payments on enforceable
obligations of the former redevelopment agency until all enforceable obligations of the
prior redevelopment agency have been paid in full and all assets have been liquidated.
ABX1 26 directs the State Controller of the State of California to review the propriety
of any transfers of assets between redevelopment agencies and other public bodies
that occurred after January 1, 2011. If the public body that received such transfers is
not contractually committed to a third party for the expenditure or encumbrance of
those assets, the State Controller is required to order the available assets to be
transferred to the public body designated as of successor agency by ABX1 26.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
109
14. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
a. Long-Term Debt
Below is a schedule of changes in long-term obligations of the Successor Agency for
the year (in thousands):
Successor Agency:
June 30,
2018 Additions Retirements
June 30,
2019
Accrued
Interest
Due Within
One Year
Bonds Payable
1999 Tax Allocation Refunding Bonds 3,155$ -$ (595)$ 2,560$ 53$ 625$
2002 Tax Allocation Bonds 6,880 - (1,295) 5,585 116 1,370
Total Bonds Payable 10,035 - (1,890) 8,145 169 1,995
Other Long-Term Obligations
Mayer DDA 2,962 - (553) 2,409 51 553
Bella Terra OPA (Parking) 8,887 - (1,265) 7,622 3 1,265
Bella Terra AHA (Phase II) 15,012 - (816) 14,196 3 816
CIM DDA (Parking & Infrastructure) 6,088 - (252) 5,836 306 269
CIM DDA (Additional Parking) 387 - (11) 376 28 12
Section 108 Loan RDA 1,010 - (490) 520 7 520
Compensated Absences 72 5 (28) 49 - 14
Total Other Long-Term Obligations 34,418 5 (3,415) 31,008 398 3,449
Total Long-Term Obligations 44,453$ 5$ (5,305)$ 39,153$ 567$ 5,444$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
110
14. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(1) 1999 Tax Allocation Refunding Bonds
Year of Issuance 1999
Type of Debt Tax Allocation Refunding Bonds
Original Principal Amount $10,835,000
Security Tax Increment
Interest Rates 3.00% to 5.05%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt Prepay Agency’s 1992 Loans to
Public Financing Authority
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2020 625$ 112$ 737$
2021 365 88 453
2022 380 69 449
2023 405 49 454
2024 425 29 454
2025 360 9 369
Total 2,560$ 356$ 2,916$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
111
14. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(2) 2002 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 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt Prepay Agency’s 1992 Loans to
Public Financing Authority and
fully defease 1992 Public
Financing Authority bonds
Debt service requirements to maturity are (in thousands):
Pledged Revenues
The Successor Agency will repay a total of $9,275,000, principal and interest,
for the outstanding 1999 and 2002 Tax Allocation Refunding Bonds as of
June 30, 2019 from semi-annual Redevelopment Property Tax Trust Fund
(RPTTF) revenue allocations.
The 1999 and 2002 Tax Allocation Refunding Bonds are not a debt of the
City of Huntington Beach, the State of California, nor any of its political
subdivisions, and neither the City, the State nor any of its political subdivision
is liable therefore, not in any event shall the bonds be payable out of funds
or properties other than those of the Redevelopment Agency as set forth in
the bond indenture.
Year Ending
June 30 Principal Interest Total
2020 1,370$ 245$ 1,615$
2021 800 191 991
2022 840 150 990
2023 875 107 982
2024 920 62 982
2025 780 20 800
Total 5,585$ 775$ 6,360$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
112
14. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(3) Mayer Disposition and Development Agreement
In fiscal year 1996-97, the Agency entered into a disposition and
development agreement (DDA) with Robert Mayer Corporation (Corporation)
concerning additional development adjacent to the Waterfront Hotel. Under
the agreement, the Corporation would advance payments for the project
costs with the Agency reimbursing up to $16,750,000 of the costs. As of
year-end, the Successor Agency obligation under the agreement amounted
to $2,409,000. Project-generated revenues as available will repay these
amounts over the time needed to fully amortize the advance. The interest
rate of this obligation is 6.32%. The DDA has been approved as an
enforceable obligation by the DOF.
(4) Bella Terra Parking Structure
In fiscal year 2005-06, the Agency entered into an owner participation
agreement with Bella Terra Associates, LLC (formerly Huntington Center
Associates, LLC). Under the agreement, the Corporation would construct
various public improvements, including a parking structure, which would then
be deeded to the City. The Agency would reimburse $15,000,000 of the
costs of the public improvements. As of year-end, the Successor Agency
obligation under the agreement amounted to $7,622,000. Project-generated
revenues as available will repay these amounts over the time needed to fully
amortize the advance. The interest rate of this obligation is 6.94%. The
agreement has been approved as an enforceable obligation by the DOF.
(5) Bella Terra Phase II
In fiscal year 2010-11, the Agency entered into an affordable housing
agreement with BTDJM Phase II Associates (DJM). The agreement would
facilitate the construction of a 467 unit mixed use project, including 43
moderate units and 28 very low units. Under the terms of the agreement,
the Agency would reimburse DJM for the construction of the affordable units
up to $17,000,000. DJM has transferred the site to UDR, and as of year-end,
the Successor Agency obligation under the agreement amounted to
$14,196,000. Reimbursement of the affordable units will be based upon the
site-generated tax increment for the mixed use project as well as the 20%
housing fund from the site-generated Bella Terra I. The interest rate of this
obligation is 4.00%. The agreement has been approved as an enforceable
obligation by the DOF.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
113
14. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(6) CIM/Huntington Disposition and Development Agreement – Strand
Parking Structure and Infrastructure
Year of Issuance 2009
Type of Debt Loan from CIM Group, LLC
Original Principal Amount $7,900,000
Security Tax Increment
Interest Rates 7.0%
Interest Payment Dates September 30th
Principal Payment Dates September 30th
Purpose of Debt Strand Parking Structure and
Infrastructure
As of year-end, the Successor Agency obligation under the agreement
amounted to $5,836,000. Repayment shall be made solely from
Redevelopment Property Tax Trust Fund (RPTTF) revenues received by the
Huntington Beach Redevelopment Successor Agency Private Purpose Trust
Fund in the amounts included in the Oversight Board approved Recognized
Obligation Payment Schedule (ROPS) to the County Auditor Controller
(CAC) and the Department of Finance (DOF) no fewer than 90 days prior to
the semiannual RPTTF property fund (Redevelopment Property Tax Trust
Fund) distribution (or October 4th for the January 2nd distribution and March
1st for the June 1st distribution) (Section 34177(m)). The DDA has been
approved as an enforceable obligation by the DOF.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
114
14. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(7) CIM/Huntington Disposition and Development Agreement – Additional
Strand Parking
Year of Issuance 2009
Type of Debt Loan from CIM Group, LLC
Original Principal Amount $950,000
Security Tax Increment
Interest Rates 10.0%
Interest Payment Dates September 30th
Principal Payment Dates September 30th
Purpose of Debt Additional Strand Parking
Structure and Infrastructure
As of year-end, the Successor Agency obligation under the agreement
amounted to $376,000. Repayment shall be made solely from
Redevelopment Property Tax Trust Fund (RPTTF) revenues received by the
Huntington Beach Redevelopment Successor Agency Private Purpose Trust
Fund in the amounts included in the Oversight Board approved Recognized
Obligation Payment Schedule (ROPS) to the County Auditor Controller
(CAC) and the Department of Finance (DOF) no fewer than 90 days prior to
the semiannual RPTTF property fund (Redevelopment Property Tax Trust
Fund) distribution (or October 4 for the January 2 distribution and March 3
for the June 1 distribution) (Section 34177(m)). The DDA has been
approved as an enforceable obligation by the DOF.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
115
14. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
(Continued)
(8) Section 108 Loan Redevelopment Agency
Year of Issuance and Refinance Original 2000
Refinanced 2010
Type of Debt Section 108 Loan from Federal
Government
Principal Amount Original $6,000,000
Refinanced $3,665,000
Security Loan Agreement with Federal
Government
Interest Rates Original 7.7%
Refinanced 2.3% to 3.3%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt Capital Improvements.
Debt service requirements to maturity are (in thousands):
b. Advances from the City Housing Fund
The Successor Agency has recorded advances from the City Housing Fund totaling
$1,363,000 from the Low-Income Housing Fund to the Redevelopment Agency
Capital Projects Fund for Main Pier property acquisitions.
Year Ending
June 30 Principal Interest Total
2020 520 9 529
Total 520$ 9$ 529$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
116
15. COMMITMENTS AND CONTINGENCIES
a. Legal Actions
There are legal actions pending against the City resulting from normal operations.
In the opinion of management and the City Attorney, the financial resolution of these
actions should not have a significant impact on these financial statements.
b. Sales Tax Sharing Agreements
City Council has agreed to provide sales tax rebates to various companies, based
upon various factors such as increased job-base or new sales tax to the City. The
sales tax rebates serve to attract and retain various companies in the City of
Huntington Beach. The City of Huntington Beach has four sales tax sharing
agreements that extend until 2020, 2024, 2033, and 2038. Sales tax rebates totaled
$1,004,567 for the year ended June 30, 2019. Sales tax sharing agreements
include an agreement with Surf City Auto Group II, Inc. for a new Jeep car
dealership that extends though 2038. The Sales tax sharing is a 50%/50% Auto
Group/City split with base sales of $1,681,797 (Jeep sales for 2016) and increases
by 1% each year. The other sales tax sharing agreements are with Pinnacle
Petroleum through 2024, with a base of $100,000, ACS (Applied Computer
Sciences) which continues through 2020, with a maximum annual share of
$250,000, and McKenna Subaru Huntington Beach which runs through 2033 with
a 45%/55% McKenna/City split with base sales of $150,800.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
117
15. COMMITMENTS AND CONTINGENCIES (Continued)
c. Cooperation and Owner Participation Agreements
On September 2, 2003, the Redevelopment Agency Approved a Cooperation
Agreement Regarding Capital Improvements in the Southeast Coastal
Redevelopment Project with the City. This agreement commits the Redevelopment
Agency to reimburse the City for a number of capital improvement projects to be
undertaken as part of the Five Year Capital Improvement Program in the Southeast
Redevelopment project area starting in FY 2003/04 as they are undertaken. The
Successor Agency received its Finding of Completion notice from the Department
of Finance on May 13, 2014. The Oversight Board (to the Successor Agency) have
approved and reauthorization of the loans between the City and former
Redevelopment Agency in FY 16/17. The State Department of Finance has denied
the validity of the loans and the City has filed suit against the State.
d. Redevelopment Successor Agency Debt to City
The City has advanced money to the Redevelopment Agency for major capital
improvements, economic development projects, and operations. In January 2011,
the City Council and Redevelopment Agency Board approved a revised
Cooperation Agreement, which included a Promissory Note that memorialized
indebtedness previously incurred by the Agency and owed to the City from a series
of loans made from the City to the Agency from 1982 to present. The City and
Successor Agency have not recorded the advances in the accompanying financial
statements due to uncertainties related to Health and Safety Code Section 34191.4,
which establishes certain restrictions and limitations on the repayment of city-
agency loans. In accordance with Health and Safety Code Section 34191.4(b)(3),
all other loans between the city and former Redevelopment Agency will begin to be
repaid, at a 3% interest rate, as determined by SB 107 upon approval of the
Oversight Board and the Department of Finance. The Oversight Board (to the
Successor Agency) have approved and reauthorization of the loans between the
City and former Redevelopment Agency in FY 16/17. The State Department of
Finance has denied the validity of the loans and the City has filed suit against the
State. Below is a schedule of the activity for the year (in thousands):
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
118
15. COMMITMENTS AND CONTINGENCIES (Continued)
d. Redevelopment Successor Agency Debt to City (Continued)
e. Low Moderate Income Housing Asset Fund Debt to City
In May 2009, a Promissory Note was issued by the Redevelopment Agency to the
City to pay for outstanding bonded debt related to the Emerald Cove Housing
Project. The note is secured by a pledge of Set-Aside Funds. Based on the
Promissory Note, the interest rate for the loan is 0% and the loan is scheduled to
be repaid by 2021. The City has not recorded the advances in the accompanying
financial statements due to uncertainties surrounding ABX1 26 and Assembly Bill
1484 and related litigation (see note 15f). Below is a schedule of the activity for the
year (in thousands):
June 30,
2018 Additions Reductions
June 30,
2019
General Fund
Emerald Cove 3,245$ -$ -$ 3,245$
June 30,
2018 Additions Reductions
June 30,
2019
General Fund
Direct Advances 2,312$ -$ -$ 2,312$
Indirect Advances 6,567 - - 6,567
Land Sales 32,833 - - 32,833
Interest 27,351 1,672 - 29,023
Total General Fund 69,063 1,672 - 70,735
Sewer Fund
Direct Advances 285 7 - 292
Deferred Development Fees 178 4 - 182
Total Sewer Fund 463 11 - 474
Drainage Fund
Direct Advances 689 17 - 706
Deferred Development Fees 190 5 - 195
Total Drainage Fund 879 22 - 901
Park Acquisition and Development Fund
Direct Advances 5,670 137 - 5,807
Deferred Development Fees 421 10 - 431
Total Park Acquisition and Development Fund 6,091 147 - 6,238
Water Fund
Direct Advances 4,268 103 - 4,371
Total Water Fund 4,268 103 - 4,371
Total All Funds 80,764$ 1,955$ -$ 82,719$
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
119
15. COMMITMENTS AND CONTINGENCIES (Continued)
f. Successor Agency Litigation
Until 2012, the Huntington Beach Redevelopment Agency existed and received
property tax increment from property within the “City Redevelopment Project Area.”
In 2012, the State Legislature dissolved all redevelopment agencies, and all tax
increment was returned to the County for payment to other taxing entities. The only
exception was that tax increment would continue to be paid to the Successor
Agency to the City Redevelopment Agency to pay any pre-dissolution, legally
binding obligations established prior to the dissolution of the agencies. Further, the
City transferred the former Redevelopment Agency’s housing obligations to the
Huntington Beach Housing Authority pursuant to Health and Safety Code section
34176.
The Successor Agency contended that its payments to retire the former
Redevelopment Agency’s portion of the 2010 Lease Revenue Bonds used to
finance the Emerald Cove low income housing project were such an obligation. The
annual payment on these bonds is approximately $400,000 a year. The amount
that the City contends to be due to pay the former Redevelopment Agency’s share
of the bonds is $3,245,000.
The Successor Agency also contended that the 2012 Pacific City Development
Agreement was a pre-dissolution, legally binding obligation. Pacific City is a
development project that was conditioned on providing 77 affordable housing units,
of which the Successor Agency now was obliged to construct 26 units off-site, at a
cost of $6,500,000. This would not be a City General Fund obligation.
The State Department of Finance rejected the City’s “Recognized Obligation
Payment Schedule” (“ROPS”) to establish these two obligations as entitled to be
funded through tax increment. In response, the City sued the Department of
Finance.
All post-redevelopment matters are being heard in Sacramento before a select
panel of judges. On January 29, 2014, the Superior Court held that the Emerald
Cove Bonds and the Pacific City housing were not preexisting Authority obligations
payable with tax increment. The Successor Agency appealed the judgment. The
appellate decision was received in 2018 and the Successor Agency lost the appeal.
The Housing Authority is reviewing options on meeting the affordable housing
requirements for Pacific City with other projects. The City itself does not require a
reserve for either case.
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
120
15. COMMITMENTS AND CONTINGENCIES (Continued)
f. Successor Agency Litigation (continued)
In addition, as stated above in section (c) and (d), the City of Huntington Beach has
filed suit against the State of California regarding the Department of Finance’s
denial of loans which were between the Redevelopment Agency and the City of
Huntington Beach.
16. OTHER INFORMATION
a. Fund and Accumulated Deficits
The following funds have total fund deficits at year-end (in thousands):
The fund deficit in the Refuse Fund is due to fees and charges below the costs to
provide services and the implementation of GASB Nos. 68 and 75 that require the
net pension liability and net other postemployment benefits liability to be reported
on the face of the financial statement. The Self Insurance Workers’ Comp fund has
a deficit due to increases in statutory benefits related to workers’ comp claims, rising
healthcare costs, and the implementation of GASB Nos. 68 and 75.
The City has established plans to reduce and eliminate the deficits in these funds.
The City has increased refuse rates to address the deficit in the Refuse Fund.
Additional transfers will be made over the next ten to twenty years from the General
Fund, Proprietary funds, and other governmental funds to address the deficit in the
Self Insurance Workers’ Comp Internal Service Fund.
17. SUBSEQUENT EVENTS
a. Public Cable Television Authority
The City has been a member of the Public Cable Television Authority, (“PCTA”), a
joint powers authority between the cities of Huntington Beach, Fountain Valley,
Stanton, and Westminster to manage the Community Antenna Television Systems
(“CATV”) for the member cities. On January 22, 2019, the City gave six-month
notice to the Public Cable Television Authority (“PCTA”) that it was terminating its
membership in PCTA. The City formally withdrew from PCTA on July 22, 2019.
Enterprise Funds:
Refuse Fund 193$
Internal Service Fund:
Self Insurance Workers' Comp 12,193
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2019
121
17. SUBSEQUENT EVENTS (Continued)
b. Pension Obligation Bonds
On November 18, 2019, the City Council approved a resolution providing for the
possible issuance of taxable Pension Obligation Bonds to refund all or a portion of
the City’s CalPERS unfunded accrued liability, totaling $436.2 million as of the June
30, 2018 actuarial valuation. On November 21, 2019, the City submitted the
necessary documents to the Orange County Superior Court to begin the judicial
validation process, which is expected to take at least 90 days. The resolution also
approves a not-to-exceed bond amount with the following conditions: (a) an
aggregate principal amount not to exceed the City’s unfunded accrued actuarial
liability under the PERS Contract pursuant to the Retirement Law as of the date of
issuance of the Initial Series of Bonds (as determined by PERS), plus the
underwriter’s discount on the Initial Series of Bonds, plus any original issue discount
on the Initial Series of Bonds, plus the costs of issuance of the Initial Series of
Bonds, (b) the true interest cost to the City on the Initial Series of Bonds shall not
exceed 5.00%, and (c) the Initial Series of Bonds shall mature not later June 30,
2044 (the current PERS final amortization of the City’s unfunded accrued actuarial
liability as set forth in the Actuarial Reports).
REQUIRED SUPPLEMENTARY INFORMATION
122
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123
City of Huntington Beach
Notes to Required Supplementary Information
For the Year Ended June 30, 2019
Budgetary Information
The City Council must annually adopt a budget by June 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 Manager 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, with the Director of Finance’s approval, 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 which included carryovers of prior year encumbrances
all of which were within available fund balance and estimated revenue amounts.
The City Council adopts governmental fund budgets consistent with generally accepted principles
as legally required. There are no significant non-budgeted financial activities. Revenues for special
revenue funds are budgeted by entitlements, grants and estimates of future development and
economic growth. Expenditures and transfers are budgeted based upon available financial
resources.
On or before February 28th of each year, each department submits data to the City Manager 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 May 1st, 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 schedules show budgetary data for the General and Special Revenue. 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
restricted, committed, or assigned fund balance in governmental fund types. The City reappropriates
these encumbrances into the new fiscal year.
The following pages present schedules of budget to actual comparison of the General and Grant
Special Revenue Fund’s Revenues, and Expenditures and Changes in Fund Balance (in thousands).
124
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See accompanying Notes to Required Supplementary Information
City of Huntington Beach
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period
(in Thousands)
Measurement Period 2017-18 2016-17 2015-16 2014-15 2013-14
Total Pension Liability
Service cost 8,314$ 8,084$ 7,436$ 7,102$ 7,263$
Interest on total pension liability 38,769 37,749 37,194 35,653 34,412
Differences between expected and actual experience (2,042) (9,148) 1,072 (2,900) -
Changes in assumptions (3,634) 30,762 - (8,565) -
Benefit payments, including refunds of employee contributions (26,685) (25,312) (24,316) (23,377) (22,444)
Net change in total pension liability 14,722 42,135 21,386 7,913 19,231
Total pension liability - beginning 557,090 514,955 493,569 485,656 466,425
Total pension liability - ending (a)571,812$ 557,090$ 514,955$ 493,569$ 485,656$
Plan Fiduciary Net Position
Contributions - employer 13,495$ 12,316$ 10,982$ 9,747$ 9,066$
Contributions - employee 3,649 3,869 3,736 3,790 3,909
Investment income 32,963 40,328 1,856 8,230 56,429
Administrative Expense (614) (536) (226) (418) (472)
Benefit payments (26,685) (25,312) (24,316) (23,377) (22,444)
Paln to Plan Resource Movement 1 - - - -
Other (1,166) - - 2 -
Net change in plan fiduciary net position 21,643 30,665 (7,968) (2,026) 46,488
Plan fiduciary net position - beginning 393,812 363,147 371,115 373,141 326,653
Plan fiduciary net position - ending (b)415,455$ 393,812$ 363,147$ 371,115$ 373,141$
Net pension liability - beginning 163,278 151,808 122,454 112,515 139,771
Net pension liability - ending (a)-(b)156,357$ 163,278$ 151,808$ 122,454$ 112,515$
Plan fiduciary net position as a percentage of the
total pension liability 72.66% 70.69% 70.52% 75.19% 76.83%
Covered payroll 45,431$ 44,848$ 44,365$ 44,233$ 41,142$
Net pension liability as a percentage of covered
payroll 344.16% 364.07% 342.18% 276.84% 273.48%
Notes to Schedule:
* - Fiscal year 2013/14 was the first year of implementation, therefore only five years are shown.
Benefit changes: there were no changes to benefit terms specific to the plan.
Changes in assumptions: In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and
Review of Actuarial Assumptions December 2017. There were no ch anges in the discount rate. In 2017, the accounting discount rate reduced from
7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent
(net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based
on the 7.5 percent discount rate.
Last Ten Fiscal Years*
CalPERS City Miscellaneous Plan - 99
127
City of Huntington Beach
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period
(in Thousands)
Measurement Period 2017-18 2016-17 2015-16 2014-15 2013-14
Total Pension Liability
Service cost 13,509$ 13,657$ 12,159$ 11,119$ 11,096$
Interest on total pension liability 51,223 49,350 48,390 46,160 44,246
Differences between expected and actual experience 2,584 (10,819) 2,678 (820) -
Changes in assumptions (3,657) 40,352 - (11,054) -
Benefit payments, including refunds of employee contributions (37,128) (34,222) (32,116) (30,535) (29,540)
Net change in total pension liability 26,531 58,318 31,111 14,870 25,802
Total pension liability - beginning 729,281 670,963 639,852 624,982 599,180
Total pension liability - ending (a)755,812$ 729,281$ 670,963$ 639,852$ 624,982$
Plan Fiduciary Net Position
Contributions - employer 21,058$ 20,629$ 18,703$ 17,791$ 15,152$
Contributions - employee 4,164 4,570 4,058 4,110 3,850
Investment income 39,336 48,413 2,144 9,661 66,805
Administrative Expense (736) (640) (270) (497) (555)
Benefit payments (37,128) (34,222) (32,116) (30,535) (29,540)
Net Plan to Plan Resource Movement (3) - (29) - -
Other (1,398) - - - -
Net change in plan fiduciary net position 25,293 38,750 (7,510) 530 55,7 1 2
Plan fiduciary net position - beginning 472,474 433,724 441,234 440,704 384,992
Plan fiduciary net position - ending (b)497,767$ 472,474$ 433,724$ 441,234$ 440,704$
Net pension liability - beginning 256,807 237,239 198,618 184,278 214,188
Net pension liability - ending (a)-(b)258,045$ 256,807$ 237,239$ 198,618$ 184,278$
Plan fiduciary net position as a percentage of the
total pension liability 65.86% 64.79% 64.64% 68.96% 70.51%
Covered payroll 43,371$ 43,283$ 42,619$ 42,252$ 38,397$
Net pension liability as a percentage of covered
payroll 594.97% 593.32% 556.65% 470.08% 479.93%
Notes to Schedule:
* - Fiscal year 2013/14 was the first year of implementation, therefore only five years are shown.
Changes in assumptions: In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience Study and
Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the accounting discount r ate reduced from
7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount rate from 7.5 percent
(net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014, amounts reported were based
on the 7.5 percent discount rate.
Benefit changes: there were no changes to benefit terms specific to the plan.
Last Ten Fiscal Years*
CalPERS City Safety Plan - 100
128
City of Huntington Beach
Required Supplementary Information
Schedule of Changes in the Net Pension Liability and Related Ratios
(in Thousands)
Total Pension Liability 2018-19 2017-18** 2016-17 2015-16 2014-15 2013-14
Service cost 398$ 344$ 487$ 552$ 495$ 544$
Interest on total pension liability 3,990 2,964 3,976 3,945 3,919 3,828
Differences between expected and actual experience - (794) - 982 - -
Changes in assumptions - 2,115 1,515 2,928 - -
Benefit payments, including refunds of employee contribution (4,771) (3,388) (4,144) (3,773) (3,588) (3,548)
Net change in total pension liability (383) 1,241 1,834 4,634 826 824
Total pension liability - beginning 65,827 64,586 62,752 58,118 57,292 56,468
Total pension liability - ending (a)65,444$ 65,827$ 64,586$ 62,752$ 58,118$ 57,292$
Plan Fiduciary Net Position
Contributions - employer 4,962$ 3,507$ 5,346$ 7,277$ 4,678$ 4,539$
Contributions - employee - - - - - -
Investment income 2,582 2,128 6,373 4,282 (1,313) 3,465
Administrative Expense (191) (145) (182) (189) (170) (176)
Benefit payments (4,771) (3,388) (4,144) (3,773) (3,588) (3,548)
Section 115 Trust Segregation - (3,788) - - - -
Other - - - - 3,183 258
Net change in plan fiduciary net position 2,582 (1,686) 7,393 7,597 2,790 4,538
Plan fiduciary net position - beginning 56,271 57,957 50,564 42,967 40,177 3 5,639
Plan fiduciary net position - ending (b)58,853$ 56,271$ 57,957$ 50,564$ 42,967$ 40,177$
Net pension liability - beginning 9,556 6,629 12,188 15,151 17,115 20,829
Net pension liability - ending (a)-(b)6,591$ 9,556$ 6,629$ 12,188$ 15,151$ 17,115$
Plan fiduciary net position as a percentage of the
total pension liability 89.93% 85.48% 89.74% 80.58% 73.93% 70.13%
Covered payroll 12,863$ 10,890$ 17,167$ 19,517$ 22,069$ 22,004$
Net pension liability as a percentage of covered payroll 51.24% 87.75% 38.61% 62.45% 68.65% 77.78%
* - Fiscal year 2013/14 was the first year of implementation, therefore only six years are shown.
** - The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1, 2017 to June 30, 2018.
Last Ten Fiscal Years*
Supplemental Retirement Plan
129
City of Huntington Beach
Required Supplementary Information
Schedule of Changes in Net OPEB Liability and Related Ratios
For the Measurement Periods Ended June 30
(in Thousands)
Measurement Period 2018 2017
Total OPEB Liability
Service cost 1,205$ 877$
Interest on the total OPEB liability 1,787 1,293
Benefit payments (1,683) (1,036)
Net change in total OPEB liability 1,309 1,134
Total OPEB liability - beginning 32,125 30,991
Total OPEB liability - ending (a)33,434$ 32,125$
Plan Fiduciary Net Position
Contribution - employer 4,191$ 1,036$
Net investment income 1,126 471
Benefit payments (1,683) (1,036)
Administrative expense (131) (9)
Net change in plan fiduciary net position 3,503 462
Plan fiduciary net position - beginning 23,322 22,860
Plan fiduciary net position - ending (b)26,825$ 23,322$
Net OPEB liability - ending (a)-(b) 6,609$ 8,803$
Plan fiduciary net position as a percentage of the total OPEB liability 80.23% 72.60%
Covered employee payroll 81,458$ 60,985$
Net OPEB liability as a percentage of covered employee payroll 8.11% 14.43%
Notes to Schedule:
* Fiscal year 2017/18 was the first year of implementation, therefore only two years of information are shown.
Last Ten Fiscal Years*
Other Post Employment Benefits Plan
130
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30, 2019
(in Thousands)
2018-19 1 2017-18 1, 2 2016-17 1 2015-16 1 2014-15 1 2013-14 1
Actuarially determined contribution 14,819$ 9,734$ 11,921$ 11,238$ 10,510$ 8,685$
Contributions in relation to the actuarially determined contributions (14,819) (9,734) (11,921) (11,238) (10,510) (8,685)
Contribution deficiency (excess)-$ -$ -$ -$ -$ -$
Covered payroll 45,419$ 33,210$ 45,118$ 44,253$ 46,337$ 43,327$
Contributions as a percentage of covered payroll 32.63% 29.31% 26.42% 25.39% 22.68% 20.05%
Notes to Schedule
Valuation dates: 6/30/2012 through 6/30/2016
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll growth
Discount Rate
Retirement age
Mortality
For 10/1/14-6/30/15, 15 Year Smoothed Market (for details, see June 30, 2012 Funding Valuation Report). For
7/1/15-6/30/19, Market Value (for details, see the Funding Valuation Reports for the years ended June 30,
Last Ten Fiscal Years*
CalPERS City Miscellaneous Plan - 99
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
For details, see Funding Valuation Reports for the years ended June 30, 2012-2015.
2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1, 2017 to June 30,
3.00%
7.375%, net of pension plan investment and administrative expenses; includes inflation. On December 21,
2016, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using
a three year phase-in beginning with the June 30, 2016 actuarial valuations. The discount rate will be lowered
to 7.25 percent next year and 7.00 percent the following year as adopted by the Board.
For 10/1/13-6/30/16, the probabilities of retirement are based on the 2014 CalPERS Experience study for the
period from 1997 to 2007. For 7/1/16-6/30/19, the probabilities of retirement are based on the 2014 CalPERS
Experience study for the period from 1997 to 2011.
For 10/1/13-6/30/16, the probabilities of mortality are based on the 2010 CalPERS Experience Study for the
period from 1997 to 2007. For 7/1/16-6/30/19, the probabilities of mortality are based on the 2014 CalPERS
Experience Study for the period from 1997 to 2011. For 7/1/16-6/30/18, Pre-retirement and Post-retirement
mortality rates include 5 years of projected mortality improvem ent using Scale AA published by the Society of
Actuaries. For 7/1/18-6/30/19, Pre-retirement and Post-retirem ent mortality rates include 20 years of projected
*Beginning with the June 30, 2013 valuations, CalPERS employed an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year
period with the increases or decreases in the rate spread directly over a 5-year period.
131
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30, 2019
(in Thousands)
2018-19 1 2017-18 1, 2 2016-17 1 2015-16 1 2014-15 1 2013-14 1
Actuarially determined contribution 23,062$ 15,223$ 19,468$ 19,129$ 18,125$ 14,759$
Contributions in relation to the actuarially determined contributions (23,062) (15,223) (19,468) (19,129) (19,125) (14,759)
Contribution deficiency (excess)-$ -$ -$ -$ (1,000)$ -$
Covered payroll 43,684$ 31,943$ 43,269$ 42,607$ 44,055$ 41,167$
Contributions as a percentage of covered payroll 52.79% 47.66% 44.99% 44.90% 43.41% 35.85%
Notes to Schedule
Valuation dates: 6/30/2012 through 6/30/2016
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal
Amortization method/period
Asset valuation method
Inflation 2.75%
Salary increases Varies by entry age and service
Payroll growth
Discount Rate
Retirement age
Mortality
For 10/1/14-6/30/15, 15 Year Smoothed Market (for details, see June 30, 2012 Funding Valuation Report). For
7/1/15-6/30/19, Market Value (for details, see the Funding Valu ation Reports for the years ended June 30,
)
3.00%
2 The 2017-18 period reflects nine months of activity only as th e fiscal year change resulted in a nine-month reporting period from October 1, 2017 to June 30,
2018
Last Ten Fiscal Years*
7.375%, net of pension plan investment and administrative expenses; includes inflation. On December 21,
2016, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent
using a three year phase-in beginning with the June 30, 2016 actuarial valuations. The discount rate will be
lowered to 7.25 percent next year and 7.00 percent the followin g year as adopted by the Board.
For 10/1/13-6/30/16, the probabilities of retirement are based on the 2014 CalPERS Experience study for the
period from 1997 to 2007. For 7/1/16-6/30/19, the probabilities of retirement are based on the 2014
CalPERS Experience study for the period from 1997 to 2011.
For 10/1/13-6/30/16, the probabilities of mortality are based on the 2010 CalPERS Experience Study for the
period from 1997 to 2007. For 7/1/16-6/30/19, the probabilities of mortality are based on the 2014 CalPERS
Experience Study for the period from 1997 to 2011. For 7/1/16-6/30/18, Pre-retirement and Post-retirement
mortality rates include 5 years of projected mortality improvem ent using Scale AA published by the Society of
Actuaries. For 7/1/18-6/30/19, Pre-retirement and Post-retirem ent mortality rates include 20 years of
*Beginning with the June 30, 2013 valuations, CalPERS employed an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-
year period with the increases or decreases in the rate spread directly over a 5-year period.
CalPERS City Safety Plan - 100
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
For details, see Funding Valuation Reports for the years ended June 30, 2012-2015.
132
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30, 2019
(in Thousands)
2018-19 1 2017-18 1, 2 2016-17 1 2015-16 1 2014-15 1 2013-14 1
Actuarially determined contribution 2,258$ 2,879$ 3,895$ 3,576$ 3,634$ 4,534$
Contributions in relation to the actuarially determined contributions (4,962) (3,507) (5,346) (7,277) (4,678) (4,539)
Contribution deficiency (excess)(2,704)$ (628)$ (1,451)$ (3,701)$ (1,044)$ (5)$
Covered payroll 12,863$ 10,890$ 17,167$ 19,517$ 22,069$ 22,004$
Contributions as a percentage of covered payroll 38.58% 32.20% 31.14% 37.29% 21.20% 20.63%
Notes to Schedule
Valuation date:9/30/2017 9/30/2017 9/30/2015 9/30/2013 9/30/2013 9/30/2011
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal, Level Percentage of Payroll
Amortization method/period
Asset valuation method
Inflation 3.00%
Salary increases Varies by entry age and service
Payroll growth
Investment rate of return
Retirement age
Mortality
2019 2 2018 2 2017 2016 2015 2014
Annual Money Weighted Rate of Return, net of investment expense 4.79% 4.04% 12.87% 10.20% -2.82% 9.20%
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from October 1, 2017 to June 30, 2018.
Last Ten Fiscal Years*
Supplemental Retirement Plan
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
Merit- CalPERS 1997-2011 Experience Study plus 3.25% aggregate increase for the October 1, 2013 to June 30,
2018 measurement period. 3% aggregate increase for the July 1, 2018 - June 30, 2019 measurement period.
9/30/12 UAAL: fixed 10-year period, Gains/Losses: fixed 15-year period, Discount rate change loss: 10-year
period, 6/30/18 UAAL: fixed 5-year period fresh start. Level dollar amortization
2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1, 2017 to June 30, 2018.
The probabilities of mortality are based on theCalPERS 1997-2011 Experience Study. Pre-retirement and Post-
retirement mortality rates include mortality projected fully generational with Scale MP-14, modified to converge to
ultimate improvement rates in 2022 for the October 1, 2013 to June 30, 2018 measurement period. Mortality
projected fully generational with Scale MP-17 for the July 1, 2018 to June 30, 2019 measurement period.
Schedule of Money Weighted Rate of Return
6.5%, net of pension plan investment and administrative expenses, including inflation for the October 1, 2013 to
June 30, 2018 measurement period. 6.25%, net of pension plan investment and administrative expenses, for the
The probabilities of retirement are based on the CalPERS 1997-2011 Experience Study
Investment gains/losses spread over a 3-year rolling period
133
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30, 2019
(in Thousands)
Fiscal Year Ended June 30 2019 2018**
Actuarially Determined Contribution (ADC)1,746$ 2,022$
Contributions in relation to the ADC (2,270) (4,192)
Contribution deficiency (excess)(524)$ (2,170)$
Covered-employee payroll**79,682$ 59,589$
Contributions as a percentage of covered-employee payroll 2.85%7.03%
Notes to Schedule:
Valuation date:6/30/2017 6/30/2015
Methods and assumptions used to determine contributions:
Actuarial Cost Method Entry Age Normal
Amortization Method/Period Level percent of payroll over a closed rolling 15-year period
Asset Valuation Method Market value
Inflation
Payroll Growth 3% per annum, in aggregate
Investment Rate of Return
Healthcare cost-trend rates 7.0% initial, 1.0% - 2.0% near term increase then decreasing 0.5% per year to trend
rate that reflects medical price inflation.
Retirement Age Tier 1 employees - 2.5% @55 and Tier 2 employees - 2.0% @62
The probabilities of Retirement are based on the 2014 CalPERS
Experience Study for the period from 1997 to 2011.
Mortality Pre-retirement mortality probability based on 2014 CalPERS 1997-2011 Experience
Study covering CalPERS participants. Post-retirement mortality probability based on
CalPERS Experience Study 2007-2011 covering participants in CalPERS.
*Historical information is required only for measurement periods for which GASB 75 is applicable.
Future years' information will be displayed up to 10 years as information becomes available.
** For the nine-month period ending June 30, 2018. The City changed its fiscal year effective October 1, 2017.
3% for the October 1, 2017 - June 30, 2018 period. 2.75% for the July 1, 2018 - June
6% for the October 1, 2017 - June 30, 2018 period. 6.25% for the July 1, 2018 -
June 30, 2019 period. Assumes investing in California Employers' Retiree Benefit
Trust asset allocation Strategy 1.
Last Ten Fiscal Years*
Other Post Employment Benefits Plan
134
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135
SUPPLEMENTARY INFORMATION
136
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137
City of Huntington Beach
Other Governmental Funds
Special Revenue Funds account for revenues and expenditures legally constrained to a specific purpose.
The Air Quality Fund accounts for revenues from the local agencies used to improve local air quality.
The Development Impact Fee Fund accounts for fees collected for new developments to be used for
transportation, park land acquisition and development, library and other public facilities in an effort to mitigate
the impacts of those new developments.
The Disability Access Fund accounts for the State Mandated Disability Access Fee (SB 1186) to fund increased
training certified access specialist (CASp) services for the public and to facilitate compliance with construction
related accessibility requirements.
The Drainage Fund accounts for fees received from developers to construct and maintain the City’s drainage
system.
The Fourth of July Parade Fund accounts for the activities of the City’s annual parade.
The Gas Tax Fund accounts for monies allocated under the Streets and Highways Code of California.
Expenditures may be made for any street related purpose allowed under the code.
The Housing Residual Receipt Fund accounts for residual receipts received for housing activities.
The Park Acquisition and Development Fund accounts for fees received from developers to develop and
maintain the City’s park system.
The ELM Automation Fund accounts for automation fee revenues and Enterprise Land Management (ELM)
replacement costs and maintenance expenditures.
The Traffic Congestion Relief Fund accounts for moneys allocated for roadway maintenance as established
by Assembly Bill 2928.
The Traffic Impact Fee Fund accounts for moneys received from the traffic impact fee levied on new
developments in the City.
The Transportation Fund accounts for moneys received from the countywide half cent sales tax and other
specific sources to be spent on transportation related expenditures.
Debt Service Funds account for the receipts for and payment of general long-term debt.
The Public Financing Authority accounts for the activity of the Huntington Beach Public Financing Authority.
Capital Projects Funds account for the acquisition and construction of capital assets other than those financed
by proprietary fund types.
The Affordable Housing In-Lieu Fund accounts for the Affordable Housing In-Lieu Fee from developers of
housing projects who have elected to pay the fee in-lieu of building the affordable housing in their project.
The Infrastructure Fund records activity for certain designate infrastructure related expenditures.
The Lease Capital Project Fund records activity for capital lease project expenditures.
The Parking In-Lieu Fund records construction activity from developers who pay fees in-lieu of directly providing
parking facilities to the City.
The Senior Center Development Fund records construction activity for the Senior Center Development at
Central Park.
The Sewer Development Fund accounts for fees received from developers to construct and maintain sewer
facilities.
The Technology Fund accounts for technology infrastructure project expenditures
138
ASSETS Air Quality
Development
Impact Fee Disability Access Drainage
Fourth of July
Parade Gas Tax
Cash and Investments 998$ 18,789$ 163$ 1,733$ 100$ 6,243$
Taxes Receivable - - - - - 663
Other Receivables 73 87 1 8 - 29
Prepaids - - - - 64 -
Total Assets 1,071$ 18,876$ 164$ 1,741$ 164$ 6,935$
LIABILITIES
Accounts Payable -$ 15$ 2$ -$ 16$ 104$
Accrued Payroll - 3 - - - -
Total Liabilities - 18 2 - 16 104
FUND BALANCES
Nonspendable
Prepaids - - - - 64 -
Restricted
Pollution Remediation - - - - - -
Highways, Streets and Transportation - - - - - 6,831
Low Income Housing - - - - - -
Air Quality 1,071 - - - - -
Other Capital Projects - 18,858 - 1,741 - -
Other Purposes - - 162 - 84 -
Committed
Parks - - - - - -
Total Fund Balances 1,071 18,858 162 1,741 148 6,831
Total Liabilities and Fund Balances 1,071$ 18,876$ 164$ 1,741$ 164$ 6,935$
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
June 30, 2019
(In Thousands)
139
Housing
Residual
Receipt
Park Acquisition
and
Development
ELM Automation
Fund
Traffic
Congestion
Relief
Traffic Impact
Fee Transportation
Total Special
Revenue Funds
437$ 3,429$ 297$ 1,281$ 4,292$ 1,656$ 39,418$
- - - - - 512 1,175
2 16 2 6 20 8 252
- - - - - - 64
439$ 3,445$ 299$ 1,287$ 4,312$ 2,176$ 40,909$
7$ 4$ -$ 44$ 63$ 179$ 434$
- 2 5 - - 36 46
7 6 5 44 63 215 480
- - - - - - 64
- 332 - - - - 332
- - - 1,243 4,249 1,961 14,284
432 - - - - - 432
- - - - - - 1,071
- - - - - - 20,599
- - 294 - - - 540
- 3,107 - - - - 3,107
432 3,439 294 1,243 4,249 1,961 40,429
439$ 3,445$ 299$ 1,287$ 4,312$ 2,176$ 40,909$
OTHER GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
CITY OF HUNTINGTON BEACH
SPECIAL REVENUE FUNDS
(In Thousands)
June 30, 2019
(continued)
140
ASSETS
Public
Financing
Authority
Affordable
Housing In-Lieu Infrastructure
Lease Capital
Project
Cash and Investments 4,316$ 506$ 10,389$ -$
Cash and Investments with Fiscal Agent 4,683 - - 40
Taxes Receivable - - - -
Other Receivables 31 2 48 -
Due from Other Funds - - 30 -
Prepaids - - - -
Total Assets 9,030$ 508$ 10,467$ 40$
LIABILITIES
Accounts Payable -$ 41$ 344$ -$
Accrued Payroll - - - -
Due to Other Funds - - - 30
Total Liabilities - 41 344 30
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - - 10 -
Total Deferred Inflows of Resources - - 10 -
FUND BALANCES
Nonspendable
Prepaid Insurance - - - -
Restricted
Pollution Remediation - - - -
Debt Service 9,030 - - -
Highways, Streets and Transportation - - - -
Low Income Housing - 467 - -
Air Quality - - - -
Other Capital Projects - - - 10
Other Purposes - - - -
Committed
Parks - - - -
Other Capital Projects - - 10,113 -
Assigned
Capital Improvement Reserve - - - -
Total Fund Balances 9,030 467 10,113 10
9,030$ 508$ 10,467$ 40$
Total Liabilities, Deferred Inflows
of Resources and Fund Balances
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2019
(In Thousands)
CAPITAL PROJECT FUNDS
(continued)
DEBT SERVICE
FUNDS
141
Parking In-Lieu
Senior Center
Development
Sewer
Development Technology
Total Capital
Projects Funds
Total Other
Governmental
Funds
522$ 16$ 6,612$ 3,601$ 21,646$ 65,380$
- 822 - - 862 5,545
- - - - - 1,175
3 - 31 13 97 380
- - - - 30 30
- - - - - 64
525$ 838$ 6,643$ 3,614$ 22,635$ 72,574$
-$ -$ 80$ -$ 465$ 899$
- - - - - 46
- - - - 30 30
- - 80 - 495 975
- - - - 10 10
- - - - 10 10
- - - - - 64
- - - - - 332
- - - - - 9,030
- - - - - 14,284
- - - - 467 899
- - - - - 1,071
- 838 - - 848 21,447
- - - - - 540
- - - - - 3,107
525 - 6,563 - 17,201 17,201
- - - 3,614 3,614 3,614
525 838 6,563 3,614 22,130 71,589
525$ 838$ 6,643$ 3,614$ 22,635$ 72,574$
CAPITAL PROJECT FUNDS
(continued)
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30, 2019
(In Thousands)
142
REVENUES Air Quality
Development
Impact Fee
Disability
Access Drainage
Fourth of July
Parade Gas Tax
Sales Taxes -$ -$ -$ -$ -$ -$
Other Taxes - - - - - 6,969
Licenses and Permits - - 77 - - -
Use of Money and Property 36 607 5 53 81 155
Intergovernmental 84 - - - 58 -
Charges for Current Service - 4,774 - 429 179 -
Other - - - - 74 -
Total Revenues 120 5,381 82 482 392 7,124
EXPENDITURES
Current:
City Manager - - - - - -
Finance - - 11 - - -
Information Systems - - - - - -
Community Services - 1,313 - - 278 -
Library Services - 126 - - - -
Public Works 106 - - - - 3,704
Total Expenditures 106 1,439 11 - 278 3,704
Excess Of Revenues Over
(Under) Expenditures 14 3,942 71 482 114 3,420
Other Financing Sources (Uses):
Transfers Out - - - - - -
Total Other Financing Sources
Sources (Uses) - - - - - -
Net Change in Fund Balances 14 3,942 71 482 114 3,420
Fund Balances - Beginning Of Year 1,057 14,916 91 1,259 34 3,411
Fund Balances - End Of Year 1,071$ 18,858$ 162$ 1,741$ 148$ 6,831$
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
SPECIAL REVENUE FUNDS
OTHER GOVERNMENTAL FUNDS
143
Housing
Residual
Receipt
Park Acquisiton
and
Development
ELM
Automation
Fund
Traffic
Congestion
Relief
Traffic Impact
Fee Transportation
Total Special
Revenue Funds
-$ -$ -$ -$ -$ 3,495$ 3,495$
- - - - - - 6,969
- - - - - - 77
30 123 7 49 150 76 1,372
- - - 906 - 170 1,218
- 62 366 - 589 - 6,399
199 - 1 - - 1 275
229 185 374 955 739 3,742 19,805
827 - - - - - 827
- - - - - - 11
- - 404 - - - 404
- 283 - - - - 1,874
- - - - - - 126
- - - 1,158 915 4,938 10,821
827 283 404 1,158 915 4,938 14,063
(598) (98) (30) (203) (176) (1,196) 5,742
(26) - - - - - (26)
(26) - - - - - (26)
(624) (98) (30) (203) (176) (1,196) 5,716
1,056 3,537 324 1,446 4,425 3,157 34,713
432$ 3,439$ 294$ 1,243$ 4,249$ 1,961$ 40,429$
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
SPECIAL REVENUE FUNDS
144
REVENUES
Public
Financing
Authority
Affordable
Housing In-Lieu Infrastructure
Lease Capital
Project
Sales Taxes -$ -$ -$ -$
Other Taxes - - - -
Licenses and Permits - 137 - -
Use of Money and Property 113 70 296 3
Intergovernmental - - - -
Charges for Current Service - - - -
Other - - 9 -
Total Revenues 113 207 305 3
EXPENDITURES
Current:
City Manager - 100 - -
Finance 6 - - -
Fire - - - 759
Information Systems - - - -
Community Services - - 124 -
Library Services - - - -
Public Works - - 4,473 -
Debt Service:
Principal 3,355 - - -
Interest 1,675 - - 24
Total Expenditures 5,036 100 4,597 783
Excess Of Revenues Over
(Under) Expenditures (4,923) 107 (4,292) (780)
Other Financing Sources (Uses):
Transfers In 5,043 - 5,258 -
Transfers Out - - - -
Total Other Financing Sources
Sources (Uses) 5,043 - 5,258 -
Net Change in Fund Balances 120 107 966 (780)
Fund Balances - Beginning of Year 8,910 360 9,147 790
Fund Balances - End of Year 9,030$ 467$ 10,113$ 10$
DEBT SERVICE
FUNDS CAPITAL PROJECT FUNDS
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
(continued)
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
145
Parking In-Lieu
Senior Center
Development
Sewer
Development Technology
Total Capital
Projects Funds
Total Other
Governmental
Funds
-$ -$ -$ -$ -$ 3,495$
- - - - - 6,969
68 - - - 205 282
- 17 257 60 703 2,188
- - - - - 1,218
- - 213 - 213 6,612
- - - 3 12 287
68 17 470 63 1,133 21,051
- - - - 100 927
- - - - - 17
- - - - 759 759
- - - - - 404
- - - - 124 1,998
- - - - - 126
- 50 1,898 - 6,421 17,242
- - - - - 3,355
- - - - 24 1,699
- 50 1,898 - 7,428 26,527
68 (33) (1,428) 63 (6,295) (5,476)
- - - 850 6,108 11,151
- - - - - (26)
- - - 850 6,108 11,125
68 (33) (1,428) 913 (187) 5,649
457 871 7,991 2,701 22,317 65,940
525$ 838$ 6,563$ 3,614$ 22,130$ 71,589$
CAPITAL PROJECT FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
(continued)
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL F UNDS
146
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 36$ 36$
Intergovernmental 250 73 84 11
TOTAL REVENUES 250 73 120 47
EXPENDITURES:
Current:
Public Works 266 1,019 106 913
NET CHANGE IN FUND BALANCE (16) (946) 14 960
Fund Balance - Beginning of Year 1,057 1,057 1,057 -
Fund Balance - End of Year 1,041$ 111$ 1,071$ 960$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Charges for Current Service 3,060$ 3,060$ 4,774$ 1,714$
Use of Money and Property - - 607 607
TOTAL REVENUES 3,060 3,060 5,381 2,321
EXPENDITURES:
Current:
Community Services 1,165 3,884 1,313 2,571
Library Services 50 150 126 24
Debt Service:
Principal 10 10 - 10
TOTAL EXPENDITURES 1,225 4,044 1,439 2,605
NET CHANGE IN FUND BALANCE 1,835 (984) 3,942 4,926
Fund Balance - Beginning of Year 14,916 14,916 14,916 -
Fund Balance - End of Year 16,751$ 13,932$ 18,858$ 4,926$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 84$ 84$ 77$ (7)$
Use of Money and Property - - 5 5
TOTAL REVENUES 84 84 82 (2)
EXPENDITURES:
Current:
Finance 84 84 11 73
NET CHANGE IN FUND BALANCE - - 71 71
Fund Balance - Beginning of Year 91 91 91 -
Fund Balance - End of Year 91$ 91$ 162$ 71$
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
Air Quality
Development Impact Fee
Disability Access
147
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
From Use of Money and Property -$ -$ 53$ 53$
Charges for Current Service 100 100 429 329
TOTAL REVENUES 100 100 482 382
EXPENDITURES:
Current:
Public Works - - - -
NET CHANGE IN FUND BALANCE 100 100 482 382
Fund Balance - Beginning of Year 1,259 1,259 1,259 -
Fund Balance - End of Year 1,359$ 1,359$ 1,741$ 382$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property 120$ 120$ 81$ (39)$
Intergovernmental 65 65 58 (7)
Charges for Current Service 135 135 179 44
Other 80 80 74 (6)
TOTAL REVENUES 400 400 392 (8)
EXPENDITURES:
Current:
Community Services 430 497 278 219
NET CHANGE IN FUND BALANCE (30) (97) 114 211
Fund Balance - Beginning of Year 34 34 34 -
Fund Balance - End of Year 4$ (63)$ 148$ 211$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 155$ 155$
Other Taxes 6,791 6,791 6,969 178
TOTAL REVENUES 6,791 6,791 7,124 333
EXPENDITURES:
Current:
Public Works 5,999 9,738 3,704 6,034
NET CHANGE IN FUND BALANCE 792 (2,947) 3,420 6,367
Fund Balance - Beginning of Year 3,411 3,411 3,411 -
Fund Balance - End of Year 4,203$ 464$ 6,831$ 6,367$
(In Thousands)
Fourth of July Parade
Drainage
Gas Tax
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
148
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 30$ 30$
Other 406 406 199 (207)
TOTAL REVENUES 406 406 229 (177)
EXPENDITURES:
Current:
City Manager 50 843 827 16
TOTAL EXPENDITURES 50 843 827 16
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 356 (437) (598) (161)
OTHER FINANCING SOURCES (USES):
Transfers Out - (26) (26) -
TOTAL OTHER FINANCING SOURCES (USES) - (26) (26) -
NET CHANGE IN FUND BALANCE 356 (463) (624) (161)
Fund Balance - Beginning of Year 1,056 1,056 1,056 -
Fund Balance - End of Year 1,412$ 593$ 432$ (161)$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 123$ 123$
Charges for Current Service - - 62 62
TOTAL REVENUES - - 185 185
EXPENDITURES:
Current:
Community Services 1,169 2,333 283 2,050
NET CHANGE IN FUND BALANCE (1,169) (2,333) (98) 2,235
Fund Balance - Beginning of Year 3,537 3,537 3,537 -
Fund Balance - End of Year 2,368$ 1,204$ 3,439$ 2,235$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
From Use of Money and Property -$ -$ 7$ 7$
Charges for Current Service 225 225 366 141
Other - - 1 1
TOTAL REVENUES 225 225 374 149
EXPENDITURES:
Current:
Information Systems 405 405 404 1
NET CHANGE IN FUND BALANCE (180) (180) (30) 150
Fund Balance - Beginning of Year 324 324 324 -
Fund Balance - End of Year 144$ 144$ 294$ 150$
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
ELM Automation Fund
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
Housing Residual Receipt
Park Acquisition and Development
149
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 49$ 49$
Intergovernmental 1,515 947 906 (41)
TOTAL REVENUES 1,515 947 955 8
EXPENDITURES:
Current:
Public Works 1,232 2,370 1,158 1,212
NET CHANGE IN FUND BALANCE 283 (1,423) (203) 1,220
Fund Balance - Beginning of Year 1,446 1,446 1,446 -
Fund Balance - End of Year 1,729$ 23$ 1,243$ 1,220$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 150$ 150$
Charges for Current Service 100 100 589 489
TOTAL REVENUES 100 100 739 639
EXPENDITURES:
Current:
Public Works - 3,599 915 2,684
NET CHANGE IN FUND BALANCE 100 (3,499) (176) 3,323
Fund Balance - Beginning of Year 4,425 4,425 4,425 -
Fund Balance - End of Year 4,525$ 926$ 4,249$ 3,323$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Sales Taxes 3,350$ 3,350$ 3,495$ 145$
Use of Money and Property 38 38 76 38
Intergovernmental - - 170 170
Other - - 1 1
TOTAL REVENUES 3,388 3,388 3,742 354
EXPENDITURES:
Current:
Public Works 3,613 6,537 4,938 1,599
NET CHANGE IN FUND BALANCE (225) (3,149) (1,196) 1,953
Fund Balance - Beginning of Year 3,157 3,157 3,157 -
Fund Balance - End of Year 2,932$ 8$ 1,961$ 1,953$
Traffic Congestion Relief
Traffic Impact Fee
CITY OF HUNTINGTON BEACH
(In Thousands)
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
Transportation
150
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 113$ 113$
EXPENDITURES:
Current:
Finance 12 12 6 6
Debt Service:
Principal 3,355 3,355 3,355 -
Interest 1,676 1,676 1,675 1
TOTAL EXPENDITURES 5,043 5,043 5,036 7
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (5,043) (5,043) (4,923) 120
OTHER FINANCING SOURCES (USES):
Transfers In 5,043 5,043 5,043 -
NET CHANGE IN FUND BALANCE - - 120 120
Fund Balance - Beginning of Year 8,910 8,910 8,910 -
Fund Balance - End of Year 8,910$ 8,910$ 9,030$ 120$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 15$ 15$ 137$ 122$
Use of Money and Property - - 70 70
TOTAL REVENUES 15 15 207 192
EXPENDITURES:
Current:
City Manager 37 305 100 205
NET CHANGE IN FUND BALANCE (22) (290) 107 397
Fund Balance - Beginning of Year 360 360 360 -
Fund Balance - End of Year 338$ 70$ 467$ 397$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 296$ 296$
Other - - 9 9
TOTAL REVENUES - - 305 305
EXPENDITURES:
Current:
Community Services - 244 124 120
Public Works 6,008 11,228 4,473 6,755
TOTAL EXPENDITURES 6,008 11,472 4,597 6,875
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (6,008) (11,472) (4,292) 7,180
OTHER FINANCING SOURCES (USES):
Transfers In 5,208 5,258 5,258 -
NET CHANGE IN FUND BALANCE (800) (6,214) 966 7,180
Fund Balance - Beginning of Year 9,147 9,147 9,147 -
Fund Balance - End of Year 8,347$ 2,933$ 10,113$ 7,180$
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
Affordable Housing In-Lieu
Infrastructure
Public Financing Authority
OTHER GOVERNMENTAL FUNDS
151
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 3$ 3$
EXPENDITURES:
Fire - 786 759 27
Debt Service:-
Interest - - 24 (24)
TOTAL EXPENDITURES - 786 783 3
NET CHANGE IN FUND BALANCE - (786) (780) 6
Fund Balance - Beginning of Year 790 790 790 -
Fund Balance - End of Year 790$ 4$ 10$ 6$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Licenses and Permits 68$ 68$ 68$ -$
EXPENDITURES:
Current:
City Manager 105 135 - 135
NET CHANGE IN FUND BALANCE (37) (67) 68 135
Fund Balance - Beginning of Year 457 457 457 -
Fund Balance - End of Year 420$ 390$ 525$ 135$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 17$ 17$
EXPENDITURES:
Current:
Public Works - 50 50 -
NET CHANGE IN FUND BALANCE - (50) (33) 17
Fund Balance - Beginning of Year 871 871 871 -
Fund Balance - End of Year 871$ 821$ 838$ 17$
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
Senior Center Development
Parking In-Lieu
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
Lease Capital Project
152
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 257$ 257$
Charges for Current Service 100 100 213 113
TOTAL REVENUES 100 100 470 370
EXPENDITURES:
Current:
Public Works 2,500 4,403 1,898 2,505
NET CHANGE IN FUND BALANCE (2,400) (4,303) (1,428) 2,875
Fund Balance - Beginning of Year 7,991 7,991 7,991 -
Fund Balance - End of Year 5,591$ 3,688$ 6,563$ 2,875$
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property -$ -$ 60$ 60$
Other - - 3 3
TOTAL REVENUES - - 63 63
EXPENDITURES:
Current:
Information Systems - 616 - 616
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES - (616) 63 679
OTHER FINANCING SOURCES (USES):
Transfers In - 850 850 -
TOTAL OTHER FINANCING SOURCES (USES) - 850 850 -
NET CHANGE IN FUND BALANCE - 234 913 679
Fund Balance - Beginning of Year 2,701 2,701 2,701 -
Fund Balance - End of Year 2,701$ 2,935$ 3,614$ 679$
Technology
Sewer Development
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
153
LMIHAF Capital Projects Fund
REVENUES:
Original
Budget Final Budget Actual
Variance with
Final Budget
Positive
(Negative)
Use of Money and Property 406$ 406$ 748$ 342$
EXPENDITURES:
Current:
City Manager 391 396 311 85
Total Expenditures 391 396 311 85
Excess of Revenues Over (Under) Expenditures 15 10 437 427
OTHER FINANCING SOURCES (USES):
Transfers In - 26 26 -
Transfers Out (405) (405) (405) -
Total Other Financing Sources (Uses) (405) (379) (379) -
Net Change in Fund Balance (390) (369) 58 427
Fund Balance - Beginning of Year 5,483 5,483 5,483 -
Fund Balance - End of Year 5,093$ 5,114$ 5,541$ 427$
CITY OF HUNTINGTON BEACH
(In Thousands)
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
MAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
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155
City of Huntington Beach
Internal Service Funds
Internal Services Funds are used to accumulate and allocate costs internally among the City’s various functions.
The Self Insurance Workers’ Comp Fund accounts for the City’s self insurance workers’ compensation program.
The Self Insurance General Liability Funds accounts for the City’s self insurance general liability program.
The Equipment Replacement Fund accounts for the City’s equipment replacement needs.
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157
Self Insurance
Workers' Comp
Self Insurance
General
Liability
Equipment
Replacement
Fund
Internal Service
Fund Total
ASSETS
Current Assets:
Cash and Investments 15,116$ 15,095$ 6,015$ 36,226$
Other Receivables, Net 68 70 28 166
Prepaids 600 - 818 1,418
Total Current Assets 15,784 15,165 6,861 37,810
Capital Assets:
Machinery and Equipment - - 2,262 2,262
Construction in Progress - - 208 208
Less Accumulated Depreciation - - (296) (296)
Total Capital Assets - - 2,174 2,174
Total Assets 15,784 15,165 9,035 39,984
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 165 - - 165
Deferred Outflows Related to Other Postemployment Benefits 9 4 - 13
Total Deferred Outflows of Resources 174 4 - 178
LIABILITIES
Current Liabilities:
Accounts Payable 141 43 313 497
Accrued Payroll 13 7 - 20
Current Portion of Claims Payable 5,873 1,302 - 7,175
Current Portion of Compensated Absences 7 8 - 15
Total Current Liabilities 6,034 1,360 313 7,707
Non-Current Liabilities:
Compensated Absences 18 22 - 40
Net Pension Liability 1,284 - - 1,284
Net Other Postemployment Benefits Liability 22 10 - 32
Claims Payable 20,756 7,095 - 27,851
Total Non-Current Liabilities 22,080 7,127 - 29,207
Total Liabilities 28,114 8,487 313 36,914
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 37 - - 37
Total Deferred Inflows of Resources 37 - - 37
NET POSITION
Net Investment in Capital Assets - - 2,174 2,174
Unrestricted (12,193) 6,682 6,548 1,037
Total Net Position (12,193)$ 6,682$ 8,722$ 3,211$
Governmental Activities
CITY OF HUNTINGTON BEACH
STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
June 30, 2019
(In Thousands)
158
Self Insurance
Workers' Comp
Self Insurance
General
Liability
Equipment
Replacement
Fund
Internal Service
Fund Total
OPERATING REVENUES
Fees and Charges for Service 7,323$ 4,829$ 5,000$ 17,152$
Total Operating Revenues 7,323 4,829 5,000 17,152
OPERATING EXPENSES
Supplies and Operations 1,572 338 2,288 4,198
Claims and Judgments 3,283 1,452 - 4,735
Depreciation - - 226 226
Total Operating Expenses 4,855 1,790 2,514 9,159
Operating Income 2,468 3,039 2,486 7,993
NON-OPERATING REVENUES (EXPENSES)
Interest Income 499 444 109 1,052
Change in Net Position 2,967 3,483 2,595 9,045
Net Position - Beginning Of Year (15,160) 3,199 6,127 (5,834)
Net Position- End Of Year (12,193)$ 6,682$ 8,722$ 3,211$
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
Governmental Activities
159
Self Insurance
Workers' Comp
Self Insurance
General
Liability
Equipment
Replacement
Fund
Internal Service
Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers and Users 7,301$ 4,805$ 4,972$ 17,078$
Cash Paid to Employees for Services (480) (211) - (691)
Cash Paid to Suppliers of Goods and Services (6,577) (3,775) (3,334) (13,686)
Net Cash and Investment Provided (Used) by
Operating Activities 244 819 1,638 2,701
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of Capital Assets - - (1,535) (1,535)
Net Cash and Investments Used by
Capital and Related Financing Activities - - (1,535) (1,535)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received 499 444 109 1,052
Net Cash and Investments Provided (Used) by
Investing Activities 499 444 109 1,052
Net Increase in Cash
and Investments 743 1,263 212 2,218
Cash and Investments -
Beginning of Year 14,373 13,832 5,803 34,008
Cash and Investments - End of Year 15,116$ 15,095$ 6,015$ 36,226$
RECONCILIATION OF OPERATING
INCOME (LOSS) TO NET CASH AND INVESTMENTS
PROVIDED (USED) BY OPERATING ACTIVITIES
Operating (Loss) 2,468$ 3,039$ 2,486$ 7,993$
Adjustments to Reconcile Operating
Income (Loss) to Net Cash and Investments
Provided (Used) by Operating Activities
Depreciation - - 226 226
(Increase) in Other Receivables, Net (22) (24) (28) (74)
(Increase) Decrease in Prepaids - 923 (818) 105
(Decrease) in Accounts Payable (82) (49) (228) (359)
Increase in Accrued Payroll 1 2 - 3
(Decrease) in Claims Payable (2,182) (3,074) - (5,256)
Increase in Compensated Absences 11 2 - 13
Decrease in Deferred Pension Outflow 126 - - 126
(Decrease) in Deferred Pension Inflow (6) - - (6)
(Decrease) in Net Pension Liability (68) - - (68)
Decrease in Deferred Other Postemployment Benefits Outflow 6 3 - 9
(Decrease) in Ending Net Other Postemployment Benefits Liability(8) (3) - (11)
Net Cash and Investments Provided
by Operating Activities 244$ 819$ 1,638$ 2,701$
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
There were no noncash investing, capital, or financing activities during the year ended June 30, 2019.
Governmental Activities
CITY OF HUNTINGTON BEACH
STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(In Thousands)
160
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161
City of Huntington Beach
Fiduciary Funds
Fiduciary Funds account for assets held by the City as an agent for other organizations or individuals.
The General Deposit Fund accounts for the deposit of general monies held by the City for private individuals
and businesses.
The Community Facilities Districts Funds accounts for the debt service activity of the City’s community facilities
district.
The Huntington Beach Business Improvement District Fund accounts for the activities of the City’s business
improvement district.
The Central Net Fund accounts for the activity of the Central Net Operations Authority.
The Parking Structures Fund accounts for the activities of the Bella Terra Parking Structure and Strand Parking
Structure.
The West Orange County Water Board Fund accounts for the activities of the West Orange County Water
Board.
162
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163
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF FIDUCIARY FUND ASSETS AND LIABILITIES
FIDUCIARY FUNDS
JUNE 30, 2019
Agency Funds
Assets:
General
Deposit
Community
Facilities
Districts
Business
Improvement
Districts
Central Net
Operations
Authority
Parking
Structures
West Orange
County Water
Board
Total Agency
Funds
Cash and Investments 181$ 2,740$ 1,079$ $ 303 $ 4,402 $ 1,874 $ 10,579
Cash with Fiscal Agent - 3,451 - - - - 3,451
Accounts Receivable, Net - 13 544 82 21 10 670
Total Assets 181$ 6,204$ 1,623$ 385$ 4,423$ 1,884$ 14,700$
Liabilities:
Accounts Payable -$ -$ 1,565$ 1$ $ 459 $ 265 $ 2,290
Accrued Payroll - - - 8 - - 8
Due to Bondholders - 6,204 - - - - 6,204
Held for Others 181 - 58 376 3,964 1,619 6,198
Total Liabilities 181$ 6,204$ 1,623$ $ 385 $ 4,423 $ 1,884 $ 14,700
164
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES
ALL AGENCY FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
Balance
June 30, 2018 Additions Deletions
Balance
June 30, 2019
General Deposit
Assets:
Cash and Investments 183$ 6$ (8)$ 181$
Total Assets 183$ 6$ (8)$ 181$
Liabilities:
Held for Others 183$ 1$ (3)$ 181$
Total Liabilities 183$ 1$ (3)$ 181$
Community Facilities Districts
Assets:
Cash and Investments 2,637$ 4,262$ (4,159)$ 2,740$
Cash with Fiscal Agent 3,433 43 (25) 3,451
Accounts Receivable, Net 13 17 (17) 13
Total Assets 6,083$ 4,322$ (4,201)$ 6,204$
Liabilities:
Due to Bondholders 6,083$ 121 -$ 6,204$
Total Liabilities 6,083$ 121$ -$ 6,204$
Business Improvement Districts
Assets:
Cash and Investments 493$ 4,736$ (4,150)$ 1,079$
Accounts Receivable, Net 398 668 (522) 544
Total Assets 891$ 5,404$ (4,672)$ 1,623$
Liabilities:
Accounts Payable 740$ 5,548$ (4,723)$ 1,565$
Held for Others 151 - (93) 58
Total Liabilities 891$ 5,548$ (4,816)$ 1,623$
Central Net Operations Authority
Assets:
Cash and Investments 372$ 1,148$ (1,217)$ 303$
Accounts Receivable, Net 2 133 (53) 82
Total Assets 374$ 1,281$ (1,270)$ 385$
Liabilities:
Accounts Payable 10$ 90$ (99)$ 1$
Accrued Payroll 8 9 (9) 8
Held for Others 356 20 - 376
Total Liabilities 374$ 119$ (108)$ 385$
165
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF CHANGES IN FIDUCIARY ASSETS AND LIABILITIES
ALL AGENCY FUNDS
FOR THE YEAR ENDED JUNE 30, 2019
(CONTINUED)
Balance
June 30, 2018 Additions Deletions
Balance
June 30, 2019
Parking Structures
Assets:
Cash and Investments 3,914$ 2,643$ (2,155)$ 4,402$
Accounts Receivable, Net 13 21 (13) 21
Total Assets 3,927$ 2,664$ (2,168)$ 4,423$
Liabilities:
Accounts Payable 363$ 1,837$ (1,741)$ 459$
Held for Others 3,564 400 - 3,964
Total Liabilities 3,927$ 2,237$ (1,741)$ 4,423$
West Orange County Water Board
Assets:
Cash and Investments 6,363$ 31,054$ (35,543)$ 1,874$
Accounts Receivable, Net 36 1,666 (1,692) 10
Total Assets 6,399$ 32,720$ (37,235)$ 1,884$
Liabilities:
Accounts Payable 882$ 5,686$ (6,303)$ 265$
Held for Others 5,517 - (3,898) 1,619
Total Liabilities 6,399$ 5,686$ (10,201)$ 1,884$
Total - All Agency Funds
Assets:
Cash and Investments 13,962$ 43,849$ (47,232)$ 10,579$
Cash with Fiscal Agent 3,433 43 (25) 3,451
Accounts Receivable, Net 462 2,505 (2,297) 670
Total Assets 17,857$ 46,397$ (49,554)$ 14,700$
Liabilities:
Accounts Payable 1,995$ 13,161$ (12,866)$ 2,290$
Accrued Payroll 8 9 (9) 8
Due to Bondholders 6,083 121 - 6,204
Held for Others 9,771 421 (3,994) 6,198
Total Liabilities 17,857$ 13,712$ (16,869)$ 14,700$
166
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167
168
City of Huntington Beach
Statistical Section
This part of the City of Huntington Beach’s Comprehensive Annual Report presents detailed information
as a context for understanding what the information in the financial statements, note disclosures, and
required supplementary information say about the City’s overall financial health.
Financial Trends – contain trend information to help the reader understand how the City’s
financial performance has changed over time.
Revenue Capacity – contains information to help the reader assess the City’s most significant
local revenue source, the property tax.
Debt Capacity – present information to assess the affordability of the City’s current levels of
outstanding debt and the City’s ability to issue additional debt in the future.
Demographic and Economic Information – offers information to help the reader
understand the environment within which the City’s financial activities take place.
Operating Information – contains service and infrastructure data to help the reader
understand how the City’s financial report relates to the services the City provides and the
activities it performs.
Unless otherwise noted, the information in these schedules is derived from the comprehensive annual
financial reports for the relevant year.
169
June 30, June 30,
Governmental Activities 2019 2018*** 2017 2016 2015
Net investment in capital assets 664,281$ 650,466$ 646,336$ 624,180$ 615,512$
Restricted 66,089 58,537 41,888 41,555 52,270
Unrestricted (251,022) (254,528) (262,874) (222,863) (222,787)
Total Governmental Activities Net Position 479,348$ 454,475$ 425,350$ 442,872$ 444,995$
Business-Type Activities
Net investment in capital assets 145,696$ 143,954$ 140,478$ 142,566$ 142,616$
Restricted 21,153 25,886 30,444 32,049 28,096
Unrestricted 36,747 27,492 22,228 21,997 28,476
Total Business-Type Activities Net Position 203,596$ 197,332$ 193,150$ 196,612$ 199,188$
Primary Government
Net investment in capital assets 809,977$ 794,420$ 786,814$ 766,746$ 758,128$
Restricted 87,242 84,423 72,332 73,604 80,366
Unrestricted (214,275) (227,036) (240,646) (200,866) (194,311)
Total Primary Government Net Position 682,944$ 651,807$ 618,500$ 639,484$ 644,183$
Expenses: June 30, June 30,
Governmental Activities: 2019 2018*** 2017 2016 2015
City Council 360$ 218$ 347$ 321$ 270$
City Manager 4,501 2,063 4,691 3,849 3,302
City Treasurer 246 101 216 208 158
City Attorney 2,886 1,536 3,307 2,598 2,284
City Clerk 976 475 889 806 855
Finance 6,245 3,455 6,201 5,765 5,208
Human Resources 6,261 4,760 5,693 6,814 5,169
Community Development* 6,144 4,301 7,576 7,208 6,605
Building - - - - -
Fire 56,494 26,688 52,941 47,965 42,162
Information Services 7,530 4,375 7,047 6,852 6,552
Police 87,355 42,109 84,786 74,943 64,048
Economic Development** - - - - -
Community Services 13,369 6,768 15,558 9,935 13,809
Library Services 5,206 2,890 5,064 4,611 4,246
Public Works 40,803 23,898 35,373 31,791 27,979
Non-Departmental**** - 18,164 29,368 35,240 24,080
Interest on Long-Term Debt 1,823 1,467 2,063 2,119 2,245
Total Governmental Activities 240,199 143,268 261,120 241,025 208,972
Business-Type Activities
Water Utility 43,405 28,414 45,940 41,643 38,614
Sewer Service 9,442 6,127 9,351 8,729 8,192
Refuse Collection 12,051 8,916 10,821 11,277 11,308
Hazmat Service 234 117 224 244 204
Total Business-Type Activities 65,132 43,574 66,336 61,893 58,318
Total Business and Government Type Activities 305,331$ 186,842$ 327,456$ 302,918$ 267,290$
* Planning and Building departments were combined in the year ended September 30, 2011. The combined department was later renamed to Community
Development in the year ended September 30, 2016.
** Economic Development was included with the City Manager's office beginning in the year ended September 30, 2014.
*** The 2018 period reflects nine months of activity only as the fiscal year change resulted in reporting period from October 1, 2017 to June 30, 2018.
**** Beginning with the fiscal year ended June 30, 2019, non-departmental expenditures are no longer presented separately but are included as part of
functional expenditures.
CITY OF HUNTINGTON BEACH
CITY OF HUNTINGTON BEACH
Fiscal Year Ended
(In Thousands)
NET POSITION BY COMPONENT - LAST TEN FISCAL YEARS
September 30,
September 30,
CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
(In Thousands)
Fiscal Year Ended
170
Governmental Activities 2014 2013 2012 2011 2010
Net investment in capital assets 618,825$ 617,267$ 612,346$ 569,497$ 567,351$
Restricted 34,018 51,867 44,220 51,195 49,100
Unrestricted 89,524 54,076 53,098 41,239 33,135
Total Governmental Activities Net Position 742,367$ 723,210$ 709,664$ 661,931$ 649,586$
Business-Type Activities
Net investment in capital assets 140,770$ 145,886$ 134,129$ 134,882$ 121,576$
Restricted 27,951 27,488 27,804 27,988 30,512
Unrestricted 53,166 65,595 63,686 59,260 61,723
Total Business-Type Activities Net Position 221,887$ 238,969$ 225,619$ 222,130$ 213,811$
Primary Government
Net investment in capital assets 759,595$ 763,153$ 746,475$ 704,379$ 688,927$
Restricted 61,969 79,355 72,024 79,183 79,612
Unrestricted 142,690 119,671 116,784 100,499 94,858
Total Primary Government Net Position 964,254$ 962,179$ 935,283$ 884,061$ 863,397$
Expenses:
Governmental Activities: 2014 2013 2012 2011 2010
City Council 258$ 271$ 310$ 300$ 301$
City Manager 3,878 1,583 1,767 1,502 1,674
City Treasurer 169 132 141 1,274 1,532
City Attorney 2,321 2,221 2,313 2,354 2,772
City Clerk 747 797 689 813 883
Finance 5,314 4,825 4,573 3,423 4,309
Human Resources 4,616 5,032 4,743 4,792 5,284
Community Development* 7,091 6,155 6,123 6,036 3,170
Building - - - - 4,608
Fire 43,194 36,323 35,336 35,393 33,545
Information Services 6,456 6,096 5,857 5,909 6,812
Police 66,681 60,466 60,690 60,192 59,049
Economic Development** - 8,395 3,703 10,876 11,891
Community Services 12,509 15,521 15,586 16,104 16,147
Library Services 4,024 3,873 3,777 3,838 4,519
Public Works 31,691 28,500 26,508 27,232 26,483
Non-Departmental**** 21,602 25,563 19,190 19,595 24,303
Interest on Long-Term Debt 1,946 2,289 2,376 6,287 6,146
Total Governmental Activities 212,497 208,042 193,682 205,920 213,428
Business-Type Activities
Water Utility 41,499 38,446 37,437 31,712 34,902
Sewer Service 9,712 7,253 7,623 6,338 6,575
Refuse Collection 11,145 10,882 10,785 10,690 10,585
Hazmat Service 231 220 216 243 315
Total Business-Type Activities 62,587 56,801 56,061 48,983 52,377
Total Business and Government Type Activities 275,084$ 264,843$ 249,743$ 254,903$ 265,805$
CITY OF HUNTINGTON BEACH
CITY OF HUNTINGTON BEACH
NET POSITION BY COMPONENT - LAST TEN FISCAL YEARS
(In Thousands)
(continued)
Fiscal Year Ended
September 30,
September 30,
CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
(In Thousands)
(continued)
Fiscal Year Ended
171
CITY OF HUNTINGTON BEACH
CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
(In Thousands)
Program Revenues: June 30, June 30,
Governmental Activities: 2019 2018*** 2017 2016 2015
Charges for Services
City Council 149$ 91$ 108$ 116$ 71$
City Manager 3,300 2,374 3,515 3,029 2,994
City Treasurer 135 81 100 101 639
City Attorney 7 4 5 4 143
City Clerk 327 229 257 201 199
Finance 2,899 1,746 2,047 2,277 1,353
Human Resources 751 373 654 513 1,263
Community Development* 7,459 5,448 7,448 9,252 10,670
Building - - - - -
Fire 9,831 9,104 10,296 9,894 8,625
Information Services 628 381 501 521 834
Police 6,044 4,703 4,968 5,958 5,512
Economic Development** - - - - -
Community Services 23,530 19,245 21,693 18,853 18,569
Library Services 308 237 476 408 495
Public Works 6,368 4,392 5,392 5,733 6,474
Non-Departmental**** - 916 1,116 1,290 327
Total Charges for Services 61,736 49,324 58,576 58,150 58,168
Operating Grants 6,644 3,976 7,329 4,723 7,458
Capital Grants 8,361 6,055 3,408 5,939 9,809
Total Governmental Activities Program Revenue 76,741 59,355 69,313 68,812 75,435
Business-Type Activities:
Water Utility 43,958 29,530 39,938 35,765 35,350
Sewer Service 11,868 8,362 10,854 11,280 11,239
Refuse Collection 12,022 8,820 11,282 11,215 11,221
Hazmat Service 276 25 287 235 222
Total Business-Type Activities Program Revenues 68,124 46,737 62,361 58,495 58,032
Total Primary Government Program Revenue 144,865 106,092 131,674 127,307 133,467
Net (Expense) Revenue:
Governmental Activities: (163,458) (83,913) (191,807) (172,213) (133,537)
Business-Type Activities 2,992 3,163 (3,975) (3,398) (286)
Total Net (Expense) Revenue (160,466) (80,750) (195,782) (175,611) (133,823)
General Revenue and Other Changes in Net Position
Governmental Activities:
Property Taxes 89,124 61,185 82,925 87,128 82,615
Sales Taxes 47,437 33,844 43,551 34,289 33,063
Utility Taxes 18,788 14,014 19,303 19,482 20,229
Other Taxes 20,227 14,883 17,991 17,313 16,464
Use of Money and Property 8,746 2,158 3,370 3,618 5,551
From Other Agencies 4,046 2,263 3,896 4,397 5,653
Gain on Sale of Property - - - - -
Other - 2,811 2,438 5,693 4,440
Transfers (37) (332) (51) (38) 35
Total Governmental Activities General Revenues 188,331 130,826 173,423 171,882 168,050
Business-Type Activities:
Use of Money and Property 3,235 279 462 939 1,281
Transfers 37 332 51 38 (35)
Total Business-Type Activities General Revenues 3,272 611 513 977 1,246
Total General Revenues and Transfers 191,603 131,437 173,936 172,859 169,296
Extraordinary Gain - - - - -
Changes in Net Position - Governmental Activities 24,873 46,913 (18,384) (331) 34,513
Changes in Net Position - Business-Type Activities 6,264 3,774 (3,462) (2,421) 960
Net Position - Beginning of Year 651,807 618,500 639,484 642,236 964,254
Prior Period Adjustment - Governmental Activities - (17,788) 862 - (333,677)
Prior Period Adjustment - Business-Type Activities - 408 - - (23,814)
Net Position - Beginning of Year as restated 651,807 601,120 640,346 642,236 606,763
Net Position - End of Year 682,944$ 651,807$ 618,500$ 639,484$ 642,236$
* Planning and Building departments were combined in the year ended September 30, 2011. The combined department was later renamed to Community
Development in the year ended September 30, 2016.
** Economic Development was included with the City Manager's office beginning in the year ended September 30, 2014
*** The 2018 period reflects nine months of activity only as the fiscal year change resulted in reporting period from October 1, 2017 to June 30, 2018.
**** Beginning with the fiscal year ended June 30, 2019, non-departmental expenditures are no longer presented separately but are included as part of
functional expenditures.
September 30,
Fiscal Year Ended
172
Program Revenues:
Governmental Activities: 2014 2013 2012 2011 2010
Charges for Services
City Council 68$ 66$ 65$ 63$ 62$
City Manager 2,835 134 130 127 126
City Treasurer 621 602 585 568 566
City Attorney 139 135 131 127 456
City Clerk 321 248 170 98 106
Finance 1,313 1,275 1,238 1,202 1,234
Human Resources 2,499 1,236 1,150 1,117 1,103
Community Development* 9,357 9,411 7,706 6,084 682
Building - - - - 4,126
Fire 8,672 9,482 9,497 8,632 8,504
Information Services 809 786 763 741 731
Police 5,170 4,653 5,073 5,207 4,849
Economic Development** - 2,505 2,303 2,800 2,685
Community Services 18,055 17,832 17,792 15,345 15,470
Library Services 434 634 466 325 415
Public Works 6,367 7,315 5,482 5,638 4,850
Non-Departmental**** 318 306 281 273 269
Total Charges for Services 56,978 56,620 52,832 48,347 46,234
Operating Grants 7,958 7,303 5,088 8,914 7,069
Capital Grants 5,486 7,191 6,624 5,198 7,418
Total Governmental Activities Program Revenue 70,422 71,114 64,544 62,459 60,721
Business-Type Activities:
Water Utility 36,944 38,679 35,926 34,583 34,394
Sewer Service 10,665 12,267 11,546 10,532 10,565
Refuse Collection 11,006 10,950 10,786 10,631 10,506
Hazmat Service 183 278 154 383 198
Total Business-Type Activities Program Revenues 58,798 62,174 58,412 56,129 55,663
Total Primary Government Program Revenue 129,220 133,288 122,956 118,588 116,384
Net (Expense) Revenue:
Governmental Activities: (142,075) (136,928) (129,138) (143,461) (152,707)
Business-Type Activities (3,789) 5,373 2,351 7,146 3,286
Total Net (Expense) Revenue (145,864) (131,555) (126,787) (136,315) (149,421)
General Revenue and Other Changes in Net Position
Governmental Activities:
Property Taxes 81,355 74,795 74,856 86,056 85,552
Sales Taxes 29,243 30,276 30,051 25,339 23,646
Utility Taxes 20,621 20,764 20,152 19,135 19,757
Other Taxes 15,601 14,568 12,930 13,368 11,629
Use of Money and Property 3,725 2,816 3,434 3,239 4,043
From Other Agencies 4,279 6,003 6,585 5,647 4,184
Gain on Sale of Property - - - - 4,496
Other 6,903 5,240 4,941 3,060 5,448
Transfers (38) (38) (38) (38) (38)
Total Governmental Activities General Revenues 161,689 154,424 152,911 155,806 158,717
Business-Type Activities:
Use of Money and Property 1,015 137 1,100 1,135 1,824
Transfers 38 38 38 38 38
Total Business-Type Activities General Revenues 1,053 175 1,138 1,173 1,862
Total General Revenues and Transfers 162,742 154,599 154,049 156,979 160,579
Extraordinary Gain - (4,669) 23,960 - -
Changes in Net Position - Governmental Activities 19,614 12,827 47,733 12,345 6,010
Changes in Net Position - Business-Type Activities (2,736) 5,548 3,489 8,319 5,148
Net Position - Beginning of Year 962,179 935,283 884,061 863,397 852,239
Prior Period Adjustment - Governmental Activities (457) 719 - - -
Prior Period Adjustment - Business-Type Activities (14,346) 7,802 - - -
Net Position - Beginning of Year as restated 947,376 943,804 884,061 863,397 852,239
Net Position - End of Year 964,254$ 962,179$ 935,283$ 884,061$ 863,397$
(In Thousands)
(continued)
Fiscal Year Ended
September 30,
CITY OF HUNTINGTON BEACH
CHANGES IN NET POSITION - LAST TEN FISCAL YEARS
173
2019 2018 2017 2016 2015
General Fund:
Nonspendable 23$ 41$ -$ -$ 4,479$
Restricted 8,154 6,384 2,671 2,637 2,871
Committed 25,011 25,011 25,011 25,011 25,011
Assigned 45,825 34,464 33,498 35,199 32,431
Unassigned - 2,734 - - -
Total General Fund 79,013$ 68,634$ 61,180$ 62,847$ 64,792$
Other Governmental Funds:
Nonspendable 64$ 726$ -$ -$ -$
Restricted 59,213 52,742 40,588 40,293 45,515
Committed 20,308 20,800 17,686 21,368 21,659
Assigned 3,614 2,701 826 838 161
Total Other Governmental Funds 83,199$ 76,969$ 59,100$ 62,499$ 67,335$
2014 2013 2012 2011 2010
General Fund:
Nonspendable 4,378$ 4,040$ 4,633$ 10,841$ 4,605$
Restricted 2,070 1,878 1,387 1,304 1,452
Committed 25,011 24,011 - - 30,493
Assigned 29,595 24,578 48,415 42,411 4,802
Unassigned - - - - -
Total General Fund 61,054$ 54,507$ 54,435$ 54,556$ 41,352$
Other Governmental Funds:
Nonspendable -$ -$ -$ -$ 6,576$
Restricted 27,214 27,425 27,722 32,519 33,319
Committed 16,447 11,098 6,745 4,049 1,755
Assigned 151 316 1,181 1,711 3,914
Unassigned - (210) (395) (4,377) (4,319)
Total Other Governmental Funds 43,812$ 38,629$ 35,253$ 33,902$ 41,245$
Fiscal Year Ended September 30,
CITY OF HUNTINGTON BEACH
FUND BALANCES - GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
Fiscal Year Ended September 30,Fiscal Year Ended June 30,
174
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175
2019 2018* 2017 2016 2015
REVENUES:
Property Taxes 89,367$ 80,614$ 80,826$ 86,382$ 82,472$
Sales Taxes 47,437 33,844 43,551 39,305 32,234
Utility Taxes 18,788 14,014 19,303 19,482 20,229
Other Taxes 27,196 18,409 17,991 17,313 16,464
Licenses and Permits 8,574 6,293 8,812 9,820 9,270
Fines and Forfeitures 4,300 3,048 3,995 5,144 4,746
From Use of Money and Property 23,276 11,600 17,210 18,055 17,473
From Other Agencies 13,072 10,384 15,293 13,712 18,634
Charges for Current Service/Other Revenue 33,787 30,216 32,351 32,506 35,869
TOTAL REVENUES 265,797 208,422 239,332 241,719 237,391
EXPENDITURES
Current:
City Council 369 279 333 318 278
City Manager 6,598 3,143 4,116 3,092 2,703
City Treasurer 248 134 201 204 167
City Attorney 2,874 2,037 3,052 2,539 2,425
City Clerk 981 602 830 790 895
Finance 6,484 4,376 5,763 5,659 5,452
Human Resources 6,362 5,323 5,535 6,776 4,606
Community Development** 8,138 5,554 6,963 7,062 6,954
Building - - - - -
Fire 54,431 36,347 46,831 46,200 45,008
Information Systems 8,342 5,385 6,603 6,742 6,846
Police 83,546 57,916 75,015 72,612 68,940
Economic Development*** - - - - -
Community Services 11,720 7,958 14,124 10,768 10,223
Library Services 4,944 3,436 4,422 4,247 4,146
Public Works 46,878 30,357 38,635 23,659 23,820
Non-Departmental***** - 22,432 28,396 24,670 20,067
Capital Outlay**** - - - 27,269 14,986
Debt Service:
Principal 5,346 311 5,091 5,933 5,454
Interest 1,890 965 2,066 2,138 2,226
TOTAL EXPENDITURES 249,151 186,555 247,976 250,678 225,196
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES 16,646 21,867 (8,644) (8,959) 12,195
OTHER FINANCING SOURCES (USES):
Transfers In 11,190 13,261 6,692 9,034 12,158
Issuance of Long-Term Debt - - 2,767 10,197 -
Issuance Premium - - - - -
Payments to Escrow - - - - -
Transfers Out (11,227) (13,593) (6,743) (17,053) (14,238)
TOTAL OTHER FINANCING SOURCES (USES)(37) (332) 2,716 2,178 (2,080)
Extraordinary Item - Dissolution of RDA - - - - -
INCREASE (DECREASE) IN FUND BALANCES 16,609$ 21,535$ (5,928)$ (6,781)$ 10,115$
DEBT SERVICE AS A PERCENTAGE OF
NON-CAPITAL EXPENDITURES 3.0% 0.7% 3.0% 3.7% 3.8%
* The 2017-18 period reflects nine months of activity only as the fisc al year change resulted in a nine month reporting period from
October 1, 2017 to June 30, 2018.
** Planning and Building departments were combined in the year ended September 30, 2011. The department was later renamed to
Community Development in the year ended September 30, 2016
*** Economic Development was included with the City Manager's office beginning in the year ended September 30, 2014.
**** Beginning with the fiscal year ended September 30, 2017, capital outlay expenditures are no longer presented separately but are
are included as part of functional expenditures.
***** Beginning with the fiscal year ended June 30, 2019, non-departmental expenditures are no longer presented separately but are
included as part of functional expenditures.
CITY OF HUNTINGTON BEACH
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
Fiscal Year Ended
September 30, June 30,
176
2014 2013 2012 2011 2010
REVENUES:
Property Taxes 79,460$ 74,442$ 74,554$ 85,869$ 85,072$
Sales Taxes 30,454 29,763 29,126 25,034 22,582
Utility Taxes 20,621 20,764 20,152 19,135 19,757
Other Taxes 15,601 14,568 12,930 13,368 11,629
Licenses and Permits 7,976 9,880 7,773 6,728 6,204
Fines and Forfeitures 4,392 4,058 4,252 4,334 3,965
From Use of Money and Property 16,695 16,046 16,855 15,660 16,330
From Other Agencies 16,804 18,237 18,537 17,659 19,893
Charges for Current Service/Other Revenue 33,886 34,150 30,051 26,996 26,401
TOTAL REVENUES 225,889 221,908 214,230 214,783 211,833
EXPENDITURES
Current:
City Council 258 260 310 300 301
City Manager 3,040 1,574 1,758 1,493 1,652
City Treasurer 169 132 141 1,274 1,532
City Attorney 2,321 2,221 2,313 2,354 2,772
City Clerk 747 797 689 798 868
Finance* 5,314 4,825 4,573 3,423 4,286
Human Resources 4,298 5,661 5,213 6,106 5,284
Community Development** 7,091 6,155 6,119 6,034 3,170
Building - - - - 3,449
Fire 42,602 35,920 35,145 34,546 32,816
Information Systems 6,456 6,096 5,857 5,879 6,782
Police 66,628 60,460 60,249 59,546 58,566
Economic Development*** - 7,012 3,389 13,784 14,704
Community Services 10,040 13,952 14,082 13,724 14,501
Library Services 3,739 3,588 3,492 3,546 4,158
Public Works 22,872 22,169 22,666 19,006 20,466
Non-Departmental***** 21,033 19,684 15,455 14,914 14,832
Capital Outlay**** 10,729 10,745 11,096 6,872 17,175
Debt Service:
Principal 4,797 9,381 6,012 9,446 7,351
Interest 1,987 2,321 2,564 6,397 6,368
TOTAL EXPENDITURES 214,121 212,953 201,123 209,442 221,033
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES 11,768 8,955 13,107 5,341 (9,200)
OTHER FINANCING SOURCES (USES):
Transfers In 9,832 9,501 18,904 27,385 20,850
Issuance of Long-Term Debt - - - 36,275 14,745
Issuance Premium - - - 1,884 707
Payments to Escrow - - - (37,601) (15,967)
Transfers Out (9,870) (10,339) (18,942) (27,423) (20,888)
TOTAL OTHER FINANCING SOURCES (USES)(38) (838) (38) 520 (553)
Extraordinary Item - Dissolution of RDA - (4,669) (11,839) - -
INCREASE (DECREASE) IN FUND BALANCES 11,730$ 3,448$ 1,230$ 5,861$ (9,753)$
DEBT SERVICE AS A PERCENTAGE OF
NON-CAPITAL EXPENDITURES 3.5% 6.1% 4.7% 8.5% 7.2%
CITY OF HUNTINGTON BEACH
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS
(In Thousands)
September 30,
(Modified Accrual Basis of Accounting)
Fiscal Year Ended
177
Fiscal Year
Common
Property Public Utilities Total Secured Unsecured
Total Assessed
Valuation
Total Direct
Tax Rate
2009-2010 25,324,857$ 263$ 25,325,120$ 1,086,770$ 26,411,890$ 0.17082
2010-2011 25,513,584 70,602 25,584,186 1,090,869 26,675,055 0.17082
2011-2012 25,480,770 72,602 25,553,372 1,170,004 26,723,376 0.17082
2012-2013 26,927,738 60,802 26,988,540 1,056,938 28,045,478 0.17082
2013-2014 28,005,989 53,702 28,059,691 1,106,038 29,165,729 0.17082
2014-2015 29,723,274 74,102 29,797,376 989,809 30,787,185 0.17082
2015-2016 31,193,211 66,802 31,260,013 1,132,728 32,392,741 0.17082
2016-2017 32,540,317 55,802 32,596,119 1,067,760 33,663,879 0.17082
2017-2018 34,199,035 41,102 34,240,137 1,100,077 35,340,214 0.17082
2018-2019 35,941,648 61,202 36,002,850 1,117,879 37,120,729 0.17082
Source: County of Orange Auditor Controller
Fiscal Year
City Basic Rate
(1), (2) City Other School Districts
Metro Water
District Others
2009-2010 0.15582 0.01500 0.58099 0.00430 0.32471 1.08082
2010-2011 0.15582 0.01500 0.58252 0.00370 0.32548 1.08252
2011-2012 0.15582 0.01500 0.58334 0.00370 0.32513 1.08299
2012-2013 0.15582 0.01500 0.60412 0.00350 0.30798 1.08642
2013-2014 0.15582 0.01500 0.59841 0.00350 0.31444 1.08717
2014-2015 0.15582 0.01500 0.62448 0.00350 0.29444 1.09324
2015-2016 0.15582 0.01500 0.07615 0.00350 0.84418 1.09465
2016-2017 0.15582 0.01500 0.07786 0.00350 0.83599 1.08817
2017-2018 0.15582 0.01500 0.09970 0.00350 0.84418 1.11820
2018-2019 0.15582 0.01500 0.09246 0.00350 0.84418 1.11096
Note: Rates are per $100 of assessed valuation
Source: County of Orange Auditor Controller
Direct Total Direct
and
Overlapping
Overlapping
CITY OF HUNTINGTON BEACH
ASSESSED AND ACTUAL VALUATION
OF ALL TAXABLE PROPERTY (EXCLUDING REDEVELOPMENT AGENCY)
LAST TEN FISCAL YEARS
LAST TEN FISCAL YEARS
(In Thousands)
PROPERTY TAX RATES
ALL DIRECT AND
OVERLAPPING GOVERNMENTS
TAX RATE 04-001
LARGEST AREA IN CITY
(1) Excludes rates associated with Mello-Roos Districts
(2) In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1% fixed amount. This 1%
is shared by all taxing agencies for which the subject property resides. In 1986, the State Constitution was amended
to allow rates over the 1% base rate for voter approved general obligation debt. Valuations of real property are
frozen at the value of the property in 1975, with an allowable adjustment up to 2% per year for inflation. However,
property is assessed to its current value when a change of ownership occurs. New construction, including tenant
improvements, is assessed at its current value.
178
Fiscal Year Total Levy Amount
Percentage
of Levy
Delinquent
Tax
Collections*Amount
Percentage
of Levy
Delinquent
Taxes
Receivable
Delinquency
Percent
Secured Taxes
2009-2010 43,892 36,992 84.3% 1,880 38,872 88.6% 1,038 2.4%
2010-2011 44,014 42,233 96.0% 1,339 43,572 99.0% 746 1.7%
2011-2012 44,304 42,611 96.2% 951 43,562 98.3% 660 1.5%
2012-2013 47,162 45,722 96.9% 855 46,577 98.8% 565 1.2%
2013-2014 49,808 48,452 97.3% 656 49,108 98.6% 545 1.1%
2014-2015 52,188 50,759 97.3% 576 51,335 98.4% 519 1.0%
2015-2016 55,886 53,916 96.5% 546 54,462 97.5% 1,263 2.3%
2016-2017 58,258 56,481 96.9% 525 57,006 97.9% 1,253 2.2%
2017-2018 62,418 59,731 95.7% 474 60,205 96.5% 2,073 3.3%
2018-2019 63,934 62,222 97.3% 622 62,844 98.3% 920 1.4%
Unsecured Taxes
2009-2010 1,882 1,677 89.1% 44 1,721 91.4% 65 3.5%
2010-2011 1,940 1,739 89.6% 22 1,761 90.8% 75 3.9%
2011-2012 1,863 1,731 92.9% 28 1,759 94.4% 68 3.7%
2012-2013 1,882 1,653 87.8% 23 1,676 89.1% 62 3.3%
2013-2014 1,922 1,693 88.1% 33 1,726 89.8% 76 4.0%
2014-2015 2,016 1,839 91.2% 37 1,876 93.1% 69 3.4%
2015-2016 1,925 1,740 90.4% 35 1,775 92.2% 39 2.0%
2016-2017 1,899 1,692 89.1% 23 1,715 90.3% 34 1.8%
2017-2018 1,964 1,829 93.1% 28 1,857 94.6% 26 1.3%
2018-2019 1,964 1,804 91.9% 20 1,824 92.9% 29 1.5%
Community Facilities Districts
2009-2010 3,937 3,925 99.7% 11 3,936 100.0% - 0.0%
2010-2011 3,850 3,838 99.7% - 3,838 99.7% 1 0.0%
2011-2012 4,106 4,091 99.6% 3 4,094 99.7% 2 0.0%
2012-2013 4,093 4,077 99.6% 4 4,081 99.7% 4 0.1%
2013-2014 3,968 3,957 99.7% 6 3,963 99.9% - 0.0%
2014-2015 3,981 3,967 99.6% 1 3,968 99.7% 2 0.1%
2015-2016 4,121 4,106 99.6% 9 4,115 99.9% 2 0.0%
2016-2017 4,098 4,085 99.7% 2 4,087 99.7% - 0.0%
2017-2018 4,141 4,128 99.7% 5 4,133 99.8% - 0.0%
2018-2019 4,099 4,086 99.7% 3 4,089 99.8% 1 0.0%
* Delinquency tax collections information not available prior to fiscal year 2004-2005
Note: The levy and tax year is for July 1st through June 30th and does not include the Redevelopment Agency
Note:
2002/2003 to current fiscal year includes the following:
Secured: includes supplemental, st ltg reorg, nuisance abatement, weed abatement, retirement override,
tax admin c harges, and community interes t. Does not inc lude CFD.
Unsecured: includes aircraft unsecured tax. Does not include CFD.
Miscellaneous: excluded from all tables.
Delinquency Amount: reflects the "unpaid" amounts as stated in the OC auditor-controller website.
CITY OF HUNTINGTON BEACH
Collected within the Fiscal
Year of the Levy Total Collections
Source: County of Orange Auditor Controller's Office
(In Thousands)
LAST TEN FISCAL YEARS
PROPERTY TAX LEVIES AND COLLECTIONS
179
2018-2019
Taxable Assessed Value Percent
(In Thousands) of Total TAV
Bella Terra Associates LLC 374,197$ 1.01%
McDonnell Douglas/Boeing 309,280 0.83%
PCH Beach Resort LLC 206,144 0.56%
DCO Pacific City LLC 205,278 0.55%
SoCal Holdings LLC 189,188 0.51%
Elan Multifamily LLC 134,122 0.36%
LSREF4 Shark Huntington LLC 120,193 0.32%
Pacific City Hotel LLC 117,720 0.32%
Freeway Industrial Park HB Boardwalk LLC 109,884 0.30%
PC Group Retail LLC 109,682 0.30%
Total Top Ten 1,875,688 5.05%
All Other Property Taxpayers 35,245,041 94.95%
City Total 37,120,729$ 100.00%
2009-2010
Taxable Assessed Value Percent
(In Thousands) of Total TAV
The Boeing Company/McDonnell Douglas Corporation 465,017$ 1.76%
Pacific Sands LLC 127,095 0.48%
United Dominion Realty LP 125,620 0.48%
Seacliff Village Shopping Center INC 108,269 0.41%
WB-NNC Seawind Owner LLC 102,632 0.39%
Cambro Manufacturing Company 100,547 0.38%
JS Stadium LLC 91,142 0.35%
West County Commerce Realty Holding 85,668 0.32%
Casa Apartments LP 79,599 0.30%
FG Seacliff Senior Apartments LP 75,432 0.29%
Total Top Ten 1,361,021 5.15%
All Other Property Taxpayers 25,050,869 94.85%
City Total 26,411,890$ 100.00%
Source: HdL Coren & Cone
Note: Information provided for the period from July 1st through June 30th.
TOP TEN PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
CITY OF HUNTINGTON BEACH
180
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181
Long-Term Indebtedness 2019 2018**** 2017 2016 2015
Governmental Activities:
Judgement Obligation Bonds -$ -$ -$ 659$ 1,634$
Public Financing Authority:
2001(a) Lease Revenue Bond - - - - -
2001(b) Lease Revenue Bond - - - - -
2010(a) Lease Revenue Bond 8,235 9,030 9,030 9,795 10,525
2011(a) Lease Revenue Bond 17,770 19,735 19,735 21,650 24,985
2014(a) Lease Revenue Bond 13,145 13,740 13,740 14,315 14,865
Total Public Financing Authority 39,150 42,505 42,505 45,760 50,375
Redevelopment Agency:
1999 Tax Allocation Refunding Bonds - - - - -
2002 Tax Allocation Refunding Bonds - - - - -
Mayer Disposition and Development Agreement - - - - -
Bella Terra OPA (Parking) - - - - -
CIM DDA (Parking & Infrastructure) - - - - -
CIM DDA (Additional Parking) - - - - -
Section 108 Loan RDA/Bowen Court - - - - -
Total Redevelopment Agency - - - - -
Other Long-Term Obligations:
Capital Leases Payable 5,083 6,079 6,286 4,130 -
PARS Payable - - - - -
Section 108 Loan City - 430 430 625 805
LED Lighting Phase I 656 762 866 966 1,063
CEC 2,818 3,000 3,000 3,000 -
I-Bank 2,454 2,730 2,730 3,000 -
Total Other Long-Term Obligations 11,011 13,001 13,312 11,721 1,868
Total Long-Term Obligations - Governmental Activities 50,161$ 55,506$ 55,817$ 58,140$ 53,877$
Leases Payable -$ -$ -$ -$ -$
Total Long-Term Obligations - Business-Type Activities -$ -$ -$ -$ -$
Total Long Term Obligations - Governmental Activities
and Business-Type Activities 50,161$ 55,506$ 55,817$ 58,140$ 53,877$
2019 2018**** 2017 2016 2015
Population* 202,265 201,761 202,413 201,919 198,389
Debt Per Capita 248$ 275$ 276$ 288$ 272$
Total Personal Income (In Thousands)** 9,222,677$ 8,849,843$ 8,878,441$ 8,880,801$ 8,725,545$
Per Capita Personal Income** 45,597$ 43,863$ 43,863$ 43,982$ 43,982$
Unemployment Rate*** 2.60% 2.70% 2.80% 3.90% 3.90%
Total Employment*** 110,500 109,900 103,200 107,200 104,000
* Source: State of California Department of Finance. FY 10/11 population decrease primarily attributed to the US Census adjustment.
** Source: Claritas, Inc.
*** Source: State of California Employment Development Depart ment
**** The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from October 1, 2017 to
June 30, 2018.
Long-Term Obligations - Business-Type Activities:
Fiscal Year Ended
CITY OF HUNTINGTON BEACH
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(In Thousands)
September 30, June 30,
182
Long-Term Indebtedness 2014 2013 2012 2011 2010
Governmental Activities:
Judgement Obligation Bonds 2,574$ 3,474$ 4,339$ 5,179$ 5,989$
Public Financing Authority:
2001(a) Lease Revenue Bond - - - - 25,650
2001(b) Lease Revenue Bond - - - - 15,915
2010(a) Lease Revenue Bond 11,230 11,910 12,565 13,200 13,820
2011(a) Lease Revenue Bond 28,165 31,195 34,155 36,275 -
2014(a) Lease Revenue Bond - - - - -
Total Public Financing Authority 39,395 43,105 46,720 49,475 55,385
Redevelopment Agency:
1999 Tax Allocation Refunding Bonds - - - 6,180 6,610
2002 Tax Allocation Refunding Bonds - - - 13,525 14,470
Mayer Disposition and Development Agreement - - - 5,803 6,153
Bella Terra OPA (Parking) - - - 13,922 14,076
CIM DDA (Parking & Infrastructure) - - - 7,288 7,444
CIM DDA (Additional Parking) - - - 435 440
Section 108 Loan RDA/Bowen Court - - - 3,997 5,725
Total Redevelopment Agency - - - 51,150 54,918
Other Long-Term Obligations:
Capital Leases Payable - - 290 572 857
PARS Payable 29 56 4,517 5,868 7,149
Section 108 Loan City 975 1,135 1,285 1,425 -
LED Lighting Phase I - - - - -
CEC - - - - -
I-Bank - - - - -
Total Other Long-Term Obligations 1,004 1,191 6,092 7,865 8,006
Total Long-Term Obligations - Governmental Activities 42,973$ 47,770$ 57,151$ 113,669$ 124,298$
Leases Payable -$ -$ 3$ 6$ 9$
Total Long-Term Obligations - Business-Type Activities -$ -$ 3$ 6$ 9$
Total Long Term Obligations - Governmental Activities
and Business-Type Activities 42,973$ 47,770$ 57,154$ 113,675$ 124,307$
2014 2013 2012 2011 2010
Population* 195,999 195,999 193,616 192,524 190,377
Debt Per Capita 219$ 246$ 297$ 300$ 559$
Total Personal Income (In Thousands)** 8,278,410$ 7,839,899$ 7,573,894$ 7,356,548$ 8,440,720$
Per Capita Personal Income** 42,237$ 42,237$ 40,492$ 39,340$ 38,642$
Unemployment Rate*** 3.60% 3.60% 4.30% 6.30% 7.40%
Total Employment*** 120,200 120,200 119,600 115,100 110,600
Long-Term Obligations - Business-Type Activities:
September 30,
Fiscal Year Ended
CITY OF HUNTINGTON BEACH
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(In Thousands)
183
2008-2009 -
2009-2010 -
2010-2011 -
2011-2012 -
2012-2013 -
2013-2014 -
2014-2015 -
2015-2016 -
2016-2017 -
2017-2018 -
2018-2019 -
CITY OF HUNTINGTON BEACH
LAST TEN FISCAL YEARS
(In Thousands)
LEGAL DEBT MARGIN
Assessed
Valuation
Debt Limit - 12% of
Assessed Valuation
Debt Applicable
to Limit
Legal Debt
MarginFiscal Year
26,102,478 3,132,297 3,132,297
26,411,890 3,169,427 3,169,427
26,675,055 3,201,007 3,201,007
26,723,376 3,206,805 3,206,805
28,045,478 3,365,457 3,365,457
29,165,729 3,499,887 3,499,887
30,787,185 3,694,462 3,694,462
32,392,741 3,887,129 3,887,129
37,120,729 4,454,487 4,454,487
33,663,879 4,039,665 4,039,665
35,340,214 4,240,826 4,240,826
184
2018/19 Assessed Valuation: $40,169,845,596
Debt Repaid with Property Taxes (Tax and Assessment Debt):
Overlapping Tax and Assessment Debt
Percent
Applicable*
Debt Applicable
to City
Metropolitan Water District 1.375% 660,688
Coast Community College District 28.493% 214,855,599
Huntington Beach Union High School District 73.027% 131,649,423
Fountain Valley School District 27.295% 14,793,890
Huntington Beach City School District 99.953% 95,139,226
Ocean View School District 93.512% 38,774,751
Westminster School District 24.234% 24,973,683
Los Alamitos Unified School District Facilities District No. 1 1.213% 1,859,168
City of Huntington Beach Community Facilities Districts (1990-1, 2000-1, 2002-1, 2003-1) 100.000% 31,930,000
Total Overlapping Tax and Assessment Debt 554,636,428$
Ratios to 2018-19 Assessed Valuation
Total Overlapping Tax and Assessment Debt 1.38%
Direct and Overlapping General Fund Debt
Orange County General Fund Obligations 6.786% 26,378,539
Orange County Pension Obligations 6.786% 27,661,720
Orange County Board of Education Certificates of Participation 6.786% 915,431
North Orange County Regional Occupation Program Certificates of Participation 0.088% 8,175
Coast Community College District General Fund Obligations 28.493% 840,554
Huntington Beach Union High School District Certificates of Participation 73.027% 46,080,833
Los Alamitos Unified School District Certificates of Participat ion 1.090% 435,028
Huntington Beach School District Certificates of Participation 99.953% 12,792,944
Ocean View School District Certificates of Participation 93.512%19,740,383
Westminster School District Certificates of Participation 24.234% 9,028,443
City of Huntington Beach General Fund Obligations: 100.000% 50,161,000
Total Direct and Overlapping General Fund Obligation Debt 194,043,050$
Overlapping Tax Increment Debt (Successor Agency) 100.000% 8,145,000
Total Direct Debt 50,161,000$
Total Overlapping Debt 706,663,478
Combined Total Debt 756,824,478$ (1)
(1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue, and non-bonded capital lease obligations.
Ratios to Adjusted Assessed Valuations
Combined Direct Debt ($50,161,000) 0.12%
Combined Total Debt 1.88%
Ratios to Redevelopment Successor Agency Incremental Valuation ($2,532,922,305)
Total Overlapping Tax Increment Debt 0.29%
Source: California Municipal Statistics and City of Huntington Beach Finance Department
STATEMENT OF DIRECT AND
OVERLAPPING BONDED DEBT
JUNE 30, 2019
CITY OF HUNTINGTON BEACH
* The percentage of overlapping debt applicable to the city is estimated using tax able assessed property value. Applicable percentages w ere estimated by
determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed
value.
185
2019 % of total
The Boeing Company 3,827 3.55%
No Ordinary Moments 740 0.69%
Hyatt Regency Huntington Beach 641 0.60%
Safran Cabin Galleys US Inc 631 0.59%
Waterfront Hilton Beach Resort 625 0.58%
Safran Cabin Inc 555 0.52%
Cambro Manufacturing 550 0.51%
Huntington Beach Hospital 527 0.49%
Walmart 462 0.43%
Huntington Valley Healthcare 381 0.35%
Total of top 10 8,939 8.30%
All others 98,761 91.70%
Total employment (public and private) 107,700 100.00%
2010 % of total
Boeing 4,478 3.99%
Quiksilver 705 0.63%
Cambro Manufacturing 951 0.85%
Verizon 290 0.26%
Hyatt Regency Huntington Beach 641 0.57%
C & D Aerospace 555 0.50%
Huntington Beach Hospital 503 0.45%
Walmart 255 0.23%
Rainbow Disposal 408 0.36%
Westec Intelligent Surveillance, Inc. 230 0.21%
Total of top 10 9,016 8.04%
All others 103,084 91.96%
Total employment (public and private) 112,100 100.00%
Source: Economic Development Department, City of Huntington Beach
CITY OF HUNTINGTON BEACH
PRINCIPAL PRIVATE EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
186
Budgeted
General Government:2019 2018*** 2017 2016 2015 2014 2013 2012 2011 2010
City Council 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
City Manager 12.50 12.50 11.50 11.50 11.50 11.50 7.00 7.00 7.00 6.00
City Treasurer 2.00 2.00 2.00 1.50 1.50 1.50 1.50 1.50 1.50 10.00
City Attorney 11.00 11.00 12.00 11.00 11.00 11.00 11.00 11.00 11.00 17.00
City Clerk 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 8.00
Finance 33.00 33.00 33.00 32.50 31.50 31.50 29.50 29.50 29.50 32.00
Human Resources 15.00 15.00 15.00 15.00 15.00 15.00 14.50 15.00 15.00 20.50
Community Development 44.00 44.00 44.00 43.50 44.00 43.00 42.75 42.75 43.75 26.00
Building * - - - - - - - - - 25.75
Information Systems 30.00 30.00 30.00 30.00 30.00 30.00 29.50 29.50 29.50 39.00
Economic Development **- - - - - - 4.50 5.50 11.50 14.00
Library Services 28.25 28.25 28.25 28.25 28.25 28.25 27.75 27.75 29.75 32.25
Fire 198.00 198.00 198.00 198.00 198.00 196.50 176.50 176.50 176.50 176.00
Police 364.50 364.50 364.50 364.50 361.50 360.50 358.50 363.00 367.00 355.00
Community Services 36.00 36.00 44.00 44.00 43.00 43.00 56.00 61.00 61.00 65.75
Public Works 207.00 207.00 199.00 199.00 198.00 196.00 196.00 196.00 203.00 227.00
986.25 986.25 986.25 983.75 978.25 972.75 960.00 971.00 991.00 1,055.25
Source: Finance Department, City of Huntington Beach
Note: Actual full-time city employees by function/program data is not available for the fiscal year ended September 30, 2010 (budgeted data provided).
* Building and Planning reported as a combined figure for fiscal year ended September 30, 2011 and subsequent years.
** The Economic Development department was merged into the City Manager's Office for fiscal year ended September 30, 2014 and subsequent
years.
*** The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from
October 1, 2017 to June 30, 2018.
Actual
CITY OF HUNTINGTON BEACH
FULL-TIME ACTUAL AND BUDGETED CITY EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
187
Function/Program 2019 2018*** 2017 2016 2015
Finance:
Water Bills Processed 639,245 476,290 632,997 635,052 536,684
Active Business Licenses 21,414 21,782 22,074 21,420 21,424
Accounts Receivable B illings Processed 30,217 25,000 34,963 30,826 38,594
City Clerk:
Passports Issued 7,024 5,757 7,408 5,623 5,121
Planning:
Entitlements Processed 221 206 216 221 280
Plan Reviews 1,542 1,466 1,376 1,653 1,595
Field Inspection Complaints 8,183 7,005 8,459 7,951 8,233
Code Violation Cases 4,786 4,219 3,981 4,324 4,710
Building:
Number of Permits Issued 9,807 7,490 9,728 10,981 10,670
Number of Inspections Completed 36,562 30,501 38,796 39,380 38,320
Value of Construction Permits (Thousands of Dollars) 135,910 109,462 216,252 283,910 234,946
Processed Number of Certificate of Occupancies* 686 523 740 n/a n/a
Completed Plan Reviews 3,491 2,771 4,172 4,172 3,815
Counter Visits 21,409 16,498 21,731 23,492 21,893
Fire:
Inspections 6,140 3,963 2,758 5,132 6,499
Responses 20,354 14,490 20,555 20,279 19,562
Ocean Rescues 4,953 3,530 3,639 3,977 5,371
Estimated Beach Visitors 10,577,290 12,522,640 13,339,518 12,272,030 11,803,943
Police:
Physical Arrests 5,979 4,614 5,298 5,112 4,854
Parking Violations 79,069 54,500 70,846 90,361 83,453
Traffic Violations 13,314 11,869 19,916 17,639 17,596
Community Services:
Park/Open Space Acreage 1,066 1,065 1,065 1,062 1,062
Enrollment in Recreation Classes 37,978 27,152 37,968 34,424 30,228
Public Works:
Water Sold (Acre Feet)** 26,251 19,777 25,944 24,505 24,763
Gallons of Sewage Pumped Per Day** 19 million 19 million 22 million 19 million 19 million
Library:
Items in Collection 293,995 292,037 288,599 285,814 343,655
Items Borrowed 942,821 655,626 943,642 921,105 908,656
* Beginning the 2013/14 Fiscal Year, the Building Department no longer processes Certificate of Oc cupancies.
** Reduction of estimate is the result of the Governor's executive order to reduce water consumption.
*** The 2017-18 period reflects nine months of activity only as the fis cal year change resulted in a nine month reporting period from
October 1, 2017 to June 30, 2018.
Source: Various departments of the City of Huntington Beach
CITY OF HUNTINGTON BEACH
OPERATING INDICATORS BY FUNCTION/ACTIVITY
LAST TEN FISCAL YEARS
188
Function/Program 2014 2013 2012 2011 2010
Finance:
Water Bills Processed 630,240 628,207 646,229 630,268 640,351
Active Business Licenses 20,450 21,127 22,304 21,903 21,045
Accounts Receivable Billings Processed 42,360 45,422 45,422 42,968 37,146
City Clerk:
Passports Issued 4,598 4,220 3,850 3,082 3,251
Planning:
Entitlements Processed 204 231 205 195 353
Plan Reviews 1,466 1,575 1,184 1,524 2,216
Field Inspection Complaints 7,030 7,301 6,105 6,064 8,187
Code Violation Cases 2,545 2,385 2,573 2,521 3,315
Building:
Number of Permits Issued 9,348 8,970 8,444 8,413 8,037
Number of Inspections Completed 36,142 33,962 31,224 29,905 29,792
Value of Construction Permits (Thousands of Dollars) 216,343 248,246 190,992 104,238 91,049
Processed Number of Certificate of Occupancies* n/a 477 647 765 796
Completed Plan Reviews 3,148 n/a n/a n/a n/a
Counter Visits 21,326 20,854 19,777 20,288 20,272
Fire:
Inspections 6,641 5,087 6,974 7,858 7,450
Responses 15,815 15,608 15,040 15,940 15,629
Ocean Rescues 6,426 4,195 4,669 3,845 2,822
Estimated Beach Visitors 12,035,134 11,016,615 8,906,592 7,840,968 8,208,477
Police:
Physical Arrests 4,303 4,237 5,774 6,457 5,695
Parking Violations 74,668 72,347 77,282 77,261 74,115
Traffic Violations 16,330 13,016 16,916 16,770 22,660
Community Services:
Park/Open Space Acreage 1,062 1,062 1,062 998 1,003
Enrollment in Recreation Classes 30,184 30,218 32,817 32,565 31,743
Public Works:
Water Sold (Acre Feet)** 29,279 28,354 27,784 26,868 27,268
Gallons of Sewage Pumped Per Day** 22 million 22 million 22 million 22 million 22 million
Library:
Items in Collection 332,092 385,901 420,956 427,707 437,603
Items Borrowed 937,533 892,543 888,019 943,695 1,009,634
CITY OF HUNTINGTON BEACH
OPERATING INDICATORS BY FUNCTION/ACTIVITY
LAST TEN FISCAL YEARS
(Continued)
189
Library Services One Main Library and Four Branches
Fire:
Fire Stations 8
Police:
Stations One Main Station and Three Substations
Community Services:
Acreage of Parks 1,066
Community Centers 6
Public Works:
Centerline Square Miles of Streets Maintained 450
Miles of Beach Maintained 4.7
Miles of Storm Drains Maintained 121
Miles of Sewer Maintained 363
Source: Various departments of the City of Huntington Beach
JUNE 30, 2019
CAPITAL ASSET STATISTICS BY FUNCTION/ACTIVITY
CITY OF HUNTINGTON BEACH