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HomeMy WebLinkAboutBe Well (Mind OC) - 2021-04-19 (2) 1iv6.v) 6;00 AIMIL Aav,5v 7-p City of Huntington Beach File #: 21-333 MEETING DATE: 4/19/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Oliver Chi, City Manager PREPARED BY: Julian Harvey, Interim Chief of Police Subject: Approve selection of Be Well OC (Mind OC) as service provider for the City's Mobile Crisis Response Program for select mental health calls for service Statement of Issue: Annually, the Huntington Beach Police Department (HBPD) responds to over 2,500 calls for service specifically involving mental health related needs. In addition, HBPD handles another 12,000 calls relating to homelessness, in which mental illness is either the primary cause or a significant contributing factor. Combined, these represent roughly 10% of all police calls for service. While our officers are capable of navigating these interactions, the City recognizes that there are other organizations throughout Orange County that have specific training to better address these unique service needs, and that a partnership may result in better outcomes for all. As such, the City issued a Request for Qualifications (RFQ) seeking respondents interested in developing and implementing a Mobile Crisis Response program model as an alternative to our current mental health response model. Three (3) responses were received by the deadline of February 17, 2021, each of which were evaluated for their responsiveness to the RFQ and capabilities in implementing a successful program. Ultimately, Be Well OC was selected among the respondents as the most qualified and with the greatest likelihood of success. Financial Impact: Restricted funding has been identified to cover the first year, and the costs are not to exceed $1.5 million for this pilot program. The following are the funding sources for this program: 1) Police Development Impact Fee Fund (Fund 227) $368,000; 2) Restricted Restitution Fund (Fund 100) $282.000: and 3) American Rescue Plan Act HOME Funding $850,000. Recommended Action: A) Approve the selection of Be Well OC (Mind OC) as the service provider for the City's trial Mobile Crisis Response program, to shift the burden of response from the police department to Be Well OC for designated, triaged mental health calls for service not involving violence, weapons, or criminal behavior. City of Huntington Beach Page 1 of 3 Printed on 40412021 ._Ae-44G Lei stu"' "NTINC7„ 2000 Main Street, o.,,«..o,;;,'? Huntington Beach,CA U 92648 'City of Huntington Beach APPROVED 7-0 WITH IDENTIFIED z/"0F'o`�o y� AMENDMENTS (SEE ATTACHED ACTION AGENDA) File #: 23-566 MEETING DATE: 6/26/2023 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Al Zelinka, City Manager VIA: Sunny Han, Acting Chief Financial Officer PREPARED BY: Serena Bubenheim, Acting Assistant Chief Financial Officer Subiect: Continued from June 20, 2023 with Public Hearing open - Request to Consider Adopting Resolution No. 2023-24 to Adopt a Budget for the City for Fiscal Year 2023/2024 and Authorize the Corresponding Appropriation and Transfer of$4.9 Million of AES Reserves and $3.9 Million of Equipment Replacement Reserves and Return to a 12-year Paving Cycle; Resolution No. 2023-25 Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024; Resolution No. 2023-23 Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits; Resolution No. 2023-27 Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Coordinator, Homeless Services Manager, and Municipal Records Manager; Resolution No. 2023-28 to Adopt a Revised General Fund Reserve Policy; Resolution No. 2023-26 Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code; Approve and Authorize the execution of Amendment No. 2 to the Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program; Approve and Authorize the Execution of Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services; Approve and Authorize the Execution of Professional Services Contract between the City of Huntington Beach and Hinderliter, De Llamas and Associates for Sales and Use Tax Allocation and Audit Services; Approve the Budget Balancing Plan to Proactively Address the Fiscal Year 2024/25 Projected General Fund Deficit; and, Approve Modifications to the Frequency of Select Boards and Commissions ("BCCs") and Direct Staff to Update Municipal Code Section 2.100, "Operating Policy for Boards and Commissions" to Formalize a Process for BCC-directed Assignments Exceeding Four (4) Hours of Staff Time. Statement of Issue: City of Huntington Beach Page 1 of 14 Printed on 6/23/2023 powereral/LegistarTM File #: 23-566 MEETING DATE: 6/26/2023 The City Charter of the City of Huntington Beach requires a Public Hearing prior to the adoption of the City's annual budget. The City Charter further requires adoption of the annual budget by June 30, 2023, for Fiscal Year (FY) 2023/24. Financial Impact: Proposed Budget: The Fiscal Year 2023/24 Proposed Budget is structurally balanced. The All Funds Proposed Budget equals $508.8 million. The General Fund Proposed Budget totals $285.6 million, with the planned use of $8.8 million in General Fund reserves. Individual departmental and fund-level appropriations are contained in the attachments herein. Employee Tax Override: Pursuant to Chapter 3.07 of the Municipal Code, the Proposed Budget for Fiscal Year 2023/24 assumes the continuation of the Retirement Tax Cap of $0.01500 per $100 of assessed value. As of the most recent audited financial statements, this tax rate resulted in $7.9 million in revenue in Fiscal Year 2021/22. This recurring revenue source is included in the Proposed FY 2023/24 Budget. Update to the City's General Fund Reserve Balance Policy: The City desires to maintain a prudent level of reserves and the Government Finance Officers Association (GFOA) recommends a minimum of two months of operating expenditures be set aside for unforeseen events. Staff is recommending consolidating certain General Fund Assignments into the Economic Uncertainties Reserve in order to meet the two-month reserve requirement. Additionally, staff is recommending strengthening the City's Reserve policy to ensure that funds are set aside systematically and used only when truly necessary. Mind OC Contract Extension: Staff is requesting approval to amend the professional services contract with Mind OC for the Be Well HB mobile crisis response program. The City has been awarded federal and state grants (U.S. Department of Health and Human Services and California Dept. of Health Care Services) to offset the cost of the program for FY 2023/24. Funding for future years will be identified in future budgets. National Development Council Contract: Staff is requesting approval to execute a new professional services contract with National Council for Community Development (NDC). Funding for this contract is provided through the annual allocations for the Community Development Block Grant and HOME programs and the Community Development Department's annual operating budget. Hinderliter, De Llamas and Associates Contract: Staff is requesting approval to execute a new professional services contract with Hinderliter, De Llamas and Associate). Funding for this contract is included in the Finance Department's annual operating budget. Recommended Action: A) Adopt Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" (Attachment 2); and, B) Authorize the Professional Services included in the FY 2023/24 budget to be representative of the services projected to be utilized by departments in FY 2023/24 (Attachment 3); and, City of Huntington Beach Page 2 of 14 Printed on 6/23/2023 lee powerec@g LeglstarT" File #: 23-566 MEETING DATE: 6/26/2023 • C) Authorize the appropriation and transfer of the full balance ($4.9 million) of the AES Reserve from the General Fund to the AES Mitigation Fund 1284; and, * D) Authorize the appropriation and transfer of$3,903,803 from the General Fund Equipment Replacement Reserve to the Equipment Replacement Fund 324; and, E) Approve the return to a 12 year paving cycle; and, * F) Adopt Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" of $1,171,687,773" (Attachment 4); and, • G) Adopt Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits" (Attachment 5); and, H) Adopt Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Coordinator, Homeless Services Manager, and Municipal Records Manager" (Attachment 6); and, * I) Adopt Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" (Attachment 7) and authorize the City Manager or designee to execute all administrative and budgetary actions necessary to consolidate certain General Fund Assigned Fund Balances to the Economic Uncertainties Reserve in order to meet the City's two-month Emergency Reserve requirement; and, * J) Adopt Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" (Attachment 8); and, K) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program" (Attachment 9); and, * L) Approve and authorize the Mayor and City Clerk to execute "Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services" (Attachment 10); and, City of Huntington Beach W Vie} Af,I , rete jA Page 3 of 14 Printed on 6/23/2023 powered:a LegistarT" File #: 23-566 MEETING DATE: 6/26/2023 M) Approve and authorize the Mayor and City Clerk to execute "Professional Services Contract between the City of Huntington Beach and Hinderliter, De Llamas and Associates for Sales and Use Tax Allocation and Audit Services" (Attachment 11); and, N) Approve the Budget Balancing Plan to proactively address the Fiscal Year 2024/25 Projected General Fund Deficit; (Attachment 12); and, 0) Approve modifications to the frequency of select Boards and Commissions ("BCCs") and direct staff to update Municipal Code Section 2.100, "Operating Policy for Boards and Commissions," to formalize a process for BCC-directed assignments exceeding four (4) hours of staff time. Alternative Action(s): A. Instruct City staff regarding changes to be incorporated into the budget and adopt the FY 2023/24 Budget and corresponding actions and resolutions as amended. B. Continue the Public Hearing to a future date. Analysis: As required by the City Charter, the City Manager submitted the FY 2023/24 Proposed Budget to the City Council on May 7, 2023. The Proposed Budget and the Five-Year Capital Improvement Program (CIP) were also discussed at a City Council Study Session held on May 16, 2023. The purpose of the budget study session was to provide the City Council an opportunity to discuss the Proposed Budget with staff before proceeding with the formal Public Hearing on June 6, 2023. Overview Over the past couple years, the City has come together in an extraordinary way to address the fiscal and public health challenges of the COVID-19 pandemic. Through the leadership and support of the City Council, the City implemented significant cost saving measures without reductions in essential service levels, including a Citywide Separation Incentive Program and reorganization plan, and refinancing of the City's pension debt. As a result of these measures, and numerous other measures taken over the past couple years, we project a $3.8 million dollar General Fund surplus for FY 2022/23. Inclusive of these significant budget measures, the FY 2023/24 Proposed Budget also includes mandated and additional one-time savings to mitigate the City's rising pension costs; prioritizes improvements to the City's facilities, roads and parks; incorporates increased funding for critical programs such as Workers' Compensation and General Liabilities; accounts for increases to the City's contractual obligations and inflationary cost impacts; and includes the addition of 11 positions across various City departments to meet increased demand and bring critical services in-house. The FY 2023/24 Proposed Budget is structurally balanced and totals $508.8 million across All Funds. This reflects a $23.2 million, or 4.4 percent, decrease from the FY 2022/23 Adopted All Funds Budget City of Huntington Beach Page 4 of 14 Printed on 6/23/2023 -NdeJ4frth/C-16 powered*LegislarT" ' I File #: 23-566 MEETING DATE: 6/26/2023 of $532.0 million. A significant portion of the decrease is due to the one-time redistribution of $29.6 million of American Rescue Plan Act (ARPA) funds to the General Fund in FY 2022/23 for the provision of core governmental services. For FY 2023/24, General Fund revenue is projected at $280.4 million, a $2.8 million, or 1 percent decrease from the FY 2022/23 Adopted Budget. Major sources of General Fund revenue include Property Tax, Sales Tax, Utility Users Tax, and Transient Occupancy Tax, among others. The largest decrease in General Fund revenue is in Non-Operating Revenue, attributable to the one-time transfer of ARPA funds for general governmental services that was included in the FY 2022/23 Adopted Budget. The largest revenue increase is in Property Tax, with expected revenues totaling $104.2 million due to gains in assessed property valuations. Franchise and Utility Users Taxes are anticipated at $33.0 million, a 21.8 percent increase, driven by increases in utility prices including gas and electricity. Charges for Current Services is projected to increase $6.4 million due to increased demand for services, including medical transports, recreation classes and building and planning services. The Proposed General Fund Expenditure Budget totals $285.6 million and is supported by revenues of $280.4 million, plus the one-time use of $8.8 million in General Fund Reserves. Use of reserves include the transfer of $3.9 million from the Equipment Replacement Reserve to the Equipment Replacement Fund for the purchase of critical infrastructure and public safety vehicles and equipment. The full balance of the AES Reserve ($4.9 million) is being transferred to a new AES Mitigation Fund to be used for various Capital Improvement Projects as outlined in the Memorandum of Understanding between the City and AES Southland Development LLC. The Proposed General Fund Budget has no reliance on one-time revenues to fund ongoing operations, which is critical to maintaining the City's financial viability and success and represents a $16.6 million, or 6.2 percent, increase compared to the FY 2022/23 Adopted Budget of$269.0 million. This increase is attributable to higher personnel costs arising from the addition of 11 full time employees, increased Workers' Compensation and overtime costs, and inflationary impacts on normal business activities. The FY 2023/24 Proposed Budget includes 1,002.75 Full Time Equivalents (FTEs); an increase of 11 FTEs across all funds compared to FY 2022/23. The new positions include 1 Deputy Community Prosecutor, 2 Senior Deputy City Attorneys and 1 Senior Legal Assistant in the City Attorney's Office. A Municipal Records Manager is being added to the City Clerk's Office to assist with the citywide centralization of records management, and 1 Graphic Designer and 1 Multi-Media Officer are proposed to oversee the operations of the City's Cable "3" Channel, YouTube Channel and online digital content, and to assist with citywide public information materials in the Office of Communications, bringing part of currently contracted services in-house. Three new positions are included in the Community Development Department to provide timely inspection and plan review services and improve long-term service delivery. One HR Analyst is included in Risk Management to support increased workload, mitigate risk and ensure compliance with regulatory requirements. The FY 2023/24 Proposed Budget was carefully prepared to balance immediate priorities along with the need for long-term investments. The Proposed Budget does not include any financial impacts of City of Huntington Beach Page 5 of 14 Printed on 6/23/2023 (I powere&'Legistar1' File#: 23-566 MEETING DATE: 6/26/2023 agreements with bargaining groups that are under consideration by the City; the City Budget will be amended as bargaining group agreements are approved by the City Council. The City Budget reflects the priorities of the City Council and outlines a plan committed to enriching the quality of life for our residents, businesses, and visitors by increasing funding for core services such as public safety, community & library service programs, and improving the City's infrastructure. Budget Balancing Plan At the June 6th City Council meeting, City staff were directed to provide a budget balancing plan to proactively address the FY 2024/25 General Fund projected deficit. Departments submitted potential revenue opportunities and expenditure reductions totaling $7,179,520 for Council review, as summarized below: Summary Proposed Revenue Opportunities 1,653,295 Expenditure Reductions(One-Time) 1,643,297 Expenditure Reductions(Ongoing) 3,882,928 7,179,520 Department Reductions and Revenue Opportunities Proposed City Manager 118,610 City Attorney - City Clerk 123,050 Community& Library Services 1,157,548 Finance 273,251 Fire 1,292,695 Human Resources 35,000 Information Services 440,000 Community Development 625,487 Police 60,000 Public Works 655,582 City Treasurer - Citywide 2,398,297 7,179,520 The anticipated service level impacts are listed in Attachment 12. As the Fiscal Year 2023/24 Proposed Budget is balanced, staff is recommending a phased approach for Council-approved budget reductions based on the level of effort involved in implementing certain expenditure reductions and the service level impacts to the community. Level One: Effective July 1, 2023. The process to implement increased revenue options would begin at the start of Fiscal Year 2023/24. Approved budget reductions would be included in the Fiscal Year 2023/24 Adopted Budget. City of Huntington Beach Page 6 of 14 Printed on 6/23/2023 powered:A'LegistarT'" • File #: 23-566 MEETING DATE: 6/26/2023 '} Type .. Dept Amount 1 Update the Master Fee and Charges Schedule Ongoing All 198,000 2 Evaluate Emergency Medical Service(EMS) Fees Ongoing Fire 936,254 3 Lifeguard Tower Advertisements Ongoing Fire 356,441 4 Police Fines and Fees Ongoing Police 60,000 Comm & Lib 5 LPR(License Plate Readers) Citation Revenue Ongoing Svcs 102,600 1,653,295 BUDGET REDUCTIONS Cost Reductions :. Ty e. Dept . Amount. Partial reprogramming of one-time revenues from Emerald 1 Cove loan repayment One-time Citywide 1,138,297 2 Employee Work Enhancements Ongoing Citywide 712,000 3 Circuit _ Ongoing. Citywide 350,000 4 Eliminate City Clerk Remodel CIP One-time City Clerk 100,000 Reclassify Director of Homeless& Behavioral Health 5 position to Manager. Ongoing City Mgr 57,519 6 Employee Medical Exams Ongoing HR 35,000 7 Eliminate funding for MySidewalk dashboard program Ongoing Info Svcs 80,000 8 Eliminate IS Service Van One-time Info Svcs 60,000 9 Reduce Equipment Replacement One-time Info Svcs 300,000 Terminate Ice Rink Contract Comm & Lib 10 (if single sponsor does not materialize by date) Ongoing Svcs 157,594 Comm & Lib 11 Aquatics Summer Swim Lesson Expansion Ongoing Svcs 138,950 Eliminate a portion of the temporary salaries budget in the Housing and Permit Center Divisions and shift restricted 12 fund grant work to the Senior Management Analyst Ongoing Comm Dev 203,739 Code Enforcement Replacement Vehicles-downgrade One-time/ 13 three vehicle replacement upgrades from trucks to sedans Ongoing Comm Dev 60,000 3,393,099 Level Two: Effective January 1, 2024. Due to the level of effort and service level impacts for these budget reductions, items approved for elimination by City Council in this category may take an estimated six months to implement. City of Huntington Beach Page 7 of 14 Printed on 6/23/2023 poweredage Legistarmi 1 File #: 23-566 MEETING DATE: 6/26/2023 BUDGET REDUCTIONS 'No Cost?Reductions .Type . .. :....Dept Amount 1 Eliminate Temporary Dept Asst II Ongoing City Clerk 23,050 2 Reclassify Multimedia Officer to Multimedia Coordinator Ongoing City Mgr 31,091 Reduce Professional/Contract Services by eliminating 3 contingency and reducing SOW(CMO) Ongoing City Mgr 30,000 4 Principal Finance Analyst(Budget)-Defund (1) Ongoing Finance 143,253 5 Call Center Part-time Staff Ongoing Finance 35,000 Reduce various Public Works contract and maintenance Public 6 budgets. Ongoing Works 46,700 Public 7 Revise tree trimming from 6-year to 7-year cycle Ongoing Works 100,000 Reduce contract and weekly landscape service for Facilities Public 8 to 2x per month. Ongoing Works 123,882 Comm & Lib 9 Gate Arm Efficiency Savings-Temp Salaries Ongoing Svcs 42,000 Comm & Lib 10 Eliminate Citywide Security Services Ongoing Svcs 147,692 Comm & Lib 11 Eliminate Park Ranger Services Ongoing Svcs 78,075 Comm & Lib 12 Senior Center-Saturday Closure Ongoing Svcs 14,450 Comm & Lib 13 Edison/Murdy-5 hr less/week Ongoing Svcs 17,000 Comm & Lib 14 Closure-Central Library(Sundays) Ongoing Svcs 150,000 Reduction in Open Hours-Central Library (reduce Monday by 2 hrs;Tuesday-Thursday by 3 hrs= 11 Comm & Lib 15 hrs/week) Ongoing Svcs 83,071 Community Café Community Forum (costs for consultants,food and supplies only; continuation Comm & Lib 16 of event with sponsors,donations, and in-kind) Ongoing Svcs 35,000 Reduce Temporary Salaries, Overtime, Equipment budget 17 in Inspection Services and Administration Ongoing Comm Dev 123,295 18 Accounting Technician (Accounts Payable)- Defund (1) Ongoing Finance 94,998 Reduce beach restroom cleaning intervals during non-peak Public 19 season months Ongoing Works 100,000 Reduce contract sign & lighting maintenance services and Public 20 related equipment funding Ongoing Works 62,000 Eliminate City funded downtown power washing and porter Public 21 service and transfer costs to the Downtown BID Ongoing Works 154,000 Reduce contract and weekly landscape service to Pier Plaza, Public 22 Bluff Top,&Sunset landscape 2x per month - Ongoing Works 69,000 Comm & Lib City of Huntington Beach Page 8 of 14 Printed on 6/23/2023 powerecA 'LegistarT'•' File#: 23-566 MEETING DATE: 6/26/2023 I 23 I Defund 1 Care Manager I Ongoing I Svcs I 24,5501 BUDGET REDUCTIONS I No Cost Reductions Type Dept ` Amount Comm &Lib 24 Closure-Banning Branch Ongoing Svcs 63,543 Comm& Lib 25 Closure-Main Street Branch Ongoing Svcs 66,883 Comm & Lib 26 Closure-Helen Murphy Branch Ongoing Svcs 36,140 27 Code Enforcement Technician-Defund (1) Ongoing Comm Dev 85,933 28 Economic Development Project Manager-Defund (1) Ongoing Comm Dev 152,520 2,133,126 Boards and Commissions Implementation of the proposed budget balancing plan will increase the workload on City staff and reduce the time available to complete core work duties. To ensure that core City functions are maintained, staff is requesting policy direction from Council to reduce the frequency of meetings to every other month for a minimum period of one year for the following Boards and Commissions: • Harbour Commission • Finance Commission • Jet Noise Commission • Historic Resources Board • Central Park Collaborative Additionally, any Boards and Commissions request for staff efforts beyond four (4) hours, as determined by the primary staff liaison, with concurrence by the department head and City Manager, will require City Council approval. Approved requests will be completed based on staff capacity and in the following priority order: (1) Day-to-day responsibilities and (2) Strategic Plan priorities. Formalizing this process will require review and updates to Municipal Code Section 2.100, Operating Policy for Boards and Commissions. The regular report to the City Council on the Strategic Plan will note changes to implementation of priorities due to work related to City Council-approved assignments beyond core Boards and Commissions duties. Professional Services As established by Administrative Regulation Number 228, each department has submitted a list of professional services that are generally contained in their Proposed Budgets (Attachment 3). City of Huntington Beach Page 9 of 14 Printed on 6/23/2023 powere a'LegistarT'' File #: 23-566 MEETING DATE: 6/26/2023 Professional services contracts are subject to compliance with Administrative Regulation Number 228 and City Ordinance Chapter 3.03. Paving Cycle In August 2022, staff gave a study session presentation on the Pavement Management Plan (PMP) Overview. At this study session Council provided direction to implement a 9-year zone cycle instead of the previous 12-year zone cycle, of which the last zone of the first 12-year cycle is currently under construction. In working through the CIP process, and working to achieve a balanced budget, staff reviewed the cost/benefit of a 9-year cycle to a 12-year cycle. After this review staff is recommending a 12-year cycle for the following reasons: 1. Over 7 years, the Pavement Classification Index (PCI) would only increase by 1 point (83.4 to 84.4), and both scores are in the "good" condition rating; 2. The construction cost for the 9-zone program totals $2.5 million more annually than the 12- zone program; and 3. The City has seen success with the 12-year zone program which has achieved an overall PCI of 81.6 which indicates the residential streets are currently in "good" condition. Gann Appropriation Limit In November 1979, the California voters approved Article 13B of the State of California Constitution, which allows the City's spending of tax proceeds. to increase only by factors from the base year of 1978-1979. In June 1990, Proposition 111 was passed, which changed the way the limit is calculated and is outlined as follows. The City may increase its limit annually in two ways: • By a percentage equal to the increase from the preceding year in county or city population (whichever is greater). • By an amount equal to the change in per capita personal income in California or the change in the assessment roll the preceding year due to the addition of local non-residential new construction (whichever is greater). The proposed appropriation limit for FY 2023/24 was calculated as follows: FY 2022/23 Appropriation Limit $1,126,155,850 Multiplied by percentage grown in State Per Capita Personal Income 1.0444 Multiplied by change in County Population ' 0.9962 Proposed FY 2023/24 Appropriation Limit $1,171,687,773 Appropriations of revenues controlled by the Gann Limit are primarily in the General Fund. The General Fund proposed appropriation for FY 2023/24 of $285.6 million is significantly below this appropriation limit (Attachment 4). City of Huntington Beach Page 10 of 14 . Printed on 6/23/2023 powereaq LegistarT'•' File#: 23-566 MEETING DATE: 6/26/2023 Examples of proceeds of taxes governed by the Gann Appropriation Limit are: property taxes, sales taxes, utility taxes, state subventions, fines, forfeitures, interest revenue on regulatory licenses, user charges, and user fees, to the extent that those proceeds exceed the costs reasonably borne by that entity in providing the regulation, product, or service. Employee Tax Override On July 16, 2012, the City Council adopted an ordinance to permanently cap the tax rate at $0.01500 per $100 of assessed valuation. Therefore, the requested tax levy for FY 2023/24 reflects the same tax rate of$0.01500 per$100 of assessed valuation effective in FY 2012/13 pursuant to Chapter 3.07 of the Municipal Code. Fiscal Year 2023/24 will represent the twelfth year of the application of the permanent cap. The current capped Employee Tax Override results in an approximate $75 annual tax levy for a property assessed at $500,000. Revenue generated from this property tax helps the City fund public safety employee pension costs associated with pre-1978 retirement benefit levels. As such, the tax can only pay for the estimated costs associated with the public safety pension benefit formulas in place prior to the enactment of Proposition 13 on July 1, 1978. Hence, the tax can only pay for retirement benefits for all retired, current, and future public safety City employees that were contracted for prior to July 1, 1978 (such as the 2% at 50 benefit formula for Safety employees in place before enactment of Proposition 13). Based on the most recent CaIPERS actuarial valuations, the cost of pre-1978 retirement benefit levels for Safety personnel totals $26.1 million. As such, the proposed tax rate is recouping only 27 percent of eligible Safety personnel retirement costs. Due to the County of Orange's timeline for approving the tax rate and the city's budget cycle, the rate must be set before the City Council takes action on its annual budget. The recommended assessment rate would maintain essential services for Fiscal Year 2023/24 (Attachment 5). Public Hearing The City Charter requires that a public hearing be conducted on the City budget prior to adoption. Public Hearing notices have been published per City Charter requirements (Attachment 1). At the close of this hearing, all legal requirements for budget adoption will have been met. Update to the General Fund Reserve Policy The City desires to maintain a prudent level of reserves based on the revenue impacts described above and the City's desire to maintain strong bond ratings to minimize borrowing costs. The Government Finance Officers Association (GFOA) recommends a minimum of two months of operating expenditures be set aside for unforeseen events. Cities with robust fiscal reserve policies are more likely to receive improved bond ratings based on higher scores related to financial management policies and improved fund balance reserves. Staff is recommending consolidating certain General Fund Assignments into the Economic Uncertainties Reserve in order to meet the two-month reserve requirement, as listed below: City of Huntington Beach Page 11 of 14 Printed on 6/23/2023 powered81/LegistarT" File#: 23-566 MEETING DATE: 6/26/2023 Balance as of June 30,2022(in thousands) Cityview Replacement $ 1,028 Triple Flip 109 Strategic Initiatives 16,536 Housing Agreement 1,657 Year-End Fair Value 1,983 Total Recommended for Consolidation 21,313 Economic Uncertainties Reserve 26,114 Economic Uncertainties Reserve(revised) $47,427 Two-Month Reserve Requirement $47,215 Additionally, staff is recommending: (1) a minimum of 25% of unrestricted one-time revenues would be transferred to the Section 115 Trust, and (2) strengthening the City's Reserve policy to ensure that funds are set aside systematically and used only when truly necessary and approved by a 6/7th vote of City Council. If Economic Uncertainties Funds are utilized and the level falls below the two-month reserve requirement, the Chief Financial Officer will bring forward a proposed plan to City Council to replenish the fund within three fiscal years. Acknowledge Receipt of Fire Inspections California Health & Safety Code Sections 13146.2 and 13146.3 require all fire departments that provide fire protection services to perform annual inspections in every building used as a public or private school, hotel motel, lodging house, apartment house and certain residential care facilities. These inspections are performed to meet certain building standards. Section 13146.2 of the Code requires departments to report annually to its governing body on its conformance to these requirements. State Senate Bill 1205 requires that effective January 1, 2019, the governing body annually adopt a resolution or other formal document certifying that these inspections were completed and that this document be submitted to the State. During calendar year 2022, the Huntington Beach Fire Department completed annual inspections of all buildings referenced under Sections 13146.2 and 13146.3 of the California Health and Safety Code. This includes the following: #in f #of — — Occupancy Type [ Jurisdiction j Inspections R1s ("hotel, motel, lodging houses") i 20 20 R1s that are also High Rises I 3 3 R2s ("apartment houses") 2,537 2,537 R2 that are also High Rises _ —_ 1 ( 1 _ R2.1 ("supervised residential") 5 5 R4s ("residential/assisted living") 1 1 Es ("public and private schools") -38 I 38- i This represents inspection rate of 100% of all required facilities. City of Huntington Beach Page 12 of 14 Printed on 6/23/2023 powerecA ,LegistarT'•' File #: 23-566 MEETING DATE: 6/26/2023 In conformance with Senate Bill 1205, staff recommends the adoption of the resolution shown as Attachment 8. Mind OC Contract Extension Since its successful launch in May 2021, Be Well HB, a pilot mobile crisis response program has become a critical City resource to help with a variety of non-emergency public assistance situations such as mental health crisis, addiction, and homelessness. Council approval is requested to extend the contract with the service provider, Mind OC, for an additional three years until June 30, 2026 (Attachment 9), with an annual contract amount of not-to- exceed $1.5 million. The cost for FY 2023/24 will be 100% covered by a portion of the $500,000 federal grant from the U.S. Department of Health and Human Services and $1.5 million state grant from the California Dept. of Health Care Services. Funding for the two subsequent years will be incorporated into the respective annual operating budgets and program costs may be reduced or eliminated, contingent upon the funding availability in each given year. National Development Council Contract The National Council for Community Development (NDC) provides technical assistance services for housing and economic development activities for the Community Development Department. An existing three-year contract will expire at the beginning of FY 2023/24. Council approval is requested for a new two-year agreement until June 30, 2025 (Attachment 10) with total compensation not to exceed $156,818. Funding for this contract is incorporated in the Community Development Block Grant and HOME program administrative costs, and the Community Development Department's annual operating budget. The contract procurement required through Municipal Code 3.03 was completed through an executed interagency agreement with San Joaquin County. Hinderliter, De Llamas and Associates Contract Hinderliter, De Llamas and Associates (HdL) provides sales and use tax professional and auditing services to ensure that sales tax allocations made by the State Board of Equalization (BOE) are as accurate as possible and to act on behalf of the City to pursue misallocated funds. An existing three- year contract will expire on July 31, 2023. Council approval is requested for a new three-year agreement through July 31, 2026 (Attachment 11). The proposed new contract includes an annual fixed fee of$10,200 for a total of $30,600 in fixed fees. In addition, HdL would receive 15 percent of any new sales and use tax revenue received by the City as a result of its extensive audit and sales and use tax recovery work, if the tax recovery work is approved by the BOE. This audit fee applies to additional monies received in the first eight consecutive reporting quarters beginning with the receipt of the audit revenue and includes retroactive back-quarter adjustments obtained by the firm. For the most recent three years of available data, HdL recovered approximately $1.75 million in revenue from the BOE on behalf of the City and has recovered over $14 million since the City began contracting with HdL in 1990. Funding for this contract is incorporated in the Finance Department's annual operating budget. The contract procurement required through Municipal Code 3.03 was completed through an executed interagency agreement with the City of Bakersfield. Environmental Status: Not applicable City of Huntington Beach Page 13 of 14 Printed on 6/23/2023 powered34 Legistar"" File #: 23-566 MEETING DATE: 6/26/2023 Strategic Plan Goal: Community Engagement Homeless Response Economic Development & Housing Infrastructure & Parks Fiscal Sustainability, Public Safety or Other Attachment(s): 1. Public Hearing Notice 2. Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" 3. Professional Services included in the Fiscal Year 2023/2024 Budget 4. Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" 5. Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits" 6. Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Coordinator, Homeless Services Manager, and Municipal Records Manager" 7. Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" 8. Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" 9. Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program 10. Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services 11. Professional Services Contract between the City of Huntington Beach and Hinderliter, De Llamas and Associates for Sales and Use Tax Allocation and Audit Services 12.Budget Balancing Plan 13.FY 2023/24 Budget Adoption Presentation City of Huntington Beach Page 14 of 14 Printed on 6/23/2023 powered LegistarT" PUBLIC HEARING CITY OF HUNTING TON BEACH Notice of of Public Hearin on the Proposed Cif Budget for Fiscal Year 202312024 Notice is hereby given that a public hearing will be held by the City Council of the City of Huntington Beach for the purpose of considering the City Budget for Fiscal Year 2023f2024. The Proposed Budget for Fiscal Year 202312024 totals $506,818,053 including General Fund Expenditures of$285,564,240. The public hearing Is scheduled in 0'<e Council Chambers of the Civic Center,located at 2000 Main Street on Tuesday,June 6,2023 at 6:00pm. The public may obtain copies of the Proposed Budget for Fiscal Year 202312024 from the City's website at http:;rwww.huntinolonheachca.ctov. All Interested persons are Invited to attend to express their opinions for, or against, the Proposed Budget with written or oral comments. Written communications to the City Council should be directed to the Office of the City Clerk at the address below. Further information may be obtained from the Finance Department, 2000 Main Street, Huntington Beach, CA, 92648- 2702 or by telephone(714)536-5630. The City of Huntington Beach endeavors to accommodate persons of handicapped status in the admission or access to,or treatment or employment in,city programs or activities. The City of Huntington Beach is an equal opportunity employer. Dated: May 25,2023 and June t,2023 City of Huntington Beach By: Robin Estanislau,City Clerk 2000 Main Street Huntington Beach,CA 92848-2702 Telephone: (714)536-5227 htta;ihuntinQtonbeachca.goviHBPublicCommnist - 7 $}i 35 City Council/ ACTION AGENDA June 26, 2023 Public Financing Authority 6:00 PM —COUNCIL CHAMBERS RECONVENE CITY COUNCIL/PUBLIC FINANCING AUTHORITY ADJOURNED REGULAR MEETING — 6:00 PM ROLL CALL Kalmick, Moser, Van Der Mark, Strickland, McKeon, Bolton, Burns All Present PLEDGE OF ALLEGIANCE— Led by Councilmember Moser CLOSED SESSION REPORT BY CITY ATTORNEY— None. ANNOUNCEMENT OF SUPPLEMENTAL COMMUNICATIONS(Received After Agenda Distribution) - Consent Calendar#2(1) PUBLIC COMMENTS(3-Minute Time Limit)— 27 Speakers COUNCIL COMMITTEE APPOINTMENT ANNOUNCEMENTS— None. AB 1234 REPORTING — None. OPENNESS IN NEGOTIATION DISCLOSURES— None. CONSENT CALENDAR 2. 23-570 Adopted Resolution No. 2023-33 appointing Mark D. Alvarado as Interim Chief Financial Officer and approving the Employment Agreement Recommended Action: A) Adopt Resolution No. 2023-33, "A Resolution of the City Council of the City of Huntington Beach appointing Mark D. Alvarado as Interim Chief Financial Officer"; and B) Approve and authorize the City Manager to execute the "Employment Agreement between the City of Huntington Beach and Mark D. Alvarado." Approved 7-0 PUBLIC HEARING 3. 23-566 Continued from June 20, 2023 with Public Hearing open -Adopted Resolution No. 2023-24 to Adopt a Budget for the City for Fiscal Year 2023/2024 and Authorize the Corresponding Appropriation and Transfer of $4.9 Million of AES Reserves and $3.9 Million of Equipment Replacement Reserves and Return to a 12-year Paving Cycle; Resolution No. 2023-25 Establishing the Gann Appropriation Page 3 of 6 City Council! ACTION AGENDA June 26, 2023 Public Financing Authority Limit for Fiscal Year 2023/2024; Resolution No. 2023-23 Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits; Resolution No. 2023-27 Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Coordinator, Homeless Services Manager, and Municipal Records Manager; Resolution No. 2023-28 to Adopt a Revised General Fund Reserve Policy; Resolution No. 2023-26 Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code; Approved and Authorized the execution of Amendment No. 2 to the Agreement between the City of Huntington Beach and Mind OC for Mobile Crisis Response Program; Approved and Authorized the execution of Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services; Approved and Authorized the execution of Professional Services Contract Between the City of Huntington Beach and Hinderliter, De Llama and Associates for Sales and Use Tax Allocation and Audit Services; and, Approved the Budget Balancing Plan (as amended) to Proactively Address the Fiscal Year 2024/25 Projected General Fund Deficit Recommended Action: A) Adopt Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" (Attachment 2) as amended to include the impacts of the Police Officers'Association (POA) MOU, additional parking revenues, and revised Budget Balancing Plan as amended(N); and, B) Authorize the Professional Services included in the FY 2023/24 budget to be representative of the services projected to be utilized by departments in FY 2023/24 (Attachment 3); and, C) Authorize the appropriation and transfer of the full balance ($4.9 million) of the AES Reserve from the General Fund to the AES Mitigation Fund 1284; and, D) Authorize the appropriation and transfer of$3,903,803 from the General Fund Equipment Replacement Reserve to the Equipment Replacement Fund 324; and, E) Approve the return to a 12 year paving cycle; and, F) Adopt Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" of $1,171,687,773" (Attachment 4); and, Page 4 of 6 City Council/ ACTION AGENDA June 26, 2023 Public Financing Authority G) Adopt Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits" (Attachment 5); and, H) Adopt Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Coordinator, Homeless Services Manager, and Municipal Records Manager" (Attachment 6); and, I) Adopt Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" (Attachment 7) and authorize the City Manager or designee to execute all administrative and budgetary actions necessary to consolidate certain General Fund Assigned Fund Balances to the Economic Uncertainties Reserve in order to meet the City's two-month Emergency Reserve requirement; and, J) Adopt Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" (Attachment 8); and, K) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program" (Attachment 9); and, L) Approve and authorize the Mayor and City Clerk to execute "Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services" (Attachment 10); and, M) Approve and authorize the Mayor and City Clerk to execute "Professional Services Contract between the City of Huntington Beach and Hinderliter, De Llamas and Associates for Sales and Use Tax Allocation and Audit Services" (Attachment 11); and, N) Approve the Budget Balancing Plan as amended to proactively address the Fiscal Year 2024/25 Projected General Fund Deficit; (Attachment 12); and, Move Budget Reductions identified in Level 2 to Level 1 per revised Plan: 2) Reclassify Multimedia Officer to Multimedia Coordinator, 4) Reduce Various Public Works contract and maintenance budgets, and 6) Community Café Community Forum (costs for consultants, food and supplies only; continuation of event with sponsors, donations, and in-kind); and, Page 5 of 6 City Council/ ACTION AGENDA June 26, 2023 Public Financing Authority Authorize staff to meet with labor associations on modifications identified under Level 1 per revised Plan: 2) Employee Work Enhancements; and, 0) "Operating Policy for Boards and Commissions,"to formalize a process fix BCC-irected assignments *seeding four(4) hours of staff time. Defer to the Boards, Commissions, Committees (BCC's) Ad Hoc Committee Speakers (25) Supplemental Communications (327) Approved 7-0 with identified amendments ADMINISTRATIVE ITEMS 4. Adopted Resolution No. 2023-32 Approving and Implementing the Memorandum of Understanding (MOU) between the Huntington Beach Police Management Association (PMA) and the City of Huntington Beach for July 1, 2023 through June 30, 2026 Recommended Action: A) Adopt Resolution No. 2023-32, "A Resolution of the City Council of the City of Huntington Beach Approving and Implementing the Memorandum of Understanding Between the Huntington Beach Police Management Association (PMA) and the City for July 1, 2023 through June 30, 2026;" and, B) Authorize City Manager or designee to take all administrative and budgetary actions necessary for implementation of Resolution No. 2023-32. Approved 7-0 ADJOURNMENT—at 10:40 PM, Councilmember Kalmick acknowledged the great work of Chief Assistant City Attorney Mike Vigliotta who is leaving Huntington Beach to assume the position of City Attorney for the City of Orange. The next regularly scheduled meeting of the Huntington Beach City Council/Public Financing Authority is Tuesday, July 18, 2023, in the Civic Center Council Chambers, 2000 Main Street, Huntington Beach, California. The regular meeting of July 5, 2023, has been cancelled due to a lack of quorum. INTERNET ACCESS TO CITY COUNCIL/PUBLIC FINANCING AUTHORITY AGENDA AND STAFF REPORT MATERIAL IS AVAILABLE PRIOR TO CITY COUNCIL MEETINGS AT http://www.huntingtonbeachca.gov Page 6 of 6 AMENDMENT NO. 2 TO AGREEMENT BETWEEN THE CITY OF HUNTINGTON BEACH AND MIND OC FOR PILOT MOBILE CRISIS RESPONSE PROGRAM THIS AMENDMENT is made and entered into by and between the CITY OF HUNTINGTON BEACH, a California municipal corporation, hereinafter referred to as "City," and MIND OC, a California Corporation, hereinafter referred to as "Consultant." WHEREAS, City and Consultant are parties to that certain agreement, dated April 20, 2021, entitled"Professional Services Contract Between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program"which agreement shall hereinafter be referred to as the "Original Agreement"; and City and Consultant wish to amend the Original Agreement to increase the amount of compensation to be paid to Consultant, NOW, THEREFORE, it is agreed by City and Consultant as follows: 1. ADDITIONAL COMPENSATION In consideration of the services to be performed under the Original Agreement, City agrees to pay Consultant at the rates specified in Exhibit B, which is attached hereto and incorporated by reference into this Agreement. City further agrees to pay Consultant an additional sum not to exceed Four Million Five Hundred Thousand Dollars ($4,500,000.00). The additional sum shall be added to the original sum of Three Million Dollars ($3,000,000.00), for a new contract amount not to exceed Seven Million Five Hundred Thousand Dollars ($7,500,000.00). 2. TERM The term of the Agreement is extended up and including June 30, 2026. 23-12811/309913 1 3. REAFFIRMATION Except as specifically modified herein, all other terms and conditions for the Original Agreement shall remain in full force and effect. IN WITNESS WHEREOF,the parties hereto have caused this Agreement to be executed by and through their authorized officers on June 26 ,2023. MIND OC CITY OF HUNTINGTON BEACH, a municipal corporation of the State of • California By: Marshall Moncrief, O print name ITS: (circle one)Chairma l'residen ice President Mayor CEO AND s, f City Clerk By: / Victor Jordan, CFO . TIATED AN) APPR• ED: print name ITS: (circle one)Secretary/Chief Financial 14111.._ Officer/Asst.Secretary-Treasured City Manager APPROVED AS TO FORM: COUNTERPART City Attorney `lt ' 23-12811/309913 2 3. REAFFIRMATION Except as specifically modified herein, all other terms and conditions for the Original Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers on June 26 , 2023. MIND OC CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California By: print name f f'eq ITS: (circle one)Chairman/PresidentNice President Mayor AND q4Y/4,zzatu) City Clerk /io/ By: •i. TIATED AN II APPR• ED: print name ITS: (circle one) Secretary/Chief Financial Officer/Asst. Secretary-Treasurer City Manager APPROVED A er ORM: COUNTERPART • / ��� Ci • ttorney 23-12811/309913 2 EXHIBIT B ''il's7 '''''. B W II ‘,t.�r J ORANGE COUNTY Mobile Crisis Intervention Services Budget for Years 2023 - 2025: Huntington Beach Coverage (21-hours with hours overlapping)with Care Coordination Support for 7 days(2 person team each 12-hrs) Option 1: Contract total amount stays the same for all 3 years,might need to adjust hours in years 2&3(no COLA) Summary Costs 7 FYa23-24 , 5,1 Fr24 25 FYY25 26 Personnel 1,147,858 1,147,858 1,147,858 Non-Personnel Operational Costs 122,672 122,672 122,672 Indirect Costs 127,053 127,053 127,053 Annual Costs(12 months) 1,397,583 1,397,583 1,397,583 Detailed Costs = Benefits Annual Total Personnel Costs " FTE . Hourly Rate ` _ ""Wages °" " o Crisis Intervention Workers 10.80 $ 32.00 718,848 158,147 876,995 Care Navigator 1.00 $ 27.00 56,160 12,355 68,515 HOPE City Manager 1.00 $ 47.38 98,550 21,681 120,231 Director, Mobile Response 0.20 $ 86.54 36,001 7,920 43,921 Exec Asst, Mobile Response 0.20 $ 43.33 18,025 3,966 21,991 Fleet Supervisor 0.20 $ 31.93 13,283 2,922 16,205 Medical Director-see Consultant " "Personnel Costs Total 13.40 ;;940,867 < <„ . 206,991 " . R 1,147,858 Non-Personnel Operational Costs 'u.°• ,i '-, 1', :E� . °'-Annual Total Supplies(uniforms,van,program,office) 16,000 Community Outreach&Travel Expenses 8,100 Technology&Phone Expense 24,000 Medical Director(Consultant) 18,000 Professional Development(Program Specific) 5,000 Van Insurance,Fuel,Upkeep 51,572 Non-Personnel Operational Costs Total 122,672 ''" 4•- k�, 1,270,530 Ongoing Annual Tout � °"� Indirect Costs Annual Total ."8 ,.' A, • 'Indireet,(10%) , 4 "d�k ` ,o ... ,E ,, . a, 127,053 'Contract Total(12 months) 1,397,583 Paerillilik Be 'el ‘-0.�.a., ORANGE COUNTY Mobile Crisis Intervention Services Budget for Year 2023-2025: Huntington Beach Coverage(21-hours with hours overlapping)with Care Coordination Support for 7 days(2 person team each 12-hrs) Option 2: Contract total hours stay the same for all 3 years with cost adjustments in years 2&3 Years 2&3:Increases due to inflation and cost of living adjustment(COLA)of 3% Summary Costs „- FY 23 24 t. FY 24-25„ , FY 257,26 Personnel 1,147,858 1,182,294 1,217,763 Non-Personnel Operational Costs 122,672 126,352 130,143 Indirect Costs 127,053 130,865 134,791 Annual Costs(12 months) 1,397,583 1,439,510 1,482,696 Detailed Costs a,. 'FY 23-24 FY 24-25 FY 25-26 Benefits; .Annual Total Annual Total .Annual Total Personnel Costs FTE Hourly,Rate Wages �' _ , - ; ' „,` , , , , 22 0 (12 mo) (12 mo) (12 mo) Crisis Intervention Workers 10.80 $ 32.00 718,848 158,147 876,995 903,304 930,404 Care Navigator 1.00 $ 27.00 56,160 12,355 68,515 70,571 72,688 HOPE City Manager 1.00 $ 47.38 98,550 21,681 ' 120,231 123,838 127,554 Director,Mobile Response 0.20 $ 86.54 36,001 7,920 43,921 45,238 46,596 Exec Asst,Mobile Response 0.20 $ 43.33 18,025 3,966 21,991 '22,651 23,330 Fleet Supervisor 0.20 $ 31.93 13,283 2,922 16,205 16,691 17,192 Medical Director-see Consultant Personnel Costs Total 13.40 -,- 940,867„ ,.,,: _206,991 - 1,147,858 1,182,294 1,217,763 Non-Personnel''Operational Costs tt - _ ,t,.. „, ti L . . Supplies(uniforms,van,program,office) 16,000 16,480 16,974 Community Outreach&Travel Expenses 8,100 8,343 8,593 Technology&Phone Expense 24,000 24,720 25,462• Medical Director(Consultant) 18,000 18,540 19,096 Professional Development(Program Specific) 5,000 5,150 5,305 Van Insurance,Fuel,Upkeep 51,572 53,119 54,713 Non-Personnel Operational Costs Total 122,672 ` 126,352 130,143 Ongoing Annual Total uI ,` '. I °-» I•' 1,270,530 I' 1,308 646,l'° 1;347,905 Indirect Costs ' . t ' Indirect(10%) d , '. ,.. * ,°,. iA, ., ,0 a" 127,053 ,.. 130,865 ,134,791. !Contract Total(12 months) I 1,397,583 I 1,439,510 I 1,482,696 �r1 MINDOC-001 FSORIANO • A��`� CERTIFICATE OF LIABILITY INSURANCE DAs«3/2023Y) THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S),AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder Is an ADDITIONAL INSURED,the policy(les)must have ADDITIONAL INSURED provisions or be endorsed, If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy,certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER License//0767776 N$�EACT HUB International insurance Services Inc. m as95 MacArthur Court (A1MCC,Nro,Ext):(949)623-3980 uc,No):(949)891-0407 Suite 600 5,-Mass: Newport Beach,CA 92660 INSURER(S)AFFORDING COVERAGE NAIL It INSURER A:Landmark American Insurance Company 33138 INSURED 1 INSURER B:AIImerica Financial Benefit Insurance Company 41840 MIndOC INSURER C; 18650 MacArthur Blvd.Ste 220 INSURER D: Irvine,CA 92612 INSURER E: INSURER F: COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACTOR OTHER DOCUMENT WITH RESPECT TO WHICH THIS ' CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR ADDL SUER POLICY EFF POLICY EXP LIMITS LTR TYPE OF INSURANCE INSD WVD POLICY NUMBER IMMIDD/YYYYL(MM/DDIYYYYI A X COMMERCIAL GENERAL LIABILITY EACH OCCURRENCE $ 2,000,000 CLAIMS•MADE X OCCUR X LHC849142 5/21/2023 5/21/2024 pREM BES(Ea occu ence) $ 50,000 MED EXP(Any one person) $ 5,000 PERSONAL&ADV INJURY $ 2,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ 4,000,000 X POLICY l J Year- LOC PRODUCTS-COMP/OP AGG $ 2,000,000 OTHER: PROFESSIONAL LI s 2,000,000 B COMBINED SINGLE LIMIT 1,000,000 AUTOMOBILE LIABILITY !Ea accidenn $ X ANY AUTO X AW3H57278102 2/4/2023 2/4/2024 BODILY INJURY(Per person) S OWNED SCHEDULED AUTOSI ONLY AUTOS W� q BODILYBODILY INJURY(Per accident) $ X AUR7t7S ONLY X mina (Pe�aalRdent�AMAGE $ —•` $ — UMBRELLA LIAR �_ OCCUR EACH OCCURRENCE $ EXCESS LIAB CLAIMS•MADE AGGREGATE $ DED RETENTIONS $ WORKERS COMPENSATION AND EMPLOYERS'LIABILITY YIN PER EERH • ANY iatPROPRIETOR/PARTNER/EXECUTIVE N!A E.L.EACH ACCIDENT $ iliandory In NN) EL.DISEASE-EA EMPLOYEE S ifEeSsC O uOFd eOP ERATIONS below El.DISEASE-POLICY LIMIT S A Med Prof Liability LHC849142 5/21/2023 6/21/2024 Each Claim 2,000,000 A Med Prof Liability LHC849142 5/21/2023 5/21/2024 Aggregate 4,000,000 DESCRIPTION OF OPERATIONS!LOCATIONS 1 VEHICLES(ACORD 101,Additional Remarks Schedule,may be attached If more space Is required) RE:Mobile Crisis Reponse Team City of Huntington Beach,Its officers,elected or appointed officials,employees,agents and volunteers are Additional insured as respects to General Liability and Automobile Liability as required by written contract as per forms attached. APP OVER AS TO T E.GATES CITY ATTORNEY CERTIFICATE HOLDER CANCELLATION CITY OF HUNTINGTON BEACH SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE City •of Huntington Beach THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. 2000 Main Street Huntington Beach,CA 92648 AUTHORIZED REPRESENTATIVE /bE ACORD 25(2016/03) OO 1988-2016 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD S�/Bsss`® ®sf\ INGT�� 14op,,•'•„,,co,P0{,-;;°• ; City of Huntington Beach o 2000 Main Street ♦ Huntington Beach, CA 92648 _' % (714) 536-5227 ♦ www.huntingtonbeachca.gov '•'�z 11 $ CpufUTY'���d1/ Office of the City Clerk Robin Estanislau, City Clerk July 10, 2023 MIND OC Attn: Marshall Moncrief, MFT, MBA 18650 MacArthur Blvd., Suite 220 Irvine, CA 92612 Dear Mr. Moncrief: Enclosed is a fully executed copy of Amendment No. 2 to Agreement between the City of Huntington Beach and MIND OC for Pilot Mobile Crisis Response Program, approved by City Council on June 26, 2023. Sincerely, t11441/ 9Aki,Uattu) Robin Estanislau, CMC City Clerk RE:ds Enclosure Sister City: Anjo, Japan NOTE TO FILE For All Supplemental Communications Received Regarding the Fiscal Year 2023-24 Budget Related Items See 6/26/23 Budget Record Category ID # 320.20 System ID #6411346 2 n Street, ��N?iNcro� Huntington ton lBeach,CA �:x ;`- 92648 City of Huntington Beach APPROVED 7-0 `2cF ouNTv cP�o�' TO CONTINUE WITH c � � PUBLIC HEARING OPEN TO JUNE 26, 2023 File #: 23-521 MEETING DATE: 6/20/2023 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Al Zelinka, City Manager VIA: Sunny Han, Acting Chief Financial Officer PREPARED BY: Serena Bubenheim, Acting Assistant Chief Financial Officer Subject: Continued from June 6, 2023 with Public Hearing open - Request to Consider Adopting Resolution No. 2023-24 to Adopt a Budget for the City for Fiscal Year 2023/2024 and Authorize the Corresponding Appropriation and Transfer of $4.9 Million of AES Reserves and $3.9 Million of Equipment Replacement Reserves and Return to a 12-year Paving Cycle; Resolution No. 2023-25 Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024; Resolution No. 2023-23 Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits; Resolution No. 2023-27 Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager; Resolution No. 2023-28 to Adopt a Revised General Fund Reserve Policy; Resolution No. 2023-26 Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code; Approve and Authorize the execution of Amendment No. 2 to the Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program; and Approve and Authorize the Execution of Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services Statement of Issue: The City Charter of the City of Huntington Beach requires a Public Hearing prior to the adoption of the City's annual budget. The City Charter further requires adoption of the annual budget by June 30, 2023, for Fiscal Year (FY) 2023/24. Financial Impact: Proposed Budget: The Fiscal Year 2023/24 Proposed Budget is structurally balanced. The All Funds Proposed Budget equals $508.8 million. The General Fund Proposed Budget totals $285.6 million, with the planned use of $8.8 million in General Fund reserves. Individual departmental and fund-level appropriations are contained in the attachments herein. City of Huntington Beach Page 1 of 10 Printed on 6/15/2023 powereQa LegistarT" File #: 23-521 MEETING DATE: 6/20/2023 Employee Tax Override: Pursuant to Chapter 3.07 of the Municipal Code, the Proposed Budget for Fiscal Year 2023/24 assumes the continuation of the Retirement Tax Cap of $0.01500 per $100 of assessed value. As of the most recent audited financial statements, this tax rate resulted in $7.9 million in revenue in Fiscal Year 2021/22. This recurring revenue source is included in the Proposed FY 2023/24 Budget. Update to the City's General Fund Reserve Balance Policy: The City desires to maintain a prudent level of reserves and the Government Finance Officers Association (GFOA) recommends a minimum of two months of operating expenditures be set aside for unforeseen events. Staff is recommending consolidating certain General Fund Assignments into the Economic Uncertainties Reserve in order to meet the two-month reserve requirement. Additionally, staff is recommending strengthening the City's Reserve policy to ensure that funds are set aside systematically and used only when truly necessary. Mind OC Contract Extension: Staff is requesting approval to amend the professional services contract with Mind OC for the Be Well HB mobile crisis response program. The City has been awarded federal and state grants (U.S. Department of Health and Human Services and California Dept. of Health Care Services) to offset the cost of the program for FY 2023/24. Funding for future years will be identified in future budgets. National Development Council Contract: Staff is requesting approval to execute a new professional services contract with National Council for Community Development (NDC). Funding for this contract is provided through the annual allocations for the Community Development Block Grant and HOME programs and the Community Development Department's annual operating budget. Recommended Action: A) Adopt Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" (Attachment 2); and, B) Authorize the Professional Services included in the FY 2023/24 budget to be representative of the services projected to be utilized by departments in FY 2023/24 (Attachment 3); and, C) Authorize the appropriation and transfer of the full balance ($4.9 million) of the AES Reserve from the General Fund to the AES Mitigation Fund 1284; and, D) Authorize the appropriation and transfer of$3,903,803 from the General Fund Equipment Replacement Reserve to the Equipment Replacement Fund 324; and, E) Approve the return to a 12 year paving cycle; and, F) Adopt Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" of City of Huntington Beach Page 2 of 10 Printed on 6/15/2023 powere3Qi LegistarT" File#: 23-521 MEETING DATE: 6/20/2023 $1,171,687,773" (Attachment 4); and, G) Adopt Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits" (Attachment 5); and, H) Adopt Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager" (Attachment 6); and, I) Adopt Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" (Attachment 7) and authorize the City Manager or designee to execute all administrative and budgetary actions necessary to consolidate certain General Fund Assigned Fund Balances to the Economic Uncertainties Reserve in order to meet the City's two-month Emergency Reserve requirement; and, J) Adopt Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" (Attachment 8); and, K) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program" (Attachment 9); and, L) Approve and authorize the Mayor and City Clerk to execute "Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC)for Technical Assistance Services" (Attachment 10). Alternative Action(s): A. Instruct City staff regarding changes to be incorporated into the budget and adopt the FY 2023/24 Budget and corresponding actions and resolutions as amended. B. Continue the Public Hearing until June 20, 2023. Analysis: As required by the City Charter, the City Manager submitted the FY 2023/24 Proposed Budget to the City Council on May 7, 2023. The Proposed Budget and the Five-Year Capital Improvement Program (CIP)were also discussed at a City Council Study Session held on May 16, 2023. The purpose of the budget study session was to provide the City Council an opportunity to discuss City of Huntington Beach Page 3 of 10 Printed on 6/15/2023 powero3l LegistarT File #: 23-521 MEETING DATE: 6/20/2023 the Proposed Budget with staff before proceeding with the formal Public Hearing on June 6, 2023. Overview Over the past couple years, the City has come together in an extraordinary way to address the fiscal and public health challenges of the COVID-19 pandemic. Through the leadership and support of the City Council, the City implemented significant cost saving measures without reductions in essential service levels, including a Citywide Separation Incentive Program and reorganization plan, and refinancing of the City's pension debt. As a result of these measures, and numerous other measures taken over the past couple years, we project a $3.8 million dollar General Fund surplus for FY 2022/23. Inclusive of these significant budget measures, the FY 2023/24 Proposed Budget also includes mandated and additional one-time savings to mitigate the City's rising pension costs; prioritizes improvements to the City's facilities, roads and parks; incorporates increased funding for critical programs such as Workers' Compensation and General Liabilities; accounts for increases to the City's contractual obligations and inflationary cost impacts; and includes the addition of 11 positions across various City departments to meet increased demand and bring critical services in-house. The FY 2023/24 Proposed Budget is structurally balanced and totals $508.8 million across All Funds. This reflects a $23.2 million, or 4.4 percent, decrease from the FY 2022/23 Adopted All Funds Budget of $532.0 million. A significant portion of the decrease is due to the one-time redistribution of $29.6 million of American Rescue Plan Act (ARPA) funds to the General Fund in FY 2022/23 for the provision of core governmental services. For FY 2023/24, General Fund revenue is projected at $280.4 million, a $2.8 million, or 1 percent decrease from the FY 2022/23 Adopted Budget. Major sources of General Fund revenue include Property Tax, Sales Tax, Utility Users Tax, and Transient Occupancy Tax, among others. The largest decrease in General Fund revenue is in Non-Operating Revenue, attributable to the one-time transfer of ARPA funds for general governmental services that was included in the FY 2022/23 Adopted Budget. The largest revenue increase is in Property Tax, with expected revenues totaling $104.2 million due to gains in assessed property valuations. Franchise and Utility Users Taxes are anticipated at $33.0 million, a 21.8 percent increase, driven by increases in utility prices including gas and electricity. Charges for Current Services is projected to increase $6.4 million due to increased demand for services, including medical transports, recreation classes and building and planning services. The Proposed General Fund Expenditure Budget totals $285.6 million and is supported by revenues of $280.4 million, plus the one-time use of $8.8 million in General Fund Reserves. Use of reserves include the transfer of $3.9 million from the Equipment Replacement Reserve to the Equipment Replacement Fund for the purchase of critical infrastructure and public safety vehicles and equipment. The full balance of the AES Reserve ($4.9 million) is being transferred to a new AES Mitigation Fund to be used for various Capital Improvement Projects as outlined in the Memorandum of Understanding between the City and AES Southland Development LLC. The Proposed General Fund Budget has no reliance on one-time revenues to fund ongoing City of Huntington Beach Page 4 of 10 Printed on 6/15/2023 powereelolj LegistarT'1 File #: 23-521 MEETING DATE: 6/20/2023 operations, which is critical to maintaining the City's financial viability and success and represents a $16.6 million, or 6.2 percent, increase compared to the FY 2022/23 Adopted Budget of$269.0 million. This increase is attributable to higher personnel costs arising from the addition of 11 full time employees, increased Workers' Compensation and overtime costs, and inflationary impacts on normal business activities. The FY 2023/24 Proposed Budget includes 1,002.75 Full Time Equivalents (FTEs); an increase of 11 FTEs across all funds compared to FY 2022/23. The new positions include 1 Deputy Community Prosecutor, 2 Senior Deputy City Attorneys and 1 Senior Legal Assistant in the City Attorney's Office. A Municipal Records Manager is being added to the City Clerk's Office to assist with the citywide centralization of records management, and 1 Graphic Designer and 1 Multi-Media Officer are proposed to oversee the operations of the City's Cable "3" Channel, YouTube Channel and online digital content, and to assist with citywide public information materials in the Office of Communications, bringing part of currently contracted services in-house. Three new positions are included in the Community Development Department to provide timely inspection and plan review services and improve long-term service delivery. One HR Analyst is included in Risk Management to support increased workload, mitigate risk and ensure compliance with regulatory requirements. The FY 2023/24 Proposed Budget was carefully prepared to balance immediate priorities along with the need for long-term investments. The Proposed Budget does not include any financial impacts of agreements with bargaining groups that are under consideration by the City; the City Budget will be amended as bargaining group agreements are approved by the City Council. The City Budget reflects the priorities of the City Council and outlines a plan committed to enriching the quality of life for our residents, businesses, and visitors by increasing funding for core services such as public safety, community & library service programs, and improving the City's infrastructure. Professional Services As established by Administrative Regulation Number 228, each department has submitted a list of professional services that are generally contained in their Proposed Budgets (Attachment 3). Professional services contracts are subject to compliance with Administrative Regulation Number 228 and City Ordinance Chapter 3.03. Paving Cycle In August 2022, staff gave a study session presentation on the Pavement Management Plan (PMP) Overview. At this study session Council provided direction to implement a 9-year zone cycle instead of the previous 12-year zone cycle, of which the last zone of the first 12-year cycle is currently under construction. In working through the CIP process, and working to achieve a balanced budget, staff reviewed the cost/benefit of a 9-year cycle to a 12-year cycle. After this review staff is recommending a 12-year cycle for the following reasons: 1. Over 7 years, the Pavement Classification Index (PCI) would only increase by 1 point (83.4 to 84.4), and both scores are in the "good" condition rating; 2. The construction cost for the 9-zone program totals $2.5 million more annually than the 12- City of Huntington Beach Page of 10 Printed on 6/15/2023 powere3.i 'LegistarTs,' File #: 23-521 MEETING DATE: 6/20/2023 zone program; and 3. The City has seen success with the 12-year zone program which has achieved an overall PCI of 81.6 which indicates the residential streets are currently in "good" condition. Gann Appropriation Limit In November 1979, the California voters approved Article 13B of the State of California Constitution, which allows the City's spending of tax proceeds to increase only by factors from the base year of 1978-1979. In June 1990, Proposition 111 was passed, which changed the way the limit is calculated and is outlined as follows. The City may increase its limit annually in two ways: • By a percentage equal to the increase from the preceding year in county or city population (whichever is greater). • By an amount equal to the change in per capita personal income in California or the change in the assessment roll the preceding year due to the addition of local non-residential new construction (whichever is greater). The proposed appropriation limit for FY 2023/24 was calculated as follows: FY 2022/23 Appropriation Limit $1,126,155,850 Multiplied by percentage grown in State Per Capita Personal Income 1.0444 Multiplied by change in County Population 0.9962 Proposed FY 2023/24 Appropriation Limit $1,171,687,773 Appropriations of revenues controlled by the Gann Limit are primarily in the General Fund. The General Fund proposed appropriation for FY 2023/24 of $285.6 million is significantly below this appropriation limit (Attachment 4). Examples of proceeds of taxes governed by the Gann Appropriation Limit are: property taxes, sales taxes, utility taxes, state subventions, fines, forfeitures, interest revenue on regulatory licenses, user charges, and user fees, to the extent that those proceeds exceed the costs reasonably borne by that entity in providing the regulation, product, or service. Employee Tax Override On July 16, 2012, the City Council adopted an ordinance to permanently cap the tax rate at $0.01500 per $100 of assessed valuation. Therefore, the requested tax levy for FY 2023/24 reflects the same tax rate of$0.01500 per$100 of assessed valuation effective in FY 2012/13 pursuant to Chapter 3.07 of the Municipal Code. Fiscal Year 2023/24 will represent the twelfth year of the application of the permanent cap. The current capped Employee Tax Override results in an approximate $75 annual tax levy for a property assessed at $500,000. Revenue generated from this property tax helps the City fund public safety employee pension costs associated with pre-1978 retirement benefit levels. As such, the tax can only pay for the estimated costs associated with the public safety pension benefit formulas in place prior to the enactment of Proposition 13 on July 1, 1978. Hence, the tax can only pay for City of Huntington Beach Page 6 of 10 Printed on 6/15/2023 powere3131 Legistar m File #: 23-521 MEETING DATE: 6/20/2023 retirement benefits for all retired, current, and future public safety City employees that were contracted for prior to July 1, 1978 (such as the 2% at 50 benefit formula for Safety employees in place before enactment of Proposition 13). Based on the most recent CaIPERS actuarial valuations, the cost of pre-1978 retirement benefit levels for Safety personnel totals $26.1 million. As such, the proposed tax rate is recouping only 27 percent of eligible Safety personnel retirement costs. Due to the County of Orange's timeline for approving the tax rate and the city's budget cycle, the rate must be set before the City Council takes action on its annual budget. The recommended assessment rate would maintain essential services for Fiscal Year 2023/24 (Attachment 5). Public Hearing The City Charter requires that a public hearing be conducted on the City budget prior to adoption. Public Hearing notices have been published per City Charter requirements (Attachment 1). At the close of this hearing, all legal requirements for budget adoption will have been met. Update to the General Fund Reserve Policy The City desires to maintain a prudent level of reserves based on the revenue impacts described above and the City's desire to maintain strong bond ratings to minimize borrowing costs. The Government Finance Officers Association (GFOA) recommends a minimum of two months of operating expenditures be set aside for unforeseen events. Cities with robust fiscal reserve policies are more likely to receive improved bond ratings based on higher scores related to financial management policies and improved fund balance reserves. Staff is recommending consolidating certain General Fund Assignments into the Economic Uncertainties Reserve in order to meet the two-month reserve requirement, as listed below: Balance as of June 30,2022(in thousands) Cityview Replacement $ 1,028 Triple Flip 109 Strategic Initiatives 16,536 Housing Agreement 1,657 Year-End Fair Value 1,983 Total Recommended for Consolidation 21,313 Economic Uncertainties Reserve 26,114 Economic Uncertainties Reserve(revised) $47,427 Two-Month Reserve Requirement $47,215 Additionally, staff is recommending: (1) a minimum of 25% of unrestricted one-time revenues would be transferred to the Section 115 Trust, and (2) strengthening the City's Reserve policy to ensure that funds are set aside systematically and used only when truly necessary and approved by a 6/7th vote of City Council. If Economic Uncertainties Funds are utilized and the level falls below the two-month reserve City of Huntington Beach Page 7 of 10 Printed on 6/15/2023 powereat4 LegistarT'•' File#: 23-521 MEETING DATE: 6/20/2023 requirement, the Chief Financial Officer will bring forward a proposed plan to City Council to replenish the fund within three fiscal years. Acknowledge Receipt of Fire Inspections California Health & Safety Code Sections 13146.2 and 13146.3 require all fire departments that provide fire protection services to perform annual inspections in every building used as a public or private school, hotel motel, lodging house, apartment house and certain residential care facilities. These inspections are performed to meet certain building standards. Section 13146.2 of the Code requires departments to report annually to its governing body on its conformance to these requirements. State Senate Bill 1205 requires that effective January 1, 2019, the governing body annually adopt a resolution or other formal document certifying that these inspections were completed and that this document be submitted to the State. During calendar year 2022, the Huntington Beach Fire Department completed annual inspections of all buildings referenced under Sections 13146.2 and 13146.3 of the California Health and Safety Code. This includes the following: Occupancy Type Jurisdiction Inspections R1s ("hotel, motel, lodging houses") 20 20 R1s that are also High Rises _ 3 3 R2s ("apartment houses") 2,537 2,537 R2that are also High Rises i _ 1 1_ R2.1 ("supervised residential") 5 —�� 5 R4s ("residential/assisted living") 1 1 Es ("public and private schools") 38 38 This represents inspection rate of 100% of all required facilities. In conformance with Senate Bill 1205, staff recommends the adoption of the resolution shown as Attachment 8. Mind OC Contract Extension Since its successful launch in May 2021, Be Well HB, a pilot mobile crisis response program has become a critical City resource to help with a variety of non-emergency public assistance situations such as mental health crisis, addiction, and homelessness. Council approval is requested to extend the contract with the service provider, Mind OC, for an additional three years until June 30, 2026 (Attachment 9), with an annual contract amount of not-to- exceed $1.5 million. The cost for FY 2023/24 will be 100% covered by a portion of the $500,000 federal grant from the U.S. Department of Health and Human Services and $1.5 million state grant from the California Dept. of Health Care Services. Funding for the two subsequent years will be incorporated into the respective annual operating budgets and program costs may be reduced or eliminated, contingent upon the funding availability in each given year. National Development Council Contract The National Council for Community Development (NDC) provides technical assistance services for housing and economic development activities for the Community Development Department. An City of Huntington Beach Page 8 of 10 Printed on 6/15/2023 powere3i t%LegistarT'•' File#: 23-521 MEETING DATE: 6/20/2023 existing three-year contract will expire at the beginning of FY 2023/24. Council approval is requested for a new two-year agreement until June 30, 2025 (Attachment 10) with total compensation not to exceed $156,818. Funding for this contract is incorporated in the Community Development Block Grant and HOME program administrative costs, and the Community Development Department's annual operating budget. The contract procurement required through Municipal Code 3.03 was completed through an executed interagency agreement with San Joaquin County. Environmental Status: Not applicable Strategic Plan Goal: Community Engagement Homeless Response Economic Development & Housing Infrastructure & Parks Fiscal Sustainability, Public Safety or Other Attachment(s): 1. Public Hearing Notice 2. Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" 3. Professional Services included in the Fiscal Year 2023/2024 Budget 4. Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" 5. Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits" 6. Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager" 7. Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" 8. Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" 9. Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program 10. Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC)for Technical Assistance Services 11.FY 2023/24 Budget Adoption Presentation City of Huntington Beach Page 9 of 10 Printed on 6/15/2023 powered%LegistarT" File #: 23-521 MEETING DATE: 6/20/2023 City of Huntington Beach Page 10 of 10 Printed on 6/15/2023 powerellgi LegistarT PUBLIC HEARING CITY OF HUNTING TON BEACH __ Notice of Public Hearing on the Proposed City Budget for Fiscal Year 2023/2024 Notice is hereby given that a public hearing will be held by the City Council of the City of Huntington Beach for the purpose of considering the City Budget for Fiscal Year 202312024. The Proposed Budget for Fiscal Year 2023/2024 totals$508,818,053 including General Fund Expenditures of 3285,564,240. The public hearing is scheduled in the.Council Chambers of the Civic Center,located at 2000 Main Street on Tuesday.June 6,-2023 at 6:00pm. The public may obtain copies of the Proposed Budget for Fiscal Year 202312024 from the City's website at http:llww',r.huntinnfont eachca,gov. All interested persons are Invited to attend to express their opinions for, or against, the Proposed Budget with written or oral comments, Written communications to the City Council should be directed to the Office of the City Clerk at the address below. Further information may be obtained from the Finance Department, 2000 Main Street, Huntington Beach,CA, 92648- 2702 or by telephone(714)536-5630, The City of Huntington Beach endeavors to acomrnodate persons of handicapped status in the admission or access to,or treatment or employment in,city programs or activities. The City of Huntington Beach is an equal opportunity employer. Dated: May 25,2023 and June 1,2023 City of Huntington Beach By: Robin Estanislau,City Clerk 2000 Main Street Huntington Beach,CA 92648-2702 Telephone: (714)536-5227 htti lihuntinatonbeachca.govH8PublicCommenisr 318 CONTINUANCE OF PUBLIC HEARING • • • ^C. N STATE OF CALIFORNIA ) ; . COUNTY OF ORANGE ) SS CITY OF HUNTINGTON BEACH ) N C7 I, Robin Estanislau, declare as follows: That I am the City Clerk of the City of Huntington Beach; that at a regular meeting of the City Council/Public Financing Authority of the City of Huntington Beach held Tuesday, June 20, 2023, said public hearing was continued open to an Adjourned Regular Meeting on Monday, June 26, 2023 at 5:00 pm to Request to Consider Adopting Resolution No. 2023-24 to Adopt a Budget for the City for Fiscal Year 2023/2024 and Authorize the Corresponding Appropriation and Transfer of $4.9 Million of AES Reserves and $3.9 Million of Equipment Replacement Reserves and Return to a 12-year Paving Cycle; Resolution No. 2023-25 Establishing the Gann Appropriation { Limit for Fiscal Year 2023/2024; Resolution No. 2023-23 Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits; Resolution No. 2023-27 Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager; Resolution No. 2023-28 to Adopt a Revised General Fund Reserve Policy; Resolution No. 2023-26 Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code; Approve and g:lage ndas\agmisc\Pubhear-Continued.doc } Authorize the execution of Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program; and Approve and Authorize the Execution of Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services); and that on Wednesday, June 21, 2023 at the hour of 12:30 p.m., a copy of said notice was posted at a conspicuous place near the door at which the meeting was held. I declare under penalty of perjury that the foregoing is true and correct. Executed on Wednesday, June 21, 2023 at Huntington Beach, California. ROBIN ESTANISLAU, CITY CLERK, CMC p•ly //I � ,� by: Senior Deputy Cit Jerk Posted pursuant to Government Code Section 54950 }3} I declare,under penalty of perjury,that I am employed by the City of Huntington Beach,in the Office of the City Clerk and that I posted this public notice on the Mt:Siposting bulletin board at the Clvi Center on 'e; at 1 ..^A) z CO .LI g:lagendaslagmisc\Pubhear-Contlnued.doc Date /3� Signature ,Ct itrn,'i f2.1f J. i Senior Deputy City Clerk r' I - City Council/ ACTION AGENDA June 20, 2023 Public Financing Authority Recommended Action: A) Adopt Resolution No. 2023-22, "A Resolution of the City Council of the City of Huntington Beach Concerning the Update of the Local Signal Synchronization Plan for the Measure M (M2) Program"; B) Adopt Resolution No. 2023-29, "A Resolution of the City Council of the City of Huntington Beach Concerning the Status and Update of the Circulation Element, and Mitigation Fee Program for the Measure M (M2) Program"; and C) Adopt the 7-year Capital Improvement Program (Fiscal Years 2023/24 through 2029/30) included as Attachment #4 for compliance with the renewed Measure M eligibility requirements. Approved 7-0 PUBLIC HEARING 14. 23-521 Continued to June 26, 2023 at 5:00 PM with Public Hearing Open - Request to Consider Adopting Resolution No. 2023-24 to Adopt a Budget for the City for Fiscal Year 2023/2024 and Authorize the Corresponding Appropriation and Transfer of$4.9 Million of AES Reserves and $3.9 Million of Equipment Replacement Reserves and Return to a 12-year Paving Cycle; Resolution No. 2023-25 Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024; Resolution No. 2023-23 Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits; Resolution No. 2023-27 Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager; Resolution No. 2023-28 to Adopt a Revised General Fund Reserve Policy; Resolution No. 2023-26 Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code; Approve and Authorize the execution of Amendment No. 2 to the Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program; and Approve and Authorize the Execution of Professional Services Contract between the City of Huntington Beach and National Council for Community Development(NDC) for Technical Assistance Services Recommended Action: A) Adopt Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" (Attachment 2); and, Page 6 of 9 City Council/ ACTION AGENDA June 20,2023 Public Financing Authority B) Authorize the Professional Services included in the FY 2023/24 budget to be representative of the services projected to be utilized by departments in FY 2023/24 (Attachment 3); and, C) Authorize the appropriation and transfer of the full balance($4.9 million) of the AES Reserve from the General Fund to the AES Mitigation Fund 1284; and, D) Authorize the appropriation and transfer of $3,903,803 from the General Fund Equipment Replacement Reserve to the Equipment Replacement Fund 324; and, E) Approve the return to a 12 year paving cycle; and, F) Adopt Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" of $1,171,687,773" (Attachment 4); and, G) Adopt Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits" (Attachment 5); and, H) Adopt Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager" (Attachment 6); and, I) Adopt Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" (Attachment 7) and authorize the City Manager or designee to execute all administrative and budgetary actions necessary to consolidate certain General Fund Assigned Fund Balances to the Economic Uncertainties Reserve in order to meet the City's two-month Emergency Reserve requirement; and, J) Adopt Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" (Attachment 8); and, K) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program" (Attachment 9); and, Page 7 of 9 City Council/ ACTION AGENDA June 20, 2023 Public Financing Authority L) Approve and authorize the Mayor and City Clerk to execute "Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services" (Attachment 10). Supplemental Communication (1) Public Speakers— 1 Approved 7-0 to continue with Public Hearing open to Monday, June 26, 2023 at 5:00 PM ADMINISTRATIVE ITEMS 15. 23-622 ITEM WITHDRAWN FROM CONSIDERATION-- Future Development of 17642 Beach Blvd. A) Rccciye and file this r port; and B) Provide direction to staff regarding future use of the Site 16. 23-525 Approved Introduction of the Proposed Memorandum of Understanding Between the Huntington Beach Police Management Association (PMA) and the City of Huntington Beach for July 1, 2023 through June 30, 2026. Recommended Action: Approve introduction of the proposed Memorandum of Understanding Between the Huntington Beach Police Management Association and the City of Huntington Beach for the period July 1, 2023 through June 30, 2026. Approved 7-0 17. 23-524 Adopted Resolution No. 2023-31 Approving and Implementing the Memorandum of Understanding (MOU) between the Huntington Beach Police Officers' Association (POA) and the City of Huntington Beach for July 1, 2023, through June 30, 2026; and authorized appropriation of funds. Recommended Action: A) Adopt Resolution No. 2023-31, "A Resolution of the City Council of the City of Huntington Beach Approving and Implementing the Memorandum of Understanding Between the Huntington Beach Police Officers' Association (POA) and the City for July 1, 20231, through June 30, 2026;" and, B) Authorize City Manager or designee to take all administrative and budgetary actions necessary for implementation of Resolution No. 2023-31. Approved 7-0 COUNCILMEMBER ITEMS Page 8 of 9 ''~�NTiG 2060 Main Street, • o� g;�4 "a;1�0 Huntington Beach,CA 92648 City of Huntington Beach APPROVED 7-0 Z6: U t TO CONTINUE WITH PUBLIC HEARING OPEN TO JUNE 20, 2023 File#: 23-481 MEETING DATE: 6/6/2023 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Al Zelinka, City Manager VIA: Sunny Han, Acting Chief Financial Officer PREPARED BY: Serena Bubenheim, Acting Assistant Chief Financial Officer Subject: Consider Adopting Resolution No. 2023-24 to Adopt a Budget for the City for Fiscal Year 2023/2024 and Authorize the Corresponding Appropriation and Transfer of$4.9 Million of AES Reserves and $3.9 Million of Equipment Replacement Reserves and Return to a 12-year Paving Cycle; Resolution No. 2023-25 Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024; Resolution No. 2023-23 Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits; Resolution No. 2023-27 Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager; Resolution No. 2023-28 to Adopt a Revised General Fund Reserve Policy; Resolution No. 2023-26 Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code; Approve and Authorize the execution of Amendment No. 2 to the Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program; and Approve and Authorize the Execution of Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services Statement of Issue: The City Charter of the City of Huntington Beach requires a Public Hearing prior to the adoption of the City's annual budget. The City Charter further requires adoption of the annual budget by June 30, 2023, for Fiscal Year (FY) 2023/24. Financial Impact: Proposed Budget: The Fiscal Year 2023/24 Proposed Budget is structurally balanced. The All Funds Proposed Budget equals $508.8 million. The General Fund Proposed Budget totals $285.6 million, with the planned use of $8.8 million in General Fund reserves. Individual departmental and fund-level appropriations are contained in the attachments herein. City of Huntington Beach Page 1 of 10 Printed on 6/1/2023 powered by LegistarT"' File #: 23-481 MEETING DATE: 6/6/2023 Employee Tax Override: Pursuant to Chapter 3.07 of the Municipal Code, the Proposed Budget for Fiscal Year 2023/24 assumes the continuation of the Retirement Tax Cap of $0.01500 per $100 of assessed value. As of the most recent audited financial statements, this tax rate resulted in $7.9 million in revenue in Fiscal Year 2021/22. This recurring revenue source is included in the Proposed FY 2023/24 Budget. Update to the City's General Fund Reserve Balance Policy: The City desires to maintain a prudent level of reserves and the Government Finance Officers Association (GFOA) recommends a minimum of two months of operating expenditures be set aside for unforeseen events. Staff is recommending consolidating certain General Fund Assignments into the Economic Uncertainties Reserve in order to meet the two-month reserve requirement. Additionally, staff is recommending strengthening the City's Reserve policy to ensure that funds are set aside systematically and used only when truly necessary. Mind OC Contract Extension: Staff is requesting approval to amend the professional services contract with Mind OC for the Be Well HB mobile crisis response program. The City has been awarded federal and state grants (U.S. Department of Health and Human Services and California Dept. of Health Care Services) to offset the cost of the program for FY 2023/24. Funding for future years will be identified in future budgets. National Development Council Contract: Staff is requesting approval to execute a new professional services contract with National Council for Community Development (NDC). Funding for this contract is provided through the annual allocations for the Community Development Block Grant and HOME programs and the Community Development Department's annual operating budget. Recommended Action: A) Adopt Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" (Attachment 2); and, B) Authorize the Professional Services included in the FY 2023/24 budget to be representative of the services projected to be utilized by departments in FY 2023/24 (Attachment 3); and, C) Authorize the appropriation and transfer of the full balance ($4.9 million) of the AES Reserve from the General Fund to the AES Mitigation Fund 1284; and, D) Authorize the appropriation and transfer of$3,903,803 from the General Fund Equipment Replacement Reserve to the Equipment Replacement Fund 324; and, E) Approve the return to a 12 year paving cycle; and, F) Adopt Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" of City of Huntington Beach Page 2 of 10 Printed on 6/1/2023 powered by Legistar"" File #: 23-481 MEETING DATE: 6/6/2023 $1,171,687,773" (Attachment 4); and, G) Adopt Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits" (Attachment 5); and, H) Adopt Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager" (Attachment 6); and, I) Adopt Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" (Attachment 7) and authorize the City Manager or designee to execute all administrative and budgetary actions necessary to consolidate certain General)Fund Assigned Fund Balances to the Economic Uncertainties Reserve in order to m t the City; two-month Emergency Reserve requirement; and, J) Adopt Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" (Attachment 8); and, K) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program" (Attachment 9); and, L) Approve and authorize the Mayor and City Clerk to execute "Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC)for Technical Assistance Services" (Attachment 10). Alternative Action(s): A. Instruct City staff regarding changes to be incorporated into the budget and adopt the FY 2023/24 Budget and corresponding actions and resolutions as amended. B. Continue the Public Hearing until June 20, 2023. Analysis: As required by the City Charter, the City Manager submitted the FY 2023/24 Proposed Budget to the City Council on May 7, 2023. The Proposed Budget and the Five-Year Capital Improvement Program (CIP)were also discussed at a City Council Study.Session held on May 16, 2023. The purpose of the budget study session was to provide the City Council an opportunity to discuss City of Huntington Beach Page 3 of 10 Printed on 6/1/2023 powered by Legistar^" File#: 23-481 MEETING DATE: 6/6/2023 the Proposed Budget with staff before proceeding with the formal Public Hearing on June 6, 2023. Overview Over the past couple years, the City has come together in an extraordinary way to address the fiscal and public health challenges of the COVID-19 pandemic. Through the leadership and support of the City Council, the City implemented significant cost saving measures without reductions in essential service levels, including a Citywide Separation Incentive Program and reorganization plan, and refinancing of the City's pension debt. As a result of these measures, and numerous other measures taken over the past couple years, we project a $3.8 million dollar General Fund surplus for FY 2022/23. Inclusive of these significant budget measures, the FY 2023/24 Proposed .Budget also includes mandated and additional one-time savings to mitigate the City's rising pension costs; prioritizes improvements to the City's facilities, roads and parks; incorporates increased funding for critical programs such as Workers' Compensation and General Liabilities; accounts for increases to the City's contractual obligations and inflationary cost impacts; and includes the addition of 11 positions across various City departments to meet increased demand and bring critical services in-house. The FY 2023/24 Proposed Budget is structurally balanced and totals $508.8 million across All Funds. This reflects a $23.2 million, or 4.4 percent, decrease from the FY 2022/23 Adopted All Funds Budget of $532.0 million. A significant portion of the decrease is due to the one-time redistribution of $29.6 million of American Rescue Plan Act (ARPA) funds to the General Fund in FY 2022/23 for the provision of core governmental services. For FY 2023/24, General Fund revenue is projected at $280.4 million, a $2.8 million, or 1 percent decrease from the FY 2022/23 Adopted Budget. Major sources of General Fund revenue include Property Tax, Sales Tax, Utility Users Tax, and Transient Occupancy Tax, among others. The largest decrease in General Fund revenue is in Non-Operating Revenue, attributable to the one-time transfer of ARPA funds for general governmental services that was included in the FY 2022/23 Adopted Budget. The largest revenue increase is in Property Tax, with expected revenues totaling $104.2 million due to gains in assessed property valuations. Franchise and Utility Users Taxes are anticipated at $33.0 million, a 21.8 percent increase, driven by increases in utility prices including gas and electricity. Charges for Current Services is projected to increase $6.4 million due to increased demand for services, including medical transports, recreation classes and building and planning services. The Proposed General Fund Expenditure Budget totals $285.6 million and is supported by revenues of $280.4 million, plus the one-time use of $8.8 million in General Fund Reserves. Use of reserves include the transfer of $3.9 million from the Equipment Replacement Reserve to the Equipment Replacement Fund for the purchase of critical infrastructure and public safety vehicles and equipment. The full balance of the AES Reserve ($4.9 million) is being transferred to a new AES Mitigation Fund to be used for various Capital Improvement Projects as outlined in the Memorandum of Understanding between the City and AES Southland Development LLC. The Proposed General Fund Budget has no reliance on one-time revenues to fund ongoing City of Huntington Beach Page 4 of 10 Printed on 6/1/2023 powered by Legistarn" File#: 23-481 MEETING DATE: 6/6/2023 operations, which is critical to maintaining the City's financial viability and success and represents a $16.6 million, or 6.2 percent, increase compared to the FY 2022/23 Adopted Budget of$269.0 million. This increase is attributable to higher personnel costs arising from the addition of 11 full time employees, increased Workers' Compensation and overtime costs, and inflationary impacts on normal business activities. The FY 2023/24 Proposed Budget includes 1,002.75 Full Time Equivalents (FTEs); an increase of 11 FTEs across all funds compared to FY 2022/23. The new positions include 1 Deputy Community Prosecutor, 2 Senior Deputy City Attorneys and 1 Senior Legal Assistant in the City Attorney's Office. A Municipal Records Manager is being added to the City Clerk's Office to assist with the citywide centralization of records management, and 1 Graphic Designer and 1 Multi-Media Officer are proposed to oversee the operations of the City's. Cable "3" Channel, YouTube Channel and online digital content, and to assist with citywide public information materials in the Office of Communications, bringing part of currently contracted services in-house. Three new positions are included in the Community Development Department to provide timely inspection and plan review services and improve long-term service delivery. One HR Analyst is included in Risk Management to support increased workload, mitigate risk and ensure compliance with regulatory requirements. The FY 2023/24 Proposed Budget was carefully prepared to balance immediate priorities along with the need for long-term investments. The Proposed Budget does not include any financial impacts of agreements with bargaining groups that are under consideration by the City; the City Budget will be amended as bargaining group agreements are approved by the City Council. The City Budget reflects the priorities of the City Council and outlines a plan committed to enriching the quality of life for our residents, businesses, and visitors by increasing funding for core services such as public safety, community & library service programs, and improving the City's infrastructure. Professional Services As established by Administrative Regulation Number 228, each department has submitted a list of professional services that are generally contained in their Proposed Budgets (Attachment 3). Professional services contracts are subject to compliance with Administrative Regulation Number 228 and City Ordinance Chapter 3.03. Paving Cycle In August 2022, staff gave a study session presentation on the Pavement Management Plan (PMP) Overview. At this study session Council provided direction to implement a 9-year zone cycle instead of the previous 12-year zone cycle, of which the last zone of the first 12-year cycle is currently under construction. In working through the CIP process, and working to achieve a balanced budget, staff reviewed the cost/benefit of a 9-year cycle to a 12-year cycle. After this review staff is recommending a 12-year cycle for the following reasons: 1. Over 7 years, the Pavement Classification Index (PCI) would only increase by 1 point (83.4 to 84.4), and both scores are in the "good" condition rating; 2. The construction cost for the 9-zone program totals $2.5 million more annually than the 12- City of Huntington Beach Page 5 of 10 Printed on 6/1/2023 powered by LegistarT" File#: 23-481 MEETING DATE: 6/6/2023 zone program; and 3. The City has seen success with the 12-year zone program which has achieved an overall PCI of 81.6 which indicates the residential streets are currently in "good" condition. Gann Appropriation Limit In November 1979, the California voters approved Article 13B of the State of California Constitution, which allows the City's spending of tax proceeds to increase only by factors from the base year of 1978-1979. In June 1990, Proposition 111 was passed, which changed the way the limit is calculated and is outlined as follows. The City may increase its limit annually in two ways: • By a percentage equal to the increase from the preceding year in county or city population (whichever is greater). • By an amount equal to the change in per capita personal income in California or the change in the assessment roll the preceding year due to the addition of local non-residential new construction (whichever is greater). The proposed appropriation limit for FY 2023/24 was calculated as follows: FY 2022/23 Appropriation Limit $1,126,155,850 Multiplied by percentage grown in State Per Capita Personal Income 1.0444 Multiplied by change in County Population 0.9962 Proposed FY 2023/24 Appropriation Limit $1,171,687,773 Appropriations of revenues controlled by the Gann Limit are primarily in the General Fund. The General Fund proposed appropriation for FY 2023/24 of $285.6 million is significantly below this appropriation limit (Attachment 4). Examples of proceeds of taxes governed by the Gann Appropriation Limit are: property taxes, sales taxes, utility taxes, state subventions, fines, forfeitures, interest revenue on regulatory licenses, user charges, and user fees, to the extent that those proceeds exceed the costs reasonably borne by that entity in providing the regulation, product, or service. Employee Tax Override On July 16, 2012, the City Council adopted an ordinance to permanently cap the tax rate at $0.01500 per $100 of assessed valuation. Therefore, the requested tax levy for FY 2023/24 reflects the same tax rate of$0.01500 per$100 of assessed valuation effective in FY 2012/13 pursuant to Chapter 3.07 of the Municipal Code. Fiscal Year 2023/24 will represent the twelfth year of the application of the permanent cap. The current capped Employee Tax Override results in an approximate $75 annual tax levy for a property assessed at $500,000. Revenue generated from this property tax helps the City fund public safety employee pension costs associated with pre-1978 retirement benefit levels. As such, the tax can only pay for the estimated costs associated with the public safety pension benefit formulas in place prior to the enactment of Proposition 13 on July 1, 1978. Hence, the tax can only pay for City of Huntington Beach Page 6 of 10 Printed on 6/1/2023 powered by Legistar'1' File#: 23-481 MEETING DATE: 6/6/2023 retirement benefits for all retired, current, and future public safety City employees that were contracted for prior to July 1, 1978 (such as the 2% at 50 benefit formula for Safety employees in place before enactment of Proposition 13). Based on the most recent CaIPERS actuarial valuations, the cost of pre-1978 retirement benefit levels for Safety personnel totals $26.1 million. As such, the proposed tax rate is recouping only 27 percent of eligible Safety personnel retirement costs. Due to the County of Orange's timeline for approving the tax rate and the city's budget cycle, the rate must be set before the City Council takes action on its annual budget. The recommended assessment rate would maintain essential services for Fiscal Year 2023/24 (Attachment 5). Public Hearing The City Charter requires that a public hearing be conducted on the City budget prior to adoption. Public Hearing notices have been published per City Charter requirements (Attachment 1). At the close of this hearing, all legal requirements for budget adoption will have been met. Update to the General Fund Reserve Policy The City desires to maintain a prudent level of reserves based on the revenue impacts described above and the City's desire to maintain strong bond ratings to minimize borrowing costs. The Government Finance Officers Association (GFOA) recommends a minimum of two months of operating expenditures be set aside for unforeseen events. Cities with robust fiscal reserve policies are more likely to receive improved bond ratings based on higher scores related to financial management policies and improved fund balance reserves. Staff is recommending consolidating certain General Fund Assignments into the Economic Uncertainties Reserve in order to meet the two-month reserve requirement, as listed below: Balance as of June 30,2022(in thousands) Cityview Replacement $ 1,028 Triple Flip 109 Strategic Initiatives 16,536 Housing Agreement 1,657 Year-End Fair Value 1,983 Total Recommended for Consolidation 21,313 Economic Uncertainties Reserve 26,114 Economic Uncertainties Reserve(revised) $47,427 Two-Month Reserve Requirement $47,215 Additionally, staff is recommending: (1) a minimum of 25% of unrestricted one-time revenues would be transferred to the Section 115 Trust, and (2) strengthening the City's Reserve policy to ensure that funds are set aside systematically and used only when truly necessary and approved by a 6/7th vote of City Council. If Economic Uncertainties Funds are utilized and the level falls below the two-month reserve City of Huntington Beach Page 7 of 10 Printed on 6/1/2023 powered by LegistarT'' File #: 23-481 MEETING DATE: 6/6/2023 requirement, the Chief Financial Officer will bring forward a proposed plan to City Council to replenish the fund within three fiscal years. Acknowledge Receipt of Fire Inspections California Health & Safety Code Sections 13146.2 and 13146.3 require all fire departments that provide fire protection services to perform annual inspections in every building used as a public or private school, hotel motel, lodging house, apartment house and certain residential care facilities. These inspections are performed to meet certain building standards. Section 13146.2 of the Code requires departments to report annually to its governing body on its conformance to these requirements. State Senate Bill 1205 requires that effective January 1, 2019, the governing body annually adopt a resolution or other formal document certifying that these inspections were completed and that this document be submitted to the State. During calendar year 2022, the Huntington Beach Fire Department completed annual inspections of all buildings referenced under Sections 13146.2 and 13146.3 of the California Health and Safety Code. This includes the following: Occupancy Type Jurisdiction Inspections R1s ("hotel, motel, lodging houses") 20 1 20 R1s that are also High Rises 3 3 R2s ("apartment houses") 2,537 j 2,537 R2 that are also High Rises 1 1 R2.1 ("supervised residential") ' 5 i 5 R4s("residential/assisted living") 1 1 Es ("public and private schools") 38 38 This represents inspection rate of 100% of all required facilities. In conformance with Senate Bill 1205, staff recommends the adoption of the resolution shown as Attachment 8. Mind OC Contract Extension Since its successful launch in May 2021, Be Well HB, a pilot mobile crisis response program has become a critical City resource to help with a variety of non-emergency public assistance situations such as mental health crisis, addiction, and homelessness. Council approval is requested to extend the contract with the service provider, Mind OC, for an additional three years until June 30, 2026 (Attachment 9), with an annual contract amount of not-to- exceed $1.5 million. The cost for FY 2023/24 will be 100% covered by a portion of the $500,000 federal grant from the U.S. Department of Health and Human Services and $1.5 million state grant from the California Dept. of Health Care Services. Funding for the two subsequent years will be incorporated into the respective annual operating budgets and program costs may be reduced or eliminated, contingent upon the funding availability in each given year. National Development Council Contract The National Council for Community Development (NDC) provides technical assistance services for housing and economic development activities for the Community Development Department. An City of Huntington Beach Page 8 of 10 Printed on 6/1/2023 powered by LegistarT" File#: 23-481 MEETING DATE: 6/6/2023 existing three-year contract will expire at the beginning of FY 2023/24. Council approval is requested for a new two-year agreement until June 30, 2025 (Attachment 10) with total compensation not to exceed $156,818. Funding for this contract is incorporated in the Community Development Block Grant and HOME program administrative costs, and the Community Development Department's annual operating budget. The contract procurement required through Municipal Code 3.03 was completed through an executed interagency agreement with San Joaquin County. Environmental Status: Not applicable Strategic Plan Goal: Community Engagement Homeless Response Economic Development & Housing Infrastructure & Parks Fiscal Sustainability, Public Safety or Other Attachment(s): 1. Public Hearing Notice 2. Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" 3. Professional Services included in the Fiscal Year 2023/2024 Budget 4. Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" 5. Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits" 6. Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager" 7. Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" 8. Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" 9. Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program 10. Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC)for Technical Assistance Services 11.FY 2023/24 Budget Adoption Presentation City of Huntington Beach Page.9 of 10 Printed on 6/1/2023 powered by Legistar"•' File #: 23-481 MEETING DATE: 6/6/2023 City of Huntington Beach Page 10 of 10 Printed on 6/1/2023 powered by LegistarT'" PUBLIC HEARING CiTY OF HUNTINGTON BEACH Notice of Public Hearing on the Proposed City Budget for Fiscal Year 2023+2024 J Notice is hereby given that a public hearing will be held by the City Council of the City of Huntington Beach for the purpose of considering the City Budget for Fiscal Year 2023/2024. The Proposed Budget for Fiscal Year 2023+2024 totals 8506,818,053 including General Fund Expenditures of 8285,564,240, The public hearing is scheduled in the Council Chambers of the Civic Center,located at 2000 Main Street on Tuesday,June 6,2023 at 6:00pm. The public may obtain copies of the Proposed Budget for Fiscal Year 2023,2024 from the City's website at http://www.huntinotonbeachca.00v, All interested persons are Invited to attend to express their opinions for, or against, the Proposed Budget with written or oral Comments. Written communications to the City Council should be directed to the Office of the City Clerk at the address below. Further information may be obtained from the Finance Department, 2000 Main Street, Huntington Beach, CA, 92648- 2702 or by telephone(714)536-5630. The City of Huntington Beach endeavors to accommodate persons of handicapped status in the admission or access to,or treatment or employment in,city programs or activities. The City of Huntington Beach is an equal opportunity employer. Dated: May 25,2023 and June 1,2023 City of Huntington Beach By: Robin Estanislau,City Clerk 2000 Main Street Huntington Beach,CA 92648-2702 Telephone: (714)536.5227 httn_Uhuntingtonbeachca.gaviliBPublictom nls+ • CONTINUANCE OF PUBLIC HEARING c— • ;.) lei STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS '' ." CITY OF HUNTINGTON BEACH ) I, Robin Estanislau, declare as follows: That I am the City Clerk of the City of Huntington Beach; that at a regular meeting of the City Council/Public Financing Authority of the City of Huntington Beach held Tuesday, June 6, 2023, said public hearing was opened and continued to a regular meeting on June 20, 2023 at 6:00pm to Consider Adopting Resolution No. 2023-24 to Adopt a Budget for the City for Fiscal Year 2023/2024 and Authorize the Corresponding Appropriation and Transfer of$4.9 Million of AES Reserves and $3.9 Million of Equipment Replacement Reserves and Return to a 12-year Paving Cycle; Resolution No. 2023-25 Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024; Resolution No. 2023-23 Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay for Pre-1978 Employee Retirement Benefits; Resolution No. 2023-27 Amending the City's Classification Plan by Adding the Classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager; Resolution No. 2023-28 to Adopt a Revised General Fund Reserve Policy; Resolution No. 2023-26 Acknowledging Receipt of a Report Made by the Fire Chief of the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code; Approve and g:lagendaslagmisc\Pubhear-Continued,d oc • Authorize the execution of Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program; and Approve and Authorize the Execution of Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services); and that on Wednesday, June 7, 2023 at the hour of 7:45 p.m., a copy of said notice was posted at a conspicuous place near the door at which the meeting was held. I declare under penalty of perjury that the foregoing is true and correct. Executed on Wednesday, June 7, 2023 at Huntington Beach, California. ROBIN ESTANISLAU, CITY CLERK, CMC ., by: Senior eput ity Clerk Posted pursuant to Government Code Section 54950 I declare,under penalty of perjury,that I am employed by the City of Huntington Beach,in the Office of the City Clerk.a d that I posted this public notice on the osting b Iletin board at the Civi Center on at 1"-1- S a.m. p.m. Date l0 2 , g:\agendas\agmisc\Pubhear-Continued.doc Signature Senior Depu City Cler City Council/ ACTION AGENDA June 6, 2023 Public Financing Authority 22. 23-461 Approved the Infrastructure Fund Annual Report for FY 2021/22 Recommended Action: Approve the Infrastructure Fund Annual Report for FY 2021/22. Approved 7-0 22. 23-463 Accepted bid and authorized execution of a construction contract with Elecnor Belco Electric, Inc. in the amount of$145,763 for the construction of Fiber Optic Communications to the Central Library, CC-1722, and authorized change orders not to exceed 15 percent Recommended Action: A) Accept the lowest responsive and responsible bid submitted by Elecnor Belco Electric, Inc. in the amount of$145,763; and, B) Appropriate $90,815 of undesignated Public Education and Government Access(PEG) funds to PEG fund business unit 24385101.82800; and, C) Authorize the Mayor and City Clerk to execute a construction contract in a formapproved by the City Attorney; and, D) Authorize the Director of Public Works to execute change orders not to exceed a total of 15 percent of the construction contract, or $21,864. Approved 7-0 PUBLIC HEARING 23. 23-481 Adopted Resolution No. 2023-24 to adopt a Budget for the City for Fiscal Year 2023/2024 and authorized the corresponding appropriation and transfer of$4.9 million of AES Reserves and $3.9 million of Equipment Replacement Reserves and return to a 12-year Paving Cycle; Resolution No. 2023-25 establishing the Gann Appropriation Limit for Fiscal Year 2023/2024; Resolution No. 2023-23 levying a Retirement Property Tax for Fiscal Year 2023/2024 to pay for Pre-1978 Employee Retirement Benefits; Resolution No. 2023-27 amending the City's Classification Plan by adding the classifications of Graphic Designer, Multimedia Officer, and Municipal Records Manager; Resolution No. 2023-28 to adopt a revised General Fund Reserve Policy; Resolution No. 2023-26 acknowledging receipt of a report made by the Fire Chief of the Huntington Beach Fire Department regarding the inspection of certain occupancies required to perform annual inspections in such occupancies pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code; approved and authorized the execution of Amendment No. 2 to the Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program; and, approved and authorized the execution of Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services Page 7 of 10 City Council/ ACTION AGENDA June 6,2023 Public Financing Authority Recommended Action: A) Adopt Resolution No. 2023-24, "A Resolution of the City Council of the City of Huntington Beach Adopting a Budget for the City for Fiscal Year 2023/2024" (Attachment2); and, B) Authorize the Professional Services included in the FY 2023/24 budget to be representative of the services projected to be utilized by departments in FY 2023/24 (Attachment 3); and, C) Authorize the appropriation and transfer of the full balance ($4.9 million) of the AES Reserve from the General Fund to the AES Mitigation Fund 1284; and, D) Authorize the appropriation and transfer of$3,903,803 from the General FundEquipment Replacement Reserve to the Equipment Replacement Fund 324; and, E) Approve the return to a 12 year paving cycle; and, F) Adopt Resolution No. 2023-25, "A Resolution of the City Council of the City of Huntington Beach Establishing the Gann Appropriation Limit for Fiscal Year 2023/2024" of $1,171,687,773" (Attachment 4); and, G) Adopt Resolution No. 2023-23, "A Resolution of the City Council of the City of Huntington Beach Levying a Retirement Property Tax for Fiscal Year 2023/2024 to Pay forPre-1978 Employee Retirement Benefits" (Attachment 5); and, H) Adopt Resolution No. 2023-27, "A Resolution of the City Council of the City of Huntington Beach Amending the City's Classification Plan by Adding the Classifications ofGraphic Designer, Multimedia Officer, and Municipal Records Manager" (Attachment 6); and, I) Adopt Resolution No. 2023-28, "A Resolution of the City Council of the City of Huntington Beach Adopting a Revised General Fund Reserve Policy" (Attachment 7) andauthorize the City Manager or designee to execute all administrative and budgetary actions necessary to consolidate certain General Fund Assigned Fund Balances to the Economic Uncertainties Reserve in order to meet the City's two-month Emergency Reserve requirement; and, J) Adopt Resolution No. 2023-26, "A Resolution of the City Council of the City of Huntington Beach, California Acknowledging Receipt of a Report Made by the Fire Chiefof the Huntington Beach Fire Department Regarding the Inspection of Certain Occupancies Required to Perform Annual Inspections in such Occupancies Pursuant to Sections 13146.2 and 13146.3 of the California Health and Safety Code" (Attachment 8); and, Page 8 of 10 City Council/ ACTION AGENDA June 6, 2023 Public Financing Authority K) Approve and authorize the Mayor and City Clerk to execute"Amendment No. 2 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program" (Attachment 9); and, L) Approve and authorize the Mayor and City Clerk to execute "Professional Services Contract between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services" (Attachment 10). Supplemental Communication (2 emails) Speaker(1) Approved 7-0 to continue with public hearing open to June 20, 2023 ADMINISTRATIVE ITEMS 24. 23-488 Approved introduction of the proposed Memorandum of Understanding Between the Huntington Beach Police Officers' Association and the City of Huntington Beach for July 1, 2023 through June 30, 2025 Recommended Action: Approve introduction of the proposed Memorandum of Understanding Between the Huntington Beach Police Officers' Association and the City of Huntington Beach for the period July 1, 2023 through June 30, 2025. Approved 7-0 COUNCILMEMBER ITEMS 25. 23-45L Approved item submitted by Council Member Burns - Request to form a Charter Review Ad Hoc Council Committee to recommend proposed Charter amendments Recommended Action: A) Designate Mayor Tony Strickland to lead an ad hoc committee of himself and two other City Council Members of his choice to work with the City Attorney's Office, if necessary, and to return to City Council at a regular City Council meeting in July of this year with recommendations for proposed Charter Amendments; and, B) It is also requested that the City Clerk, who is our local elections official, provide a timeline of events or deadlines the City is required to meet in order to get any proposedCity Charter Amendments on the ballot for the March 5, 2024 election. Approved 4-3(Kalmick, Moser, Bolton-No) 26. 23-497 Approved item submitted by Council Member McKeon - Decertification of Beach/Edinger Corridor Specific Plan Environmental Impact Report Recommended Action: Direct the City Attorney and City Manager to return to the City Council with a plan for decertification of the BECSP EIR and vacate all associated findings. Approved 4-3(Kalmick, Moser, Bolton-No) Page 9 of 10 2000 Main Street, Huntington Beach,CA City of Huntington Beach 92648 /"°ROVED --n File #: 22-107 MEETING DATE: 2/15/2022 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Sean Joyce, Interim City Manager PREPARED BY: Dahle Bulosan, Chief Financial Officer Subject: Year-End Audit Results for the FY 2020121 Annual Comprehensive Financial Report (ACFR) and FY 2021/22 Mid-Year Budget Adjustments Statement of Issue: Fiscal Year F2020121 Year-End Audit Results The City received an Unmodified (Clean) Audit Opinion for the City's Fiscal Year (FY) 2020/21 Annual Comprehensive Financial Report (ACFR), which is the best audit result available. In addition, the Government Finance Officers Association awarded their Certificate of Achievement for Excellence in Financial Reporting to the City for the 35th consecutive year. Included as an attachment is the FY 2020/21 ACFR to receive and file. Fiscal Year 2021122 Mid-Year Adjustments The Finance Department has also performed a mid-year budget review for the fiscal year that began on July 1, 2021. In interfacing with operating departments, budgetary requests have been assessed across all City departments, and certain adjustments are being recommended based on available resources through grants and/or restricted funds. Financial Impact: Fiscal Year 2021122 Mid-Year Adjustments General Fund (100) budget adjustments are requested as follows: a. Administrative Services Department - funding for increased pre-employment medical exams, labor and employee relations consulting services, and a performance evaluation system ($120,000) b. City Manager - funding for executive recruitments, City Charter review, and Project Zero/Healing Center ($120,000) c. Community Development Department - funding for increased plan check services ($150,000); inspection services ($140,000); and sales tax sharing ($500,000) offset with plan check and inspection permit revenues and sales tax revenues for a net zero impact. d. Finance Department - funding for parking citation processing ($100,000) offset with parking citation revenues for a net zero impact. City of Huntington Beach Page 1 of 7 Printed on 2/92022 File #: 22-107 MEETING DATE: 2/15/2022 e. Fire Department - funding for Fire Strike team reimbursement costs ($1,700,000) offset with strike team reimbursement revenues for a net zero impact, Emergency Transport deployment ($381,284) offset with emergency medical services revenue for a net zero impact; and funding for physical exams for suppression staff ($47,300) f. Police Department - funding for temporary retired annuitant employees ($300,000) g. Public Works Department - funding for increased janitorial and maintenance contracts ($235,000) h. Non-Departmental - funding for COVID related expenditures disallowed for FEMA reimbursement ($1,000,000) and Be Well OC (Mind OC) Mobile Crisis Response Program contract costs ($300,000) 2. The Public Works Department is requesting additional appropriations totaling $583,000, through the following sources: a. Residential Park Development Impact Fund 228 (5150,000) b. Refuse Collection Fund 504 ($195,000) offset with refuse collection revenue for a net zero impact c. Energy Efficiency Fund 807 ($238,000) 3. The Non-Departmental Department is requesting appropriations of $2,000,000 and additional amounts as needed, in the Emergency Operations Center Fund 238 for continued COVID related expenditures offset with FEMA reimbursement revenue for a net zero impact 4. The Community Development Department is requesting an additional appropriation of $30,000 in the In-Lieu Parking Improvements Fund 308 5. The Community Development Department is requesting approval to amend a professional services contract with the National Development Council (NDC) and corresponding increase in Professional Services Authority of $125,100 6. The Non-Departmental Department is requesting approval to amend a professional services contract with Mind OC for mobile crisis response service and corresponding increase in Professional Services Authority of $1,500,000 Details related to the proposed adjustments are outlined in the report below. Further, there are sufficient revenues, cash, and / or fund balances to support the above referenced adjustments. Recommended Action: A) Receive and File the FY 2020/21 Annual Comprehensive Financial Report and other auditor issued reports; and, B) Approve mid-year budget adjustments to the FY 2021/22 Revised Budget in the funds and by the amounts contained in Attachment 3; and, C) Authorize additional Professional Services authority in the Fiscal Year 2021/22 Revised Budget in the departments and by the amounts contained in Attachment 4; and, City of Huntington Beach Page 2 of 7 Printed on 2/9/2022 ocwerel.03 Leg,star'° File #: 22-107 MEETING DATE: 2/15/2022 �E D) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 2 to Agreement between the City of Huntington Beach and National Council for Communit Development (NDC) for Technical Assistance Services" (Attachment 5); and, *�[v>�r-A _7�� E) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 1 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response_ P_ rogram" (Attachment 6). Alternative Action(s): Do not approve the recommended action(s) and direct staff accordingly. Analysis: Year-End Audit Results Auditing firm Davis Farr LLP (Auditors) audited the City's financial statements and internal control for the FY 2020/21. The City received an Unmodified (Clean) Audit Opinion for the FY 2020/21 Annual Comprehensive Financial Report (ACFR), which is the highest opinion possible (Attachment 1). In addition, the Auditors issued the following reports (Attachment 2): • AU-C 260 Letter: Auditor's Communications with Those Charged with Governance • Appropriations Limit Agreed-Upon Procedures • Air Quality Management District (AQMD) Report Fiscal Year 2021/22 Mid-Year Adjustments The FY 2021/22 Budget was adopted by the City Council on June 1, 2021, for the fiscal year beginning July 1 , 2021. The Finance Department has compiled recommended budget adjustments to cover additional Costs and/or provide appropriations necessary to expend funds that have been received for specific purposes. The City has received revenues or has set-aside prior year fund balances that will support the requested adjustments in the General Fund. The Other Funds adjustments will be funded by available revenue or fund balances within each distinct Fund. GENERAL FUND (FUND 100) The Administrative Services Department is requesting appropriations for increased pre-employment physicals, labor and employee relations consulting services, and a performance evaluation system ($120,000). The City Manager's Office requests a $120,000 budget increase for professional services to cover unanticipated contract costs related to 1) executive recruitment efforts for both Police Chief and City Manager, 2) Charter Review Committee consultant, and 3) Citywide homeless census and planning costs for the City's Project Zero/Healing Center. These projects are aligned with the City Council's strategic plan. The City received higher than anticipated requests for development services from multiple large projects. The Community Development Department is requesting to increase its professional City of Huntington Beach Page 3 of 7 Printed on 2/9/2022 oDle,404 Lea stag" File #: 22-107 MEETING DATE: 2/15/2022 services appropriation for plan check services by $150,000 and building inspections by $140,000 to cover these pass-thru costs, which have been offset by the fee revenue and result in a net neutral impact to the General Fund. Auto dealerships have done better than anticipated due to the vehicle shortage and higher sale prices per vehicle. Fuel costs have also been increasing, driving up sales tax revenues related to fuel purchases. As a result of higher than projected sales tax revenues in these areas, the portion of City sales tax sharing expenditures is also higher due to City sales tax sharing agreements with Pinnacle Petroleum, Jeep and McKenna. The Community Development Department is requesting an appropriation of $500,000 to cover the additional costs related to these sales tax sharing agreements. The Community Development Department is also requesting to amend a professional services agreement for consulting services with the National Development Council. The agreement will be increased by $125,100 for a total of $225,000 and a not to exceed $75,000 per contract year for the remainder of the three-year term. Available funds are budgeted this fiscal year and no budget appropriation increase is needed. The Finance Department is requesting an appropriation of $100,000 to cover increased expenditures for parking citation processing. The City has received increased parking fines and fees, resulting in a net neutral impact to the General Fund. The Fire Department participates in the California Fire and Rescue Emergency Mutual Aid System, and the department has responded to multiple mutual aid requests to assist in major fires over the past years. The State of California will fully reimburse Huntington Beach for all allowable Strike Team expenditures and will reimburse an additional 16.78% administrative rate applied to these allowable expenditures. The CAL FIRE 2022 Fire Season Outlook states that while wildfires are a natural part of California's landscape, the fire season in California and across the West is starting earlier and ending later each year. The Fire Department has incurred $1 ,309.351 in Strike Team expenditures for FY 21/22 so far, which is approximately 18.5% (or $204.351) higher than this time last fiscal year. Since there is no annual appropriation for this business unit, given that Strike Team costs are unknown until costs are incurred, the Fire Department is requesting a budget appropriation of $1,700,000. This FY 21/22 Mid-Year appropriation request is approximately 12.5% (or 5189,059) higher than the actual amount paid by the State of California for last fiscal year. To meet the operational demands of increased medical calls and extended wait times at overcrowded hospitals, especially during the current COVID surge, the Fire Department is requesting a budget appropriation to fund a fifth 24-hour ambulance, third 14-hour day-time ambulance, and extended hours to the existing day-time ambulances deployed in FY 2021/22. The Fire Department is requesting to increase the budget appropriation by $381,284 to account for this deployment through the end of FY 2021/22. Additional emergency medical service revenues are anticipated to offset the added costs. The Fire Department's Organizational Manual Policy D-4 states sworn personnel are required to City of Huntington Beach Page 4 of 7 Printed on 2/9/2022 o .e, 05. Legistar'• File #: 22-107 MEETING DATE: 2/15/2022 undergo a medical examination at least once in any three year period following date of employment. Currently, the department is able to send 21 safety personnel for physical medical exams. The Fire Department is requesting to increase the budget appropriation by $47,300, which would allow an additional 43 personnel to have a physical medical exam by the end of FY 2021/22. The Police Department is requesting an appropriation of $300,000 for temporary salaries, as the Department continues to utilize part-time retired annuitant employees to maintain gaps in staffing resulting from the Separation Incentive Program. For example, pilot police officers hired back as retired annuitant employees have been working on a near full time basis to ensure proper staffing levels in the Air Support Division and to train new pilots. Additionally, the Department increased work hours of the part time homeless task force case managers to assist with the implementation of the Be Well project. The Public Works Department is requesting appropriations of $235,000 for contractual maintenance expenses that increased as a result of new contract bids issued after the FY 2021-22 budget submission. The additional expenses are due to prevailing wage requirements and general labor increases, fuel increases, shifting duties from part-time temporary staff to contract services; and additional scope of work to meet community standards. Staff is requesting appropriations of $1,000,000 in the Non-Departmental Department to provide funding for COVID related expenditures that will potentially be denied for FEMA reimbursement. The City has taken an aggressive approach in charging COVID related costs to the Emergency Operations Center Fund 238 in order to ensure the City receives the greatest amount of reimbursement. Examples of disallowed costs include public safety straight time, medical and other benefit costs, Zoom subscription costs, and increased operating costs for non-essential services such as community classes and the junior lifeguard program. Since its successful launch in August 2021 , Be Well OC in Huntington Beach, the City's pilot mobile crisis response program has become a critical resource to address a variety of non-emergency crisis situations including but not limited to mental health, addiction, family disputes, and homelessness. Be Well's trained crisis counselors have responded to over 730 calls in the past five months, and the number of service requests continue to increase every month. Due to Be Well's ability to successfully assist community members experiencing crises, staff recommends extending this pilot program for an additional 14 months from April 21, 2022 to June 30, 2023 and increasing the contract by $1.5 million. Furthermore, for year 1 of the contract ending April 20, 2022, the City planned to use Permanent Local Housing Allocation funds from the State to cover eligible Be Well expenses including calls for service related to homelessness (60-65% of total calls). At-home visits were ineligible to be funded by previously identified federal funding sources. As such, the City requests General Fund budget appropriation in amount of $300,000 for the first year's contract. OTHER FUNDS Park Development Impact - Residential (Fund 228) City of Huntington Beach Page 5 of 7 Printed on 2/912022 powereW6 Le9islar"' File #: 22-107 MEETING DATE: 2/15/2022 An additional appropriation of $150,000 is needed in the Park Development Impact - Residential Fund to backfill a vacant Contract Administrator position. This position is critical to provide continuity with the large volume of park related projects currently underway. Emergency Operations Center (Fund 238) This fund accounts for citywide COVID related expenditures reimbursable by FEMA. An additional appropriation of $2,000,000 is requested to continue charging eligible COVID related expenditures which will be submitted to FEMA for reimbursement. Refuse Collection Service (Fund 504) The residential curbside collection rate increased by $0.81 effective July 1, 2021 , based on the formula adopted in Resolution 2021-05, and is estimated to provide an additional $464,000 in revenues. Part of this increase was included in the FY 2021/22 Adopted Budget. However, due to higher than anticipated inflation and increased fuel costs, the Public Works Department is requesting an expenditure appropriation of $195,000 to fund the additional pass-thru costs associated with the Refuse Collection and Disposal Services contract. Based on current revenue collection amounts, these adjustments will have a net neutral impact. In-Lieu Parking Improvements (Fund 308) An appropriation of $30,000 is needed for a Parking Structure Audit and Operational Assessment of the 5th and PCH parking structure for review of the operating revenues and expenses and Operating Agreement. There is sufficient fund balance in this fund to cover the appropriation. Energy Efficiency (Fund 807) The Public Works Department is requesting an appropriation of $238,000 in the Energy Efficiency Fund. An appropriation of $18,000 is needed for ongoing payments related to the Civic Center storage system and software, which provides battery storage and energy management for the solar panel system. Additionally, the City has applied for funding via the Southern California Edison (SCE) Charge Ready 2 (CR2) grant program to provide Electric Vehicle (EV) charging infrastructure for the city's EV fleet at the Police Department, Civic Center, Utilities Yard and Corporation Yard. In the CR2 program, SCE provides all of the necessary labor and material to install underground infrastructure for EV charging, from SCE vault to City stub out. The City is responsible for furnishing and installing the charging port hardware to complete each station, for a cost of $220,000. This request will fund 25 dual port charging stations - 50 total charging ports. Environmental Status: Not applicable. Strategic Plan Goal: Community Engagement Homelessness Response Economic Development & Housing Infrastructure and Parks COVID-19 Response City of Huntington Beach Page 5 of 7 Printed on 2/9/2022 Powerel,07/Legistal- File #: 22-107 MEETING DATE: 2/15/2022 Attachment(s): 1. FY 2020/21 Annual Comprehensive Financial Report (ACFR) 2. Other Auditor Issued Reports 3. Fiscal Year 2021/22 Recommended Mid-Year Adjustments 4. Fiscal Year 2021/22 Recommended Mid-Year Professional Services Authority 5. Amendment No. 2 to Agreement between the City of Huntington Beach and National Council for Community Development (NDC) for Technical Assistance Services*Sez.�EPf?�.?'1 FIt� 6. Amendment No. 1 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program City of Huntington Beach Page 7 of 7 Pnnled on 219=22 c"neetA$Lea stm-" CITY OF HUNTINGTON BEACH California Annual Comprehensive Financial Report For The Fiscal i Year Ended June 30, 2021 NE Wiz.-, 4kidI _.4.— CITY OF HUNTINGTON BEACH , CALIFORNIA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2021 Prepared by the Finance Department THIS PAGE INTENTIONALLY LEFT BLANK INTRODUCTORY SECTION THIS PAGE INTENTIONALLY LEFT BLANK City of Huntington Beach Annual Comprehensive Financial Report For the Year Ended June 30, 2021 TABLE OF CONTENTS INTRODUCTORY SECTION Tableof Contents........................................................................................................................................... i-ii Letter of Transmittal ................................................................................................... ............ ui-xi CityOfficials .............................................................................. ..................................................................xii OrganizationalChart......................................................................................................................................xiii Certificate of Achievement in Excellence in Financial Reporting ..................................................................xiv FINANCIAL SECTION IndependentAuditor's Report........................................................................................................................ 1-3 Management's Discussion and Analysis (Required Supplementary Information) ........................................4-21 Basic Financial Statements: Government-wide Financial Statements: Statementof Net Position.....................................................................................................................25 Statementof 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.................................................................................................................36-123 Required Supplemental Information: Notes to Required Supplementary Information.................................................................................... 126 Schedule of Revenues, Expenditures and Changes in Fund Balance— Budget AndActual — General Fund ............................................................................................................... 127 Schedule of Revenues, Expenditures and Changes in Fund Balance— Budget And Actual — Grants Special Revenue Fund..................................................................................... 128 Schedule of Revenues, Expenditures and Changes in Fund Balance— Budget And Actual — LMIHAF Capital Projects Fund .................................................................................... 129 Schedule of Revenues, Expenditures and Changes in Fund Balance— Budget And Actual — Pension Liability Debt Service Fund............................................................................ 129 Schedule of Changes in the Net Pension Liability and Related Ratios ............................................... 130-132 Schedule of Changes in the Net OPEB Liability and Related Ratios .................................................. 133 Schedule of Contributions............................ ..................................................................................... 134-136 Schedule of Money Market Weighted Rate of Return.......................................................................... 136 Schedule of Contributions for the OPEB Plan...................................................................................... 137 FINANCIAL SECTION (Continued) Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet— Other Governmental Funds.................................................................... 141-144 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Other Governmental Funds............................................................................................................... 145-148 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual —Other Governmental Funds............................................................................. 149-155 Statement of Net Position — Internal Service Funds ............................................................................ 160 Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds ................................................................ .................................... 161 Statement of Cash Flows— Internal Service Funds............................................................................. 162 Combining Statement of Fiduciary Fund Assets and Liabilities........................................................... 166 Combining Statement of Changes in Fiduciary Net Position ............................................................... 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) - LastTen 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 Function/Program— Last Ten Fiscal Years.................. 186 Operating Indicators by Function/Activity— Last Ten Fiscal Years............................................................... 187-188 Capital Assets Statistics by Function/Activity ................................................................................................ 189 CITY OF HUNTINGTON BEACH December 16, 2021 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 Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2021. As required by the City Charter, and to ensure the reliability of the information contained herein, the City of Huntington Beach (the City) 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 ACFR 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 assurance 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, 2021 . 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 (MDBA). 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. iii 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 198,039 residents, it is known as Surf City due to its abundance of beaches; the year-round sunny and warm Mediterranean climate; and its casual lifestyle. With over 10 miles of coastline and iconic pier spanning 1,856 foot in length- the longest pier on the West Coast- Huntington Beach plays host to over 16 million visitors annually. As the fourth largest city in Orange County, and the 23rd largest in California by population, Huntington Beach is recognized as a prime location to live, work and play, ranking #1 in the nation for "Quality of City Services" and #18 for "Best-Run City in America Poll" by WalletHub (June 2020) and one of the top three "Best Cities to Live In" by the Orange County Register for the past five consecutive years. Huntington Beach was also ranked the 33rd Happiest City in America by WalletHub (March 2021). The City boasts an annual median household income of $91,318, 51 percent higher than the median household income for the United States, 28 percent higher than the State of California and 6 percent higher than Orange County. In addition, more than half of its residents, or 53 percent, have a college education. There are over 105,600 people employed by public and private entities in Huntington Beach. 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. The City of Huntington Beach is a full-service city including police, fire, public works, and other key functional departments with a dedicated and talented team of over 900 full-time equivalent employees. 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. A thriving beach community, Huntington Beach is home to numerous events, including the Great Pacific Airshow — the only beachfront airshow on the West Coast featuring the U.S. Navy Blue Angels, U.S. Marine Corps MV-22 Osprey Demo Team, U.S. Army Golden Knights, and many others. This unique airshow, which first premiered in October 2016, has gained tremendous popularity and attracts visitors from all over the world to view the two-day event. The City's century-old traditional Fourth of July Fireworks Show and Parade, known nationally as "the largest Fourth of July Parade west of the Mississippi," which was adapted in 2020 to comply with State and County Shelter-in-Place orders, returned in 2021. In addition to the traditional parade, 5K run, and Pier Plaza festival, the three-day event also included an all-new Amusements Area, featuring a 75-foot tall ferris wheel, 90-foot Monster Slide, traditional carnival games, and other family-friendly activities. iv The City also hosts a variety of other exciting events for families and visitors such as the annual Concours d'Elegance, Cherry Blossom Festival, Civil War Days, and other events. In November 2021 , the City unveiled a new ice rink in Pier Plaza, kicking off its inaugural Winter Wonderland event. Surf City Winter Wonderland will transform downtown Huntington Beach into a holiday destination by providing various winter activities, such as ice-skating, live entertainment, festive programming, and more. Economic Condition and Outlook As the economy continues to recover from the impacts of the COVID-19 pandemic and public health guidelines become less restrictive, revenue sources such as Sales Tax and Transient Occupancy Tax are anticipated to increase considerably in coming fiscal years. In addition, low interest rates, recovering unemployment rates, rising consumer confidence, and recovery in the hospitality and travel industries are expected to improve Huntington Beach's economy; however, continuing volatility in the financial and equity markets, along with the rapidly changing economic picture and the length and continuing scope of the COVID-19 pandemic, adds a layer of uncertainty to the City's financial projections. The City of Huntington Beach continues to thrive together through the motto "OneH6," which reflects the City's commitment to facing the unprecedented challenges created by the COVID- 19 pandemic guided by the following principles: • To stay committed to being One Team: working together to serve the people of Huntington Beach exceptionally to inspire pride in the community. • Work to have One Focus: to stay fanatical about achieving municipal excellence by being active caretakers of our unique, people-centric HB culture. • Continue to pursue One Goal: to ensure that HB continually improves its standing as a premier coastal community as measured through the health of our people, our organization, our infrastructure, and our community. Property Tax The City of Huntington Beach's assessed valuations are very strong, reflecting both new development and increased property values. The City's Fiscal Year 2021/22 assessed property value grew 2.6 percent to $47.3 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. Over 60 percent of parcels have an assessed valuation (AV) base year prior to 2004, representing a significant amount of untapped AV. For Fiscal Year 2020/21, secured property tax revenue collections totaled $61.1 million. For Fiscal Year 2021/22, secured property taxes are estimated at $62.6 million, reflecting a 2.5 percent increase. v City of Huntington Beach Total Assessed Valuation Fiscal Years 2011/12 - 2021/22 (in billions) SSOD $A].3 S/SD $11.5 S40D S39.4 536.1 $35.0 $29.9 S31! $3DD S25D $20D S1sD Sion $50 Soo 2011112 2012/13 2013/14 101V15 2015116 2016117 2017118 2MO119 2019/20 2WO121 2MV22 Sales Tax 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. City of Huntington Beach Composition of Sales Tax Revenue Fiscal Year 2020/21 Other State and County 6%\ Autos and Pools Transportation 18% 23% Budding and Construction 7% Restaurants rd Hol" 12% Business and Industry A 940 Genwal COt mffnw Fuel and Sennce Goods stations 19% 6% Vi City of Huntington Beach Historical Sales Tax Revenue $500 547.7 $45.0 $419 5e0 a $a0A $35.0 S114 S3010 9 526.5 $77.2 577.7 $250 f Sx1d S15o $100 $5.0 Sag 2011/12 2012113 2013/14 201vis 2015116 2016/17 2U1 /l8' 201iVlq 2019120 I020l21 'Fiscal Year 201718 reflect nine months of data only due to the change in Ne City s focal year Transient Occupancy Tax (TOT) 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 $10AM in TOT revenues during Fiscal Year 202O/21 , with the $0.8M increase due to the lifting of Shelter-in-Place orders that was used to combat the COVID-19 virus on business and leisure travel. City of Huntington Beach Transient Occupancy Tax Revenue $160 SIa.O $140 S 12 0 Sll.a $10.0 $IO.a 9 SIOo $92 $9.6 512 e $80 S6 5 i 560 Sao 520 Soo 2010/11 2MV12 2012/13 2013/14 2014/15 2015/16 2016/17 20111ir 2018/19 2019/20 2020/21 'F.stal Year 2017118 retct$nine month of data only due to the change in the City'a fiscal year Budget Development and Monitoring 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 3011 and may amend or revise \1I it 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, 2021 was 1 .41 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 and Major Initiatives The Strategic Goals provides the framework for the goals and objectives of the City. The City Council has six Strategic Goals: • Community Engagement • Homelessness Response • Economic Development & Housing • Infrastructure and Parks • COVID-19 Response • Overall Organizational Fiscal Stability The goals drive 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. Pension Obligation Bonds To meet the goal of strengthening overall financial sustainability, the City issued Pension Obligation Bonds (POBs) in April 2021 in the amount of $363.6 million to refinance 85 percent of its Unfunded Pension Liability (UAL) with CalPERS. In conjunction with the issuance of the POBs, the City also implemented a robust plan to manage future pension liabilities which includes the following provisions: • A minimum $1 million annual contribution to the City's Section 115 Pension Trust • 100% of the first year refinance savings will be contributed to the Section 115 Trust in Fiscal Year 2021/22, then 50 percent annually thereafter (increased for CPI) • At the end of each fiscal year, 50 percent of any unassigned General Fund surplus would be dedicated to the Section 115 Trust • Accelerated repayment of any new UAL to be paid from the Section 115 Trust or General Fund Pension Rate Stabilization Reserve viii 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 an Unfunded Pension Liability Policy helps build capacity to manage future pension cost increases. While the impact of higher CAPERS costs will not be entirely mitigated, this proactive strategy has placed Huntington Beach in a stronger financial position than many other cities. American Rescue Plan Act (ARPA) On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which allocated $1.9 trillion in economic recovery funding for families, businesses, schools, and governments impacted by the COVID-19 public health crisis. Pursuant to that legislation, the City was allocated $29.6 million in funding, 50 percent of which was received in May 2021. City Council established a three-person City Council Ad-hoc Subcommittee in June 2021 to develop a proposed ARPA spending plan that either addressed immediate, current needs of the City, or constituted a transformative, "Plan for the Future" project with long-term positive community impacts. On September 7, 2021, City Council approved an ARPA spending plan which includes the following projects: • Oak View Rising Program: to fund implementation efforts associated with livability/landscape improvements, parking impact mitigation, community center facility planning, and youth programming efforts in the Oakview area. • Community Loan Program: to provide loan funding for start-ups and smaller, less established businesses where borrowers are making 80 percent of the Area Median Income (AMI) or less and to support existing mid-sized qualified businesses as they look to expand within the City. • Economic Development Fund: to establish a fund to help support local business expansion efforts, with a particular focus on environmental mitigation. • Major City Facility Upgrade Project: to fund the preliminary planning work associated with the City's proposed Design-Build-Finance-Operate-Maintain (DBFOM) major City facility upgrade project. Through this initial effort, the City will be able to fund site assessment work, facility master planning, and conceptual design efforts. • Police Technology Infrastructure Improvements: to upgrade HBPD's Computer Aided Dispatch (CAD) & Records Management Systems (RMS) technology infrastructure for police department response. • World Skate Skatepark Development: to ascertain the feasibility of developing local Olympic-quality recreational facilities to bring LA 2028 Olympics action sports to HB (for skateboarding, surfing, and BMX). • Joint Youth Training Center for Police & Fire: to build a new Joint Youth Training Center on the CNET training ground with new Fire and Police equipment to develop a two-track program that provides vocational and educational pathways for local students and underserved youth. Healing Center Project During the past fiscal year, the City has made tremendous strides in its efforts to end homelessness in Huntington Beach through a multifaceted project which includes the development of a premier homeless prevention program that will incorporate transitional housing program options, shelter options for families and children, and additional permanent supportive housing units in the community. As a part of this effort, the City constructed a 174- ix bed temporary Navigation Center at 17642 Beach Boulevard in partnership with the County of Orange, which opened in December 2020. The Navigation Center, operated by Mercy House, will provide homeless adults with access to healthcare, dental, and behavioral services. Staff will also assist in finding employment and permanent housing for this vulnerable population to help them on their path to housing security. In April 2021, City Council also approved the creation of Orange County's first mobile mental health response program in partnership with Be Well OC. This mobile response team, launched in September 2021, is composed of two crisis counselors and assists with many non-emergency and non-medical situations, including public assistance with lack of basic needs (e.g., food, shelter, water) and homelessness, in collaboration with the Huntington Beach Homeless Task Force. Currently, the program is available seven days a week, 12 hours per day, and is planned to expand to 24-hour coverage by Winter 2021-22, City Council also approved the use of $2.5 million in ARPA funds to assist in the creation of a healing center campus facility that embeds medical, behavioral health, recuperative care, and respite housing options that integrate into a broader continuum of mental health/substance abuse care. An additional $2.5 million was approved to facilitate the production of additional Permanent Support Housing units in the City to assist in homeless mitigation efforts. Downtown and Beach Enhancements In May 2021, the City rolled out its first Mobi-Mat to improve beach accessibility for visitors with disabilities, parents with strollers, and others with limited mobility. The mat, located near 611 Street and PCH, provides a stable walkway across the sand and to the water's edge. Due to immense popularity, a second Mobi-Mat was made available in October 2021. The City also launched a five-month pilot micro-mobility program in July 2021. This free transit service, in partnership with Circuit, provides five low-speed, six-seat electric shuttles to transport residents, workers, and visitors over short distances within the downtown area using the Circuit app and is available seven days a week. This option will reduce greenhouse gas emissions and also encourage visitors to "park once" and explore all that Huntington Beach has to offer. As part of the City's commitment to improving the downtown area, City Council approved the use of$1.75 million in ARPA funds towards Downtown Revitalization Improvements to develop final plans for reconfiguring the broader downtown resort district, including enhancements to Main Street, while investing in improvements to enhance connectivity and revitalize businesses and activities. 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 35'h consecutive year. Receipt of the award requires government entities to publish transparent, easily readable and efficiently organized Annual Comprehensive Financial Reports, conforming to program, accounting, and legal standards. The Certificate of Achievement earned for the fiscal year ended June 30, 2020, is valid for one year only. The City believes that this Annual Comprehensive Financial Report continues to r conform to the Certificate of Achievement Program requirements and will be submitted to the GFOA for its consideration for another award. 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, Zack Zithisakthanakul, Ian Wuh, John Willard, Ming Zhai, Leslie Zimmer, Michael Dolan, and Thuy Vi for their hard work and dedication. Respectfully, -L- �F - Dahle Bulosan Chief Financial Officer City of Huntington Beach City Council Barbara Delgleize, Mayor Mike Posey, Mayor Pro Tern Rhonda Bolton, Councilmember Kim Carr, Councilmember Dan Kalmick, Councilmember Natalie Moser, Councilmember Erik Peterson, Councilmember Executive Team Oliver Chi, City Manager Travis Hopkins, Assistant City Manager Elected Department Heads Alisa Backstrom, City Treasurer Robin Estanislau, City Clerk Michael Gates, City Attorney Department Directors Dahle Bulosan, Finance Sean Crumby, Public Works Chief Scott Haberle, Fire Interim Chief Julian Harvey, Police Ursula Luna-Reynosa, Community Development Brittany Mello, Interim Administrative Services Chris Slama, Community & Library Services xii City of Huntington Beach Organizational Chart Adopted Budget — FY 2021/22 THE PEOPLE Cm CITY COUNCIL CITY ATTORNEY CRY CLERK Mayor TREASURER Mayor Pro-Tem Obw S won City Counal Members 7 AANldy UObC uDDor1 6 E*CWM Record L°�a�0n Marrapanen CITY MANAGER Rdeculon ASSISTANT F� COMMUNITY & CITY MANAGER LIB Y SERVICES 91ar � F erl�ef 6 PU&IC CnY COUNCL Operaeorn Everib NFORMATpN SUPPORT 9U9TANA�ITY Ertrerper[t � � Prop �& UNurm G14K81$BIVICB] FWWCE COMMUNITY PUBLIC ADMNISTRATNE DEVELOPMENT WORKS SERVICES HW w Refou G� Permt Courser Mai 8 Pak Manapern0n RSa Kaf � Tranlporlaeon hbmabn Serv�ea Erpineerrtc, CoOe Enbrcen+ert Ecarwrtrrc C 111 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Huntington Beach California For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30. 2020 A,44� P. ;2 : Executive Director/CEO kiv FINANCIAL SECTION D Davis Farr LLP av i s Fa r r 1 Irvine,CA 92612 18201 Von Korman Avenue� Suite 1100 CERTIFIED PUBLIC ACCOUNTA`. Main:949.474.2020 1 Fax:949.263.5520 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, 2021, 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. 1 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, 2021, 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. Emphasis of Matter During the year ended June 30, 2021, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 84: Fiduciary Activities. Our opinion is not modified with respect to this matter. The financial statements for the year ended June 30, 2021 reflect certain prior period adjustments as described further in note 19 to the financial statements. Our opinion is not modified with respect to this matter. 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 OPES 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, 2 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2021 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 solely 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 16, 2021 3 MANAGEMENT DISCUSSION AND ANALYSIS 4 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 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, 2021. 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): Total Governmental and Business-Type Activities Amount Percent June 30, 2020 Increase Increase June 30 2021 Restated Decrease Decrease Assets $ 1,254,251 $ 1,214,369 $ 39,882 3.3% Deferred Outflows of Resources 419.067 57,761 361,306 625.5% Liabilities 962,271 569,678 392,593 68.9% Deferred Inflows of Resources 19,317 14,289 5,028 35.2% Total Net Position 691,730 688,163 3,567 0.5% Unrestricted Net Position (236,030) (236,041) 11 0.0% Long-Term Obligations 915,921 538,081 377,840 70.2% Program Revenues 136,519 146,713 (10,194) -6.9% Taxes 186,787 175,663 11,124 6.3% Other General Revenues 26,660 9,271 17,389 187.6% Expenses 346,399 332,175 14,224 4.3% • The City of Huntington Beach's total assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $691,730,000. Total net position increased modestly by $3,567,000 or 0.5 percent in spite of the growth in assets primarily as a result of the ramp up in liabilities and increase in deferred outflows of resources related to pension and other postemployment benefits. • Long-term obligations increased by $377,840,000 or 70.2 percent. This increase is primarily due to issuance of Pension Obligation Bonds in the amount of $363,645,000 to refinance 85 percent of the City's unfunded pension liability with CaIPERS. In addition, a new lease in the amount of $12,753,000 was approved in Fiscal Year 2020/21 to finance the purchase of three helicopters, one rescue boat, and one fire engine. Deferred outflows of resources increased by $361,306,000 or 625.5 percent primarily due to pension contributions made subsequent to the measurement date including the unfunded liability payment to CalPERS totaling $362,430,000 made from proceeds of the Pension Obligation Bond. Deferred inflows of resources increased by $5,028,000 or 35.2 percent primarily due to changes in assumptions and the differences between the expected and actual experience used to determine the City's net pension liability. 5 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 • Program revenues decreased by $10,194,000 or 6.9 percent. The decrease is primarily due to one-time revenues received in Fiscal Year 2019/20 for the payoff of Hermosa Vista and Huntington Pointe loan repayments totaling almost $7,400,000, as well as affordable housing in-lieu fees of $2,200,000 paid by the developer to fulfill the affordable housing requirement for the Sea Dance Housing Development. Additionally. the City experienced reductions in City-owned beach concessionaire and recreation class revenues as a result of a temporary rent abatement program beginning in March 2020 to help offset the loss in revenues small businesses are experiencing due to COVID-19. and the cancellation of in- person recreation programs in accordance with State and County health orders in place in prevent the spread of COVID-19. • Expenses increased by $14,224,000 or 4.3 percent largely due to additional costs incurred related to the COVID-19 pandemic. The City awarded $5,423,000 in grants to 785 local small business and non-profits impacted by COVID-19 utilizing CARES and other funds passed through the County of Orange. Additionally, the City incurred other COVID-19 related expenses, primarily within the Police and Fire departments, for increased labor costs related to paramedic transport, vaccine pod staffing, and overtime to maintain essential levels of service which are anticipated to be reimbursed with FEMA Public Assistance funds. Expenses also increased due to rising pension and workers compensation costs allocated to all City functions. 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 are comprised of three components: 1 ) government-wide financial statements: 2) fund financial statements: and 3) notes to the financial statements. This report also contains certain other supplementary information in addition to the basic financial statements. 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). 6 AidIaL City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 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, Community Development, Fire, Information Services, Police, Community Services, Library Services, and Public Works departments. Business-type activities include Water, Sewer, Refuse, and Hazmat Services. 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 26 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, Low and Moderate Income Housing Asset Fund (LMIHAF) and Pension Liability Debt Service Fund, all of which are considered to be major funds. Data from the other 22 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 other major governmental funds (Grants Special Revenue Fund, LMIHAF Capital Projects Fund, and Pension Liability Debt 7 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 Service Fund) are required to be presented and are included on pages 127-129 of this report and demonstrate compliance with the budget. The basic governmental fund financial statements can be found on pages 27 and 30 of this report. 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 used in accounting as a device 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 36-123 of this report. 8 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 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 126-137 of this report. The combining statements and schedules referred to earlier in connection with other governmental funds is presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages 141-148 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 $691,730,000. Below is a summary schedule of the City's net position at June 30, 2021 (in thousands): Amount Percent June 30.2020 Increase Increase Governmental Activities June 30,2021 (Restated) (Decrease) (Decrease) Current and Other Assets $ 276.665 S 257.987 $ 18,678 7.2% Capital Assets 737.256 714,759 22.497 3.1% Total Assets 1,013,921 972,746 41,175 4.2% Deferred Outflows of Resources 393,130 K499 338,631 621.4% Current and Other Liabilities 34,751 20.645 14,106 68.3% Long-Term Obligations 864.794 508,578 356.206 70.0% Total Liabilities 899,535 529,223 370,312 70.0% Deferred Inflows of Resources 17,716 13,374 4,342 32.5% Net Position: Net Investment in Capital Assets 699.204 673,498 25.706 3.8% Restricted 65,755 85.673 (19,918) -23.2% Unrestricted (275,159) (274.523) (636) -0.2% Total Net Position S 480,800 $ 484,648 S 5,152 1.1% Amount Percent June 30,2020 Increase Increase Business-Type Activities June 30,2021 (Restated) (Decrease) (Decrease) Current and Other Assets $ 97,861 $ 98,838 $ (977) -1.0% Capital Assets 142,469 142,785 (316) -0.2% Total Assets 240,330 241,623 (1,293) -0.5% Deferred Outflows of Resources 25,937 3,262 22,675 695.1% Current and Other Liabilities 11.599 10,952 647 5.9% Long-Term Obligations 51.137 29,503 21.634 73.3% Total Liabilities 62,736 40,455 22,281 55.1% Deferred Inflows of Resources 1,601 915 686 75.0% Net Position: Net Investment in Capital Assets 142,469 142,785 (316) -0.2% Restricted 20,332 22.248 (1,916) -8.6% Unrestricted 39,129 38,482 647 1.7% Total Not Position $ 201,930 S 203,515 $ (1,585) -0.8% 9 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 Analysis of the City's Net Position Current and Other Assets: The increase in current and other assets of $18,678,000 for governmental activities is mainly due to the increase in cash and receivables balances related to increased property and sales tax revenues, as well as the receipt of the first tranche of American Rescue Plan Act funds in May 2021 totaling $14,803,000. The decrease in current and other assets of S977.000 for business-type activities is primarily due to a reduced cash balance in the Water Master Plan fund due to ongoing large capital project costs in Fiscal Year 2020/21 that were delayed from prior year, including water main replacements and the City's share of slip lining the OC-44 imported water transmission line. Current and Other Liabilities: Current and other liabilities for governmental activities increased by $14,106,000 and increased by $647,000 for business-type activities due to normal fluctuations in the accounts payable and payroll cycles. For governmental activities, the majority of the increase is related to American Rescue Plan Act Funds received in May 2021 that was recorded as unearned revenue. Deferred Outflows and Inflows of Resources: The increase in deferred outflows of resources of $338,631,000 and $22,675,000 for governmental activities and business- type activities, respectively, is mainly due to deferral of pension contributions made subsequent to the measurement date, including the unfunded liability payment to CalPERS totaling $362,430.000 made from proceeds of the Pension Obligation Bond. The increase in deferred inflows of resources of $4,342,000 for governmental activities and $686,000 for business-type activities is related to the actuarially determined amortization of changes in assumptions, differences between projected and actual earnings on pension plan investments, and differences between expected and actual experience 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 increased by $356,206.000 for governmental activities and $21 ,634,000 for business-type activities primarily due to the City issuing a $363,645,000 Pension Obligation Bond to refinance 85 percent of its unfunded pension liability with CalPERS. 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 are 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 10 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 activities increased S25,706,000 or 3.8 percent, primarily due the acquisition of property and related construction of the City's 174-bed Navigation Center and residential street improvements. Net position invested in capital assets net of related debt from business- type activities decreased $316,000 or 0.2 percent primarily due to normal year to year depreciation. Restricted Net Position: An additional portion of the City's net position is subject to external (legally imposed or statutory) restrictions ($65,755,000 for governmental activities, and $20,332,000 for business-type activities). These amounts represent 13.4 percent and 10.1 percent of net position for governmental activities and business-type activities, respectively. Restricted net position from governmental activities decreased $19,918,000 or 23.2 percent, largely due to the change in restricted net position in the LMIHAF Capital Project fund as funds were spent for the purchase of property to construct a 174-bed Navigation Center, and in the Gas Tax Special Revenue fund for the construction of various street improvements, including arterial rehabilitation and residential street overlay projects. Restricted net position from business-type activities decreased by $1,916.000 or 8.6 percent primarily due to an increase in restricted Water Master Plan funds available for capital projects as funds are spent. Unrestricted Net Position: The unrestricted net position (negative $275.159,000 for governmental activities and $39,129,000 for business-type activities) represent negative 56.2 percent and 19.4 percent, respectively, of net position for governmental activities and business-type activities. Unrestricted net position for governmental activities decreased $636,000 or 0.2 percent. Unrestricted net position for business-type activities increased by $647,000 or 1.7 percent during the year due to the increase in Investment in Capital Assets from the Sewer fund in fiscal year 2020/21 , 11 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 A condensed summary of governmental activities (in thousands) follows: Governmental Activities Amount Per Increase Increase Revenues: June 30, 2021 June 30, 2020 Decrease Decrease Program Revenues: Charges for Current Services $ 53,683 5 59,819 $ (6.136) -10.3% Operating Grants and Contributions 6,013 8,141 (2,128) -26.1% Capital Grants and Contnbutions 10.192 14,483 (4.291) -29.6% Total Program Revenues 69,888 82,443 (12,555) •15.2% General Revenues: Property Taxes 99,958 94.263 5,695 6.0% Sales Taxes 51,162 44,616 6.546 14.7% Utility Taxes 18.374 18,149 225 1.2% Franchise Taxes 8.040 7,872 168 2.1% Transient Occupancy Tax 9.253 10,763 (1,510) -14.0% Use of Money and Property 4.399 3.208 1,191 37.1% From Other Agencies-Unrestricted 22,000 3,317 18,683 563.2% Total General Revenues 213,186 182,1e8 30,M 17.0% Total Revenues 293,074 264,631 18,443 7.0% Expenses: City Council 423 405 18 4.4% City Manager 11.163 3,328 7,835 235.4% City Treasurer 340 317 23 7.3% City Attorney 3,140 3,136 4 0.1% Crty Clerk 1.147 949 198 20.9% Finance 6.828 6.661 167 2.5% Community Development 19,716 15.722 3.994 25.4% Fire 65,960 62.840 3,120 5.0% Information Services 6.230 8.643 (2.413) -27.9% Police 102.415 97.204 5.211 5.4% Community Services 11,365 12,539 (1,174) -9.4% Library Services 6.181 5,776 405 7.0% Public Works 40,270 45,834 (5,564) -12.1% Interest on Long-Tenn Debt 2.706 1 686 1,020 60.5% Total Expenses 277,994 265,040 12,8" 4.8% Change in Net Position Before Transfers 5,190 (409) Transfers (38) (38) Change in Net Position 5,152 (447) Net Position- Beginning of Year 478,901 479,348 Cumulative Effect of Changes in Accounting Principles 5,747 Net Position- Beginning of Year as Restated 484.648 479,348 Net Position -End of Year $ 489.800 $ 478,901 12 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 The cost of all governmental activities this year was $277,884,000. However, as shown in the Statement of Activities, the amount that taxpayers ultimately financed for these activities was $207,996,000, because costs of $53,683,000 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 $6,013,000, and capital grants and contributions of$10,192,000. Overall, the City's governmental program revenues were $69,888,000. The City paid for the remaining "public benefit" portion of governmental activities with $213,186,000 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. Charges for current services decreased $6,136,000 or 10.3 percent. As noted in the financial highlights section, the absence of one-time revenue sources from large development projects and City's responses to help mitigate the risks posed by COVID-19 negatively impacted the City's recreational fee revenue which caused the Charges for Current Services to drop. Operating Grants and Contributions decreased by$2,128,000 or 26.1 percent and Capital Grants and Contributions have decreased by $4,291 ,000 or 29.6 percent, primarily due to the one-time Hermosa Vista and Huntington Pointe loan repayments of almost $7,400,000 received in the prior fiscal year. Program expenses increased by $12,844,000 or 4.8 percent due to the rise in pension and workers compensation costs coupled with the increase in spending to mitigate the effects of COVID-19. As mentioned previously, the City awarded $5,423,000 in grants to 785 local small business and non-profits impacted by COVID-19 using grant funds provided by the County of Orange. Police and Fire also incurred additional COVID-19 related personnel costs by providing services such as paramedic transport of COVID-19 patients, vaccine pod staffing, and overtime to maintain essential levels of service, which is anticipated to be reimbursed through FEMA Public Assistance funds. To help fund some of these increased costs by other departments, Public Works decreased their overall spending by $5,564,000. Total resources available during the year to finance governmental operations were $767,722,000 consisting of restated net position at July 1, 2020 of$484,648,000, program revenues of $69,888,000, and general revenues of $213,186,000. Total expenses for governmental activities during the year were $277,884,000 plus transfers of $38,000. Thus, net position increased by $5,152,000 or 1 .1 percent, to $489,800,000. 13 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 A condensed summary of business-type activities (in thousands) follows: Business-Type Activities Amount Percent Increase Increase June 30, 2021 June 30, 2020 (Decrease) (Decrease) Program Revenues: Charges for Current Services S 66.631 S 64.270 S 2.361 3.70/h Total Program Revenues 66,631 64,270 2,361 3.7% Use of Money and Property 261 2.746 (2,485) -90.5% Total Revenues 66,892 67,016 (124) -0.2% Expenses Water Utility 46,054 44.463 1,591 3.6% Sewer Service 9,284 9.828 (544) -5.5% Refuse Collection 12,936 12.609 327 2.6% Hazmat Service 241 235 6 2.6% Total Expenses 68,515 67,135 1,390 2.1% Increase(Decrease) in Net Position Before Transfers (1,623) 1119) " ans'e's 38 38 Total Change In Net Position (1,585) (81) Net Position -Beginning of Year 203.515 203,596 Net Position -End of Year $ 201,930 $ 203,515 The City's net position from business-type activities decreased by $1,623,000 before transfers. This is mainly due to increases in Water expenses for capital projects including the City's share of slip lining the OC-44 imported water transmission line and water main replacements. The cost of all business-type activities this year was $68,515,000. As shown in the Statement of Activities, the amount paid by users of the systems was $66,631,000, other revenue was $261 ,000, and transfers were $38,000. Beginning net position was $203,515,000 and ending net position was $201,930,000, a decrease of $1,585,000 which is less than a tenth of a percentage. Of the ending net position amount, $142,469,000, or 70.6 percent, was invested in capital assets, $20,332,000 or 10.1 percent was restricted for expenses for the Water Master Plan, and $39,129,000. or 19.4 percent was unrestricted. Transfers in for business-type activities were $38,000 for the current year, which is the same as prior year. 14 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 Financial Analysis of the City's Major Governmental Funds Below is an analysis of the City's major governmental fund activities for the year (in thousands): Governmental Funds Amount Percent June 30,2020 Increase Increase June 30 2021 Restated Decrease Decrease Total Fund Equity: General Fund $ 94.609 S 82,123 $ 12486 15.2% Grants Special Revenue Fund 2,354 4,561 (2,207) -48.4% LMIHAF Capital Projects Fund 3,622 9.485 (5.863) -61.8% Pension Liability Fund 16.943 7.860 9.083 0.0% Total Fund Equity $ 117,528 S 104.029 S 13,499 13.0% The General Fund Balance increased by $12.486,000 due to increased property and sales tax revenues. The City also received one-time revenues from AES Southland Development, Inc. totaling $4,900,000 related to improvements in the Southeast area, as well as Strike Team revenues totaling S1 ,458,000 for Fire department wildfire response through the California Fire Service and Rescue Emergency Mutual Aid System managed by CalOES. The Section 115 trust fund balance also increased by $2,875,000 due to budgeted contributions to the trust and strong investment returns. The Grants Special Revenue Fund Balance decreased by $2,207.000 primarily due to the increase in COVID-19 related expenditures that is anticipated to be reimbursed with FEMA Public Assistance Disaster Relief funds, and other capital projects that have not been reimbursed by the granting agencies. The bulk of the expenditure increase is related to the Small Business Grant Program and construction of a temporary Navigation Center Program totaling $5,423,000 and $5,610,000. respectively. The LMIHAF Capital Projects Fund Balance decreased by $5,863,000 primarily as a result of the acquisition of property for the construction of a 174-bed Navigation Center. The Pension Liability Fund increased by $9,083,000, largely due to revenues set aside from the voter-approved property tax override dedicated to the payment of Public Safety pension costs. The Fiscal Year 2020/21 revenues includes a one-time true up payment of $908,000 from the County for override tax generated from the former Redevelopment area. 15 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 Financial Analysis of the City's Major Proprietary Funds Below is an analysis of the fund equity of the City s proprietary funds (in thousands): Enterprise Funds Amount Percent Increase Increase June 30,2021 June 30,2020 1 Decrease Decrease Net Position: Water Fund S 121.825 5 125.233 5 34)8i -27,,0 Sewer Fund 79.953 78,275 ' 678 2.1% Refuse Fund 48 (83) 131 157.8% Hazmat Service Fund 104 90 14 15.6% Total Net Position $ 201,930 $ 203,515 S (1,585) -0.8% Unrestricted Net Position: Water Fund S 10,246 5 11.125 S (879) -7.9% Sewer Fund 28.865 2T506 1.359 4.9% Refuse Fund (86) (239) 153 64.0% Hazmat Service Fund �04 90 14 15.6% Total Unrestricted Net Position f 39,129 f 38,482 S 547 1.7% The Water Fund total net position decreased by $3,408,000 due to planned capital expenditures exceeding revenues in Fiscal Year 2020/21 , which caused the unrestricted net position to decline by S879,000. The Sewer Fund net position increased by $1 ,678,000 and unrestricted net position increased by $1,359,000 due to planned sewer projects being deferred to the following year. In addition, all enterprise funds with the exception of the Water Fund generated revenues that exceeded the expenses incurred for the current fiscal year. Long-Term Obligations Below is a schedule of the changes to the City s long-term obligations (in thousands): Governmental Activities: I June 30 2020 Additions I Retirements I June 30,2021 Revenue Bonds S 35.665 $ 19.275 S (25.395) S 29.545 Compensated Absences 12,633 5.971 (5,199) 13,405 Claims Payable 37.155 23,258 (13.634) 46,779 Pollution Remediation 2,000 - - 2.000 LED Lighting Phase 1 546 - (114) 432 I-Bank CLEEN Loan 2.171 - (289) 1.882 CEC Loan 2.588 - (131) 2,457 Pension Obligation Bonds - 341,501 - 341.501 Leases Payable 5.241 12.753 (5.241) 12,753 Total Long-Tenn Obligations Governmental Activities 97.999 402,758 (50.003) 45-0175-4 Business-Type Activities: Compensated Absences 1.615 542 -31, 1.426 Pension Obligation Bonds 22.144 - 22,144 Business-Type Activities: 1.615 22.686 (731) 23,570 Total Long-Tem1 Obligations $ 99.614 f 425.444 f (50.734) S 474,324 16 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 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 increased by $374,710.000 or 376.2 percent from the prior fiscal year as the City issued a S363,645,000 Pension Obligation Bond and $12,753,000 lease for public safety equipment in Fiscal Year 2020/21. 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 most recently reaffirmed in July 2020. The following are the ratings as determined by Standard and Poors and Fitch Ratings as of June 30, 2021 . Debt Instrument S & P Fitch 1999 Tax Allocation Refunding Bonds AA- AA 2002 Tax Allocation Refunding Bonds AA- N/A 2020(a) Lease Revenue Bonds AA AA+ 2020(b) Lease Revenue Bonds AA AA+ 2021 Pension Obligation Bonds AA+ AA+ Capital Assets The capital assets of the City are those assets which are used in the performance of the City's functions including infrastructure assets. The City has elected to use the "Basic Approach" as defined by GASB Statement 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. 17 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 Below is a schedule of the City's capital assets, net of accumulated depreciation (in thousands): Amount Percent) Increase Increase Governmental Activities: June 30.2021 June 30,2020 (Decree") Decrease Land $ 368.795 $ 362,069 $ 6,726 1.9% Buildings 126,122 126,779 (657) -0.5% Machinery and Equipment 19,583 13,962 5,621 40.3% Construction in Progress 8.584 7,515 1,069 14.2% Infrastructure 214,172 204,434 9,738 4.8% Total Governmental Activities 737,256 714,759 22,497 3.1% Business-Type Activities: Land 3,907 3,907 - 0.0% Buildings 65,947 68,359 (2,512) -3.7% Machinery and Equipment 6,786 7,025 (239) -3.4% Construction in Progress 1,782 442 1.340 303.2% Infrastructure 64,147 63.052 1.095 1.7% Total Business-Type Activities 142,469 142,785 (316) -0.2% Total Capital Assets S 879,725 $ 857,544 $ 22,181 2.6% Capital assets from governmental activities increased $22,497,000 or 3.1 percent. This increase is largely due to street replacement infrastructure costs and the acquisition of property and construction of a 174-bed Navigation Center. Capital assets from business- type activities decreased $316,000 or 0.2 percent largely due to regular depreciation for the year. 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 Fiscal Year 2020/21 General Fund Original (i.e. Adopted) Budget expenditures amount of $206,060,000 to the final budgeted amount of $220,756,000 shows a net increase of $14,696,000, or 7.1 percent. This overall increase is due to budget carryovers from the previous year and increased transfers to the Infrastructure and Equipment Replacement funds of $4,400,000 and $1,319,000, respectively. Final budgeted revenues for the General Fund increased $19,928,000 or 9.2 percent from the original (adopted) budget for the fiscal year ended June 30, 2021. The change from original to final budget occurred primarily as a result of adjustments made to budgeted property tax, sales tax, utility tax, other taxes, and transfers to other funds. 18 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 Variance with Final Budget General Fund actual revenues were greater than the final budget by $1 ,543,000 for the fiscal year ended June 30, 2021. This favorable budget variance is due in large part to actual investment returns exceeding budgeted amounts in the City's Section 115 Trust. General Fund expenditures were $4,910,000 less than the final budget. The favorable budget variance is due in large part to the following: • The Community Services and Library Services Departments realized $2,758,000 in savings primarily due to a reduction in city-provided services impacted by the COVID-19 pandemic. • The Public Works and Community Development Departments realized S1 ,050,000 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. Analysis of City's Other Major Governmental Funds Grants Special Revenue Fund The fund balance in the Grant Special Revenue Fund decreased by $2,207,000, largely due to COVID-19 related expenditures that are expected to be reimbursed through FEMA Public Assistance funds. LMIHAF Capital Projects Fund The fund balance in the LMIHAF Capital Projects Fund decreased by S5,863,000 due to the purchase of property to construct a temporary 174-bed Navigation Center in partnership with the County of Orange. Pension Liability Debt Service Fund The fund balance in the Pension Liability Debt Service Fund increased by $9,083,000 due to revenues set-aside from the voter-approved property tax override dedicated to the payment of Public Safety pension costs. The Fiscal Year 2020/21 revenues includes a one-time true up payment of 5908,000 from the County for override tax generated from the former Redevelopment area. 19 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 Economic Factors and Next Year's Budget The Adopted Fiscal Year 2021122 Budget is structurally balanced, totaling $424.4 million in All Funds. This reflects a $65.4 million, or 18.2 percent, increase from the Fiscal Year 2020/21 Adopted All Funds Budget of $359.0 million. A significant portion of the increase is due to added investment in essential infrastructure and equipment and the restoration of COVID-19 temporary cost saving measures. The larger increases were due to the following funds: Infrastructure Fund ($13.3 million), Equipment Fund ($3.4 million), Pension Liability Fund ($22.6 million), Retirement Supplement Fund ($5.3 million), and General Liability Fund ($2.6 million). The General Fund budget, which provides the majority of public services to the community, totals $228.0 million, reflecting a $11.1 million, or 5.1 percent increase from the Fiscal Year 2020121 budget of $216.9 million. This increase is a result of the added Section 115 Trust pension liability set-aside, increased investment in infrastructure and equipment, and restoration of temporary expenditure reductions made in response to the COVID-19 pandemic. The Adopted General Fund Budget for next year has no reliance on one-time revenues to fund ongoing operations, which is critical to maintaining the City's financial viability and success. Major highlights are as follows: Public Safety: Funding for Public Safety represents 55 cents for every dollar spent in the General fund. With over half of the General Fund Budget committed to the Police and Fire Departments. the City has dedicated the greatest share of its resources, or $125.3 million to these core services. In the Police Department, the budget adds $2.3 million in equipment funds, largely to finance the purchase of three new helicopters and the replacement of 39 police vehicles. The CIP includes $1 .624,000 for relocation and expansion of the Police Department Communications Center and Traffic Office, Helipad Lot Replacement, and the installation of street cameras to assist with traffic monitoring and investigations. In the Fire Department, the Adopted Budget includes $1 .1 million in Equipment Replacement Fund comprising the replacement of a Fire Engine, Rescue Boat, Command Vehicle, and Cardiac Monitors/Defibrillators. The General Fund CIP includes $590,000 for Lifeguard and Jr. Lifeguard upgrades and signals at Murdy and Heil Fire Stations. The Fiscal Year 2021/22 Adopted Budget is a balanced budget. As the economy continues to bounce back and public health guidelines become less restrictive, revenue sources such as Sales Tax and Transient Occupancy Tax are anticipated to increase considerably in the coming year. The Fiscal Year 2021/22 Adopted Budget includes the continuation of Citywide restructuring measures implemented during Fiscal Year 2020121 , restores a number of operating cuts made in response to the COVID-19 pandemic, 20 City of Huntington Beach Management's Discussion and Analysis For the Year Ended June 30, 2021 includes mandated savings along with the debt service payment for the City's recently instituted Pension Obligation Bonds, and prioritizes improvements to the City's facilities, roads and parks. The Fiscal Year 2021/22 budget remains committed to improving the quality of life for our residents, businesses, and visitors by increasing funding for core services such as public safety, community & library service programs, and improving the City's infrastructure. General Fund Revenue General Fund revenue is projected to be $228.0 million, a $11 .1 million or 5.1 percent decrease from the Fiscal Year 2020/21 Adopted Budget resulting from projected positive economic impacts resulting from widespread COVID-19 vaccinations, loosening public health orders, and the re-opening of businesses for indoor dining and shopping. • Property Taxes are estimated at $93.2 million, reflecting an increase of 1 .2 percent due to the low interest rates leading to accelerated growth in assessed valuations and Employee Retirement Override revenues being transferred to the Pension Liability Fund and no longer being budgeted in the General Fund. • Sales Tax revenues are projected to be S44.6 million, an increase of 13.8 percent from Fiscal Year 2020121 . Transient Occupancy Taxes are anticipated to increase $3.8 million, or 55.1 percent. The increases in these two revenue sources is attributable to the projected positive economic impacts resulting from widespread COVID-19 vaccinations, loosening public health orders, and the re-opening of businesses for indoor dining and shopping. • Licenses and Permits, estimated at $7.8 million, reflect a 5.7 percent increase, as economic and development activity are anticipated to increase in the coming year. Franchise Taxes are anticipated at S7.1 million, a 29.0 percent increase. Use of Money & Property, which includes parking revenues and lease concessions, is projected to increase S1 .7 million, or 11.5 percent. due to business re-openings and expected increases in visitors to our beach and downtown areas, especially as international travel continues to become less restrictive. 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 email tvi@surfcity-hb.org. 21 THIS PAGE INTENTIONALLY LEFT BLANK 22 THIS PAGE INTENTIONALLY LEFT BLANK 23 BASIC FINANCIAL STATEMENTS 24 CITY OF HUNTINGTON BEACH STATEMENT OF NET POSITION JUNE 30, 2021 (In Thousands) Governmental Business-Type ASSETS Activities Activities Total Cash and Investments S 227,029 S 88,351 $ 315,380 Cash and Investments with Fiscal Agent 9,902 - 9,902 Receivables, Net 36,889 6,496 43,385 Advances to Successor Agency 1,363 - 1,363 Inventories - 1,442 1,442 Prepaids 1,297 - 1,297 Joint Venture 185 1,572 1,757 Subtotal 276,665 97,861 374,526 Capital Assets: Non-Depreciable 377,379 5,689 383,068 Depreciable, Net 359,877 136,780 496,657 Total Capital Assets 737,256 142,469 879,725 Total Assets 1,013,921 240,330 1,254,251 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows Related to Pensions 390.427 25,616 416,943 Deferred Outflows Related to Other Postemployment Benefits 2,703 321 3,024 Total Deferred Outflows of Resources 393,130 25,937 419,067 LIABILITIES Accounts Payable 9,927 9,346 19,273 Accrued Payroll 5,877 631 6,508 Unearned Revenue 15,846 - 15,B46 Accrued Interest Payable 2,341 131 2,472 Deposits 760 1,491 2,251 Subtotal 34,751 11,599 46,350 Long-Term Obligations: Long-Term Obligations Due Within One Year 30,295 1,165 31,460 Long-Term Obligations Due in More than One Year 420,459 22,405 442,864 Net Pension Liability 411,153 27,224 438,377 Net Other Postemployment Benefits Liability 2,877 343 3,220 Total Long-Term Obligations 864,784 51,137 915,921 Total Liabilities 899,535 62,736 962,271 DEFERRED INFLOWS OF RESOURCES Deferred Inflows Related to Pensions 15,306 1,314 16,620 Deferred Inflows Related to Other Postemployment Benefits 2,410 287 2,697 Total Deferred Inflow of Resources 17,716 1,601 19,317 NET POSITION Net Investment in Capital Assets 699,204 142,469 841,673 Restricted for: Debt Service 4,435 - 4,435 Capital Projects 13,927 20,332 34,259 Public Works and Community Services Projects 47,393 - 47,393 Total Restricted Net Position 65,755 20,332 86,087 Unrestricted (275,159) 39,129 (236,030) Total Net Position $ 489,800 $ 201,930 $ 691,730 See Notes to the Financial Statements 25 CITY OF HUNTINGTON BEACH STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2021 (In Thousands) Net(Expense)Revenue and Changes in Program Revenues Net Position Charges for Operating Capital Grants Business- Current Grants and and Governmental Type Functions/Programs Ez nses Services Contributions Contributions Activities Activities Total Governmental Activities: City Council $ 423 $ 162 $ - $ - $ (261) $ - $ (261) City Manager 11.163 4,208 33 14 (6,908) - (6,908) City Treasurer 340 149 - - (191) - (191) City Attorney 3,140 6 - - (3,134) - (3,134) City Clerk 1,147 30 - - (1,117) - (1,117) Finance 6,828 3,055 - - (3,773) - (3,773) Community Development 19,716 8.353 2,142 964 (8,257) - (8,257) Fire 65,960 8,877 25 - (57,058) - (57.058) Information Services 6.230 610 - - (5,620) - (5,620) Police 102,415 6.477 1.519 - (94.419) - (94,419) Community Services 11,365 15.558 427 28 4.648 - 4.648 Library Services 6,181 153 401 - (5,627) - (5,627) Public Works 40,270 6,045 1,466 9.186 (23,573) - (23,573) Interest on Long-Term Debt 2,706 - (2,7061 - (2.706) Total Governmental Activities 277,894 53,683 6,013 10,192 (207,996) 21 07,996) Business-type Activities: Water Utility 46.054 42,523 - - - (3,531) (3,531) Sewer Service 9,284 10.828 - - - 1,544 1.544 Refuse Collection 12,936 13.014 - - - 78 78 Hazmat Service 241 266 25 25 Total Business-Type Activities 68,515 66,631 - (1,884) (1,884 Total Governmental and Business Type Activities $ 346,399 $ 120,314 $ 6,013 $ 10,192 $ (207,996) $ (1,884) $(209,880 ) General Revenues: Taxes: Property Taxes $ 99.958 $ - $ 99.958 Sales Taxes 51.162 - 51.162 Utility Taxes 18,374 - 18.374 Franchise Taxes 8,040 - 8.040 Transient Occupancy Tax 9,253 9.253 Total Taxes 186,787 - 186,787 Other: Use of Money and Property 4.399 261 4,660 From Other Agencies-Unrestricted 22,000 22,000 Total General Revenues 213,186 261 213,447 Transfers (38) 38 Total General Revenues and Transfers 213,148 299 213,447 Change in Net Position 5,152 (1,585) 3,567 Not Position-Beginning of Year 478,901 203,515 682,416 Cumulative Effect of Changes in Accounting Principles 5,747 5,747 Net Position-Beginning of Year as Restated 494,648 203,515 688,163 Net Position-End of Year $ 489,800 $ 201,930 $ 691,730 See Notes to the Financial Statements 26 CITY OF HUNTINGTON BEACH BALANCE SHEET GOVERNMENTALFUNDS JUNE 30,2021 (In Thousands) other Grants Special LMIHAF Capital Pension Governmental ASSETS General Fund Revenue Projects LiabilityFunds Total Cash and Investments S 86.267 5 17.434 $ 2,263 5 16.762 S 70.447 S 193.173 Cash and Investments with Fiscal Agent - 30 - 36 SAX 9.902 Taxes Receivable 13.258 - - 98 1,494 14,850 Other Receivables,Net 8.163 5,094 8.092 47 547 21,943 Advances to Successor Agency - - 1,363 - - 1,363 Prepaids 115 105 220 TOTAL ASSETS $ 107,803 $ 22,558 $ 11,718 $ 16,943 $ $2,429 S 241,451 LIABILITIES,DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts Payable $ 3,803 $ 862 $ 3 S - 5 4,544 S 9.212 Accrued Payroll 5.567 95 7 - 192 5.861 Uneamed Revenue 1,020 14,826 - - - 15,846 Deposits Payable 760 760 Total Liabilities 11,150 15,783 10 4,736 31,679 Deferred Inflows of Resources: Unavailable Revenue 2,044 4,421 8.086 209 14.760 Total Deferred Inflows of Resources 2.044 4,421 8,086 209 14,760 Fund Balances: Nonspendablo Prepaids 115 - - - 105 220 Restricted Underground Utilities 364 - - - - 364 Restitution 282 - - - - 282 Donations 767 - - - - 767 Section 115 Trust 11,378 - - - - 11,378 Pollution Remediation - - - - 355 355 Debt Service - - - 16,943 4,435 21,378 Highways,Streem and Transportation - - - - 1D443 10.443 Low Income Housing - - 3.622 - 2.698 6.320 Air Quality - - - - 1,518 1,518 Omer Capital Projects - - - - 25.775 25.775 Other Purposes 770 2.354 - - 2.018 5,142 Committed Economic Uncertainties 25.381 - - - - 25,381 Parks - - - - 1.389 1.389 Other Capital Projects 184 - - - 21.852 22.036 Omer Purposes - - - - 3.616 3,616 Assigned Litigation Reserves 3.650 - - - - 3,650 AES Reserve 4,900 - - - - 4,900 Capital Improvement Reserve 8,230 - - - 3.280 11.510 Equipment Replacement 8,295 - - - - 8.295 General Plan Maintenance 791 - - - - 791 General Liability Plan Migration 2,801 - - - - 2,801 Pension Rate Stabilization 741 - - - - 741 Cityview Replacement 1,028 - - - - 1.028 Section 115 Trust 1.500 - - - - 1.500 Triple Flip 749 - - - - 749 Strategic Initiatives 16,536 - - - - 16,536 Housing Agreement 174 - - - 174 Year-End Fair Value 1,983 - - - - 1.983 Other Purposes 3,990 3.990 TOTAL FUND BALANCES 94.609 2,354 3,622 16,943 77,484 195,012 TOTAL LIABILITIES.DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 107,803 $ 22,558 S 11.718 S 16.943 $ 82,429 $ 241,451 See Notes to the Financial Statements 27 CITY OF HUNTINGTON BEACH RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2021 (In Thousands) Amounts reported for governmental activities in the statement of net position are different because: Total Fund Balances Governmental Funds $ 195,012 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 1,113,591 Accumulated Depreciation (381,639) Total Capital Assets 731,952 731,952 Joint Venture 185 Internal Services funds are used by management to charge the cast 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 Statement of Net Position. (8,441) Revenues that are measurable but not available are not recognized as revenue in governmental funds. Such amounts are recorded as unavailable revenue under the modified accrual basis of accounting. 14,760 Deferred outflows related to pensions 389,193 Deferred outflows related to Other Postemployment Benefits(OPEB) 2,688 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. (409,844) Deferred inflows related to pensions (15,245) Deferred inflows related to Other Postemployment Benefits(OPEB) (2,397) 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. (2,861) Other long-term liabilities are not due in the current period and, therefore, are not recorded in the governmental funds. Accrued Interest Payable (2,337) 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 (20,138) Long-Term Obligations Due in More than One Year (382,727) Net Position of Governmental Activities $ 489,800 See Notes to the Financial Statements 28 CITY OF HUNTINGTON BEACH STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED JUNE 30, 2021 (In Thousands) LMIHAF Other General Granb Special Capital Pension Governmental REVENUES Fund Revenue Projects LiabilityFunds Total Property Taxes 5 91,708 $ - S - S 8.250 S - $ 99,958 Sales Taxes 47.676 - - - 3,486 51.162 Utility Taxes 18,374 - - - - 18,374 Other Taxes 18,428 - - - 7,317 25,745 Licenses and Permits 7.805 - - - 408 8.213 Fines and Forfeitures 4,619 - - - - 4.619 From Use of Money and Property 16,196 222 964 300 1.481 19.163 Intergovernmental 9,967 18,075 - - 1.794 29.836 Charges for Current Services 21,878 - - 1493 2,018 25,389 Other 2,001 38 2.039 Total Revenues 238,652 18,297 964 10,043 16,542 294.498 EXPENDITURES Current: City Council 397 - - 646 - 1,043 City Manager 3.867 5.453 - 6,284 372 15.976 City Treasurer 319 - - 518 - 837 City Attorney 2.938 - - 4.776 - 7.714 Ciry Clerk 1.068 8 - 1.734 - 2.810 Finance 6,025 18 - 9.788 342 16,173 Community Development 8,920 8450 6,421 14492 929 39,212 Fire 57.002 1,880 - 89,773 1.071 149,726 Information Services 6.991 64 - 11,358 682 19.095 Police 89.440 2,141 - 140,857 - 232.438 Community Services 7.708 553 - 12,523 4.280 25.064 Library Services 5.150 233 - 8,367 349 14,099 Public Works 24.116 1,569 - 39,177 23.145 88.007 Debt Service: Principal 1.723 - - - 2.260 3.983 Interest 182 755 937 Total Expenditures 215,846 20,369 6.421 340,293 34.185 617.114 Excess(Deficiency)of Revenues Over (Under)Expenditures 22,806 (2,072) (5,457) (330,250) (17,643) (332,616) OTHER FINANCING SOURCES(USES) Transfers In 548 1,271 - - 11.239 13.058 Issuance of Long-Term Debt - - - (453) - (453) Issuance Premium - - - - 1,743 1.743 Issuance Discount - - - (649) - (649) Proceeds of Lang Term Debt - - 340435 32,028 372.463 Payments to Escrow - - - - (28.256) (28.256) Transfers Out (10.8681 (1406) (406) (4161 (13,096) Total Other Financing Sources(Uses) (10,320) (135) (406) 339,333 16.338 344,810 Net Change In Fund Balances 12.486 (2,207) (5,863) 9,083 (1,305) 12,194 Fund Balances-Beginning of Year 80.088 4,561 9,485 7,860 75,077 177,071 Cumulative Effect of Changes In Accounting Principles 2,035 3,712 5.747 Fund Balances-Beginning of Year as Restated 82,123 4,561 9,485 7.860 78,789 182,818 Fund Balances-End of Year $ 94.609 S 2.354 S 3,622 $ 16,943 $ 77,484 $ 195,012 See Notes to the Financial Statements 29 CITY OF HUNTINGTON BEACH RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2021 (In Thousands) Amounts reported for governmental activities in the Statement of Activities are different because: Net Changes in Fund Balances-Total Governmental funds $ 12,194 Capital Expenditures-Governmental funds report capital outlays as expenditures. However,in the Statement of Activities,the cost of these assets are allocated over their estimated useful lives and reported as depreciation expense. Depreciable Assets Purchased 29,506 Non-Depreciable Assets Purchased 11,575 Non-Depreciable Assets Disposition (3.780) Capital Asset Depreciation (16,050) Joint venture (72) Accrual of Revenues-Certain revenues in the Statement of Activities do not meet the"availability" criteria for revenue recognition in the governmental funds and are not reported in the governmental funds as revenue. Current Year Grant and Other Revenue Accrual 3.010 Prior Year Grant and Other Revenue Accrual (2,922) 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. (1,064) 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. (9,994) Governmental funds report expenditures for retirement contributions whereas these amounts are reported as deferred outflows of resources on the Statement of Net Position. 339,296 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). 454 Internal service funds are used by management to charge the costs of certain activities,such as self insurance workers'compensation charges.The net revenue of this internal service fund is reported as governmental activities. (13,168) Liabilities not liquidated with current resources-Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore,are not reported as expenditures in governmental funds. Current Year Interest Accrual (2,337) Prior Year Interest Accrual 568 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. 31,170 The issuance of long-term debt provides current financial resources to governmental funds. (372.463) The repayment of some expenses such as compensated absences,claims,and pension expenses, reported in the Statement of Activities,do not require the use of current resources,and therefore are not reported as expenditures in the governmental funds. (771) Change In Net Position of Governmental Activities $ 5.152 See Notes to the Financial Statements 30 CITY OF HUNTINGTON BEACH STATEMENT OF NET POSITION PROPRIETARY FUNDS June 30,2021 (In Thousands) Governmental Business-Type ActMties-Ento rise Funds Activities Water Sewer Refuse Haamat Internal Service Fund Servico Fund Fund Service Fund Total Funds ASSETS Current Assets: Cash and Imestnems S 31.348 S 35.763 S 420 f 488 $ 68,019 $ 33,856 Restricted Cash and Investments 20,332 - - - 20,332 - Other Receivables.Net 2.575 579 606 9 3.769 96 Prepaids - 1.077 Joint Ventures 1.572 - - - 1,572 - Inventones 1442 - - - 1442 - Unbilled Receivables 1.727 "1 559 2,727 Total Current Assets 58.996 36.783 1,585 497 97,861 35.029 Capital Asset: Land 3,907 - - 3.907 - Buildings and Improvements 57.298 42.784 - - 100,082 - MaWneryandEquipment 16,797 4,584 215 - 21.596 6.831 Infrastructure 104.496 44.808 - - 149.304 - Constuctionin Progress 294 1488 - - 1.782 - LessAccumulatedDepreciation (91.545) (42.576) (81) (134.2021 (1,527) Total Capital Assets 91,247 51.088 134 142,469 5.304 Total Assets 150.243 87.871 1,719 497 240,330 40,333 DEFERRED OUTFLOWS OF RESOURCES Defamed Outflows Related to Pensions 17.925 6,705 600 386 25,616 1,234 Deferred Outflows Related to Other Postemployment Benefits 231 79 8 3 321 15 Total Deferred Outflows of Resources 18,156 6,794 608 389 25,937 1,249 Total Assets and Deferred Outflows of Resources f 168,399 f 9g655 f 2.327 f 886 f 266,267 f 41,582 LIABILITIES Current Liabilities: Accounts Payable $ 7.630 $ 693 $ 1,023 S - S 9.346 5 715 Accrued Payroll 433 174 14 10 631 16 Deposits Payable 1491 - - - 1491 - iMerest Payable 91 35 3 2 131 4 Current Portion of Claims Payable - - - - 10.108 Current Portion of Compensated Absences 274 103 10 2 389 12 Total Current Liabilities 9.919 1,005 1,050 14 11,988 10,855 Nor1-Cunent Liabilities: Compensated)kbsences 731 275 24 7 1,037 32 Long-Tenn Obligations Due Within One Year 543 203 18 12 776 37 Long-Term Obligations Due in More than One Year 14.953 5,593 501 321 21,368 1,029 Net Pension Liability 19.053 7,126 639 406 27.224 1.309 Net Other Postemployment Benefits Liability 246 94 9 4 343 16 Claims Payable 36.671 Total Non Current Liabilities 35.526 13,281 1.191 750 50,748 39,094 Total Liabilities 45,M5 14,286 2.241 764 62,736 49,949 DEFERRED INFLOWS OF RESOURCES Defamed Inflows Related to Pensionn 923 345 31 IS 1,314 61 Deferred Inflows Related to Other Postemployment Benefits 206 71 7 3 287 13 Total Deferred Inflows of Resources 1.129 416 38 18 1.601 74 NET POSITION Imeslmem in Capital Assets 91.247 51.088 134 - 142,469 5.304 Resrcted for: Capital Projects 20,332 - - - 20,332 - Unresmaed 10.246 28,865 (86) 104 39,129 (13.745) Total Not Position 121.825 79.953 48 1" 201.930 (8,"11 Total Liabilities,Deferred Inflows of Resources,and Net Position It 168,399 S 94,655 f 2.327 f 886 f 266,267 f 41,582 See Notes to the Financial Statements 31 CITY OF HUNTINGTON BEACH STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) Governmental Business-Type Activities-Enterprise Funds Activities Water Sower Refuse Haxmat Intomal Service Fund Service Fund Fund Service Fund Total Funds OPERATING REVENUES Sales S 38,995 S - S - S - $ 38,995 S - Fees and Charges for Service - 10,814 12.968 266 24,046 14.130 Other 3,528 14 46 3.588 73 Total Operating Revenues 42,523 10,828 13,014 266 66,631 14,203 OPERATING EXPENSES Water Purchases 17,144 - - - 17,144 Supplies and Operations 9,664 7,096 12.911 239 29,910 4,486 Engineanng 3,013 - - - 3,013 - productionandDistribution 8,339 - - - 8,339 Maintenance 561 - - - 561 - Water Meters 2.178 - 2.178 Water Quality flu - 834 Water Use Efficiency 244 - - - 244 - Or,=and Judgments - - - 22,073 Depreciation 3,986 2,153 22 6161 714 Total Operating Expenses 45,963 9,249 12,933 239 68.384 27,273 Operating Income(Loss) (3.440) 1.679 81 27 (1,753) (13,070) NON-OPERATING REVENUES(EXPENSES) Invesunent Income(LOSS) 123 134 2 2 261 (90) Interest Expense (91) (35) (3) (2) (131) (4) Debt Service (4) Total Non Operating Revenues(Expenses) 32 99 (1) 130 (98) Income(Loss)Before Transfers (3,408) 1.678 80 27 (1,623J 113,168) TRANSFERS Transfers In - - 51 - 51 - Transfers Out (13) (13) Total Transfers 51 (13) 38 Change in Not Position (3,408) 1,678 131 14 (1,585) 113.1611) Not Position-Beginning of Year 125,233 78,275 (83) 90 203,515 4,727 Net Position-End of Year S 121,825 S 79.953 S 48 S 104 S 201,930 S (8,441) See Notes to the Financial Statements 32 CITY OF HUNTINGTON BEACH STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) Governmental Business-Type Activities-Enl0 dse Funda Activities Water Sower Refuse Harmat Intamal Service Fund Service Fund Fund Service Fund Total Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers and Users S 41.916 S 10,797 S 12,802 5 265 $ 65.760 S 14.241 Cash Paid to Employees for Services (24.920) (9,342) (844) (573) (35.679) (1.561) Cash Paid to Suppliers of Goods and Services (32.327) (3,565) (12,593) (3) (48 4a8) (16,762) Net Cash and Investment Provided by Operating Activities (15.331) (2,1101 (635) (3111 (18.387) (4,082) CASH FLOWS FROM NONCAPFIAL FINANCING ACTIVITIES Transfers In - - 51 - 51 - TrarsfemOut - - - (13) (13) - Deot Service - - - (4) Proceeds 5om Issuance of Long-Term Debt 15.496 5,796 519 333 22.144 1,066 Not Cash and Investments Provided(Used)by Noncapital Financing Activities 15.496 5,796 570 320 22,182 1,062 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of Capitol Assets (3.373) (2,472) (5.845) 0.950) Not Cash and Investments Used by Capital and Related Financing Activities (3.373) 12.472) (5.845) (1,960) CASH FLOWS FROM INVESTING ACTIVITIES Investment Income(Lass) 123 134 2 2 261 (90) Not Cash and Investments Provided by Investing Activities 123 134 2 2 261 (90) Net Increase(Decrease)in Cash and Irmesbdents (3DI15) 1,348 (63) 11 (1,789) (5,070) Cash and Investments-Beginning of Year $4.765 34,415 403 477 90,140 38,926 Cash and Investments-End of Year S 51.680 s 35.763 S 420 S 488 $ 88.351 $ 33.856 RECONCILIATION OF OPERATING INCOME(LOSS)TO NET CASH AND INVESTMENTS PROVIDED(USED)BY OPERATING ACTIVITIES Operating Income(LOSS) S (3440) S 1,579 $ 81 $ 27 $ (1,753) $ if 3,070) Adjustments to Reconcile Operating Income(Leas)to Not Cash and Investments Provided(Used)by Operating Activities Depreciation 3S86 2.153 22 - 6,161 714 (Increase)Decrease in Other Receivables,Net (446) (66) (223) (1) (736) 38 Decrease in Unbilled Receivables 141 35 11 - 187 - Decrease(Increase)in Prepaids - - - - - (477) (Increase)in Joint Ventures (254) (254) (increase)in Inventory (9) - - - (9) - Increase(Decrease)in Accounts Payable 692 29 14 - 735 177 Increase(Decrease)in Aeerved Payroll 63 17 3 - 63 (7) Increase(Decrease)in Deposits Payable (302) - - - (302) - Increase(Decrease)in Claims Payable - - - - - 9,624 Increase(Decrease)in Compensated Absences (150) (16) (26) 5 (189) - (Increase)Decrease in Deferred Pension Oudflo, (15.878) (5,939) (532) (342) (22,691) (1,093) Increase(Decrease)in Dalai Pension Inflow 501 187 17 6 711 32 increase(Decrease)in Net Pension Liability (196) (73) - (6) (275) (19) Decrease in Deferred Other Postemployment Benefits Outflow 12 4 - - 16 1 (Decrease)in Deferred Other Postemployment Benefits Inflow (18) (6) (1) - (25) (1) (Decrease)in Net Other Postemployment Benefits Liability (33) (12) (1) (46 (1) Net Cash and Investments Provided by Operating Activities S (15,331) It (2,110) s (635) S (311) s (13,337) s (4,082) NONCASH INVESTING,CAPITAL,AND FINANCING ACTIVITIES There were M nonctosh investing,capital,or financing activities during the year ended June 30,2021. See Notes to the Financial Statements 33 CITY OF HUNTINGTON BEACH STATEMENT OF FIDUCIARY FUND NET POSITION FIDUCIARY FUNDS JUNE 30, 2021 (In Thousands) Hundnton Beach P.nslon Trust Fur - Red.velopm.nt Retirement Successor Agency m ASSETS Cuaeial Fund. Supplemental Fund Pdvata Purpow Trust Cash and Investments $ 4,490 $ 3 $ 6,647 Cash and Investments with Fiscal Agent 3,265 - 2,582 Mutual Funds - 69,928 - Money Market Funds - 433 - Accounts Receivable,Net 699 20 Total Assets 8,454 70,364 9,249 LIABILITIES Accounts Payable 1.928 - 427 Accrued Payroll - - 6 Advances from City of Huntington Beach - - 1,363 Long-Term Obligations: Long-Term Obligations Due Within One Year - - 4,171 Long-Tern Obligations Due in More than One Year 25.550 Total Long-Term Obligations 29,721 Total Liabilities 1,928 31,517 NET POSITION Restricted for Pension Benefits - 70,364 - Held in Trust For Other Purposes - - (22,268) Restricted for Individuals and Organizations 6.526 - Total Net Position $ 6.526 S 70,364 S (22,268) CITY OF HUNTINGTON BEACH STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) Huntington aeach Pen.mo Tm.l Fund- Red.velopmant Retirem.nt Su.,..wr As. ADDITIONS Custodial Funds Supplemental Fund Pdvata Purpose Trva Employer Contributions $ - $ 933 $ - Special Assessments or Special Taxes Collected from Property Owners 1.512 - 5,201 Business Improvement District Taxes 4.093 - - Parking Assessments 2,442 Total Additions Before Investment Income 8,047 933 5,201 Investment Income: Investment Income 13 15.846 10 Less Investment Expense (1291 Net investment Income 13 15,717 10 Total Additions 8,060 16.650 5,211 DEDUCTIONS Benefits - 5,494 - Administrative Costs 51 314 - Payments to other Organizations 4,748 - - Economic Development - - 223 Interest and Fiscal Agency Expenses 1.511 - 1.822 Principal 1,810 Total Deductions 8,120 5,808 2,045 Change in Net Position (60) 10,842 3,166 Net Position-Beginning of Year 59.522 (25.434) Cumulative Effect of Changes in Accounting Principles 6,586 Net Position-Beginning of Year as Restated 6,586 59,522 (25,434) Net Position-End of Year $ 61526 $ 70,364 $ (22.268) See Notes to the Financial Statements 34 THIS PAGE INTENTIONALLY LEFT BLANK 35 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 Footnote Number Description Page 1. Summary of Significant Accounting Policies............................ 37-53 2. Cash and Investments................................................................... 54-61 3. Other Receivables.......................................................................... 61-62 4. Unearned Revenue........................................................................ 63 5. Unavailable Revenue .................................................................. 63 6. Retirement Plan — Normal ............................................................ 64-74 7. Retirement Plan — Supplemental................................................ 74-81 8. Other Post Employment Benefits ............................................... 82-88 9. Risk Management ................................................................89-90 10. Interfund Transactions..........................................................................91-92 11. Long-Term Obligations.................................................................. 93-105 12. Capital Assets ...................................... ..... . .... ......................... 106-108 13. Investment in Joint Ventures .................... . ............................. 108 14. Related Party Transaction......................... . ................ 108 15. Successor Agency Trust for Assets of the Former Redevelopment Agency of the City of Huntington Beach.....109-116 16. Commitments and Contingencies............. ................................. 116-120 17. Other Information .......................................................................... 120 18. Subsequent Events ....................................................................... 120-122 19. Prior Period Adjustments ............................................................. 122-123 36 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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. 37 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 38 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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. As a general rule, the effects of interfund activity have been eliminated from the government-wide financial statements. 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 565,755,000 of governmental activities restricted net position, of which $36,839,000 is restricted by enabling legislation. The government-wide Statement of Net Position reports $20,332,000 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. 39 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 S275,159,000 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. 2021 is $438,377,000 and Net OPEB Liability is 53,220,000. respectively, of which $411,153,000 and $2.877,000, respectively, is payable from Governmental Activities. The government-wide Statement of Net Position reports $39,129,000 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 presents 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. 40 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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. 41 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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, 2021, by major fund (in thousands): General Fund S 3.940 Grants Special Revenue 1,782 LMIHAF Capital Projects 12 Other Governmental Funds 19.067 Total Encumbrance All Funds $ 24,801 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 S1 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. 42 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 and expenses. 43 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 Custodial and Trust Funds. The City's fiduciary funds include Custodial and Trust Funds. Custodial Funds report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria. The Custodial funds present results of operations and include net position. Custodial 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. Pension Liability Debt Service — accounts for the City's contribution to its pension plan obligations, as provided by the voter-approved property tax override and other sources of revenue, including the allocable share from Enterprise Funds and Other Governmental Funds. 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. 44 - City of Huntington Beach Notes to Financial Statements For the Year Ended June 30. 2021 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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 Custodial Funds - are used to account for debt service activities related to the Parking Structure - Bella Terra and Community Facilities District conduit debt issues, in which the City acts as an agent, not as a principal. The Business Improvement District fund is used to account for taxes received and held until disbursement. 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 States Dissolution Act. 45 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 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. In June 2020, the City Council adopted a resolution authorizing the deposit and investment of excess funds in the Orange County Investment Pool (OCIP). The investments in OCIP are managed by the County Treasurer. 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. 46 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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. 47 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 inflow 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. 3. Changes in the net other postemployment benefits liability not included in OPEB 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. 48 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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. 49 4 o .=0 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I. 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 50 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) m. Redevelopment Property Tax Trust Funds Under AEX1 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. 51 City of Huntington Beach .^�ftww�gh Notes to Financial Statements 1W For the Year Ended June 30, 2021 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 Plans fiduciary net position have been determined on the same basis as they are reported by the CaIPERS' 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 Other Employee CalPERS Post-Employment Retirement Plan Pension Plans Benefit Plan Valuation Dale (VD) June 30, 2019 June 30, 2019 June 30, 2019 Measurement Date (MD) June 30, 2021 June 30, 2020 June 30, 2020 Measurement Period (MP) July 1, 2020 to July 1, 2019 to July 1, 2019 to June 30, 2021 June 30, 2020 June 30, 2020 52 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 inputs 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. 53 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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. INVESTMENTTYPE MAXIMUM MATURITY MAXIMUM SPECIFIED%OF PORTFOUO MINIMUMRATING /MAXIMUM PER ISSUER REQUIREMENTS Bankers'Acceptances 180 days ZS%)up to 40%with l approval)/ Al/Pl,"A"Rating Negotiable Certificates of De 3 years(Up to S years posit 30%/10% Al/P1."A"Rating with Council approval Commercial Paper 270days 25%/10% Al,"A"Rating State Obligations-CA And Others 5 years None/10% "A"Rating City/Inca)Agency of CA Obligadats 5 years None/10% "A"Rating U.S.Treasury Obligations Syears None None U.S.Government Agency Obllgatlons S years None None IBRD,IFC,IADB 5 years 10% "AA" Rating Repurchase Agreements 3Months None None Reverse Repurchase Agreements 92 days 20%of the base value of the portfolio. None Requires Cl Council royal. Medium-Tenn Corporate Notes Syears 30%/10% "A"Rating Non-negotiable Certificates of Deposit 3 years None/10% Al/Pl,"A"Rating Money Market Mutual Funds 60days 15%/10% "AAA"Rating local Agency Investment Fund llAIF) N/A Up to 575,000,000 None Orange County Investment Pool(OCIP) N/A Up to S75,000,000 None Joint Powen Authority N/A None/Sm,000,000 See 10.ON of IPS 54 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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. Maximum Maximum Authorized Investment Type Maximum Maturity Percentage Investment of Portfolio 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 Imestment 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 55 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 Target Asset Maximum Allocation Allocation Allocation Cash orEquivalents 0% 0% 101A Money Market 0% 0% 100% Fixed Income 30% 00% 50% Intermediate Bond 30% 40% 50% Short-Term Bond 0% 0% 10% Long-Term Bond 0% 0% 10% High yield Bond 0% 0% 10% Inflation Protected Bond 0% 0% 10% World Bond 0% 0% 10% Domestic Equity 17% 27% 37% Large Cap Equity Value,Blend,Growth) 8% 18% 28% Mid Cap Equity(Value,Blend,Growth) 0% 6% 16% Small Cap Equity(Value, Blend,Growth) 0% 3% 13% Forelign EquityU% 1 21% 31% Foreign Large Equity Value, Blend,Growth 7% 17% 27% Foreign Sm/Mid Equity(Value,Growth 0% 0% 10% ,EmerRing Markets 0% 4% 14% MN Estate 0% 10% 20% Real Estate J% 10% 20% Catrtwdities 0% 2% 12% Natural Resources 0% 2% 12% 56 -- City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 2. CASH AND INVESTMENTS (Continued) At year-end, the City had the following deposits and investments (amounts in thousands): Primary Government: Cash and Investments S 315.380 Cash and Investments with Fiscal Agent 9,902 Total Primary Government 325,282 Fiduciary Funds: Cash and Investments 11,140 Cash and Investments with Fiscal Agent 76,208 Total Fiduciary Funds 87,348 Total Deposits and Investments S 412.630 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). Investment Maturities In years INVESTMENTS: Fair Value Less than 1 1 to 3 3 to 5 1 More than 5 Total US Treasuries $ 13,129 S - $ 3,065 $ 10.064 $ - S 13.129 US Agency Secunbes' 113,063 10.018 32,424 70.621 113,063 Mutual Funds 69,928 69.928 - - - 69.928 Money Market Funds 1,578 1.578 - - - 1.578 Medium Term Notes-IADB 30,616 - 15.596 15.020 - 30,616 Corporate Bonds 45,968 18.155 23.806 4.007 45,968 Local Agency Investment Fund 44,677 44.677 - - - 44.677 Orange County Investment Pool 65,337 65.337 - - - 65.337 California Asset Mgmt Program 2,773 2.773 - - - 2,773 PARS Pension Rate Stabilization Program 11,378 11.378 11,378 Total Investments $ 398,447 S 221,844 S 74,891 S 99,712 f 398,447 Total Deposits 14,183 Total Deposits and Investments S 41L830 'Security is callable, but classified above according to original maturity date 57 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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): Rema"n as of Year End INVESTMENTS'. Min,m„m -oral AAA AA A 88B• Legal Rating Not Rated US Treasures NA E 13.129 S 13.129 S - E - S - S - US Agency Securities' N,A 113.063 113.063 - - - Mutual Funds WA 69,928 - - - - 69 928 Money Market Funds AAA 1,578 1,578 - - - Medum Term Notes-IADB AA 30,616 30.616 - - - - Corporate Bores A 45,968 - 12.531 27.431 6.006 Local Agency Investment F and WA e4,677 - - - - a4,677 Orange County Imestmenl Pool WA 65,337 - - - - 65.337 Califomia Asset Mgmt Program WA 2,773 2,773 - - - - PARS Pension Rate Stabilization Program WA 11,378 11,378 Total Investments S 398.4•17 E 161,159 $ 12.531 $ 27,431 $ 6006 S 191.320 Note ANUS Ageri es are rated AAA by Moodys and AA by Sdp 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.Agency Securities $ 73,200 Federal Home Loan Mortgage Corporation U.S.Agency Securities $ 16.313 Inter-American Development Bank Medium Term Notes $ 15.596 58 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 fair 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, 2021, 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. 59 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 2. CASH AND INVESTMENTS (Continued) Investment in the Orange County Investment Pool The City is a participant in the County Treasurer's Orange County Investment Pool (OCIP). The OCIP is an external investment pool, is not rated and is not registered with the Securities Exchange Commission (SEC). The County Treasury Oversight Committee conducts OCIP oversight. Cash on deposit in the OCIP at June 30, 2021 is stated at fair value. The OCIP values participant shares on an amortized cost basis during the year and adjusts to fair value at year-end. For further information regarding the OCIP, refer to the County of Orange Annual Comprehensive Financial Report. 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. Investment in Public Agency Retirement Services Pension Rate Stabilization Program The City established a Section 115 pension trust account within the Public Agency Retirement Services Pension Rate Stabilization Program (PARS PRSP) to hold assets that are legally restricted for use in administering the City's defined benefit pension plan. The pension trust fund's specific cash and investments are managed by a third- party portfolio manager under guidelines approved by the City. 60 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 2. CASH AND INVESTMENTS (Continued) 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, 2021 (in thousands): Fair Value Hierarchy INVESTMENTS: Level Level2 Level Total U.S. Treasuries $ - $ 13.129 S S 13.129 U.S. Agency Securities - 113,063 113,063 Medium Term Notes - IADB - 30,616 30,616 Corporate Bonds 45,968 45,968 Total Investments S S 202,776 $ $ 202.776 3. OTHER RECEIVABLES A summary of Other Receivables as of June 30, 2021 is as follows (in thousands): Description Amount Developer Loans Receivable $ 39,286 Emerald Cove Loan Receivable 6,640 Housing Rehabilitation Loans Receivable 2,207 First Time Homebuyers Receivable 1,446 Emergency Medical Fee Receivable 1.500 CDBG Program Receivable 1.076 Affordable Housing In-Lieu Receivable 84 Infrastructure Fund 209 Other Grants Receivable 1,586 Other Receivable 7,195 Total Other Receivables 61,229 Allowance for Uncollectible Developer Loans (39,286 ) Net Other Receivables on Governmental Fund Financial Statements $ 21,943 Other Receivables Reconciliation Net Receivable on Government-wide Financial Statements $ 36,889 Taxes Receivable on Governmental Fund Financial Statements (14,850) Other Receivables on Internal Service Fund (96) Net Other Receivables on Governmental Fund Financial Statements $ 21,943 61 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 3. OTHER RECEIVABLES (Continued) a. Developer Loans Loans made to developers to construct or rehabilitate certain facilities under deferred loan agreements total $39,286,000 at year-end. These loans are allowed until a future event occurs. Loans to the Low and Moderate Income Housing Asset Fund total $20,935,000, loans made under the Home Program total $14,040,000 and loans made under the Affordable Housing In-Lieu Program total $4,311 .000. Interest rates on these loans range from 0% to 10%. The allowance for uncollectible developer loans is $39.286.000 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. b. Emerald Cove Loan On June 15. 2010. the former Redevelopment Agency loaned Emerald Cove, LP 58,000,000 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. 2021 is $6,640,000. 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 $2,207,000 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 .446.000 at year-end. These loans are deferred until a future event occurs. 62 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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): Grants Total Special Unearned General Fund Revenue Revenue Comm Services Unearned Revenue (Classes) $ 1.020 S - S 1,020 Grants - 14,826 14,826 Total $ 1,020 $ 14,826 $ 15,846 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): Other Total Grants Special Governmental Unavailable General Fund Revenue LMIHAF Funds Revenue Grants S - $ 2,214 $ S - S 2214 Deferted Loans- Emerald Cove - - 6,640 - 6,640 Housing Rehabilitation - 2.207 - - 2,207 First Time Homebuyers - - 1.446 - 1,446 Related Party Transaction (city Managers Housing Loan) 1,457 - - - 1,457 Other Unavailable Revenue 567 - 209 796 Total S 2.044 S 4-421 S L= S_ 209 $ 14.760 Deferred Loans to developers and qualified individuals for housing rehabilitation and to first time homebuyers are discussed in Note 3. Related Party Transaction related to the housing loan granted to the City Manager is discussed in Note 14. 63 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 6. RETIREMENT PLAN — NORMAL a. Summary Net Pension Liability Net Pension Liability is reported in the accompanying statement of net position as follows: Net Pension Liability CalPERS Miscellaneous Plan S 160.441 CalPERS Safety Plan 271.528 Supplemental Plan (Note 7) 6.408 Total S 438.377 Deferred Outflows of Resources Deferred Outflows of Resources are reported in the accompanying statement of net position as follows: Defa ed employer Investment eamngs DMerences pen een pension contnbubons less than Expected and made after expected eamings Actual Expenence measurement date Total CalPERS Miscellaneous Plan $ 3.239 S - S 150.880 S 154.119 CaIPERS Safety Plar 4,106 489 257,329 261,924 Total 7.345 S 489 S 408209 $ 416,043 Deferred Inflows of Resources Deferred Inflows of Resources are reported in the accompanying statement of net position as follows: Differences betweer Changes Expected and in assumptions Actual Expenence Total CaIPERS Miscellaneous Plan S - S 3.587 $ 3,587 CaIPERS Safety Plan 692 4.104 4,796 Supplemental Plan(Note 7) 8,237 8.237 Total S 642 $ 15.928 $ 16,620 64 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 6. RETIREMENT PLAN — NORMAL (Continued) Pension expenses for the measurement period ending June 30, 2020 (the measurement date), are included in the accompanying financial statements as follows: Net Pension Expense CalPERS Miscellaneous Plan S 14,962 CaIPERS Safety Plan 36,664 Supplemental Plan (Note 7) 5,381 Total S 57,007 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. 65 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 6. RETIREMENT PLAN — NORMAL (Continued) Benefits Provided CaIPERS 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 S500 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. 66 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 6. RETIREMENT PLAN — NORMAL (Continued) The Plans' provisions and benefits in effect at June 30, 2021 are summarized as follows: Miscellaneous Agent Plans 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 2.0%-2.5%.50 years-63+ 1.0%-2.5%, 52 years-67+ Monthly benefits,as a %of eligible compensation years, respectively years,respectively Required employee contribution rates 8.000% 6.250% Required employer contribution rates July 1,2020-June 30,2021 38.855% 38.855% Safety Agent Plans 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 2.0%-2.7%, 50 years-57+ Monthly benefits,as a%of eligible compensation 3%,50+years years,respectively Required employee contribution rates 9.000% 11.750% Required employer contribution rates July 1,2020-June 30,2021 60.780% 60.780% 67 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 CaIPERS' 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, 2020, 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 38.855% and 60.780% for the miscellaneous and safety plans, respectively, for the period July 1 , 2020 through June 30, 2021. At June 30, 2019, the valuation date, the following employees were covered by the benefit terms for each Plan: Miscellaneous Safety Active members 593 377 Transferred members 439 79 Terminated members 329 58 Retired members and beneficiaries '003 610 68 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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, 2020. using an annual actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 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, 2019 actuarial valuation, rolled forward to June 30, 2020 using standard update procedures, were determined using the following actuarial assumptions: Actuanal Methods and Assumptions Used to Defermrne Total Peri L,01i Actuanal Cost Method Entry Age Normal in accordance with the requirement of GASB Statement No.66 Actuarial Assumptions Discount Rate 7 5% Inflation 2 50% Salary Increases Vanes by Entry Age and Service Investment Rate of Return 7.15°n Net of Pai Plan Investment and Admmistrawe Expenses includes lnflation Mortality Rate Table' Derived using CalPERS Membership Data for all Funds. Post Retirement Benefit Increase The lesser of contract COLA or 2.50% until Purchasing Power Protector Allowance Boor on purchasing power applies 2.50%thereafter. 'The mortasty table used was developed based on CaIPERS'specific data. The probabilities of mortality are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015.Pre-retirement and Post-retirement mortality rates include 15 years of 90%of Scale MP-2016 published by the Society of Actuaries.For more details on this table.please refer to the CalPERS Experence Study and projected mortality improvement using Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website. 69 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 Asset Class Allocation Years 1-10' Years 11+3 Global Equity 50.00% 4.80% 5,98% 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% In the System's ACFR. Fixed Income is included in Global Debt Securities. Liquidity is included in Short-term Investments. Inflation Assets are included in both Global Equity Secunties and Global Debt Securities. 7 An expected inflation of 2.00% used for this period 3 An expected inflation of 2.92% used for this period. 70 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 6. RETIREMENT PLAN — NORMAL (Continued) Discount Rate — The discount rate used to measure the total pension liability at June 30, 2020 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: Miscellaneous Plan Total Pension Plan Fiduciary Net Net Pension Liability Position Liability Balance at June 30, 2019(Valuabort Date) $ 591,598 S 432 522 $ 159.076 Changes in the year. service cost 7,779 - 7,779 Interest on the total pension liabilities 41,058 - 41,058 Differences between expected and actual experience (6,087) - (6.087) Benefit payments. including refunds of members contributions (30.321) (30,321) - ContnbuWrs-employer - 16.879 (16.879) Contnbutions-employee - 3.630 (3.630) Net investment income - 21.486 (21.486) Administrative expenses (610) 610 Net changes 12.429 11,064 1,365 Balance at June 30,2020(Measurement Date) $ 604.027 $ 443.586 $ 160,441 Safety Plan Total Pension Plan Fiduciary Net Net Pension Liability Position Liability Balance at June 30. 2019(Valuation Date) $ 782.327 $ 518,645 $ 263.682 Changes in the year. Service cost 13.226 - 13.226 Interest on the total pension liabilities 54.597 - 54.597 Differences between expected and actual experience (4.721) - (4.721) Benefit payments,including refunds of members contributions (41.247) (41.247) - Contributions-employer - 25.848 (25.848) Contributions-employee - 4,355 (4,355) Net investment income - 25,784 (25,784) Administrative expenses (731) 731 Net changes 21.855 14.009 7,846 Balance at June 30, 2020(Measurement Date) $ 804.182 S 532.654 S 271.528 71 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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: Plan's Aggregate Net Pension Liability/(Asset) Discount Rate - 1% Current Discount Discount Rate * 1% (6.15%) Rate (7.15%) (8.15%) Miscellaneous Plan s 237.719 $ 160.441 $ 96,583 Safety Plan 376,752 271,528 184,923 Aggregate Total 614,471 $ 431.969 $ 281,506 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 As of the start of the measurement period (July 1, 2019), the net pension liability was $159,076,000 for the Miscellaneous Plan and $263,682,000 for the Safety Plan. For the measurement period ending June 30, 2020 (the measurement date), the City incurred a pension expense of $14,962,000 and $36,664,000 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. 72 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 6. RETIREMENT PLAN — NORMAL (Continued) 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 2019-20 measurement period, the EARSL for each plan is as follows: Miscellaneous Safety Expected Average Remaining Service Lifetime 2A 39 At June 30, 2021 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Miscellaneous Plan Deferred outflows Deferred inflows of Resources of Resources Difference between projected and actual earning on pension plan investments $ 3,239 $ Difference between expected and actual experience - Contributions made subsequent to the measurement date 150,880 Total $ 154,119 $ (3.587) Safety Plan Deferred outflows Deferred inflows of Resources of Resources Difference between projected and actual earning on pension plan investments $ 4.106 $ Changes in assumptions - Difference between expected and actual experience 489 Contributions made subsequent to the measurement date 257,329 - Total $ 261,924 $ (4,796) 73 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 6. RETIREMENT PLAN — NORMAL (Continued) For the Miscellaneous Plan and Safety Plan, $150,880,000 and $257.329,000, 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, 2022. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Measurement Periods Deferred Outflows/ (Inflows) of Resources Ended June 30. Miscellaneous Safety 2021 S (4,427) S (3,860) 2022 101 (67) 2023 2,183 1.555 2024 1,795 2.171 S (348) S (201) 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, Chief Financial Officer, 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. 74 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 7. RETIREMENT PLAN — SUPPLEMENTAL (Continued) 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 June 30, 2019, the date of the Plan's most recent actuarial valuation, the average monthly benefit received by inactive plan members and beneficiaries receiving benefits is $625. Effective in 1998 (exact dates are different for various associations), new City employees are ineligible to participate in the Supplemental Employee Retirement Plan. Employees Covered: At June 30, 2021 , the measurement date, the following employees were covered by the benefit terms for the Plan: Inactive employees receiving benefits 753 Active employees 65 Total 818 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. 2018 actuarial valuation. The City is required to contribute the actuarially determined rate of 2.5% of total payroll for all permanent employees for the year ended June 30, 2021 . 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, 2021, the contributions were (in thousands): Contributions - employer $ 1 .435 75 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 remained the same as last fiscal year. The most recent policy was reviewed in June 2021 with an effective date of July 1, 2021. Please refer to Note 2 for a detailed description of the Supplemental Plans Investment Policy. The major asset class allocation for the Supplemental Plan as of June 30, 2021 is listed below: Long-Term Allocation as of Expected Rate of Asset Class Strategic Allocation June 30,2019 Return Fixed Income 40.00% 38.36% 1.55% Equities 27.00% 56.08% 5.35% Real Estate 10.00% 4.95% 0.00% Commodities 2.00% 0.00% 0.00% Cash and Equivalents 0.00% 0.61% 0.45% Total 79.00% 100.00% Quoted market prices have been used to value investments as of June 30, 2021. 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, 2021: Concentration of Investments Equaling or Exceeding 5% AssetsVanguard International Growth Adm 17.22% Fidelity® US Bond Index 14.11% DoubleLine Total Return Bond 1 10.08% PGIM Total Return Bond R6 10.06% Harbor Capital Appreciation Inst 8.13% Parnassus Core Equity Institutional 7.78% Vanguard Equity-Income Adm 7.51% 76 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 7. RETIREMENT PLAN — SUPPLEMENTAL (Continued) 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, 2021 , the annual money-weighted rate of return on the Plan's investments, net of pension plan investment expenses, was 26,88%. 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, 2021 , using an annual actuarial valuation as of June 30, 2020 rolled forward to June 30, 2021 using standard update procedures. A summary of principal assumptions and methods used to determine the City's net pension liability is shown on the following page. 77 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 7. RETIREMENT PLAN — SUPPLEMENTAL (Continued) Actuarial Assumptions—The total pension liabilities in the June 30, 2019 actuarial valuations for the June 30, 2021 measurement date were determined using the following actuarial assumptions: Actuarial Methods and Assumptions Used to Determine Total Pension Liability Actuarial Cost Method Entry Age Normal. Level Percentage of Payroll Actuarial Assumptions. Discount Rate 5.25% Inflation 2.50 Salary Increases CalPERS 1997-2015 Experience Study plus 2.75%aggregate increase Investment Rate of Return 5.25%Net of Investment Expenses CalPERS 1997-2015 Experience Study, mortality projected fully Mortality Rate Table generational wrath Scale MP-2019 Retirement, Disability,Withdrawal CaIPERS 1997.2015 Experience Study plus 23%load on future service retirement liability added to reflect recent benefits experience. The changes in actuarial assumptions include the following: All other actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial experience study for the period from 1997 to 2015, including updates to salary increase, mortality, and retirement rates. The future service retirement liabilities load increased from 15% to 23% to reflect recent experience of benefits being larger than anticipated. 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 5.25%, based on the inflation assumption of 2.50% 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. 78 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 7. RETIREMENT PLAN — SUPPLEMENTAL (Continued) 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 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. 79 - City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 7. RETIREMENT PLAN — SUPPLEMENTAL (Continued) Changes in the Net Pension Liability Supplemental Plan Total Plan Pension Fiduciary Net Pension Liability Net Position Liability Balance at June 30, 2020 $ 71,074 $ 59,017 $ 12,057 Changes in the year Service cost 350 - 350 Interest on the total pension liabilities 4,292 4.292 Changes of Assumptions 6,547 - 6,547 Benefit payments, including refunds of members contributions (5.494) (5,494) - Contributions-employer - 1,435 (1,435) Net investment income - 15,717 (15,717) Administrative expenses - (314) 314 Netchanges 5.695 11,344 (5,649) Balance at June 30, 2021 $ 76.769 $ 70,361 $ 6,406 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: Plan's Aggregate Net Pension Liability/(Asset) (in thousands) Discount Rate -1% Current Discount Discount Rate + 1% (4.25%) Rate (5.25%) (6.25%) 5 14,397 $ 6,408 S (368) 80 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 7. RETIREMENT PLAN — SUPPLEMENTAL (Continued) f. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2021, the City recognized pension expense in the amount of $5,381.000 for the Supplemental Plan. At June 30, 2021, the City reported deferred inflows of resources related to the supplemental pension plan from the following source (in thousands): Deferred Inflows of Resources Difference between projected and actual earnings on $ (8.237) pension plan investments For the Supplemental Plan, $8,237,000 was reported as deferred inflows of resources related to pensions which will be recognized in pension expense as follows (in thousands): Deferred Outflows / (Inflows) Year Ended June 30, of Resources 2022 $ (1,825) 2023 (1,908) 2024 (2,097) 2025 (2,407) $ (8.237) 81 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 8. OTHER POST EMPLOYMENT BENEFITS a. Plan Description The City administers the following two other post employment benefit (OPEB) plans: Postemp/oyment 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 CaIPERS 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. 82 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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, 2020 measurement date, the following current and former employees were covered by the benefit terms under the plan: Postemployment Medical Insurance PEMHCA Retirees and beneficiaries receiving benefits 263 189 Inactive employees not yet receiving benefits 301 - Active Plan Members 861 384 Total Plan Participants 1,425 573 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 $842,000 for year ended June 30, 2021. The assets of the CERBT are excluded from the accompanying financial statements since they are in an irrevocable trust administered by CaIPERS. 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 (5136 in 2019, $139 in 2020, and $143 in 2021 ). 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 $71.50 per employee for the Huntington Beach Firefighter's Association (HBFA) and 5121 .55 for all other Safety groups in 2021. The annual increase in minimum PEMHCA contribution to CaIPERS will continue until the time that the City contribution for retirees equals the City contribution paid for active employees. 83 Oak City of Huntington Beach Notes to Financial Statements IV For the Year Ended June 30, 2021 8. OTHER POST EMPLOYMENT BENEFITS (Continued) The City's net OPEB liability was measured as of June 30, 2020 and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation dated June 30, 2019. based on the following actuarial methods and assumptions: e Actuarial Cost Method - Entry Age Normal • Discount rate - 6.25% e Projected salary increases for covered employees due to inflation - aggregate increases of 3.00% per annum e Investment Rate of Return - 6.25%, assuming actuarially determined contributions funded into CERBT Investment Strategy 2 • Mortality Rate' - Derived using CalPERS membership data for all funds • Pre-Retirement Turnover' - Derived using CalPERS' membership data for all funds • PEMCHA minimum increases for actives - S145 in 2021 , 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: Calendar Annual Rate Calendar Annual Rate Year Non-Medicare Medicare Year Non-Medicare Medicare 2021 7.250ii, 6.30% 2029 5.40% 4.850/0 2022 7.00% 6.10% 2030 5.20% 4,70% 2023 6.75% 5.90% 2031-35 5.05% 4.60% 2024 6.50% 5.70% 203645 4.90% 4.50% 2025 6.25% 5.50% 2046-55 4.75% 4.45% 2026 6.00% 5.30% 2056-65 4.60% 4.40% 2027 5.80% 5.15% 2066-75 4.30% 4.20% 2028 5.60% 5.00% 2076+ 4.00% 4.00% Monaitty information was denved from data collected during 1997 to 2015 CalPERS Experience Study dated December 2017, which may be accessed on the CaiPERS website www.csloers.ca.dov under Forms and Publications. Post- retirement mortality rotes include mortality projected fully generational with Scale MP-19 The pre-retirement turnover information was developed based on CalPERS' swific 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.caloers.ca.00v under Forms and Publications. 84 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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: CERBT Strategy 2 Long-Term Target Expected Real Asset Class Allocation Rate of Return Global Equity 40% 4.82% Fixed Income 43% 1.47% Treasury Inflation-Protected Securities ("TIPS") 5% 1.29% Commodities 4% 0.84% Real Estate Imestment Trusts ("REITS") 8% 3.76% Total 100% ' Long-term expected rate of return is 6.25% Discount Rate The discount rate used to measure the total OPEB liability was 6.25 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. 85 City of Huntington Beach Notes to Financial Statements qW For the Year Ended June 30, 2021 8. OTHER POST EMPLOYMENT BENEFITS (Continued) The changes in the net OPEB Liability for the plan are as follows (in thousands): Increase, (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Liability Net Position I(Asset) (a) (b) (c)_(a)-(b) Balance at June 30.2020 5 32.845 S 291S3 S 3,652 veasare^r'".+... Changes recognized for the measurement period'. Service Cost 1,096 - 1,096 Interest 2,064 - 2.064 Assumption Changes (298) - (298) Contributions-Employer - 1.959 11.959) Net Investment Income - 1,580 (1.580) Benefit Payments 118481 (1,848) - Admin,strat,ve Expenses (245) 245 Net Chang" 1,014 1,446 (4321 Balance at June 30,2021 S 33,859 S 30.639 S 3,220 IMeai, f ,,11 Deu Jury 3d 2020) 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, 2020 (in thousands): 1%Decrease Current Discount Rate 1%Increase (5.25%) (6.25%) (7.25%) Net OPEB Liability $ 7,368 8 3,220 $ (178) 86 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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, 2020 (in thousands): 1%Decrease Current Trend 1%Increase (6.25% Non-Medicare I (7.25% Non-Medicare/ (8.25% Non-Medicare/ 5.30% Medicare, 6.30% Medicare, 7.30% Medicare, decreasing to 3.0% decreasing to 4.0% decreasing to 5.0% Non-Medicare/ Non-Medicare/ Non-Medicare/ 3.0% Medicare) 4.0% Medicare) 5.0% Medicare) Net OPEB Liability S (504) S 3.220 S 7,950 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: Net difference between projected and actual earnings on OPEB plan irnestments 5 Years 87 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 8. OTHER POST EMPLOYMENT BENEFITS (Continued) OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB As of June 30, 2021 , the City recognized OPEB expense of $1 ,373,000. As of June 30, 2021, the City reported deferred outflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources OPEB Contributions subsequent to the measurement date s 1.882 s Difference between expected and actual experience 1,025 - Changes in Assumptions - 2.697 Net difference between projected and actual earnings on 117 - S 3,024 $ 2,697 The $1 ,882,000 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2020 measurement date will be recognized as a reduction of the net OPEB liability during the fiscal year ending June 30, 2022. Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows (in thousands): Deferred Measurement Periods Outflows! (Inflows) Ended June 30, of Resources 2022 $ (205) 2023 (302) 2024 (343) 2025 (257) 2026 (306) Thereafter (142) $ (1,555) 88 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 524.000,000 thereafter. Effective July 1, 2019, the member agencies of BICEP agreed to dissolve the Joint Powers Authority. BICEP continues 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 51,000.000. 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. There were no liability claims in the past three years that exceeded the coverage limit. Although, there is a claim that exceeds the self-insured retention of $1 ,000,000 and is not covered under the City's liability insurance plan. Refer to note 18d. for further details. 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. 89 AAML City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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/Prism-Excess Insurance Authority. Payments for claims from $1,000,000 to statutory limits are covered by CSAC/Prism- Excess Insurance Authority. The Self Insurance Workers' Comp Internal Service Fund has a $19.6 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 17 Total Balance June 30, 2019 $ 26,630 $ 8,396 $ 35,026 Additions 9,758 3,310 13,068 Reductions (6,782) (4,157) (10,939) Net increase (Decrease) 2,976 (847) 2,129 Balance June 30, 2020 29,606 7,549 37,155 Additions 12,200 11,058 23,258 Reductions (7,012) (6,622) (13,634) Net Increase (Decrease) 5,188 4,436 9,624 Balance June 30, 2021 $ 34,794 $ 11,985 $ 46,779 90 - City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 10. INTERFUND TRANSACTIONS a. Advances to/from Other Funds The amounts at year-end were (in thousands): Advancesto (Payable): Redevelopment Agency Private Purpose Trust Advances from (Receivable): Major Governmental Funds LMIHAF Capital Projects 5 1 363 There is a 51 ,363,000 advance from the LMIHAF Capital Projects Fund to the Redevelopment Agency Private Purpose Trust Fund as of June 30, 2021 for Main Pier property acquisitions prior to the dissolution of the Redevelopment Agency on February 1, 2012. No set interest rates or fixed repayment terms have been established. 91 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 10. INTERFUND TRANSACTIONS (Continued) b. Transfers In/Out The amounts at year-end were (in thousands): Transfers Out Grams L M titer tat Razmat General Speaal Capital Governmental Governmental Service Total TraMferii in Fund Rsesnw Pro scls Funds Funtls Fund Transfers In General Fund 3 S 135 S S 400 S 535 3 13 S 546 Grants Sp"ReeedlN - 1.271 - 1.271 - 1271 Other Go emmentsl Funds 10,817 4._5 5 11 239 11,239 Total Govsrnmsntal Funds 10,517 IAN 406 e16 13."S 13 13,058 Reluse Fund 51 _ _ 51 51 Total Enterprise Funds 51 51 51 Total Transfers Out S 10.068 f 1.806 It 406 S 416 S 13.066 S 13 S 13,109 The following is a summary of the significant transfers: e $10,817,000 was transferred from the General Fund to Other Governmental Funds for debt service payments of $1,371,000 and for infrastructure related projects including road repairs, police facility repairs and enhancement, equipment, and other capital improvement projects of $9,400,000. • $51,000 was transferred from the General Fund to the Refuse Enterprise Fund to fund the senior citizen rate reduction on refuse charges. $406,000 was transferred from the LMIHAF Fund to Other Governmental Funds for debt service payments.p • S135,000 was transferred from the Grants Special Revenue Fund to the General Fund for lost EMS revenue related to COVID-19 reimbursed by HHS Grant Funds. S16,000 was transferred from the 2014A Bond Project Fund to the Infrastructure Fund to utilize bond funds on eligible Police Headquarters Modernization Project costs. • S13,000 was transferred from the Hazmat Service Enterprise Fund to the General Fund to cover administrative and overhead expenditures. 92 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS Below is a schedule of changes in long-term governmental obligations for the year (in thousands): June 30. June 30, Accrued Due Within Governmental Activities: 2020 Additions Retirements 2021 Interest One Year Public Financing Authority. 2010(a)Lease Revenue Bonds 5 7.410 $ - S (7.410) S $ 5 2011(a)Lease Revenue Bonds 15,725 - (15,725) - 2014(8)Lease Revenue Bonds 12.530 - (650) 11,880 138 665 2020(al Lease Revenue Bonds - 4,835 4,835 36 2020ib)Lease Revenue Bonds to"0 (1,610) 12,830 25 1.515 Total Public Financing Authority 35,885 19,275 (25,3951 29,545 199 2,180 Other Long-Term Obligations: Compensated Absences 12.633 5,971 (5.199) 13,405 - 4.432 Claims Payable 37.155 23.258 (13.634) 46,779 10.108 Pollution Remed,ation 2.000 - 2.000 - LED Lighting Phase 1 546 - (114) 432 2 '19 I-Bank CLEEN Loan 2,171 (289) 1,882 18 296 CEC Loan 2.588 - (131) 2.457 13 394 Pension Obligabon Bonds - 341.501 - 341,501 2.101 to.&% Leases Payable 5,241 12,753 (5.241) 12,753 a 1,907 Total Other Long-Tenn Obligations 62,334 383,483 (24,608) 421,209 2.142 20,113 Total Long-Term Obligations Governmental Actvites S 97.999 S 402.758 S (50.003) $ 450,754 $ 2.341 S 30,295 93 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 151, September 151 Principal Payment Dates September 11' 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) Bonds of $6,545,000 were advance refunded by the 2020(a) Lease Revenue Bonds on September 1 , 2020. (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 1", September 151 Principal Payment Dates September 151 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 Bonds of $13,570,000 were advance refunded by the 2020(b) Lease Revenue Bonds on August 12, 2020. The 2011(a) Lease Revenue were paid on September 1 , 2021 but in substance defeased as of June 30, 2021. 94 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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 1s' Principal Payment Dates Se tember 1st Purpose of Debt Finance the construction of a new Senior Center Debt service requirements to maturity are (in thousands): Year Ending June 30 principal Interest Total 2022 5 665 5 411 S 1076 2023 685 384 1.069 2024 720 352 1.072 2025 750 319 1,069 2026 785 289 1,074 2027-2031 4,305 1 1,067 5.372 2032-2035 3,970 1 310 4.280 Total 5 11,8801 $ 3,132 $ 15,012 95 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) (4) 2020(a) Public Financing Authority Lease Revenue Bonds Year of Issuance 2020 Type of Debt Lease Revenue Bonds Original Principal Amount $4,835,000 Security Lease with City Interest Rates 4.0% to 5.0% Interest Payment Dates May 151, November 1" Principal Payment Dates May 15: Purpose of Debt Defease 2010(a) Lease revenue Bonds which Defeased 1997 Leasehold Revenue Bonds (Construct Pier Plaza and Purchase 800 MHZ system), 2000 Lease Revenue Bonds (Capital Improvements and defeasance of Emerald Cove Certificate of Participation) Debt service requirements to maturity are (in thousands): Year Ending June 30 Principal Interest Total 2022 S - S 223 S 223 2023 - 223 223 2024 - 224 224 2025 - 224 224 2026 - 224 224 2027-2031 3.020 1,053 4,073 2032 1 .815 73 1,888 Total $ 4,835 $ 2,244 $ 7,079 On August 12, 2020, the Public Financing Authority issued $4,835,000 of 2020 Series A Lease Revenue Bonds on behalf of the City. The bond proceeds were used to advance refund the outstanding 2010 Series A Lease Revenue Bonds. The 2020 Series A bonds bear fixed interest rates ranging from 4.00 percent to 5.00 percent and have a final maturity date of May 1 , 2032. The 2020 Series A bonds payments to escrow from net proceeds are reported as other financing uses. The 2010 Series A bonds in the amount of S6,545,000 were redeemed on September 1 , 2020, The Public Financing Authority in effect reduced its aggregate debt service payments by approximately $2,118,000 over the next 12 years and obtained a net economic gain (difference between the present values of the old and new debt service payments) of $1 ,246,000. 96 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) (5) 2020(b) Public Financing Authority Lease Revenue Bonds Year of Issuance 2020 Type of Debt Lease Revenue Bonds Original Principal Amount $14,440,000 Security Lease with City Interest Rates .329% to 1.831% Interest Payment Dates May 11', November 151 Principal Payment Dates May 15' Purpose of Debt Defease 2011(a) Lease revenue Bonds which Defeased 2001(a) Leasehold Revenue Bonds (Construct Sports Complex and South Beach Phase II Improvements) and 2001(b) Lease Revenue Bonds (Defeased Civic Improvement Corporation Certificates Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total June 30 2022 $ 1,515 $ 145 S 1,660 2023 1,520 138 1,658 2024 1,530 129 1,659 2025 1,545 117 1.662 2026 1,560 j 103 1,663 2027-2030 5,160 1 186 5,346 Total $ 12,830 1 $ 818 $ 13,648 On August 12, 2020, the Public Financing Authority issued $14,440,000 of 2020 Series B Lease Revenue Bonds on behalf of the City. The bond proceeds were used to advance refund the outstanding 2011 Series A Lease Revenue Bonds. The 2020 Series B bonds bear fixed interest rates ranging from 0.329 percent to 1 .831 percent and have a final maturity date of May 1, 2030. The 2020 Series B bond payments to escrow from net proceeds are reported as other financing uses. The 2011 Series A bonds in the amount of $13,570,000 were paid on September 1 , 2021 but in substance defeased as of June 30, 2021 . The Public Financing Authority in effect reduced its aggregate debt service payments by approximately $4,533.000 over the next 10 years and obtained a net economic gain (difference between the present values of the old and new debt service payments) of 51 ,738.000. 97 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) b. Other Long-Term Obligations (1) Compensated Absences There is no repayment schedule to pay the compensated absences amount of $13.405,000 relating to governmental operations. The General Fund typically liquidates the vacation and sick leave liability. (2) Claims Payable There is no repayment schedule for the claims payable for governmental activities of $46,779,000 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. (4) 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 15' and August 15t Principal Payment Dates August 151 Purpose of Debt To purchase and upgrade street, area and pole lighting to energy efficient LED light sources 98 F City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) Debt service requirements to maturity are (in thousands): Year Ending June 30 Principal Interest Total 2022 $ 119 $ 14 $ 133 2023 122 10 132 2024 126 5 131 2025 65 1 66 Total 1 $ 432 $ 30 $ 462 (5) 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 1a1 and August 161 Principal Payment Dates August 161 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 Principal Interest Total June 30 2022 $ 296 $ 40 $ 336 2023 303 33 336 2024 310 26 336 2025 317 19 336 20 1 324 1 11 1 5 2027 1 332 1 4 1 336 Total 1 $ 1,882 $ 133 1 $ 2,015 99 1 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) (6) 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 22"d and December 22nd Principal Payment Dates June 221d and December 22°d Purpose of Debt To upgrade street pole lighting to energy efficient LED light sources Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total June 30 2022 S 394 S 34 $ 428 2023 266 20 286 2024 269 17 286 2025 272 13 285 2026 274 12 286 2027-2030 982 20 1,002 Total $ 2,457 $ 116 $ 2,573 100 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) (7) Pension Obligation Bonds Year of Issuance 2021 Type of Debt Pension Obligation Bonds Principal Amount Original $341,501,000 Interest Rates 0.221% to 3.376% Interest Payment Dates June 1511 and December 1511 Principal Payment Dates June 15'" Purpose of Debt Pay 85% of CalPERS UAL as of the June 30, 2019 valuation report. In June 2021 , the City issued a Pension Obligation Bond to pay for 85 percent of its current unfunded pension liability with CalPERS. Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total June 30 2022 S 10.859 $ 10,290 $ 21,149 2023 12.637 8,511 21,148 2024 12,683 8,463 21,146 2025 12,768 8,384 21,152 2026 12.898 8.248 21,146 2027-2031 67.921 37.818 105,739 2032-2036 76,573 29.162 105,735 2037-2041 88.914 16.828 105,742 2042 46248 2.919 49.167 Total $ 341,501 $ 130,623 1 $ 472,124 101 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) (8) Leases Payable Year of Issuance 2021 Type of Debt Capital Leases Principal Amount Various Security Master Lease Agreement Interest Rates 1.249% and 1.775% Interest Payment Dates Semi-Annually Principal Payment Dates I Semi-Annually Purpose of Debt I Public Safety E ui ment Financing In June 2021 , a new ten-year lease agreementwas approved by City Council in the amount of S12.753,130 to finance the replacement of a one fire engine, one rescue boat. three helicopters. Additionally, the City refinanced its existing capital leases into a single lease with a six-year term. Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total June 30 2022 S 1,907 $ 172 S 2,079 2023 1.901 177 2,078 2024 1,930 149 2,079 2025 1.268 121 1,38 2026 1,022 100 1,122 2027-2031 4,725 248 4 ,973 Total S 12,753 $ 967 $ 13,720 102 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 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): June 30. June 30. Accrued Due Wltnin Long-Term Obligations-Business-Type Activities: 2020 Atickbons Retirements 2021 Interest One,Year Canpensa:ee Absences S 1 615 S 542 S (731) $ 1 e26 $ - 389 Pens or Oblgata Bons 22.161 22,tad 131 716 Total Long-Tam Obligations- BuslMas-Type Activities $ 1,615 S 22,666 $ (731) S 23,STg S 131 S 1,165 (1) Compensated Absences There is no repayment schedule for the compensated absences amount of $1,426,000 relating to business-type activities. The balance for the outstanding business-type compensated absences is predominately related to the Water and Sewer funds. 103 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) (2) Pension Obligation Bond Year of Issuance 2021 Type of Debt Pension Obligation Bonds Principal Amount Original $22,144,000 Interest Rates 0.221% to 3.376% Interest Payment Dates June 15'" and December 15"' Principal Payment Dates June 15"' Purpose of Debt Pay 85% of CaIPERS UAL as of the June 30, 2019 valuation report. In June 2021, the City issued a Pension Obligation Bond to pay for 85 percent of its current unfunded pension liability with CalPERS. Debt service requirements to maturity are (in thousands): Year Ending June 30 Principal Interest Total 2022 S 776 $ 647 S 1,423 2023 888 535 1,423 2024 892 531 1,423 2025 897 527 1,424 2026 907 518 1,425 2027-2031 4,774 2.342 7,116 2032-2036 5,382 1,734 7,116 2037-2041 6,251 866 7,117 2042 1.377 46 1,423 Total $ 22,144 1 $ 7,746 S 29,890 104 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 11. LONG-TERM OBLIGATIONS (Continued) 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): Community Facilities Districts: June 30, 2020 Additions Retirements June 30,2021 Community Facilities District No. 1990-1 Special Tax Refunding Bonds S 170 S - $ (170) $ - Community Facilities District No.2000-1 2013 Special Tax Refunding Bonds 9.675 - (625) 9.050 Community Facilities District No.2002-1 Special Assessment Tax Bonds 3,945 - (160) 3.785 Community Facilities District No.2003-1 2013 Special Tax Refunding Bonds 16,415 (855) 15.560 Total Community Facilities Districts 30,205 (1,310) 23,395 Res,dential Redevelopment Bonds 2.900 (2,900) Total Obligations Not Recorded in Financial Statements $ 33,105 S - S (4,710) $ 23,395 105 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 12. CAPITAL ASSETS a. Changes in Capital Assets Capital asset activity for the year was (in thousands): June 30. June 30, Governmental Activities 2020 Additions Dispositions 2021 Capital Assets, Not Depreciateo Land 5 362,069 5 6.726 5 $ 368,795 Construction in Progress 7,515 4,848 (3,779) 8,584 Total Capital Assets-Not Depreciated 369,504 11,574 (3,779) 377,379 Capital Assets Being Depreciated Buildings 211,278 4,228 - 215,506 Machinery and Equipment 67.003 9,533 - 76,536 Infrastructure 434,072 17.704 (775) 451,001 Total Capital Assets Being Depreciated 7IZ353 31,465 (775) 743,043 Less Accumulated Depreciation: Buildings (84,499) (4,885) - (89,384) Machinery and Equipment (53,041) (3,912) - (56,953) Infrastructure (229,638) (7,966) 775 (238,829) Total Accumulated Depreciation (397.176) (16,783) 775 (393,166) Total Depreciated-Net 345,175 14.702 - 359,877 Total Capital Assets 1,091,937 43,039 (4,554) 1.120,422 Total Accumulated Depreciation (367,178) (16.763) 775 (383.166) Capital Assets of Governmental Activities-Net $ 714759 6 26,276 f (3,779) $ 737,256 106 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 12. CAPITAL ASSETS (Continued) June 30, June 30, Business-Type Activities: 2020 Additions Dispositions 2021 Capital Assets, Not Depreciated Land S 3,907 S - S - S 3.907 Construction n Progress 442 1,340 - 1.782 Total Capital Assets -Not Depreciated 4,349 1,340 5,689 Capital Assets Being Depreciated Build,ngs 100.082 - - 100,082 Machinery and Equipment 20,657 939 - 21,596 Infrastructure 145,961 3,566 (223) 149,304 Total Capital Assets Being Depreciated 266,700 4,505 (223) 270,982 Less Accumulated Depreciation. Buildings (31,723) (2.512) - (34,235) Machinery and Equipment (13,632) (1,178) - (14,810) Infrastructure (82.909) (2,471) 223 (85,157) Total Accumulated Depreciation (128,264) (6,161) 223 (134,202) Total Depreciated-Net 138.436 (1,656) 136,780 Total Capital Assets 271,049 5,945 (223) 275.671 Total Accumulated Depreciation (128.264) (6.161) 223 (134,202) Capital Assets of Business Activities-Net 5 142,785 $ (316) $ - $ 142,469 b. Depreciation Expense Depreciation in governmental activities was charged to the following functions/programs in the Statement of Activities (in thousands). Department: City Manager S 23 Finance 30 Community Development 122 Fire 299 Information Services 25 Police 190 Community 8 Library Services 2.435 Library Services 334 Public Works 12,592 Internal Service Fund depreciation charged to functions 713 Total $ 16,763 107 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 12. CAPITAL ASSETS (Continued) Depreciation in business-type activities was charged to the following functions/programs in the Statement of Activities (in thousands): Fund: Water S 3,986 Sewer Service 2,153 Refuse 22 Total $ 6,161 13. INVESTMENT IN JOINT VENTURES The City participates in a firefighter training center called Central Net Operations Authority (CNOA) through a joint powers agreement with the City of Fountain Valley. The City of Huntington Beach records 76 percent of CNOA net assets as Joint Venture Investments. 14. RELATED PARTY TRANSACTION The City has entered into a housing loan and equity sharing agreement in the principal sum of $1,510,000 with City Manager Oliver Chi in October 2019 to use as funding for the purchase of a home within the City. The property is held as security for repayment of the loan until it is paid, and will remain subject to the provisions of the loan agreement until sold. When or if the property is sold, the City will receive 50% of the increase in the value of the home. This housing loan and equity sharing agreement has a term of thirty (30) years. The balance as of the loan as of June 30, 2021 is $1,456,867. 108 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 15. 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. 109 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued) b. Long-Term Debt Below is a schedule of changes in long-term obligations of the Successor Agency for the year (in thousands): Accrwd Due When Successor Ag.no, Juno 30,2020 Addtbons Retirements Juno 30,2021 Interest On.Year Bonds Pa7atAe tWO Too Allolfibn RSA/a7sq Bonds S 1,935 S $ 1365) S 1570 S 33 S 380 2002 Tea 14or�uon Sonde 4,215 (9W1 3415 71 840 Total Bond.Payable 1151 - 11.113) 4,01115 104 1.220 Other Long-Tom Obligations May.DDA 1.854 - (600) 1.254 20 599 Bs4a Terns OPA(Pa7kagl 6.328 - (1,343) 4.985 ',343 8.4,Tome H (Ptwe 11) 13,553 - MINI) 12.867 6W CIM DDA(Pam ng 6 ldnutrutAn) 5.507 - (238) 5279 276 308 CIMDJA.AMIKK naiP.kngl 364 [131 351 26 15 Total Other Long-Term Obligation. 27,664 12,9W 2A,?X 322 2.151 ToUl Long-Tom Obligations S 33,016 S - S 14,015) S 29.721 S 424 S 4.171 110 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 15. S000ESSOR 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 10 and August 181 Principal Payment Dates August 111 Purpose of Debt Prepay Agency's 1992 Loans to Public Financing Authority Debt service requirements to maturity are (in thousands): Year Ending Principal Interest Total June 30 2022 $ 380 $ 69 $ 449 2023 405 49 454 2024 425 29 454 2025 360 9 369 Total $ 1,570 1 $ 156 $ 1,726 111 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 15. S000ESSOR 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 1 g' and August 15' Principal Payment Dates August 1°t Purpose of Debt Prepay Agency's 1992 Loans to Public Financing Authority and fully defease 1992 Public Financing Authority bonds Debt service requirements to maturity are (in thousands): Year Ending June 30 Principal Interest Total 2022 S 840 S 150 S 990 2023 875 107 982 2024 920 62 982 2025 780 20 800 Total $ 3,415 $ 339 $ 3,754 Pledged Revenues The Successor Agency will repay a total of$5,480,000, principal and interest. for the outstanding 1999 and 2002 Tax Allocation Refunding Bonds as of June 30, 2021 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. 112 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 15. 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 $1,254,000. 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 $4,985,000. 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 517,000,000. DJM has transferred the site to UDR, and as of year-end. the Successor Agency obligation under the agreement amounted to $12,867,000. 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. 113 City of Huntington Beach .ink, Notes to Financial Statements 1w: For the Year Ended June 30, 2021 15. S000ESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued) (6) CIMIHuntington 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 7.00% Interest Payment Dates September 301" Principal Payment Dates September 301" Purpose of Debt Strand Parking Structure and Infrastructure As of year-end, the Successor Agency obligation under the agreement amounted to $5,279,000. 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). The DDA has been approved as an enforceable obligation by the DOF. 114 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued) (7) CIMIHuntington 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 10.00% Interest Payment Dates September 3W1 Principal Payment Dates September 3W1 Purpose of Debt Additional Strand Parking Structure and Infrastructure As of year-end, the Successor Agency obligation under the agreement amounted to $351,000. 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). The DDA has been approved as an enforceable obligation by the DOF. 115 City of Huntington Beach All Notes to Financial Statements For the Year Ended June 30, 2021 15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued) c. 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. 16. 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 2024, 2033, and 2038. Sales tax rebates totaled $1,097,750 for the year ended June 30, 2021. Sales tax sharing agreements include an agreement with Surf City Auto Group ll. Inc. wherein 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 base sales of $100,000, and McKenna Subaru Huntington Beach through 2033 with a 45%/55% McKenna/City split with base sales of $150,800. 116 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 16. 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. 117 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 16. COMMITMENTS AND CONTINGENCIES (Continued) Below is a schedule of the activity for the year (in thousands): June 30, June 30. 2020 Additions Reductions 2021 General Fund Direct Advances S 2 3'2 S - S S 2.312 Ind�rect Advances 6 567 - - 6,567 Land Sales 32 833 - - 32.833 Interest 30 480 404 30,884 Total General Fund 72,192 404 72,5" Sewer Fund Direct Advances 298 2 - 300 Deferred Development Fees 186 1 187 Total Sewer Fund 4" 3 487 Drainage Fund Direct Advances 720 4 - 724 Deterrec Developmert Fees 199 1 200 Total Drainage Fund 919 5 924 Park Acquisition and Development Fund Direct Advances 5,927 33 - 5.960 Deferred Development Fees 440 2 442 Total Park Acquisition and Development Fund 6,367 35 6.402 Water Fund Direct Advances 4,461 25 4,486 Total Water Fund 4,"1 25 4,486 Total All Funds S 84.423 $ 472 S - $ 94.895 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 was 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 16f). Below is a schedule of the activity for the year (in thousands): June 30, June 30, 2020 Additions Reductions 2021 General Fund Emerald Cove S s 2-5 S $ - $ 3245 118 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 16. 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. 119 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 16. COMMITMENTS AND CONTINGENCIES (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. 17. OTHER INFORMATION a. Fund and Accumulated Deficits The following funds have total fund deficits at year-end (in thousands): Internal Service Fund: Self Insurance Workers' Comp S 19,584 Self Insurance General Liability S 1.834 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 Self Insurance General Liability fund has a deficit due to increases in claims judgement, cost of litigation and rising number of lawsuits against the City. As such, the City set aside S3,650.000 in litigation reserve for general liability claims in the General Fund, The City has established plans to reduce and eliminate the deficits in these funds. 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. 18. SUBSEQUENT EVENTS a. American Rescue Plan Act of 2021 (ARPA) As a response to COVID-19, the federal government passed the American Rescue Plan Act of 2021 to help combat the disease outbreak and its impacts. Enacted March 11, 2021 , the ARPA bill provides $1.9 trillion in pandemic relief and authorized $350 billion in state and local government financial assistance. Through the ARPA bill, the City is eligible to receive $29.6 million in funding for allowable expenditures. ARPA funding is provided in two tranches covering 50 percent each tranche. In fiscal year 2020/21 , the City received its first tranche in May 2021 of $14.8 million and will be receiving the remaining $14.8 million one year later. 120 City of Huntington Beach fflwf�%hh � Notes to Financial Statements For the Year Ended June 30, 2021 18. SUBSEQUENT EVENTS (Continued) A three-person City Council ARPA subcommittee was established in June 2021 to develop and review a list of potential projects. On September 7, 2021 , City Council approved a spending plan which addresses both immediate, current needs of the City and transformative, "Plan for the Future"projects with long-term community impacts including Downtown Revitalization Improvements, Police Technology Infrastructure Improvements, and a comprehensive Homeless Response Plan. b. Orange County Oil Spill Response On October 2. 2021, the United State Coast Guard notified the City of a possible oil spill in the area of Huntington Beach, which was classified as a major spill later in the day. The oil spill was originally estimated to be 5.8 nautical miles long, running from the Huntington Beach Pier down to Newport Beach. Given the oil spill impacts, a decision was made by the City and State to close the ocean from the Pier to the Santa Ana River jetty. Additionally, a decision was made by City leadership to cancel the third day of the Pacific Airshow on October 3rtl. The oil spill was declared a State emergency by the Governor on October 4", with a local emergency declaration following the same day. The oil spill has significantly affected the City, with substantial ecological impacts occurring at the beach and at the Huntington Beach Wetlands. In response, Huntington Beach Fire and Marine Safety personnel were deployed to implement oil containment efforts. The U.S. Coast Guard, acting as the lead agency, formed an Incident Management Team (comprised of federal, state and regional agencies) to respond to the oil spill incident and coordinate clean-up efforts. A Unified Command Team that includes the U.S. Coast Guard, California Department of Fish and Wildlife. and Amplify Energy Corporation has also been established to investigate the oil spill incident. As of October 11, 2021, both City and State beaches have reopened after water quality testing results showed non- detectable amounts of oil associated toxins. The City continues to actively monitor the water quality so that any further impacts may be avoided and safety measures deployed as needed. The financial impacts of the oil spill are still being evaluated at this time. 121 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 18. SUBSEQUENT EVENTS (Continued) c. Community Choice Energy (CCE) The City of Irvine began efforts to create a regional Community Choice Energy (CCE) program known as the Orange County Power Authority (OCPA), which would allow local governments to purchase energy on behalf of their communities, while still receiving transmission and distribution service from their existing utility provider. On December 10, 2020, Huntington Beach voted to join the OCPA as a founding member, along with the cities of Buena Park and Fullerton. There is no direct fiscal impact to join OCPA. Per the Joint Powers Agreement with OCPA, member agencies are not required to make any financial contributions. with the City of Irvine financing all initial start-up costs. Currently, commercial service is planned to begin April 2022, with residential service following in October 2022. d. Kennedy Commission v. Huntington Beach The Kennedy Commission case arises from an amendment to City s Beach and Edinger Corridors Specific Element Plan to limit the development of multifamily housing. The case, filed by the Kennedy Commission in July 2015 stating that the amendment was in violation of California's Housing Element laws, was tried in Superior Court and ruled in favor of the Plaintiff. The City appealed the trial court decision and prevailed upon appeal. The Kennedy Commission then appealed the decision with the Supreme Court, which upheld the Court of Appeals decision in favor of the City. In February 2020, the City adopted a revised Housing Element to comply with clarifying language in Senate Bill 1333 regarding the applicability of key provisions of state planning and zooming laws to charter cities which was certified by the California Department of Housing and Community Development as compliant with Housing Element Law. In response, the Kennedy Commission requested its remaining claims against the City be dismissed and filed a motion for attorney's fees. In July 2021, the Superior Court awarded the Kennedy Commission $3.5 million in attorney's fees, which is currently under appeal. 19. PRIOR PERIOD ADJUSTMENTS During the fiscal year ended June 30, 2021 , the City adopted new accounting guidance by implementing the provisions of GASB Statement No. 84, Fiduciary Activities, which establishes criteria for identifying and reporting fiduciary activities. The implementation of this change in accounting principles has resulted in altering the presentation of the financial statements as the City is no longer required to report the following three funds: General Deposit, Central Net Operation and West Orange County Water Board. The implementation also resulted in splitting the Parking Structure Fiduciary Fund into two separate funds, the Bella Terra Parking Structure Custodial Fund, and the Strand Parking Fund. 122 City of Huntington Beach Notes to Financial Statements For the Year Ended June 30, 2021 19. PRIOR PERIOD ADJUSTMENTS (Continued) The implementation of the Statement required the City to make prior period adjustments as shown below (in thousands): Statement of Statement Changes in Fiduciary of Activities Net Position Governmental Activities Fiduciary Activities Beginning net position/fund balance, as previously reported $ 478,901 $ - Implementation of GASB 84 5.747 6,586 Beginning net position/fund balance, as restated $ 484,648 $ 6,586 123 REQUIRED SUPPLEMENTARY INFORMATION 124 THIS PAGE INTENTIONALLY LEFT BLANK 125 City of Huntington Beach Notes to Required Supplementary Information For the Year Ended June 30. 2021 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 Chief Financial Officer'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 28" 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 151, 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, Grants Special Revenue, LMIHAF Capital Projects, and Pension Liability Debt Service Fund. 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, Grants Special Revenue. LMIHAF Capital Projects and Pension Liability Debt Service Funds Revenues, and Expenditures and Changes in Fund Balance (in thousands). 126 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021 (In Thousands) General Fund Variance with Final Budget Positive REVENUES Original Budget Final Budget Actual (Negative) Property Taxes S 94,350 S 91,708 S 91,708 S - Sales Taxes 39,227 47,676 47,676 - Utility Taxes 16,605 18,374 18,374 - Other Taxes 12,416 18,428 18,428 - Licenses and Permits 7.358 7,805 7,805 - Fines, Forfeitures and Penalties 3,282 4,619 4,619 Use of Money and Property 14,500 14,183 16,196 2,013 Intergovernmental 3,138 9.881 9,967 86 Charges for Current Service 25,326 22,560 21,878 (682) Other 979 1,875 2,001 126 Total Revenues 217.181 237,109 238,652 1,543 EXPENDITURES Current: City Council 389 404 397 7 City Manager 4,075 3,873 3,867 6 City Treasurer 280 319 319 - City Attorney 2.980 3,103 2,938 165 City Clerk 988 1,080 1,068 12 Finance 6,054 6.529 6,025 504 Community Development 9,088 9,675 8,920 755 Fire 49,994 57,003 57,002 1 Information Services 7,341 7,248 6,991 257 Police 82,267 89,440 89,440 - Community Services 8,929 9,910 7,708 2,202 Library Services 5,259 5,706 5,150 556 Public Works 26,361 24,411 24,116 295 Debt Service: Principal 1,861 1,861 1,723 138 Interest 194 194 182 12 Total Expenditures 206,060 220,756 215,846 4,910 Excess of Revenues Over Expenditures 11,121 16,353 22,806 6,453 OTHER FINANCING SOURCES(USES) Transfers In 1,433 1,581 548 (1,033) Transfers Out (11,426) (10.868) (10,868) Total Other Financing Sources (Uses) (9,993) (9,287) (10,320) (1,033) Net Change In Fund Balance 1,128 7,066 12,486 5,420 Fund Balance -Beginning of Year 80,088 80,088 80,088 - Cumulative Effects of Changes in Accounting Principles 2,035 2,035 Fund Balance-Beginning of Year as Restated 80,088 80,088 82,123 2,035 Fund Balance-End of Year $ 81,216 $ 87,154 E 94,609 $ 7,455 See Accompanying Notes to Required Supplementary Information 127 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021 (In Thousands) Grants Special Revenue Variance with Final Budget Positive REVENUES Original Budget Final Budget Actual (Negative) Use of Money and Property $ - $ 6 $ 222 $ 216 Intergovernmental 3,100 16,443 18,075 1,632 Total Revenues 3,100 16,449 18,297 1,848 EXPENDITURES Current: City Manager 6 5,530 5,453 77 City Clerk - 8 8 - Finance - 18 18 Community Development 1,573 14,633 8,450 6,183 Fire - 1,919 1,880 39 Information Systems - 89 64 25 Police 1,039 3,547 2,141 1,406 Community Services 258 675 553 122 Library Services 70 239 233 6 Public Works 809 6,148 1,569 4,579 Total Expenditures 3,755 32,806 20,369 12,437 Excess of Revenues Over(Under) Expenditures (655) (16.357) (2,072) 14,285 OTHER FINANCING USES Transfers In - 1,271 1,271 - Transfers Out (1,399) (1,406) (7) Total Other Financing Sources(Uses) (128) (135) (7) Net Change In Fund Balance (655) (16,485) (2,207) 14,278 Fund Balance-Beginning of Year 4,561 4,561 4,561 Fund Balance-End of Year $ 3,906 $ (11,924) $ 2,354 $ 14,278 See Accompanying Notes to Required Supplementary Information 128 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021 (In Thousands) LMIHAF Capital Projects Fund Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property S 380 S 380 S 964 S 584 EXPENDITURES: Community Development 334 6,579 6,421 158 Excess of Revenues Over(Under)Expenditures 46 (6,199) (5,457) 742 OTHER FINANCING SOURCES(USES): Transfers Out (406) (406) (406) - Total Other Financing Sources(Uses) (406) (406) (406) Net Change in Fund Balance (360) (6,605) (5,863) 742 Fund Balance-Beginning of Year 9,485 9,485 9,485 - Fund Balance-End of Year $ 9,125 $ 2,880 $ 3,622 $ 742 Pension Liability Debt Service Fund Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Property Taxes S - S 8.250 S 8.250 $ - Use of Money and Property - 300 300 - Charges for Current Service - 1.493 1,493 Total Revenues - 10,043 10,043 - EXPENDITURES: Current: City Council - 647 646 1 City Manager - 6,294 6,284 10 City Treasurer - 519 518 1 City Attorney - 4,784 4,776 8 City Clerk - 1,737 1,734 3 Finance - 9.803 9,788 15 Community Development - 14,514 14,492 22 Fire - 89,896 89,773 123 Information Systems - 11,375 11,358 17 Police - 141.052 140,857 195 Community Services - 12,542 12,523 19 Library Services - 8,380 8,367 13 Public Works 39,238 39,177 61 Total Expenditures 340,781 340,293 488 Excess of Revenues Over(Under) Expenditures - (330,738) (330,250) 488 OTHER FINANCING SOURCES(USES): Proceeds of Long-Term Debt - 340,435 340,435 - Issuance of Long-Term Debt - (453) (453) - Issuance Discount - (649) (649) Total Other Financing Sources(Uses) 339,333 339,333 Net Change in Fund Balance - 8,595 9,083 488 Fund Balance -Beginning of Year 7,860 7,860 7,860 Fund Balance -End of Year $ 7,860 5 16,455 $ 16,943 $ 488 See Accompanying Notes to Required Supplementary Information 129 City of Huntington Beach Required Supplementary Information Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period (in Thousands) Last Ten Fiscal Years' CaIPERS City Miscellaneous Plan-99 Measurement Period 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 Total Pension Liability Service cost S 7.779 S 8,327 S 8.314 S 8.084 $ 7.436 S 7.102 S 7,263 Interest on total pension liability 41.058 40,150 38,769 37,749 37.194 35.653 34,412 Differences between expected and actual experience (6,087) (183) (2,042) (9,148) 1.072 (2,900) - Changes in assumptions - - (3,634) 30,762 - (8.565) - Benefit payments,including refunds of employee contributions (30,321) (28,508) (26,685) (25,312) (24,316) (23.377) (22.444) Net change in total pension liability 12,429 19,786 14.722 42,135 21.386 7,913 19.231 Total pension liability-beginning 591.598 571.812 557,090 514,955 493.569 485,656 466425 Total pension liability-ending(a) S 604,027 S 591.598 S 571.812 S 557.090 S 514,955 S 493,569 S 485,656 Plan Fiduciary Net Position Contributions-employer S 16,879 S 14.816 S 13,495 S 12,316 S 10,982 S 9,747 $ 9.066 Contributions-employee 3.630 3.779 3.649 3,869 3,736 3.790 3.909 Investment income 21.485 27.288 32,963 40.328 1,856 8,230 56,429 Administrative Expense (609) (296) (614) (536) (226) (418) (472) Benefit payments (30.321) (28.508) (26,685) (25.312) (24.316) (23,377) (22.444) Plan to Plan Resource Movement - (13) 1 - - - - Other - 1 (1,166) - - 2 - Net change in plan fiduciary net position 11,064 17.067 21.643 30.665 (7,968) (2,026) 46.488 Plan fiduciary net position-beginning 432,522 415.455 393.812 363,147 371.115 373.141 326.653 Plan fiduciary net position-ending(b) $ 443,586 S 432,522 S 415,455 S 393,812 S 363,147 S 371,115 S 373.141 Net pension liability-beginning 159.076 156,357 163,278 151,808 122.454 112,515 139,771 Net pension liability-ending(a)-fie) $ 160,441 S 159,076 S 156,357 $ 163,278 S 151.808 S 122.454 $ 112.515 Plan fiduciary net position as a percentage of the total pension liability 73.44% 73.11% 72.66% 70.69% 70.52% 75,19% 76,83% Covered payroll S 45,952 S 45419 S 45,431 S 44,848 S 44,365 $ 44,233 $ 41,142 Net pension liability as a percentage of covered payroll 349.15% 350.24% 344.16% 364.07% 342.18% 276.84% 273.48% Notes to Schedule: Benefit changes:the figures above include any liability impact that may have resulted from voluntary benefit changes that occurred after the June 30,2019 valuation.However,offers of Two Years Additional Service Credit(a.k.a.Golden Handshakes)that occurred after the June 30,2019 valuation date are not included in the figures above,unless the liability impact is deemed to be material by the plan actuary. Changes in assumptions: None in 201g or 2020- 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 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. Fiscal year 2013/14 was the first year of implementation,therefore only seven years are shown. For covered employee payroll,the measurement period of July 1,2019 to June 30,2020 was used. 130 City of Huntington Beach Required Supplementary Information Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period (in Thousands) Last Ten Fiscal Years' CalPERS City Safety Plan-100 Measurement Period 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 Total Pension Liability Service cost S 13.226 S 13,644 S 13,509 S 13.657 S 12,159 S 11.119 S 11.096 Interest on total pension liability 54.597 53,048 51,223 49.350 48.390 46.160 44.246 Differences between expected and actual experience (4.721) (1.220) 2,584 (10.819) 2,678 (820) - Changes in assumptions - - (3,657) 40.352 - (11,054) - Benefit payments,including refunds of employee contributions (41,247) (38.958) (37.128) (34.222) (32.116) (30.535) (29,540) Net change In total pension liability 21,855 26.514 26,531 58.318 31,111 14,870 25,802 Total pension liability-beginning 782,326 755.812 729.281 670,963 639,852 624,982 599,180 Total pension liability-ending(a) S 804,181 $ 782.326 S 755,812 $ 729,281 $ 670,963 S 639,852 S 624.982 Plan Fiduciary Net Position Contributions-employer S 25,848 S 23,063 S 21,058 S 20.629 S 18,703 S 17.791 S 15.152 Contributions-employee 4.355 4.337 4,164 4.570 4,058 4,110 3.850 Investment income 25.784 32,776 39,336 48.413 2.144 9.661 66,805 Administrative Expense (731) (355) (736) (640) (270) 1497) (555) Benefit payments (41,247) (38.958) (37,128) (34,222) (32.116) (30,535) (29.540) Net Plan to Plan Resource Movement - 13 (3) - (29) - - Other - 1 (1,398) - - -Not change in plan fiduciary net position 14.009 20.877 25,293 38.750 (7,510) 530 55.712 Plan fiduclary net position-beginning 518.644 497.767 472,474 433,724 441,234 440,704 384.992 Plan fiduciary net position-ending(b) S 532.653 $ 518,644 S 497.767 S 472,474 S 433.724 S 441,234 S 440.704 Net pension liability-beginning 263.682 258.045 256,807 237.239 198,618 184,278 214.188 Net pension liability-ending(a)-(b) S 271.528 S 263.682 S 258,045 $ 256,807 $ 237,239 $ 198,618 $ 184,278 Plan fiduciary net position as a percentage of the total pension liability 66.24% 66.30% 65.86% 64.79% 64.64% 68.96% 70.51% Covered payroll S 43.783 S 43,684 $ 43.371 S 43.283 S 42.619 S 42.252 S 38,397 Net pension liability as a percentage of covered payroll 620.17% 603.61% 594.97% 593.32% 556.65% 470.08% 479.93% Notes to Schedule: Benefit chances:the figures above include any liability impact that may have resulted from voluntary benefit changes that occurred after the June 30,2019 valuation.However,offers of Two Years Additional Service Credit(a.k.a.Golden Handshakes)that occurred after the June 30.2019 valuation date are not included in the figures above.unless the liability impact is deemed to be material by the plan actuary. Changes in assun ions: None in 2019 or 2020.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 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 reponed were based on the 7.5 percent discount rate. Fiscal year 2013114 was the first year of implementation,therefore only seven years are shown. For covered employee payroll,the measurement period of July 1,2019 to June 30.2020 was used. 131 City of Huntington Beach Required Supplementary Information Schedule of Changes in the Net Pension Liability and Related Ratios During the Measurement Period (in Thousands) Last Ten Fiscal Yoars' Supplemental Retirement Plan Total Pension Liability 2020-21 2019-20 2018-19 2017-18" 2016-17 2015-16 2014-15 2013-14 SeMce cost $ 350 $ 338 5 398 S 344 S 487 S 552 S 495 $ 544 Interest on total pension liability 4.292 3.954 3,990 2,964 3,976 3.945 3.919 3,828 Differences between expected and actual experience - 4.594 - (794) - 982 - - Changes in assumptions 6.547 1.756 - 2.115 1,515 2.928 -Benefit payments including refunds of employee contributions (5.494) (5,012) (4.771) (3,388) (4,144) (3,773) (3,588) (3,548) Not change in total pension liability 5,695 5.630 (383) 1.241 1,834 4,634 826 824 Total pension liability-beginning 71.074 65.444 65.827 54.586 62.752 58,1;8 57,292 56,468 Total pension liability-ending(a) S 76.769 S 71.074 S 65.444 S 65.827 S 64.586 S 62,752 S 58,118 S 57.292 Plan Fiduciary Not Position Contributions-employer S 1435 $ 3.506 S 4.962 $ 3.507 S 5.346 $ 7,277 S 4.678 S 4.539 Investrnent income 15.717 2,114 2,582 2.128 6,373 4,282 (1.313) 3.465 Administrative Expense (314) (444) (191) (145) (182) (189) (170) (176) Benefit payments (5.494) (5.012) (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 not position 11,344 164 2.582 (1.686) 7.393 7.597 2.790 4.538 Plan fiduciary not position-beginning 59,017 58,853 56,271 57,957 50.564 42.967 40.177 35.639 Plan fiduciary not position-ending(b) S 70.361 $ 59,017 $ 58.853 $ 56.271 5 57.957 S 50.564 3 42.967 S 40.177 Net pension liability-beginning ;2,057 6,591 9,556 6,629 12,188 15,151 17.115 20,829 Not pension liability-ending(a){b) $ 6,408 $ 12,057 5 6,591 $ 9.556 5 6.629 $ 12.188 S 15.151 S 17.115 Plan fiduciary net position as a percentage of the total pension liability 91,65% 83,04% 89.93% 85.48% 89.74% 80.58% 73.93% 70.13% Covered payroll S 7,684 $ 8.469 S 12.863 $ 10.890 $ 17.167 S 19.517 S 22,069 S 22.004 Net pension liability as a percentage of covered payroll 83.39% 142,37% 51.24% 87,75% 38.61% 62.45% 68.65% 77,78% Fiscal year 2013114 eras the first year of implemematim,therefore only eight years are shown. The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-monN reporting period from October 1,2017 to June 30,2018. 132 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) Last Ten Fiscal Years' Other Post Employment Benefits Plan Measurement Period 2020 2019 2018 2017 Total OPEB Liability Service cost S 1.096 S 1,241 S 1,205 S 877 Interest on the total OPEB liability 2,064 1,859 1.787 1,293 Actual and expected experience difference - 1,411 - - Changes in assumptions (298) (3,358) - - Benefit payments (1,848) (1,742) (1,683) (1,036) Net change in total OPEB liability 1,014 (589) 1,309 1,134 Total OPEB liability-beginning 32.845 33,434 32.125 30,991 Total OPEB liability-ending(a) $ 33,859 $ 32,845 $ 33,434 $ 32,125 Plan Fiduciary Net Position Contribution-employer" S 1.959 $ 2.270 S 4,191 $ 1.036 Net investment income 1.580 1.901 1.126 471 Benefit payments (1,848) (1,742) (1.683) (1,036) Administrative expense (245) (61J (131) (9) Net change in plan fiduciary net position 1.446 2,368 3,503 462 Plan fiduciary net position-beginning 29,193 26,825 23.322 22,860 Plan fiduciary net position-ending(b) $ 30,639 $ 29,193 $ 26,825 $ 23,322 Net OPEB liability-ending(a}(b) $ 3,220 $ 3.652 $ 6,609 $ 8,803 Plan fiduciary net position as a percentage of the total OPEB liability 90.49% 88.88% 80.23% 72,60% Covered employee payroll $ 76,521 $ 79,682 $ 81,458 S 60.985 Net OPEB liability as a percentage of covered employee payroll 4.21% 4.58% 8.11% 14.43% Notes to Schedule: 'Fiscal year 2017/18 was the first year of implementation,therefore only four years of information are shown. "Contributions to the OPEB plan are not based on employee pay. 133 City of Huntington Beach Required Supplementary Information Schedule of Contributions For the Year Ended June 30, 2021 (in Thousands) Last Ten Fiscal Years' CaIPERS City Miscellaneous Plan-99 2020-21' 2019-20' 2018-19' 2017-18"' 2016-17' 2015-16 20W 5' 2013-14' Actuarially determined contribution S 18,086 S 16.878 S 14.819 S 9.734 $ 11,921 $ 11.238 S 10.510 $ 8,685 Contributions in relation to the actuarially determined contributions (18.086) (16,878) (14,819) (9.734) (11.921) (11.238) (10.510) (8,685) Contribution deficiency(excess) $ $ $ S $ S S $ Covered payroll $ 45,740 S 45,952 S 45.419 $ 33.210 $ 45,118 $ 44.253 S 46,337 $ 43,327 Contnbutions as a percentage of covered payroll 39.54% 36.73% 32S3% 29.31% 26.42% 25.39% 22.68% 20.05% Historical information is required only for measurement panties for which GASS 66 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 d June 30,2018. Notes to Schedule Valuation date:6/302012 through 06/30/2018 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry Age Normal Amortization method/period For details.see Miscellaneous Plan of the City of Huntington Beach Annual Valuation Report as of June 30.2020. Asset valuation method For 1 0/1/14-6/3 011 5, 15 Year Smoothed Market(for details,see June 30,2012 Funding Valuation Report).For 711/15- 6/3020,Fair Value(for details,see the Funding Valuation Reports for the years ended June 30.2013.2014.2015.2016 and 2017). Inflation 2.50% Salary increases Vanes by entry age and service Payroll growth 2.75% Discount Rate The prescribed discount rate assumption,adopted by the Board on December 21.2016.is 7.00 percent compounded annually(net of investment and adminisrstwe expenses)as of June 30,2018. Retirement age For 1 01111 3-613Wi6,Me probabilities of retirement are based on the 2014 CalPERS Experience study for the Pend from 1997 to 2007. For 711/16-6130119,me probabilities of retirement are based on Me 2014 CalPERS Expenence study for Me period from 1997 to 2011.For 7/1/19-6f30/20,the probabilities of Retirement are based on the 2017 CalPERS Experience Study for the period from 1997 to 2015. Mortality For 10/1/13-6130/16,the probabilities of mortality are based on the 2010 CalPERS Experience Study for the period from 1997 to 2007.For 7/1116-6(30119,the probabilities of mortality are based on the 2014 CaIPERS Experience Study for the period from 1997 to 2011. For 7/l/16.6/30/18.Pre-retirement and Post-retirement mortality rates include 5 years of projectee mortality improvement using Scale AA published by the Society of Actuanes. For 711118-6130119,Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries.For 71111 9-613 012 0.the probabilities of mortality are based on the 2017 CalPERS Experience Study fir me period from 1997 to 2015.Pre-retirement and Post-retirement mortality rates induce 15 years of projected morality improvement using 90%of Scale MP-2016 published by the Society of Actuaries. -Beginning with the June 30.2013 valuations,CaIPERS employed an amortaation and smoothing polity that will pay for all gains and losses over a feed 30-year period with the increases or decreases in the rate spread directly over a 5-year period. Note:The CaIPERS Board of Admimstratlon has adopted a new amortization policy effective with the June 30.2019 actuarial valuation.The new policy shortens the paned over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount.In addition,the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses.The new policy removes the 5-year ramp-down on investment gainsfiosses.These changes will apply only to new UAL bases established on or after June 30,2019. 134 City of Huntington Beach Required Supplementary Information Schedule of Contributions For the Year Ended June 30,2021 (in Thousands) Last Ten Fiscal Years' CaIPERS City Safety Plan-too 2020-21 ' 2019-20' 2018-19' 2017-18' ' 2016-17' 2015-16' 2014-15' 2013-14' Actuarially determined contribution S 27.691 S 25.847 S 23,062 S 15.223 S 19468 S 19.129 S 18.125 S 14,759 Contributions in relation to the actuarially determined contributions (27.691) (25,847) (23,062) (15,223) (19.468) (19,129) (19.125) (14,759) Contribution deficiency(excess) S S S S $ S S (1,000) S Covered payroll S 45,665 S 43.783 S 43,684 S 31,943 $ 43.269 S 42,607 S 44.055 S 41,167 Contributions as a percentage of covered payroll 60.64% 59.03% 52.79% 47.66% 44.99% 44.90% 43.41% 35.85% 'Historical information is required only for measurement periods for which GASB 68 is applicable. 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, Notes to Schedule Valuation date:6/30/2012 through 06/30/2018 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry Age Normal Amortization method period For details,see Safety Plan of the City of Huntington Beach Annual Valuation Report as of June 30,2020. Asset valuation method For 1 01111 4-6130/1 5,15 Year Smoothed Market(for details.see June 30,2012 Funding Valuation Report).For 7/1115-6130/20,Fair Value(for details,see the Funding Valuation Reports for the years ended June 30,2013. 2014.2015,2016 and 2017). Inflation 2.50% Salary increases Varies by entry age and service. Payroll growth 2.75% Discount Rate The prescribed discount rate assumption,adopted by the Board on December 21,2016,is 7.00 percent compounded annually(net of investment and administrative expenses)as of June 30,2018. Retirement age For 1011/13-6/30116.the probabilities of retirement are based on the 2014 CaIPERS Experience study for the period from 1997 to 2007. For 7/1116-6/30119,the probabilities of retirement are based on the 2014 CaIPERS Experience study for the period from 1997 to 2011.For 7l1/l9-6/30/20,the probabilities of Retirement are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015. Mortality For 1011/13-6/30/16,the probabilities of mortality are based on the 2010 CaIPERS Experience Study for the period from 1997 to 2007.For 711/16-d130119,the probabilities of mortality are based on the 2014 CaIPERS Experience Study for the period from 1997 to 2011. For 7/l/16-6/30/18,Pre-retirement and Post-refirement mortality rates include 5 years of projected mortality improvement using Scale AA published by the Society of Actuaries. For 711118-6/30/19,Pre-retirement and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the Society of Actuares.For 711119-/30/20,the probabilities of mortality are based on the 2017 CaIPERS Experience Study for the period from 1997 to 2015. Pre-retirement and Post-retirement mortality rates include 15 years of projected mortality improvement using 90%of Scale MP-2015 published by the Society of Actuaries. 'Beginning with the June 30,2013 valuations,CaIPERS 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. Note:The CaIPERS Board of Administration has adopted a new amortization policy effective with the June 30,2019 actuarial valuation.The new policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount.In addition,the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses.The new policy removes the 5-year ramp-down on investment gainsnosses.These changes will apply only to new UAL bases established on or after June 30, 2019. 135 City of Huntington Beach Required Supplementary Information Schedule of Contributions For the Year Ended June 30, 2021 (in Thousands) Last Ten Fiscal Years' Supplemental Retirement Plan 2020-21 2019-20' 2018-19' 2017-18"' 2016-17' 2015-16' 2014-15' 2013-14' Actuanally determined contribution S 933 S 1.689 S 2.258 S 2.879 S 3.895 S 3,576 $ 3,634 S 4,534 Contributions in relation to the actuarially determined contributions (1,435) (3,506) (4,962) (3,507) (5,346) (7,277) (4,678) (4,539) Contribution deficiency(excess) S (502) $ (1,817) $ (2,704) $ (628) $ (1,451) $ (3,701) $ (1,044) $ (5) Covered payroll S 7,684 S 8469 S 12,863 S 10.890 $ 17,167 $ 19.517 S 22.069 $ 22.004 Contributions as a percentage of covered payroll 18.68% 41.40% 38.58% 32,20% 31.14% 37.29% 21.20% 20.63% 'Historical information is required only for measurement periods for which GASS 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. Notes to Schedule Valuation date: 6/30/2019 6/30/2019 9/30/2017 9/30/2017 9/30/2015 9/302013 9/30/2013 9/30/2011 Methods and assumolions used to determine contribution rates: Actuarial cost method Entry Age Normal,Level Percentage of Payroll 9130112 UAAL:fixed 10-year period,Gains/Losses:fixed 15-year period,Discount rate change loss: 10-year period, 6130118 UAAL:fixed 5-year period fresh start.20-year closed period for 2020/2021. Level dollar amortization. Amortization method/period Asset valuation method Investment gains/losses spread over a 3-year rolling period. Inflation 2.50% Salary increases Aggregate-2.75%annually.Merit-CaIPERS 1997-2015 Experience Study. Payroll growth 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. Merit - CaIPERS 1997-2015 Experience Study plus 2.75%annually increase for the July 1,2019-June 30,2020. 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 July 1,2019 Investment rate of return -June 30,2021 measurement penod. Retirement age The probabilities of retirement are based on the CalPERS 1997-2015 Experience Study. Mortality The probabilities of mortality are based on the CalPERS 1997-2015 Experience Study.Pre-retirement and Post- retirement mortality rates include mortality projected fully generational with Scale MP-2019,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-2019 for the July 1,2019 to June 30,2021 measurement period. Schedule of Money Wolahtod Rate of Return 20212 20202 20192 20182 2017 2016 2015 2014 Annual Money Weighted Rate of Return,net of investment expense 26.88% 3.79% 4.79% 4.04% 12.87% 10.20% -2.82% 9.20% Historcal information is required only for measurement periods for which GASS 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. 136 City of Huntington Beach Required Supplementary Information Schedule of Contributions For the Year Ended June 30, 2021 (in Thousands) Last Ten Fiscal Years' Other Post Employment Benefits Plan Fiscal Year Ended June 30 2021 2020 2019 2018** ActuariallyDetermined Contribution(ADC) $ 1.364 S 1,793 S 1,746 S 2,022 Contributions in relation to the ADC-* (1,882) (1,9591 (2,270) (4,1921 Contribution deficiency(excess) $ (518) S (166) $ (524) $ (2,170) Covered-employee payroll' $ 70.881 $ 76,521 S 79,682 S 59,589 Contributions as a percentage of covered-employee payroll 2.66% 2,56% 2.85% 7.03% Notes to Schedule: Valuation date: 6/30/2019 6/30/2017 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 Investment gains and losses spread over 5-year rolling period. Inflation 3%for 10/l/17-6/30/18 and 2.75%per annum for the measurement period July 1,2019 to June 30,2020. Payroll Growth 3.00%per annum,in aggregate. Investment Rate of Return 6%for the October 1,2017-June 30,2018 period.6.25%for the July 1, 2018-June 30, 2020. Assumes investing in California Employers'Retiree Benefit Trust asset allocation Strategy 3, moving to Strategy 2 in March 2019. 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 to an ultimate rate of 4.0%in 2076. Retirement Age Tier 1 employees-2.5%@55 and Tier 2 employees-2.0%@62.The probabilities of retirement are based on the 2014 CaIPERS Experience Study for the period from 1997-2011.Tier 1 employees-2.5%@55 and Tier 2 employees-2.0%@ 62.The probabilities of retirement are based on the CaIPERS 1997-2015 experience Study for Measurement period as of 6/30120. Mortality Pre-retirement mortality probability based on 2014 CalPERS 1997-2011 Experience Study covering CalPERS participants.Post-retirement mortality probability based on CaIPERS Experience Study 2007-2011 covering participants in CaIPERS. Mortality based on CalPERS 1997-2015 Experience Study covering participants in CaIPERS. '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. -"Contributions to the OPEB plan are not based on employee pay. 137 SUPPLEMENTARY INFORMATION 138 THIS PAGE INTENTIONALLY LEFT BLANK 139 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 Strand Parking Structure Fund accounts for the activities of the Strand Parking Structure. • 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 Surf City "3" Fund accounts for revenues and expenditures related to a 1% fee on cable television and other video subscription services to fund the purchase and acquisition of capital equipment and facilities necessary to program and broadcast PEG (public, education and government) events on the City's cable channel. • 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 Housina 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 Protect 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. 140 CITY OF HUNTINGTON BEACH COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2021 (In Thousands) SPECIAL REVENUE FUNDS Development Disability Fourth of Strand Parking ASSETS Air Quality Impact Fee Access I Drainage Julz Parade Structures Cash and Investments $ 1,446 $ 14,535 $ 294 $ 2,714 S - $ 3,797 Taxes Receivable - - - - - - Other Receivables 72 43 1 8 11 Total Assets $ 1,518 $ 14,578 $ 295 $ 2,722 $ - $ 3,808 LIABILITIES Accounts Payable $ - $ 273 $ 4 $ - $ - $ 192 Accrued Payroll 5 Total Liabilities 278 4 - 192 FUND BALANCES Restricted Pollution Remediation - - - - - Highways,Streets and Transportation - - - - - - Low Income Housing - - - - - - Air Quality - Other Capital Projects - 14,300 - 2.722 - - Other Purposes - - 291 - - - Committed Parks - - - - - - Other Purposes 3,616 Total Fund Balances 1,518 14,300 291 2,722 3,616 Total Liabilities and Fund Balances $ 1,518 $ 14,578 $ 295 $ 2,722 $ - $ 3,808 141 CITY OF HUNTINGTON BEACH COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2021 (In Thousands) (continued) SPECIAL REVENUE FUNDS Housing Park Acquisition ELM Traffic Residual and Automation Congestion Traffic Impact Total Special Gas Tax I Receipt Development Surf City"3" Fund Relief Fee Transportation Revenue Funds $ 3,829 $ 1,247 $ 1,749 $ 1,259 $ 274 $ 2,064 $ 2,915 $ 2434 $ 38,557 680 - - 229 - - - 585 1494 11 4 5 4 1 6 9 7 182 $ 4,520 E 1,251 $ 1,754 $ 1,492 $ 275 $ 2,070 $ 2,924 $ 3,026 $ 40,233 $ 1,803 $ - $ 10 $ 32 $ - $ 35 $ 2 $ 158 $ 2,509 48 8 51 112 1,851 10 32 8 35 2 209 2,621 - - 355 - - - - - 355 2.669 - - - - 2,035 2,922 2,817 10,443 - 1,251 - - - - - - 1,251 1,518 - - - - - 17,022 - 1460 267 - - - 2,018 1,389 - - - - - 1,389 3,616 2,669 1,251 1,744 1,460 267 2,035 2,922 2,817 37,612 $ 4,520 $ 1,251 $ 1,754 $ 1,492 $ 275 $ 2,070 $ 2,924 $ 3,026 $ 40,233 142 CITY OF HUNTINGTON BEACH COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2021 (In Thousands) (continued) DEBT SERVICE FUNDS CAPITAL PROJECT FUNDS Public Financing Total Debt Service Affordable Housing ASSETS Authorlty I Fund In-Lieu I Infrastructure Cash and Investments $ 3,350 $ 3,350 $ 1,359 $ 18,712 Cash and Investments with Fiscal Agent 1,086 1,086 - - Taxes Receivable - - - - Other Receivables 1 1 88 250 Prepaids 105 Total Assets $ 4,437 $ 4,437 $ 1,447 $ 19,067 LIABILITIES Accounts Payable $ 2 $ 2 $ - $ 1,713 Accrued Payroll - 80 Total Liabilities 2 2 1,793 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue 209 Total Deferred Inflows of Resources - 209 FUND BALANCES Nonspendable Prepaid Insurance - - - 105 Restricted Pollution Remediation - - - - Debt Service 4.435 4,435 - - Highways,Streets and Transportation - - - Low Income Housing - - 1,447 - Air Quality - - - Other Capital Projects - - - - Other Purposes - - - - Committed Parks - - - - Other Capital Projects - - - 16,960 Other Purposes - - - - Assigned Capital Improvement Reserve Total Fund Balances 4,435 4,435 1,447 17,065 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 4,437 $ 4,437 $ 1,447 $ 19,067 143 CITY OF HUNTINGTON BEACH COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2021 (In Thousands) (continued) CAPITAL PROJECT FUNDS Total Other Lease Capital Senior Center Sewer Total Capital Governmental Project Parkin In-Lieu Development Development Technology Pro acts Funds Funds $ 3 $ 655 $ - $ 4.540 $ 3,271 $ 28,540 $ 70,447 8.750 - - - - 8,750 9,836 - - - - - - 1,494 3 - 13 10 364 547 05 105 $ 8,753 $ 658 $ - $ 4.553 $ 3,281 $ 37,759 $ 82,429 $ - $ - $ - $ 319 $ 1 $ 2,033 $ 4.544 80 192 319 1 2,113 4,736 209 209 209 209 105 105 - 355 4,435 - - - - - - 10.443 - - - - 1,447 2.698 - - - - - - 1.518 8,753 - - - - 8,753 25.775 - - - - - - 2.018 - - - - - 1,389 - 658 - 4.234 - 21.852 21,852 - - - - 3,616 3.280 3.280 3.280 8,753 658 - 4.234 3,280 35,437 77,484 $ 8,753 $ 658 $ - $ 4,553 $ 3,281 $ 37,759 $ 82,429 144 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) SPECIAL REVENUE FUNDS Development Disability Fourth of July Strand Parking REVENUES Air Quality Impact Fee Access Drainage Parade Structures Sales Taxes $ - S - S - S - S - S - Other Taxes Licenses and Permits - - 69 _ Use of Money and Property 8 19 2 12 16 1,232 Intergovernmental 263 - - - - - Charges for Current Service - 1,148 - 218 - - Other Total Revenues 271 1.167 71 230 16 1,232 EXPENDITURES Current City Manager - - - - Community Development - - 928 Finance - - 17 _ Information Systems - - - -Community Services - 3,557 - - 99 Library Services - 349 Public Works 15 27 Total Expenditures 15 3,906 11 27 99 928 Excess Of Revenues Over (Under)Expenditures 256 (2,739) 60 203 (83) 304 Other Financing Sources(Uses): Transfers In - - - - 45 - Transfers Out (400) Total Other Financing Sources(Uses) 45 (400) Not Change in Fund Balances 256 (2,739) 60 203 (38) (96) Fund Balances-Beginning of Year 1,262 17,039 231 2,519 38 Cumulative Effect of Changes in Accounting Principles 3,712 Fund Balance as Restated 1,262 17,039 231 2,519 38 3,712 Fund Balances-End of Year $ 1,518 S 14,300 S 291 S 2,722 S - $ 3,616 145 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) (continued) SPECIAL REVENUE FUNDS Park Housing Acquisition ELM Traffic Total Special Residual and Automation Congestion Trafc Impact Revenue Gas Tas Receipt Development Surf City'3' Fund Relief Fee Transportation Funds $ - S - S - $ - S - $ - $ - S 3,486 $ 3,486 6,783 - - 534 - - - - 7.317 _ 69 5 - 6 - 4 9 14 1,327 42 - - - - 1,456 - 21 1.782 - 335 - 225 - 1.926 28 28 6,825 33 540 335 1.460 234 3,521 15,935 - - - 372 - - - - 372 - - - - - - - - 928 11 - - - 428 - - - 428 562 - - - - - 4.218 _ _ _ 349 11.262 1.208 52 3.124 15,688 11,262 562 372 428 1,208 52 3,124 21,994 (4,437) 33 (562) 168 (93I 252 182 397 (6.059) _ _ _ - _ _ 45 (400) (355) (4,437) 33 (562) 168 (93) 252 182 397 (6,414) 71106 1,218 2,306 1,292 360 1,783 2,740 2,420 40,314 3.712 7,106 1,218 2,306 1,292 360 1,783 2,740 2,420 4g026 $ 2,669 $ 1,251 $ 1,744 S 1,460 S 267 S 2,035 $ 2,922 S 2,817 $ 37,612 146 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) (continued) DEBT SERVICE FUNDS CAPITAL PROJECT FUNDS Public:RhancingTotal DebtService AHortlableHousingIn REVENUES AuFunds Ueu Infrastructure Sales Taxes 5 - S - S - S - Other Taxes - - - - Licenses and Permits - - 224 Use of Money and Property 9 9 92 46 Intergovernmental - Charges for Current Service - - - - Other 10 Total Revenues 9 9 316 56 EXPENDITURES Current: City Manager - - - Community Development - - 1 - Finance 331 331 - - Fire - - Infomiation Systems - - - - Community Services - - - 62 Library Services - - - Public Works - - - 4,503 Debt Service: - Principal 2,260 2,260 - - Interest 700 700 Total Expenditures 3,291 3,291 1 4,565 Excess Of Revenues Over (Under)Expenditures (3,282) (3,282) 315 (4,509) Other Financing Sources(Uses): Transfers In 1,777 1,777 - 9,417 Proceeds of Long-Tern Debt 19,275 19,275 -Issuance Premium 1,743 1,743 - - Payments to Escrow (24.204) (24,204) - - Transfers Out Total Other Financing Sources(Uses) (1,409) (1,409) 9,417 Net Change in Fund Balances (4,691) (4,691) 315 4,908 Fund Balances-Beginning of Year 9,126 9,126 1,132 12.157 Cumulative Effect of Changes In Accounting Principles Fund Balance As Restated 9,126 9,126 1.132 12,157 Fund Balances-End of Year $ 4,435 S 4,435 $ 1,447 $ 17,065 147 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) (continued) CAPITAL PROJECT FUNDS Total Other Lease Capital Senior Center Sower Total Capital Governmental Project Parking In-Lieu Development Development Technology Projects Funds Funds S - S - S - S - $ - S - S 3.486 7,317 115 - - - 339 408 7 145 1.481 12 - 12 1.794 92 - 92 2.018 0 38 115 104 7 598 16,542 - - 372 1 929 - 342 1.071 - - - 1.071 1,071 254 254 682 62 4,280 - - 349 2,954 - 7457 23,145 2.260 55 55 755 l,126 2,954 254 8,900 34,185 (1,126) 115 (2,850) (247) (8,302) (17.643) - - - - - 9,417 11.239 12,753 - - - - 12,753 32,028 - 1,743 (4,052) - - - - (4,052) (28.256) (16) (161 (416) 8,701 (16) 18,102 16.338 7,575 115 (16) (2,850) (247) 9,800 (1,305) 1,178 543 16 7,084 3.527 25.637 75,077 3,712 1.178 S43 16 7,084 3,527 25,637 78,789 $ 8.753 S 658 $ - S 4,234 S 3,280 S 35,437 S 77,484 148 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, 2021 (In Thousands) Air Quality Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use o1 Money and Property 5 - $ - S 8 S 8 Intergovernmental 250 250 263 13 TOTAL REVENUES 250 250 271 21 EXPENDITURES: Current: Public Works 540 1,255 15 1.240 TOTAL EXPENDITURES 540 1.255 15 1,240 NET CHANGE IN FUND BALANCE (290) (1,005) 256 1,261 Fund Balance-Beginning of Year 1,262 1.262 1,262 Fund Balance-End of Year $ 972 S 257 S 1,518 E 1,261 Development Impact Fee Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property $ - S - S 19 S 19 Charges for Current Service 315 315 1.148 833 TOTAL REVENUES 315 315 1,167 852 EXPENDITURES: Current: Fire 280 900 - 900 Police - 115 - 115 Community Services 5.098 8.304 3.557 4,747 Library Services 200 490 349 141 TOTAL EXPENDITURES 5,578 9.809 3,906 5,903 NET CHANGE IN FUND BALANCE (5,263) (9,494) (2,739) 6,755 Fund Balance-Beginning of Year 17,039 17.039 17,039 Fund Balance-End of Year $ 11,776 $ 7.545 S 14,300 f 6,755 Disability Access Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Licenses and Permits $ 84 S 84 S 69 S (15) Use of Money and Property 2 2 TOTAL REVENUES 84 84 71 (13) EXPENDITURES: Current: Finance 84 87 11 76 TOTAL EXPENDITURES 84 87 11 76 NET CHANGE IN FUND BALANCE - (3) 60 63 Fund Balance-Beginning of Year 231 231 231 Fund Balance-End of Year f 231 f 228 S 291 S 63 149 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, 2021 (In Thousands) Drainage Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) From Use of Money and Property S - S - S 12 S 12 Charges for Current Service 150 150 218 68 TOTALREVENUES 150 150 230 80 EXPENDITURES: Current: Public Works 100 100 27 73 TOTAL EXPENDITURES 100 100 27 73 NET CHANGE IN FUND BALANCE 50 50 203 153 Fund Balance-Beginning of Year 2,519 2,519 2,519 Fund Balance-End of Year $ 2,569 $ 2,569 $ 2,722 S 153 Fourth of July Parade Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property S 120 S 16 S 16 S - Intergovemmental 63 - - - Charges for Current Service 142 - - - Other 82 TOTALREVENUES 407 16 16 EXPENDITURES: Current Community Services 407 130 99 31 TOTAL EXPENDITURES 407 130 99 31 OTHER FINANCING SOURCES(USES): Transfers In 46 45 (1) TOTAL OTHER FINANCING SOURCES(USES) 46 45 (1 NET CHANGE IN FUND BALANCE - (68) (38) 30 Fund Balance-Beginning of Year 38 38 38 Fund Balance-End of Year S 38 S (30) S - $ 30 Strand Parking Structure Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property S 1,403 S 1,403 S 1,232 S (171) TOTAL REVENUES 1,403 1,403 1,232 (171) EXPENDITURES: Current: Community Development 1,041 1,041 928 113 TOTAL EXPENDITURES 1,041 1,041 928 113 OTHER FINANCING SOURCES(USES): Transfers Out (4001 (4001 (400) TOTAL OTHER FINANCING SOURCES(USES) (400) (400) (400) NET CHANGE IN FUND BALANCE (38) (38) (96) (58) Fund Balance-Beginning of Year - - - - Cumulative Effect of Changes in Accounting Principles 3,712 3,712 Fund Balance as Restated 3,712 3,712 Fund Balance-End of Year S (38) E (38) f 3,616 E 3,654 150 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, 2021 (In Thousands) Gas Tax Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Other Taxes S 6,077 S 6,077 S 6,783 S 706 Intergovernmental 42 42 TOTAL REVENUES 6,077 6,077 6,825 748 EXPENDITURES: Current: Public Works 5,530 11,985 11,262 723 TOTAL EXPENDITURES 5,530 11,985 11,262 723 NET CHANGE IN FUND BALANCE 547 (5,908) (4,437) 1,471 Fund Balance-Beginning of Year 7,106 7,106 7,106 Fund Balance-End of Year S 7,653 S 1,198 $ 2,669 S 1.471 Housing Residual Receipt Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property S - S - S 5 5 5 Other 200 200 28 (172) TOTAL REVENUES 200 200 33 (167) EXPENDITURES: Current: Community Development 50 50 50 TOTAL EXPENDITURES 50 50 50 NET CHANGE IN FUND BALANCE 150 150 33 (117) Fund Balance•Beginning of Year 1,218 1,218 1,218 Fund Balance-End of Year $ 1,368 $ 1,368 S 1,251 $ (117) Park Acquisition and Development Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Charges for Current Service $ 70 S 70 S - S (70) TOTAL REVENUES 70 70 (70) EXPENDITURES: Current: Community Services 625 1,979 562 1,417 TOTAL EXPENDITURES 625 1,979 562 1,417 NET CHANGE IN FUND BALANCE (555) (1,909) (562) 1,347 Fund Balance-Beginning of Year 2,306 2,306 2,306 Fund Balance-End of Year f 1,751 S 397 S 1,744 $ 1,347 151 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) Surf City"3" Variance with Final Budget Positive REVENUES: _Original Budget Final Budget Actual (Negative) Other Taxes $ 605 S 605 S 534 S (71) Use of Money and Property 6 6 TOTAL REVENUES 605 605 540 (65) EXPENDITURES: Current City Manager 353 671 372 299 TOTAL EXPENDITURES 353 671 372 299 NET CHANGE IN FUND BALANCE 252 (66) 168 234 Fund Balance-Beginning of Year 1,292 1,292 1,292 Fund Balance-End of Year E 1.544 E 1,226 f 1,460 E 234 ELM Automation Fund Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Charges for Current Service S 360 S 360 S 335 S (25) TOTAL REVENUES 360 360 335 (25) EXPENDITURES: Current: Information Systems 431 431 428 3 TOTAL EXPENDITURES 431 431 428 3 NET CHANGE IN FUND BALANCE (71) (71) (93) (22) Fund Balance-Beginning of Year 360 360 360 Fund Balance-End of Year f 289 f 289 E 267 f (22) Traffic Congestion Relief Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property S - S - S 4 S 4 Intergovernmental 1,535 1,535 1456 (79) TOTAL REVENUES 1,535 1,535 1,460 (75) EXPENDITURES: Current: Public Works 1.200 2,744 1,208 1,536 TOTAL EXPENDITURES 1.200 2,744 1,208 1,536 NET CHANGE IN FUND BALANCE 335 (1,209) 252 1.461 Fund Balance-Beginning of Year 1,783 1,783 1,783 Fund Balance-End of Year E 2,118 E 574 f 2,035 E 1,461 152 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES•BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) Traffic Impact Fee Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property S - S - S 9 S 9 Charges for Current Service 225 225 TOTAL REVENUES 234 234 EXPENDITURES: Current: Public Works 195 722 52 670 TOTAL EXPENDITURES 195 722 52 670 NET CHANGE IN FUND BALANCE (195) (722) 182 904 Fund Balance-Beginning of Year 2,740 2,740 2,740 Fund Balance-End of Year $ 2,545 $ 2.018 $ 2.922 $ 904 Transportation Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Sales Taxes S 3,008 S 3.008 S 3.486 S 478 Use of Money and Property - - 14 14 Intergovernmental 21 21 TOTAL REVENUES 3,008 3.008 3,521 513 EXPENDITURES: Current: Public Works 3.398 4.929 3.124 1,805 TOTAL EXPENDITURES 3,398 4,929 3,124 1,805 NET CHANGE IN FUND BALANCE (390) (1,921) 397 2,318 Fund Balance-Beginning of Year 2,420 2,420 2,420 Fund Balance-End of Year $ 2,030 $ 499 $ 2,817 $ 2,318 Public Financing Authority Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property S - $ - $ 9 S 9 TOTAL REVENUES 9 9 EXPENDITURES: Current: Finance 10 349 331 18 Debt Service: Principal 2,575 3.125 2.260 865 Interest 1,387 1.906 700 1,206 TOTAL EXPENDITURES 3.972 5.380 3,291 2,089 OTHER FINANCING SOURCES(USES): Transfers In 1.334 1.334 1,777 443 Proceeds of Long-Term Debt - 19.275 19,275 - Issuance Premium - 1.743 1,743 - Payments to Escrow (23.135) (24,204) (1,069) TOTAL OTHER FINANCING SOURCES(USES) 1,334 (783) (1,409) (626) NET CHANGE IN FUND BALANCE (2,638) (6,163) (4,691) 1.472 Fund Balance-Beginning of Year 9.126 9,126 9,126 Fund Balance-End of Year $ 6.488 $ 2,963 $ 4,435 $ 1.472 153 CITY OF HUNTINGTON BEACH SCHEDULE OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) Affordable Housing In-Lieu Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Licenses and Permits S 546 S 546 $ 224 S (322) Use of Money and Property 92 92 TOTAL REVENUES 546 546 316 (230) EXPENDITURES: Current: Community Development 200 203 1 202 TOTAL EXPENDITURES 200 203 1 202 NET CHANGE IN FUND BALANCE 346 343 315 (28) Fund Balance-Beginning of Year 1,132 1,132 1,132 Fund Balance-End of Year $ 1,478 $ 1,475 S 1,447 S (28) Infrastructure Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property S - S - $ 46 S 46 Other 10 10 TOTAL REVENUES 56 56 EXPENDITURES: Current: Community Services 250 439 62 377 Public Works 4,071 16,330 4,503 11,827 TOTAL EXPENDITURES 4,321 16,769 4,565 12,204 OTHER FINANCING SOURCES(USES): Transfers In 3,000 9,417 9,417 TOTAL OTHER FINANCING SOURCES(USES) 3,000 9,417 9,417 NET CHANGE IN FUND BALANCE (1,321) (7,352) 4,908 12,260 Fund Balance-Beginning of Year 12,157 12,157 12,157 Fund Balance-End of Year $ 10,836 S 4,805 S 17,065 S 12,260 Lease Capital Project Variance with Final Budget Positive EXPENDITURES: Original Budget Final Budget Actual (Negative) Current: Fire $ - S 9,830 S 1,071 5 8,759 Debt Service: Interest 55 55 TOTAL EXPENDITURES 9,885 1,126 8,759 OTHER FINANCING SOURCES(USES): Proceeds of Long-Tenn Debt - 21,503 12,753 (8,750) Payments to Escrow (4,052) (4,052) TOTAL OTHER FINANCING SOURCES(USES) 17,451 8,701 (8,750) NET CHANGE IN FUND BALANCE - 7,566 7,575 9 Fund Balance-Beginning of Year 1,178 1,178 1,178 Fund Balance-End of Year $ 1,178 $ 8,744 $ 8,753 $ 9 154 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, 2021 (In Thousands) Parking In-Lieu Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Licenses and Permits S 38 S 38 $ 115 $ 77 TOTAL REVENUES 38 38 115 77 EXPENDITURES: Current: Community Development 38 38 38 TOTAL EXPENDITURES 38 38 38 NET CHANGE IN FUND BALANCE - - 115 115 Fund Balance-Beginning of Year 543 543 543 Fund Balance-End of Year f 543 f 543 $ 658 $ 115 Senior Center Development Variance with Final Budget Positive OTHER FINANCING SOURCES(USES): Original Budget Final Budget Actual (Negative) Transfers Out S - $ (16) $ (16) S TOTAL OTHER FINANCING SOURCES(USES) (16) (16) NET CHANGE IN FUND BALANCE - (16) (16) - Fund Balance-Beginning of Year 16 16 16 Fund Balance-End of Year $ 16 $ - f f Sewer Development Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Intergovernmental S - S - S 12 S 12 Charges for Current Service 160 160 92 (68) TOTAL REVENUES 160 160 104 (56) EXPENDITURES: Current: Public Works 150 6.348 2.954 3.394 TOTAL EXPENDITURES 150 6.348 2.954 3,394 NET CHANGE IN FUND BALANCE 10 (6,188) (2,850) 3,338 Fund Balance-Beginning of Year 7,084 7,084 7,084 Fund Balance-End of Year f 7,094 f 896 $ 4.234 $ 3,338 Technology Variance with Final Budget Positive REVENUES: Original Budget Final Budget Actual (Negative) Use of Money and Property $ - S - S 7 S 7 TOTAL REVENUES 7 7 EXPENDITURES: Current: Information Systems 418 254 164 TOTAL EXPENDITURES 418 254 164 NET CHANGE IN FUND BALANCE (418) (247) 171 Fund Balance-Beginning of Year 3,S27 3,527 3,527 Fund Balance-End of Year $ 3,527 $ 3,109 $ 3,280 $ 171 155 THIS PAGE INTENTIONALLY LEFT BLANK 156 THIS PAGE INTENTIONALLY LEFT BLANK 157 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' Como Fund accounts for the City's self insurance workers' compensation program. • The Self Insurance General Liability Fund accounts for the City's self insurance general liability program. • The Equipment Replacement Fund accounts for the City's equipment replacement needs. 158 THIS PAGE INTENTIONALLY LEFT BLANK 159 CITY OF HUNTINGTON BEACH STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS June 30, 2021 (In Thousands) Governmental Activities qu pmont Self Insurance Self Insurance Roplacomont Internal Service Workors'Comp General Liability Fund Fund Total ASSETS Current Assets: Cash and Investments S 16.197 S 10,337 S 7.322 S 33.856 Other Receivables,Net 48 30 18 96 Prepaids 600 477 1.077 Total Current Assets 16,845 10,367 7,817 35,029 Capital Assets: Machinery and Equipment - - 6.831 6.831 Less Accumulated Depreciation (1,527) (1,527) Total Capital Assets 5,304 5,304 Total Assets 16,945 10,367 13.121 40.333 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows Related to Pensions 1.234 - - 1,234 Deferred Outflows Related to Other Postemployment Benefits 10 5 15 Total Deferred Outflows of Resources 1,244 5 1,249 Total Assets and Deferred Outflows of Resources $ 18,089 $ 10,372 S 13.121 $ 41,582 LIABILITIES Current Liabilities: Accounts Payable $ 359 S 212 S 144 S 715 Accrued Payroll 16 - - 16 Interest Payable 4 - - 4 Current Portion of Claims Payable 6,268 3,840 - 10.108 Current Portion of Compensated Absences 12 12 Total Current Liabilities 6,659 4,052 1" 10,855 Non-Current Liabilities: Compensated Absences 32 - - 32 Long-Tenn Obligations Due Within One Year 37 - - 37 Long-Term Obligations Due in More than One Year 1,029 - - 1.029 Net Pension Liability 1,309 - - 1.309 Net Other Postemployment Benefits Liabdity 11 5 - 16 Claims Payable 28,526 8.145 36.671 Total Non-Current Liabilities 30,944 8,150 39,094 Total Liabilities 37,603 12.202 1" 49,949 DEFERRED INFLOWS OF RESOURCES Deferred Inflows Related to Pensions 61 - - 61 Deferred Inflows Related to Other Postemployment Benefits 9 4 13 Total Deferred Inflows of Resources 70 4 74 NET POSITION Net Investment in Capital Assets - - 5.304 5.304 Unrestricted (19,584) (1,834) 7.673 (13,745) Total Net Position (19.584) (1,834) 12,977 (8,441) Total Liabilities,Deferred Inflows of Resources,and Not Position $ 18,089 $ 10,372 S 13,121 S 41,582 160 CITY OF HUNTINGTON BEACH STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) Governmental Activities Equipment Self Insurance Self Insurance Replacement Internal Service Workers'Comp General Liability Fund Fund Total OPERATING REVENUES Fees and Charges for Service S 6.731 S 2,399 S 5,000 S 14,130 Other 73 73 Total Operating Revenues 6,804 2,399 5,000 14,203 OPERATING EXPENSES Supplies and Operations 1,529 837 2,120 4486 Claims and Judgments 10.667 11,406 - 22.073 Depreciation 714 714 Total Operating Expenses 12,196 12,243 2,834 27,273 Operating Income (5,392) (9,844) 2,166 (13.070) NON-OPERATING REVENUES(EXPENSES) Investment Income(Loss) (4) (7B) (8) (90) Interest Expense (4) - - (4) Debt Service (4) (4) Total Non-Operating Revenues(Expenses) (12) (78) (8) (98) Income(Loss)Before Transfers (5,404) (9,922) 2,158 (13,168) Change in Net Position (5,404) (9,922) 2.158 (13.168) Net Position-Beginning of Year (14,180) 8,088 10,819 4,727 Net Position-End of Year $ (19,584) S (1,834) $ 12,977 $ (8,441) 161 CITY OF HUNTINGTON BEACH STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30,2021 (In Thousands) Governmental Activities quipment Self Insurance Self Insurance Replacement Internal Service Workers'Com General Liabili Fund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers and Users 5 6,811 5 2,424 5 5,006 5 14,241 Cash Paid to Employees for Services (1,528) (33) - (1,561) Cash Paid to Suppliers of Goods and Services (6,513) (7,694) (2.555) (16.762) Net Cash and Investment Provided by Operating Activities (1,230) (5,303) 2,451 (4,082) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Debt Service (4) - - (4) Proceeds from Issuance of Debt 1,066 1,066 Not Cash and Investments Used by Noncapital Financing Activities 1,062 1,062 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of Capital Assets (1,9601 (1,960) Not Cash and Investments(Used)by Capital and Related Financing Activities (1,960) (1,960) CASH FLOWS FROM INVESTING ACTIVITIES Investment Income(Loss) (4) (78) (8) (90) Net Cash and Investments Provided by Investing Activities (4) (78) (8) (90) Net Increase in Cash and Investments (172) (5,381) 483 (5,070) Cash and Investments-Beginning of Year 16,369 15.718 6,839 38,926 Cash and Investments-End of Year $ 16,197 $ 10,337 $ 7,322 $ 33,856 RECONCILIATION OF OPERATING INCOME(LOSS)TO NET CASH AND INVESTMENTS PROVIDED(USED)BY OPERATING ACTIVITIES Operating(Loss) 5 (5,392) 5 (9.844) $ 2,166 $ (13,070) Adjustments to Reconcile Operating Income(Loss)to Net Cash and Investments Provided(Used)by Operating Activities Depreciation - - 714 714 Decrease in Other Receivables,Net 7 25 6 38 Decrease(Increase)in Prepaids - - (477) (477) Increase(Decrease)in Accounts Payable 55 80 42 177 Increase(Decrease)in Accrued Payroll (7) - - (7) Increase(Decrease)in Claims Payable 5.188 4,436 - 9,624 Decrease(Increase)in Deferred Pension Outflow (1,093) - - (1,093) Increase(Decrease)in Deferred Pension Inflow 32 - - 32 Increase in Net Pension Liability (19) - - (19) Decrease in Deferred Other Postemployment Benefits Outflow i - - 1 Increase in Deferred Other Postemployment Benefits Inflow 0) - - (1) (Decrease)in Ending Net Other Postemployment Benefits Liability (i) (1) Net Cash and Investments Provided by Operating Activities 6 (1,230) f (5,303) S 2,451 $ (4,082) NONCASH INVESTING,CAPITAL,AND FINANCING ACTIVITIES There were no noncash investing,capital,or financing activities during the year ended June 30,2021. 162 THIS PAGE INTENTIONALLY LEFT BLANK 163 City of Huntington Beach Fiduciary Funds Fiduciary Funds account for assets held by the City as a custodian for other organizations or individuals. • The Community Facilities Districts Funds accounts for the debt service activity of the City's three community facilities districts • The Huntington Beach Business Improvement District Fund accounts for the activities of the City's business improvement district. • The Bella Terra Parking Structure Fund accounts for the activities of the Bella Terra Parking Structure. 164 THIS PAGE INTENTIONALLY LEFT BLANK 165 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF FIDUCIARY FUND ASSETS AND LIABILITIES FIDUCIARY FUNDS JUNE 30, 2021 Custodial Funds Community Business I Parking Facilities Improvement Structure-Bella Total Custodial Assets: Districts Districts Terra Funds Current Assets: Cash and Investments $ 1,286 S 1,184 $ 2.020 $ 4.490 Cash with Fiscal Agent 1,584 - 1,681 3,265 Accounts Receivable, Net 697 2 699 Total Assets 2,870 1,881 3,703 8,454 Liabilities: Current Liabilities: Accounts Payable - 1,714 214 1,928 Total Current Liabilities 1,714 214 1,928 NET POSITION Restricted for individuals and Organizations 2,870 167 3,489 6,526 Total Net Position $ 2,870 $ 167 $ 3,489 $ 6,526 CITY OF HUNTINGTON BEACH COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2021 Custodial Funds Community Business Parking Facilities Improvement Structure-Bella Total Custodial ADDITIONS Districts Districts Terra Funds Special Assessments or Special Taxes Collected from Property Owners $ 1,512 $ - $ - S 1,512 Business Improvement District Taxes - 4,093 - 4,093 Parking Assessments - - 2,442 2,442 Interest Income 9 4 13 Total Additions 1,521 4,093 2,446 8,060 DEDUCTIONS Administrative Costs 40 1 10 51 Payments to other Organizations - 4,121 627 4,748 Interest and Fiscal Agency Expenses 705 - 806 1,511 Principal 955 - 855 1,810 Total Deductions 1,700 4,122 2.298 8.120 Change in Net Position (179) (29) 148 (60) Net Position-Beginning of Year - Cumulative Effect of Changes in Accounting Principles 3,049 196 3,341 6,586 Net Position-Beginning of Year as Restated 3,049 196 3,341 6,586 Net Position-End of Year $ 2,870 $ 167 $ 3,489 $ 6,526 166 THIS PAGE INTENTIONALLY LEFT BLANK 167 City of Huntington Beach Statistical Section This part of the City of Huntington Beach's Annual Comprehensive 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 — contains trend information to help the reader understand how the City's financial performance has changed overtime. Revenue Capacity — contains information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity - presents 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 annual comprehensive financial reports for the relevant year. 168 CITY OF HUNTINGTON BEACH NET POSITION BY COMPONENT-LAST TEN FISCAL YEARS (In Thousands) Fiscal Year Ended June 30. September 30, Governmental Activities 2021 2020 2019 2018" 2017 Net investment in capital assets S 699,204 S 673.498 S 664.281 $ 650,466 S 646.336 Restricted 65,755 79,926 66,089 58.537 41.888 Unrestricted (275,159) (274,523) (251,022) (254,528) (262,874) Total Governmental Activities Net Position $ 489,800 S 478,901 $ 479,348 S 454,475 $ 425,350 Business-Type Activities Net investment in capital assets S 142,469 S 142,785 S 145,696 S 143.954 S 140,478 Restricted 20.332 22.248 21,153 25,886 30.444 Unrestricted 39,129 38482 36,747 27492 22.228 Total Businoss-Typo Activities Not Position $ 201,930 S 203,515 $ 203,596 S 197.332 $ 193,150 Primary Government Net investment in capital assets S 841.673 S 816,283 S 809.977 S 794.420 S 786.814 Restricted 86,087 102,174 87,242 84423 72.332 Unrestricted (236,030) (236,041) (214,275) (227.036) (240.646) Total Primary Government Not Position $ 691,730 $ 682,416 $ 682,944 S 651.807 $ 618,500 CITY OF HUNTINGTON BEACH CHANGES IN NET POSITION -LAST TEN FISCAL YEARS (In Thousands) Fiscal Year Ended Expenses: June 30, September 30. Governmental Activities: 2021 2020 2019 2018' 2017 City Council $ 423 $ 405 S 360 S 218 S 347 City Manager 11.163 3.328 4.501 2.063 4.691 City Treasurer 340 317 246 101 216 City Attomey 3.140 3,136 2.886 1.536 3.307 City Clerk 1.147 949 976 475 ass Finance 6.828 6.661 6.245 3,455 6.201 Human Resources""' - - 6.261 4,760 5,693 Community Development' 19,716 15.722 6.144 4.301 7,576 Fire 65,960 62.840 56.494 26.688 52,941 Information Services 6.230 8.643 7,530 4,375 7,047 Police 102.415 97.204 87,355 42.109 84,786 Economic Development" - - - -Community Services 11,365 12,539 13,369 6.768 15.558 Library Services 6,181 5,776 5.206 2.890 5,064 Public Works 40.270 45.834 40.803 23.898 35,373 Non-Departmental"" - - - 18,164 29,368 Interest on Lang-Term Debt 2,706 1,686 1,823 1.467 2,063 Total Governmental Activities 277,884 265,040 240,199 143,268 261,120 Business-Type Activities Water Utility 46,054 44,463 43.405 28.414 45.940 Sewer Service 9.284 9,828 9.442 6.127 9.351 Refuse Collection 12,936 12,609 12,051 8,916 10,821 Hazrnat Service 241 235 234 117 224 Total Business-Type Activities 68,515 67,135 65.132 43.574 66,336 Total Business and Government Type Activities $ 346,399 $ 332,175 S 305,331 $ 186,942 $ 327,456 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 combined with Community Development in the year ended June 30,2020.Previously,it was combined with the City Managers Office as of the year ended September 30,2014. "' The 2018 period retracts 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 pan of functional expenditures. '"*Human Resources was combined with the City Managers Office in the year ended June 30,2020. 169 CITY OF HUNTINGTON BEACH NET POSITION BY COMPONENT-LAST TEN FISCAL YEARS (In Thousands) (continued) Fiscal Year Ended September 30, Governmental Activities 2016 2015 2014 2013 2012 Net investment in capital assets 5 624,180 S 615,512 5 618,825 5 617,267 S 612,346 Restricted 41,555 52,270 34,018 51,867 44.220 Unrestricted (222,863) (222.787) 89.524 54,076 53.098 Total Governmental Activities Net Position S 442.872 $ 444.995 $ 742,367 $ 723,210 S 709,664 Business-Type Activities Net investment in capital assets $ 142,566 S 142,616 S 140.770 $ 145,886 S 134,129 Restricted 32,049 28.096 27.951 27488 27,804 Unrestricted 21.997 28476 53,166 65.595 63,686 Total Business-Type Activities Net Position S 196,612 $ 199,188 $ 221,887 $ 238,969 $ 225,619 Primary Government Net investment in capital assets S 766,746 $ 758.128 S 759.595 S 763.153 S 746,475 Restricted 73,604 80,366 61,969 79,355 72.024 Unrestricted (200,866) (194,311) 142,690 119,671 116.784 Total Primary Government Net Position $ 639,494 $ 644,183 $ 964,254 $ 962,179 $ 935,283 CITY OF HUNTINGTON BEACH CHANGES IN NET POSITION -LAST TEN FISCAL YEARS (In Thousands) (continued) Fiscal Year Ended Expenses: September 30, Governmental Activities: 2016 2015 2014 2013 2012 City Council $ 321 S 270 S 258 S 271 S 310 City Manager 3,849 3,302 3,878 1.583 1.767 City Treasurer 208 158 169 132 141 City Attorney 2,598 2,284 2,321 2,221 2,313 City Clerk 806 855 747 797 689 Finance 5.765 5,209 5,314 4.825 4.573 Human Resources----- 6,814 5,169 4,616 5.032 4,743 Community Development- 7.208 6,605 7.091 6.155 6,123 Fire 47,965 42,162 43,194 36.323 35,336 Information Services 6,852 6,552 6456 6.096 5,857 Police 74.943 64.048 66.681 60.466 60.690 Economic Development" - - - 8.395 3,703 Community Services 9.935 13,809 12.509 15,521 15,586 Library Services 4.611 4.246 4,024 3,873 3.777 Public Works 31.791 27.979 31,691 28.500 26.508 Non-Departmental---' 35,240 24.080 21,602 25.563 19.190 Interest on Long-Term Debt 2.119 2,245 1,946 2.289 2,376 Total Governmental Activities 241.025 208,972 212,497 209.042 193,682 Business-Type Activities Water Utility 41,643 38.614 41499 38,446 37437 Sewer Service 8.729 8.192 9,712 7,253 7.623 Refuse Collection 11,277 11,308 11,145 10,882 10.785 Hazmat Service 244 204 231 220 216 Total Business-Type Activities 61,893 58,318 62,587 56,901 56,061 Total Business and Government Type Activities $ 302,918 $ 267,290 $ 275,084 S 264.843 S 249,743 170 CITY OF HUNTINGTON BEACH CHANGES IN NET POSITION -LAST TEN FISCAL YEARS (In Thousands) Fiscal Year Ended Program Revenues: June 30, September 30, Governmental Activities: 2021 2020 2019 2018— 2017 Charges for Services City Council S 162 S 177 S 149 5 91 s 108 City Manager 4.208 5.315 3,300 2.374 3.515 City Treasurer 149 163 135 81 100 City Attorney 6 7 7 4 5 City Clerk 30 220 327 229 257 Finance 3,055 3.302 2,899 1.746 2,047 Human Resources""' - - 751 373 654 Community Development' 8,353 10,037 7,459 5.448 7.448 Fire 8.877 10.122 9,831 9.104 10,296 Information Services 610 636 628 381 501 Police 6,477 5.329 6,044 4.703 4.968 Economic Development" - - - - - Community Services 15,558 17,631 23,530 19,245 21,693 Library Services 153 266 308 237 476 Public Works 6.045 6,614 6.368 4,392 5.392 Non-Departmental"" 916 1.116 Total Charges for Services 53.683 59,819 61,736 49,324 58,576 Operating Grants 6.013 8,141 6.644 3,976 7,329 Capital Grants 10,192 14,483 8,361 6,055 3.408 Total Governmental Activities Program Revenue 69,888 82,443 76.741 59,355 69,313 Business-Type Activities: Water Uglily 42.523 40.518 43,958 29,530 39.938 Sewer Service 10.828 10.900 11,868 8,362 10.854 Refuse Collection 13,014 12,573 12,022 8.820 11,282 Hamel Service 266 279 276 25 287 Total Business-Type Activities Program Revenues 66.631 64.270 68,124 46,737 62.361 Total Primary Government Program Revenue 136,519 146,713 144.865 106,092 131.674 Not(Expense)Revenue: Governmental Activities (207,996) (182,597) (188,299) (180,844) (73.955) Business-Type Activities (1,884) (2,865) 989 (18.395) 18.787 Total Not(Expense)Revenue (209,980) (185,462) (187,310) (199.239) (55,168) General Revenue and Other Changes in Net Position Governmental Activities: Property Taxes 99.958 94,263 61,185 82.925 87,128 Sales Taxes 51.162 44.616 33.844 43,551 34,289 Utility Taxes 18.374 18.149 14,014 19,303 19,482 Other Taxes 17.293 18,635 14.883 17.991 17.313 Use of Money and Property 4.399 3,208 2.158 3.370 3.618 From Other Agencies 22.000 3,317 2.263 3.896 4,397 Other - - 2.811 2.438 5,693 Transfers (38) (381 (332) (51) (38) Total Governmental Activities General Revenues 213,148 182,150 130,826 173,423 171,882 Business-Type Activities: Use of Money and Property 261 2.746 279 462 939 Transfers 38 38 332 51 38 Total Business-Type Activities General Revenues 299 2,784 611 513 977 Total General Revenues and Transfers 213,447 184,934 131.437 173.936 172,859 Extraordinary Gain Changes in Not Position-Governmental Activities 5.152 (447) (57.473) (7,421) 97.927 Changes in Not Position-Business-Type Activities (1,585) (81) 3.603 3.676 (2,998) Net Position-Beginning of Year 682,416 682,944 627,548 630.431 535.502 Prior Period Adjustment-Govemmental Activities 5,747 - (17.788) 862 - Prior Period Adjustment-Business-Type Activities 408 Not Position-Beginning of Year as restated 688.163 682,944 610.168 631,293 535,502 Net Position-End of Year s 691.730 s 682,416 $ 556,298 $ 627,548 $ 630,431 Planning and Budding 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 combined with Community Development in the year ended June 30,2020.Previously,it was combined win the City Managers Office as of 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. Human Resources was combined with the City Managers Office in the year ended June 30,2020. 171 CITY OF HUNTINGTON BEACH CHANGES IN NET POSITION -LAST TEN FISCAL YEARS (In Thousands) (continued) Fiscal Year Ended Program Revenues: September 30, Governmental Activities: 2016 2015 2014 2013 2012 Charges for Services City Council S 116 S 71 S 68 S 66 $ 65 City Manager 3,029 2.994 2,835 134 130 City Treasurer 101 639 621 602 585 City Attorney 4 143 139 135 131 City Clerk 201 199 321 248 170 Finance 2.277 1.353 1.313 1,275 1.238 Human Resources""' 513 1,263 2,499 1,236 1,150 Community Development' 9.252 10.670 9,357 9.411 7.706 Fire 9,894 8,625 8,672 9,482 9,497 I nformation Services 521 834 809 786 763 Police 5.958 5.512 5.170 4.653 5.073 Economic Development" - - - 2.505 2.303 Community Services 18,853 18.569 18,055 17.832 17.792 Library Services 408 495 434 634 466 Public Works 5,733 6.474 6,367 7.315 5482 Non-Departmental"" 1,290 327 318 306 281 Total Charges for Services 58,150 58.168 56.978 56,620 52,832 Operating Grants 4.723 7.458 7,958 7.303 5,088 Capital Grants 5,939 9.809 5,486 7,191 6.624 Total Governmental Activities Program Revenue 68,812 75.435 70.422 71,114 64,544 Business-Type Activities: Water Utility 35.765 35,350 36.944 38.679 35,926 Sewer Service 11.280 11,239 10,665 12.267 11,546 Refuse Collection 11,215 11,221 11.006 10.950 10.786 Hamlat Service 235 222 183 278 154 Total Business-Type Activities Program Revenues 58.495 58.032 58,798 62,174 58,412 Total Primary Government Program Revenue 127.307 133.467 129.220 133.288 122.956 Net(Expense)Revenue: Governmental Activities (192.308) (165,590) (138.550) (141.383) (143498) Business-Type Activities (7,841) (3,861) 480 (413) 1,611 Total Net(Expense)Revenue (200,149) (169,451) (138,070) (141,796) (141.887) General Revenue and Other Changes in Net Position Governmental Activities: Property Taxes 82.615 81,355 74.795 74.856 86.056 Sales Taxes 33,063 29.243 30.276 30.051 25.339 Utility Taxes 20.229 20,621 20.764 20.152 19.135 Other Taxes 16,464 15,601 14.568 12.930 13,368 Use of Money and Property 5,551 3,725 2.816 3.434 3.239 From Other Agencies 5.653 4.279 6,003 6,585 5.647 Other 4,440 6,903 5,240 4.941 3.060 Transfers 35 (38) (38) (38) (38) Total Governmental Activities General Revenues 168,050 161.689 154.424 152,911 155,806 Business-Type Activities: Use of Money and Property 1.281 1.015 137 1.100 1,135 Transfers (35) 38 38 38 38 Total Business-Type Activities General Revenues 1,246 1.053 175 1.138 1.173 Total General Revenues and Transfers 169,296 162.742 154.599 154,049 156,979 Extraordinary Gain (4,569) 23,960 Changes in Net Position-Governmental Activities (24.258) (3,901) 11,205 35,488 12.308 Changes in Not Position-Business-Type Activities (2,152) 767 (3,614) 6.511 3.524 Net Position-Beginning of Year 919.403 937.340 921.228 879,229 863,397 Prior Period Adjustment-Governmental Activities (333,677) (457) 719 - - Prior Period Adjustment-Business-Type Activities (23,814) (14,346) 7,802 Net Position-Beginning of Year as restated 561.912 922,537 929.749 $79.229 863,397 Net Position-End of Year $ 535,502 $ 919,403 $ 937,340 $ 921,228 5 879,229 172 CITY OF HUNTINGTON BEACH FUND BALANCES - GOVERNMENTAL FUNDS - LAST TEN FISCAL YEARS (In Thousands) (Modified Accrual Basis of Accounting) Fiscal Year Ended June 30, Fiscal Year Ended September 30, 2021 2020 2019 2018 2017 General Fund: Nonspendable S 115 $ 120 $ 23 $ 41 S - Restricted 13,561 9,320 8.154 6,384 2,671 Committed 25,565 25,010 25,011 25,011 25,011 Assigned 55,368 45,638 45.825 34,464 33,498 Unassigned - - 2,734 - Total General Fund $ 94,609 $ 80,088 $ 79,013 $ 68,634 $ 61,180 Other Governmental Funds: Nonspendable S 105 $ 50 $ 64 $ 726 $ - Restricted 70,161 71,671 59.213 52,742 40,588 Committed 26,857 21,735 20,308 20,800 17,686 Assigned 3,280 3,527 3,614 2,701 826 Total Other Governmental Funds $ 100,403 $ 96,983 $ 83,199 $ 76,969 $ 59,100 Fiscal Year Ended September 30, 2016 2015 2014 2013 2012 General Fund: Nonspendable S - S 4,479 $ 4,378 $ 4,040 $ 4,633 Restricted 2,637 2,871 2,070 1,878 1,387 Committed 25,011 25.011 25,011 24,011 - Assigned 35,199 32,431 29,595 24,578 48.415 Total General Fund $ 62,847 $ 64,792 $ 61,054 $ 54,507 $ 54,435 Other Governmental Funds: Restricted S 40,293 S 45,515 S 27,214 S 27,425 $ 27,722 Committed 21,368 21,659 16,447 11,098 6,745 Assigned 838 161 151 316 1,181 Unassigned - (210) (395) Total Other Govemmental Funds $ 62,499 $ 67,335 $ 43,812 $ 38,629 $ 35,253 173 THIS PAGE INTENTIONALLY LEFT BLANK 174 CITY OF HUNTINGTON BEACH CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS -LAST TEN FISCAL YEARS (In Thousands) (Modified Accrual Basis of Accounting) Fiscal Year Ended June 30, September 30, 2021 2020 2019 2018' 2017 REVENUES: Property Taxes $ 99.958 S 94,263 S 89.367 S 80,614 S 80.826 Sales Taxes 51.162 44.616 47.437 33,844 43,551 Utility Taxes 18,374 18,149 18,788 14,014 19,303 Other Taxes 25.745 24.578 27,196 18.409 17,991 Licenses and Permits 8.213 11.266 8,574 6.293 8.812 Fines and Forfeitures 4,619 3.403 4.300 3.048 3.995 From Use of Money and Property 19.163 27,863 23.276 11,600 17,210 From Other Agencies 29.836 11,309 13,072 10.394 15,293 Charges for Current Service/Other Revenue 27.428 34.772 33.787 30,216 32.351 TOTAL REVENUES 294,498 270,219 265,797 208,422 239,332 EXPENDITURES Current: City Council 1,043 394 369 279 333 City Manager 15.976 4.342 6.598 3,143 4.116 City Treasurer 837 297 248 134 201 City Attorney 7.714 2,898 2,874 2,037 3.052 City Clerk 2.810 886 981 602 830 Finance 16,173 6,200 6,484 4,376 5.763 Human Resources—— - - 6,362 5,323 5.535 Community Development'- 39,212 14.692 8.138 5.554 6,963 Fire 149,726 56.477 54.431 36,347 46,831 Information Systems 19.095 8,473 8.342 5,385 6.603 Police 232.438 87.682 83,546 57,916 75,015 Economic Development— - - - - - Community Services 25,064 14,429 11.720 7,958 14,124 Library Services 14,099 5.199 4.944 3,436 4,422 Public Works 88,007 47,655 46,878 30,357 38,635 Non-Departmental""' - - - 22,432 28,396 Capital Outlay-' - - - - - Debt Service: Principal 3,983 5,122 5,346 311 5,091 Interest 937 1.748 1,890 965 2,066 TOTAL EXPENDITURES 617,114 256,4914 249,151 186,555 247,976 EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER) EXPENDITURES (332,616) 13,725 16,646 21,867 (8,644) OTHER FINANCING SOURCES(USES): Transfers In 13,058 10.009 11,190 13.261 6,692 Issuance of Long-Term Debt (453) 1.172 - - 2,767 Issuance Premium 1,743 - - - - Issuance Discount (649) - - - - Proceeds of Long Term Debt 372,463 - - - - Payments to Escrow (28,256) - - - - Transfers Out (13,096) (10.047) (11.227) (13,593) (6,743) TOTAL OTHER FINANCING SOURCES(USES) 344,810 1,134 (37) (332) 2,716 Extraordinary Item-Dissolution of RDA INCREASE(DECREASE)IN FUND BALANCES E 12,194 $ 14,859 f 16,609 $ 21.535 E (5,928) DEBT SERVICE AS A PERCENTAGE OF NON-CAPITAL EXPENDITURES 0.8% 3.0% 3.3% 0.7% 3.2% 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. 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 combined with Community Development in the year ended June 30,2020.Previously,it was combined with the City Manager's Office as of the year ended September 30,2014. 175 CITY OF HUNTINGTON BEACH CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS -LAST TEN FISCAL YEARS (In Thousands) (continued) (Modified Accrual Basis of Accounting) Fiscal Year Ended September 30, 2016 2015 2014 2013 2012 REVENUES: Property Taxes S 86.382 S 82.472 S 79.460 S 74.442 $ 74,554 Sales Taxes 39,305 32,234 30,454 29,763 29.126 Utility Taxes 19482 20,229 20.621 20.764 20,152 Other Taxes 17.313 16.464 15.601 14.568 12.930 Licenses and Permits 9,820 9.270 7,976 9,880 7,773 Fines and Forfeitures 5,144 4.746 4,392 4.058 4.252 From Use of Money and Property 18,055 17.473 16,695 16,046 16,855 From Other Agencies 13.712 18,634 16,804 18.237 18,537 Charges for Current Service/Other Revenue 32.506 35.869 33.886 34,150 30,051 TOTAL REVENUES 241,719 237,391 225,889 221,908 214,230 EXPENDITURES Current: City Council 318 278 258 260 310 City Manager 3.092 2.703 3.040 1.574 1.758 City Treasurer 204 167 169 132 141 City Attorney 2.539 2.425 2.321 2.221 2.313 City Clerk 790 895 747 797 689 Finance 5.659 5.452 5.314 4.825 4.573 Human Resources-- 6,776 4.606 4,298 5,661 5,213 Community Development" 7,062 6.954 7,091 6,155 6.119 Fire 46,200 45.008 42,602 35,920 35,145 Information Systems 6.742 6.946 6.456 6,096 5,857 Police 72.612 68.940 66,628 60.460 60.249 Economic Development— - - - 7.012 3.389 Community Services 10.768 10.223 10,040 13.952 14.082 Library Services 4.247 4.146 3,739 3.588 3.492 Public Works 23,659 23.820 22,872 22.169 22,666 Non-Departmental—" 24.670 20.067 21,033 19,684 15.455 Capital Outlay"' 27,269 14,986 10,729 10,745 11.096 Debt Service: Principal 5,933 5,454 4,797 9,381 6.012 Interest 2,138 2,226 1,987 2,321 2,564 TOTAL EXPENDITURES 250,678 225,196 214,121 212,953 201,123 EXCESS(DEFICIENCY)OF REVENUES OVER(UNDER) EXPENDITURES (8,959) 12,195 11,768 8,955 13,107 OTHER FINANCING SOURCES(USES): Transfers In 9,034 12,158 9,832 9,501 18.904 Issuance of Long-Term Debt 10.197 - - Issuance Premium - - - - - Issuance Discount - - - - Proceeds of Long Term Debt - - - - Payments to Escrow - - - - - Transfers Out (17,053) (14,238) (9,870) (10.339) (18,942) TOTAL OTHER FINANCING SOURCES(USES) 2.178 (2,080) (38) (838) (38) Extraordinary Item-Dissolution of RDA (4,669) (11,839) INCREASE(DECREASE)IN FUND BALANCES $ (6,781) $ 10,115 $ 11,730 $ 3,448 $ 1,230 DEBT SERVICE AS A PERCENTAGE OF NON-CAPITAL EXPENDITURES 3.6% 3.7% 3.3% 5.8% 4.5% '--' Beginning with the fiscal year ended September 30.2017,capital outlay expenditures are no longer presented separately but are included as part of functional expenditures.However,capital outlay expenditures are excluded in the calculation of debt service as a percentage of non-capital 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. """Human Resources was combined with the City Managers Office in the year ended June 30,2020. 176 CITY OF HUNTINGTON BEACH ASSESSED AND ACTUAL VALUATION OF ALL TAXABLE PROPERTY (EXCLUDING REDEVELOPMENT AGENCY) LAST TEN FISCAL YEARS (In Thousands) Common Tota I AssessedTotal Direct Tax Fiscal Year Property Public Utilities Total Secured Unsecured Valuation Rate 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 2019-2020 37.741,095 518 37.741,613 1,145,838 38.887,451 0.17082 2020-2021 39,449,688 518 39,450,206 1,111,018 40,561,224 0.17082 Source: County of Orange Auditor Controller PROPERTY TAX RATES ALL DIRECT AND OVERLAPPING GOVERNMENTS TAX RATE 04-001 LARGEST AREA IN CITY LAST TEN FISCAL YEARS Direct Overlapping ity tiasic Rate Metro Water Total Direct and Fiscal Year (1), (2) City Other School Districts District Others Overlapping 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 2019-2020 0.15582 0.01500 0.07541 0.00350 0.85665 1.10638 2020-2021 0.15582 0.01500 0.07541 0.00350 0.84418 1.09391 Note: Rates are per$100 of assessed valuation Source: County of Orange Auditor Controller (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. 177 CITY OF HUNTINGTON BEACH PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (In Thousands) Collected within the Fiscal Year of the Levy Total Collections Delinquent Delinquent Percentage Tax Percentage Taxes Delinquency Fiscal Year Total Levy Amount of Levy Collections Amount of Levy Receivable Percent Secured Taxes 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 62.944 98.3% 920 1.4% 2019-2020 66,411 64.767 97.5% 496 65,263 98.3% 1,092 1.6% 2020-2021 69.341 67.887 97.9% 626 68,513 98.8% 926 1.3% Unsecured Taxes 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 90A% 35 1,775 92.2% 39 2.0% 2016-2017 1,899 1,692 89A% 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% 2019-2020 2,038 1,906 93.5% 15 1.921 94.3% 43 2.1% 2020-2021 2,143 1,955 91.2% 26 1,981 92.4% 82 3.8% Community Facilities Districts 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% 2019-2020 4,053 4,027 99.4% 2 4,029 99.4% 14 0.3% 2020-2021 3,949 3,937 99.7% - 3,937 99.7% - 0.0% Source:County of Orange Auditor Controller's Office Note: The levy and tax year is for July 1st through June 30th and does not include the Redevelopment Agency. 2011/2012 to current fiscal year includes the following: Secured: includes supplemental, st Itg reorg, nuisance abatement,weed abatement, retirement override, Lax admin charges, and community interest. Does not include CFO. Unsecured: includes aircraft unsecured tax. Does not include CFO. Miscellaneous:excluded from all tables. Delinquency Amount:reflects the"unpaid"amounts as stated in the OC Auditor-Controller website. 178 CITY OF HUNTINGTON BEACH TOP TEN PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 2020-2021 Taxable Assessed Value Percent In Thousands of Total TAV AES Huntington Beach Energy, LLC S 793,339 1.96% Bella Terra Associates LLC 389,326 0.96% PCH Beach Resort LLC 225,367 0.56% DCO Pacific City LLC 221,223 0.55% The Waterfront Hotel LLC 145,907 0.36% One Pacific Plaza Owner LLC 127,420 0.31% Pacific City Hotel LLC 118,448 0.29% Bella Terra Villas LLC 110,349 0.27% PC Group Retail LLC 92,869 0.23% Onni Huntington Beach LLC 89,960 0.22% Total Top Ten 2,314,208 5.71% All Other Property Taxpayers 38,247,016 94.29% City Total $ 40,561,224 100.00% 2011-2012 Taxable Assessed Value Percent In Thousands of Total TAV The Boeing Company/McDonnell Douglas Corporation $ 302,894 1.13% Bella Terra Associates LLC 299,064 1.12% Mayer Financial LP 199,083 0.74% CIM Huntington LLC 151,838 0.57% Pacific Sands LLC 84,960 0.32% AES Huntington Beach LLC 72,600 0.27% United Dominion Realty LP 68,702 0.26% Seacliff Village Shopping Center Inc 64,483 0.24% Cambro Manufacturing Company 60,817 0.23% NF Huntington Plaza LP 59,496 0.22% Total Top Ten 1,363,937 5.10% All Other Property Taxpayers 25,359,439 94.90% City Total $ 26,723,376 100.00% Source: County of Orange Auditor Controllers Office Note:Information provided for the period from July 1st through June 30th. 179 THIS PAGE INTENTIONALLY LEFT BLANK 180 CITY OF HUNTINGTON BEACH RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (In Thousands) Fiscal Year Ended June 30, September 30, Long-Term Indebtedness 2021 2020 2019 2018- 2017 Governmental Activities: Judgement Obligation Bonds $ - $ $ - S - S Public Financing Authority: 2010(a) Lease Revenue Bonds - 7,410 8,235 9,030 9,030 2011(a)Lease Revenue Bonds - 15,725 17,770 19.735 19,735 2014(a)Lease Revenue Bonds 11,880 12.530 13,145 13,740 13,740 2020(a)Lease Revenue Bonds 4.835 - - - - 2020(b)Lease Revenue Bonds 12,830 - Total Public Financing Authority 29,545 35,665 39,150 42,505 42,505 Other Long-Term Obligations: Leases Payable 12,753 5,241 5,083 6,079 6,286 PARS Payable - - - - - Section 108 Loan City - - - 430 430 LED Lighting Phase 1 432 546 656 762 866 CEC 2,457 2,588 2,818 3.000 3,000 I-Bank 1,882 2,171 2,454 2,730 2,730 Pension Obligation Bonds 341,501 - - Total Other Long-Term Obligations 359,025 10,546 11,011 13,001 13,312 Total Long-Term Obligations-Governmental Activities 388,570 46,211 50,161 55,506 55,817 Long-Term Obligations-Business-Type Activities: Leases Payable - - - - - Pension Obligation Bonds 22,144 - - - Total Long-Term Obligations-Business-Type Activities 22,144 - - Total Long Term Obligations-Governmental Activities and Business-Type Activities S 410,714 S 46,211 S 50,161 S 55,506 S 55,817 2021 2020 2019 2018- 2017 Population 198.039 200,748 202,265 201,761 202,4 33 Debt Per Capita S 2,074 $ 230 S 248 S 275 $ 276 Total Personal Income (In Thousands)- $9,659.154 $9.450.814 $9,222,677 S 8,849,843 $ 8,878,441 Per Capita Personal Income' S 48,774 $ 47,078 S 45,597 S 43,863 $ 43,863 Unemployment Rate" 4.70% 8.60% 2.60% 2.70% 2.80% Total Employment" 105,600 96,200 110,500 109,900 103,200 Source: Claritas,Inc. '- Source:State of California Employment Development Department '••The 2017-18 penod 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. 181 CITY OF HUNTINGTON BEACH RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (In Thousands) Fiscal Year Ended September 30, Long-Term Indebtedness 2016 2015 2014 2013 2012 Governmental Activities: Judgement Obligation Bonds $ 659 S 1,634 $ 2.574 S 3,474 $ 4,339 Public Financing Authority: 2010(a)Lease Revenue Bonds 9,795 10,525 11,230 11.910 12,565 2011(a)Lease Revenue Bonds 21.650 24,985 28,165 31,195 34,155 2014(a)Lease Revenue Bonds 14,315 14,865 - - - 2020(a)Lease Revenue Bonds - - - 2020(b)Lease Revenue Bonds - - Total Public Financing Authority 45,760 50,375 39,395 43,105 46,720 Other Long-Term Obligations: Leases Payable 4,130 - - - 290 PARS Payable - - 29 56 4,517 Section 108 Loan City 625 805 975 1,135 1,285 LED Lighting Phase 1 966 1,063 - - - CEC 3,000 - - - - I-Bank 3,000 - - - - Pension Obligation Bonds - - Total Other Long-Term Obligations 11,721 1,868 1,004 1,191 6,092 Total Long-Term Obligations_Governmental Activities 58,140 53,877 42,973 47,770 57,151 Long-Term Obligations-Business-Type Activities: Leases Payable - - - 3 Pension Obligation Bonds Total Long-Term Obligations-Business-Type Activities - - - 3 Total Long Term Obligations-Governmental Activities and Business-Type Activities $ 58,140 $ 53.877 $ 42,973 $ 47,770 $ 57.154 2016 2015 2014 2013 2012 Population 201,919 198,389 195,999 193,616 192,524 Debt Per Capita S 288 $ 272 S 219 S 247 $ 297 Total Personal Income(In Thousands)' $8.880,801 $8,725,545 S 8,278,410 S7.839,899 S 7.573,894 Per Capita Personal Income' $ 43,982 $ 43,982 S 42,237 $ 40,492 $ 39,340 Unemployment Rate" 3.90% 3.90% 3.60% 3.60% 4.30% Total Employment" 107.200 104,000 120,200 120,200 119,600 182 CITY OF HUNTINGTON BEACH LEGAL DEBT MARGIN LAST TEN FISCAL YEARS (In Thousands) Assessed Debt Limit - 12% of Debt Applicable Legal Debt Fiscal Year Valuation Assessed Valuation to Limit Margin 2011-2012 26,723,376 3,206,805 - 3,206,805 2012-2013 28.045,478 3,365,457 - 3,365,457 2013-2014 29,165,729 3,499,887 - 3,499,887 2014-2015 30,787,185 3,694,462 - 3,694,462 2015-2016 32,392,741 3,887,129 - 3,887,129 2016-2017 33,663,879 4,039,665 - 4,039,665 2017-2018 35,340,214 4,240,826 - 4,240,826 2018-2019 37,120,729 4,454,487 - 4,454,487 2019-2020 38,887,451 4,666,494 - 4,666,494 2020-2021 40,561,224 4,867,347 - 4.867,347 183 CITY OF HUNTINGTON BEACH STATEMENT OF DIRECT AND OVERLAPPING BONDED DEBT JUNE 30, 2021 2020/21 Assessed Valuation: $44,615,313,174 Debt Repaid with Property Taxes(Tax and Assessment Debt): Percent Debt Applicable Overlapping Tax and Assessment Debt Applicable' to City Metropolitan Water District 1.365% 366.230 Coast Community College District 28.593% 253,416,850 Huntington Beach Union High School District 73.089% 127,602,429 Fountain Valley School District 26.863% 15,812,905 Huntington Beach City School District 99.949% 153.985,389 Ocean View School District 93.589% 33,205,377 Westminster School District 23.996% 26,967,358 Los Alamitos Unified School District Facilities District No. 1 1.190% 2,394,342 City of Huntington Beach Community Facilities Districts(1990-1. 2000-1, 2002-1. 2003-1) 100.000% 28,395,000 Total Overlapping Tax and Assessment Debt $ 642,145,880 Direct and Overlapping General Fund Debt Orange County General Fund Obligations 6.806% 25.991,093 Orange County Pension Obligations 6.806% 33,030,757 Orange County Board of Education Certificates of Participation 6.806% 837.819 North Orange County Regional Occupation Program Certificates of Participation 0.087% 7,473 Coast Community College District General Fund Obligations 28.593% 640.483 Coast Community College District Pension Obligation Bonds 28.593% 651,920 Huntington Beach Union High School District Certificates of Participation 73.089% 44,884,752 Los Alamitos Unified School District Certificates of Participation 1.069% 390,500 Huntington Beach School District General Fund Obligations 99,949% 17,288.610 Ocean View School District Certificates of Participation 93.589% 16.836.661 Westminster School District General Fund Obligations 23.993% 7,480,753 City of Huntington Beach General Fund Obligations: 100.000% 47,069,157 City of Huntington Beach Pension Obligation Bonds 100.000% 363,645.000 Total Direct and Overlapping General Fund Obligation Debt $ 558,754,978 Overlapping Tax Increment Debt(Successor Agency) 100.000% 4,985,000 Total Direct Debt $ 410,714,157 Total Overlapping Debt 795.171.701 Combined Total Debt 5 1,205,885.858 (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($393,621,687) 0.92% Combined Total Debt 2.70% Ratios to Redevelopment Successor Agency Incremental Valuation ($3,835,496,390) Total Overlapping Tax Increment Debt 0.13% 'The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages wero estimated by determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by me district's total taxable assessed value. Source:California Municipal Statistics and City of Huntington Beach Finance Department 184 CITY OF HUNTINGTON BEACH PRINCIPAL PRIVATE EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2021 % of total The Boeing Company 3,112 2.95% Safran Cabin Inc 884 0.84% No Ordinary Moments 646 0.61% Hyatt Regency Huntington Beach 641 0.61% Boardriders Wholesale LLC 559 0.53% Cambro Manufacturing 550 0.52% Huntington Beach Hospital 527 0.50% Wal-Mart 462 0.44% Waterfront Hilton Beach Resort 450 0.43% Huntington Valley Healthcare 381 0.36% Total of top 10 8,212 7.78% All others 97,388 92.22% Total employment(public and private) 105,600 100.00% 2012 % of total The Boeing Company 4,676 4.06% Quiksilver 1,594 1.38% Cambro MFG Co. 951 0.83% Ensign United States Drilling 925 0.80% Hyatt Regency Huntington Beach 641 0.56% C & D Aerospace 555 0.48% Huntington Beach Hospital 520 0.45% Rainbow Disposal 408 0.35% Huntington Beach Healthcare 381 0.33% Wal-Mart 379 0.33% Total of top 10 11,030 9.58% All others 104,070 90.42% Total employment (public and private) 115,100 100.00% Source: Finance Department, City of Huntington Beach 185 CITY OF HUNTINGTON BEACH FULL-TIME ACTUAL AND BUDGETED CITY EMPLOYEES BY FUNCTIONIPROGRAM LAST TEN FISCAL YEARS Actual General Government: 2021 2020 2019 2018- 2017 2016 2015 2014 2013 2012 City Council 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 City Manager 18.00 18.00 12.50 12.50 11.50 11.50 11.50 11.50 7.00 7.00 City Treasurer 1.50 1.50 2.00 2.00 2.00 1.50 1.50 1.50 1.50 1.50 City Attorney 11.00 11.00 11.00 11.00 12.00 11.00 11.00 11.00 11.00 11.00 City Clerk 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Finance 31.50 31.50 33.00 33.00 33.00 32.50 31.50 31.50 29.50 29.50 Human Resources" - - 15.00 15.00 15.00 15.00 15.00 15.00 14.50 15.00 Community Development 54.00 54.00 44.00 44.00 44.00 43.50 44.00 43.00 42.75 42.75 Information Systems 23.00 22.00 30.00 30.00 30.00 30.00 30.00 30.00 29.50 29.50 Economic Development' - - - - - - - - 4.50 5.50 Library Services 27.25 23.25 28.25 28.25 28.25 28.25 28.25 28.25 27.75 27.75 Fire 200.00 200.00 198.00 198.00 198.00 198.00 198.00 196.50 176.50 176.50 Police 357.00 356.00 366.50 364.50 364.50 364.50 361.50 360.50 358.50 363.00 Community Services 33.00 37.00 36.00 36.00 44.00 44.00 43.00 43.00 56.00 61.00 Public Works 201.00 199.00 207.00 207.00 199.00 199.00 198.00 196.00 196.00 196.00 962.25 958.25 987.25 986.25 986.25 983.75 978.25 972.75 960.00 971.00 Source:Finance Department,City of Huntington Beach Economic Development was combined with Community Development in the year ended June 30,2020.Previously,it was combined with the City Manager's Office as of the year ended September 30,2014, "Human Resources was combined with City Manager's Office in the year ended June 30,2020. 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, 186 CITY OF HUNTINGTON BEACH OPERATING INDICATORS BY FUNCTION/ACTIVITY LAST TEN FISCAL YEARS Function/Program 2021 2020 2019 2018- 2017 Finance: Water Bills Processed 637.920 636,708 639,245 476,290 632.997 Active Business Licenses 19,011 20,910 21,414 21,782 22,074 Accounts Receivable Billings Processed 20,183 25,687 30,217 25,000 34,963 City Clerk: Passports Issued "" 418 4,579 7,024 5.757 7,408 Planning: Entitlements Processed 112 162 221 206 216 Plan Reviews 1,955 1,358 1.542 1.466 1.376 Field Inspection Complaints 11,899 11,610 8,183 7,005 8.459 Code Violation Cases 4,473 3,260 4,786 4,219 3.981 Building: Number of Permits Issued 9,075 8,855 9,807 7,490 9,728 Number of Inspections Completed 26.710 32.859 36.562 30,501 38,796 Value of Construction Permits (Thousands of Dollars) 166,000 169,393 135.910 109.462 216,252 Processed Number of Certificate of Occupancies' 655 515 686 523 740 Completed Plan Renews 4.673 3,469 3.491 2,771 4.172 Counter Visits 115 14.922 21,409 16,498 21,731 Fire: Inspections 4,008 5,965 6,140 3,963 2,758 Responses 20.428 21,068 20,354 14,490 20,555 Ocean Rescues 4,116 2,487 4,953 3.530 3,639 Estimated Beach Visitors 7,910.293 6,712,125 10,577,290 12,522.640 13.339,518 Police: Physical Arrests 5,363 5,785 5,979 4,614 5,298 Parking Violations 95,753 59,484 79,069 54.500 70,846 Traffic Violations 10.920 12,105 13.314 11,869 19,916 Community Services: Park/Open Space Acreage 1,072 1,066 1,066 1.065 1.065 Enrollment in Recreation Classes 15.511 28,952 37,978 27.152 37.968 Public Works: Water Sold(Acre Feet)" 27,731 25.966 26.251 19,777 25,944 Gallons of Sewage Pumped Per Day" 19 million 19 million 19 million 19 million 22 million Library: Items in Collection 291,444 294.849 293.995 292,037 288,599 Items Borrowed 481,523 779,124 942,821 655,626 943,642 Beginning the 2013114 Fiscal Year, the Building Department no longer processes Certificate of Occupancies. Reduction of estimate is the result of the Governor's executive order to reduce water consumption. The 2017-18 penod 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. ***' Passport acceptance was closed to the public from June 2020 through May 2021 due to COVID-19. It was reopened on June 15, 2021 Source: Various departments of the City of Huntington Beach 187 CITY OF HUNTINGTON BEACH OPERATING INDICATORS BY FUNCTION/ACTIVITY LAST TEN FISCAL YEARS (Continued) Function/Program 2016 2015 2014 2013 2012 Finance: Water Bills Processed 635,052 536,684 630.240 628,207 646,229 Active Business Licenses 21,420 21,424 20,450 21,127 22,304 Accounts Receivable Billings Processed 30,826 38,594 42,360 45,422 45,422 City Clerk: Passports Issued 5,623 5,121 4,598 4,220 3,850 Planning: Entitlements Processed 221 280 204 231 205 Plan Remews 1,653 1,595 1,466 1,575 1,184 Field Inspection Complaints 7,951 8,233 7,030 7,301 6,105 Code Violation Cases 4,324 4,710 2.545 2.385 2,573 Building: Number of Permits Issued 10.981 10,670 9,348 8.970 8,444 Number of Inspections Completed 39,380 38,320 36,142 33,962 31,224 Value of Construction Permits (Thousands of Dollars) 283,910 234,946 216,343 248,246 190,992 Processed Number of Certificate of Occupancies' r/a rla n1a 477 647 Completed Plan Renews 4,172 3,815 3,148 n/a n/a Counter Visits 23,492 21,893 21,326 20,854 19,777 Fire: Inspections 5,132 6,499 6,641 5,087 6,974 Responses 20,279 19,562 15,815 15,608 15,040 Ocean Rescues 3,977 5,371 6,426 4,195 4,669 Estimated Beach Visitors 12,272,030 11.803,943 12,035.134 11,016,615 8,906.592 Police: Physical Arrests 5,112 4,854 4,303 4,237 5,774 Parking Violations 90,361 83,453 74,668 72,347 77,282 Traffic Violations 17,639 17.596 16.330 13,016 16,916 Community Services: Park/Open Space Acreage 1,062 1,062 1,062 1,062 1,062 Enrollment in Recreation Classes 34,424 30,228 30,194 30,218 32,817 Public Works: Water Sold(Acre Feet)" 24,505 24,763 29,279 28,354 27,784 Gallons of Sewage Pumped Per Day" 19 million 19 million 22 million 22 million 22 million Library: Items in Collection 285.814 343.655 332,092 385.901 420.956 Items Borrowed 921,105 908,656 937,533 892,543 888.019 188 CITY OF HUNTINGTON BEACH CAPITAL ASSET STATISTICS BY FUNCTION/ACTIVITY JUNE 30, 2021 Library Services One Main Library and Four Branches Fire: Fire Stations 6 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 451 Miles of Beach Maintained 4.7 Miles of Storm Drains Maintained 120 Miles of Sewer Maintained 362 Source: Various departments of the City of Huntington Beach 189 Dav s Fa r r Davis Farr LLP 18201 Von Korman Avenue Suite 1100 1 Irvine.CA 92612 CERTIFIED PUBLIC ACCOUNTANTS Main:949.474.2020 1 Fax:949.263.5520 REQUIRED AUDIT COMMUNICATIONS Honorable Mayor and City Council City of Huntington Beach Huntington Beach, California We have audited the 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 for the year ended June 30, 2021. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated June 17, 2021. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Huntington Beach are described in Note 1 to the financial statements. The City implemented Governmental Accounting Standards Board (GASB) Statement No. 84 related to Fiduciary Activities and GASB Statement No. 98 that changed the name of the Comprehensive Annual Financial Statements to the Annual Comprehensive Financial Statements. We noted no transactions entered into by the City of Huntington Beach during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City of Huntington Beach's financial statements were: • Judgments involving the estimated useful lives and depreciation methodology used for capital assets, including certain infrastructure. We evaluated management's judgments for reasonableness. • Judgments as to which City capital projects should be capitalized and depreciated in the government-wide financial statements and proprietary funds. We evaluated management's judgments for reasonableness. • Judgments relating to the collectability of accounts and notes receivable. We evaluated management's judgments for reasonableness. • Judgments with respect to recording claims payable and remediation obligations. We evaluated management's judgments for reasonableness. • Judgments involving calculation of the pension liability. We evaluated the actuarial valuation report supporting the calculations. • Judgments involving the calculation of the other post-employment benefit (OPEB) liability. We evaluated the actuarial valuation report supporting the calculations. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected those misstatements. We recorded material adjustments to the fiduciary funds related to the implementation of GASB 84. Additionally, the following immaterial misstatements detected as a result of audit procedures were not corrected by management: • recording LAIF and OCIP investments at fair value, • recording prior year adjustment to allocate interest to the Pension Liability debt service fund, • recording the bond premium and deferred refunding charge on the 2020 Lease Revenue Bonds, and • reclassification of operating expenses to change in joint venture investment in the nonoperating section of the Water Fund. Management believes these adjustments are not material, either individually or in the aggregate, to each opinion unit's financial statements taken as a whole. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated December 16, 2021, Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City of Huntington Beach's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City of Huntington Beach's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to management's discussion and analysis, budgetary comparison information for the General Fund and each major special revenue fund, schedule of funding progress, schedule of changes in net pension liability and related ratios, schedule of pension contributions, schedule of money-weighted rate of return, schedule of changes in net OPEB liability and related ratios and schedule of OPEB contributions, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on supplementary information, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on introductory section and the statistical section, which accompany the financial statements but are not RSI. Such information has 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. Restriction on Use This information is intended solely for the information and use of the City Council and management of the City of Huntington Beach and is not intended to be, and should not be, used by anyone other than these specified parties. tsP Irvine, California December 16, 2021 Dav i s Fa r r Davis Farr LLP 18201 Von Korman Avenue I Suite 1100 1 Irvine.CA 92612 .Eat[ to v_9,._ A_Cou Y TAN PS Main:949.474.20201 Fax:949.263.5520 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Air Quality Special Revenue Fund Performed in Accordance with Government Auditing Standards City Council City of Huntington Beach Huntington Beach, California We have audited, in accordance with the 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, Air Quality Management District Fund of the City of Huntington Beach, California, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the Air Quality Management District Fund of the City of Huntington Beach's basic financial statements, and have issued our report thereon dated December 16, 2021. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Air Quality Management District Fund's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Air Quality Management District Fund's internal control. Accordingly, we do not express an opinion on the effectiveness of the Air Quality Management District Fund's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Air Quality Management District Fund's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, including applicable provisions of Assembly Bill 2766 (AB2766) Chapter 1705 (Health and Safety Code Sections 44220 through 44247), noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. cuP Irvine, California December 16, 2021 gyp• Davis Farr LLP Dav isFa r r 18201 Von Korman Avenue I Suite 1100 1 Irvine,CA 92612 CERTIFIED PUBLIC ACCov%TANTS Main:949.474.20201 Fax:949.263.5520 INDEPENDENT ACCOUNTANT'S REPORT The Honorable Mayor and City Council City of Huntington Beach, California We have performed the procedures enumerated below on the City of Huntington Beach, California (City) appropriations limit worksheets for compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution for the year ended June 30, 2021. The City is responsible for compliance with Section 1.5 of Article XIIIB of the California Constitution. The City has agreed to and acknowledged that these procedures are appropriate to meet the intended purpose of evaluating compliance with the requirements of Section 1.5 of Article XIIIB of the California Constitution and the League of California Cities publication entitled Article XI11B Appropriations Limitation Uniform Guidelines for the year ended June 30, 2021. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The procedures and the associated findings are as follows: 1. We obtained the worksheets referred to above and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote. Results: No exceptions were noted as a result of our procedures. 2. We recalculated the mathematical computations reflected in the City's worksheets. Results: No exceptions were noted as a result of our procedures. 3. We compared the current year information used to determine the current year limit and agreed it to worksheets prepared by the City and to information provided by the State Department of Finance. Results: No exceptions were noted as a result of our procedures. 4. We compared the amount of the prior year appropriations limit presented in the worksheets to the amount adopted by the City Council for the prior year. Results: No exceptions were noted as a result of our procedures. The Honorable Mayor and City Council City of Huntington Beach, California Page Two We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively on the worksheets referred to above. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication entitled Article XIII8 Appropriations Limitation Uniform Guidelines. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the Management of the City of Huntington Beach, California and is not intended to be, and should not be, used by anyone other than the specified party. LLP Irvine, California December 16, 2021 ATTACHMENT 3 Fiscal Year 2021/2022 Recommended Mid-Year Budget Adjustments Recommended Adjustments by Fund: APPROPRIATION INCREASE Fund No Fund Name Appropriation Revenue Offset Net Increase Dept 100 General Fund 120,000 - 120,000 Administrative Services 100 General Fund 120,000 - 120,000 City Manager 100 General Fund 790,000 790,000 - Community Development 100 General Fund 100,000 100,000 - Finance 100 General Fund 2,128,584 2,081,294 47,300 Fire 100 General Fund 300,000 - 300,000 Police 100 General Fund 235,000 - 235,000 Public Works 100 General Fund 1,300,000 - 1,300,00o Non-Departmental General Fund Subtotal 5,093,584 2,971,294 2,122,300 228 Park Development Impact-Residential 150,000 - 150,000 Public Works 238 Emergency Operations Center* 2,000,000 2,000,000 - Non-Departmental 308 In-Lieu Parking Improvements 30,000 - 30,000 Community Development 504 Refuse Collection Service 195,000 195,000 - Public Works 807 Energy Efficiency 238,000 - 238,000 Public Works Other Funds Subtotal 2,613,000 2,195,000 418,000 All Funds Total 7,706,594 5,166,284 2,540,300 Additional appropriations in excess of$2 million to be budgeted as needed in the Emergency Operation Center Fund 238 for COVID response efforts and will be fully offset by FEMA reimbursement revenues. ATTACHMENT 4 Fiscal Year 2021/2022 Recommended Mid-Year Professional Services Authority Fund No Fund Name Description Amount Department 100 General Fund Technical assistance services 125,100 Community Development 100 General Fund Mobile crisis response 1,500,000 Non-Departmental 1,625,100 AMENDMENT NO. I TO AGREEMENT BETWEEN TIME CITY OF HUNTINGTON BEACH AND MIND OC FOR PILOT MOBILE CRISIS RESPONSE PROGRAM THIS AMENDMENT- is made and entered into by and between the CITY 01, HUNIINGTON BEACH, a California municipal corporation, hereinafter relerrcd to as "City." and MIND OC, a California Corporation, hereinafter referred to as "Consultant." WHEREAS, Cite and Consultant are parties to that certain agreement, dated April 20, 2021. entitled "Professional Services Contract Between the City of Huntington Beach and Mind OC for pilot Mobile Crisis Response Program" which agreement shall hereinafter be referred to as the "Original Agreement": and Citv and Consultant wish to amend the Original Agreement to increase the amount of compensation to be paid to Consultant. NOW. TEIEREFORE, it is agreed by City and Consultant as follows: I. ADDITIONAL COMPENSATION In consideration of the services to be performed under the Original Agreement, City agrees to pay Consultant at the rates specified in Exhibit B, which is attached hereto and incorporated by reference into this Agreement. City further agrees-to pay Consultant an additional sum not to exceed One Million Five Hundred Thousand Dollars (SI,500,000.00). The additional sum shall be added to the original sum of One Million Five Hundred Thousand Dollars (Sl 500,000.00). for a new contract amount not to exceed Three Million Dollars (53.000,000.00). 2. TERM ']'lie term of the Agreement is extended up and including .tune 30. 2023. 22-10891/275053 1 3. REAFFIRMATION Except as specifically modified herein, all other terms and conditions for the Original Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers on February 15 2022. MIND OC CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California By: print name ITS: (circle one)Chairman PrcsidenWice President Mayo AND `/'/i ^ L By: City Clerk IN TED A APPROVED: print name ITS: (circle one)Secretary/Chief Financial Officer/Asst. Secretary -Treasurer City Manager APPROVE S ity ttomey 22-10991/275053 2 3. REAFFIRMATION Except as specifically modified herein, all other terms and conditions for the Original Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers on February 15 , 2022. MIND OC CITY OF HUNTINGTON BEACH, a municipal corporation of the State of By: California '/� 7.51��1 l�ti'1C 1'iP prim mree ITS: (eirde one)Clu' idta tAfC_ President Mayor GEL AND / By:411'IG 1 �, 1 `�,�.1/,v City Clerk �#"= Val cN i Q INITIATED AND APPROVED: print rrsoe ITS: (circle one)Secretary! h F'iemcir l Officer/Asst. Secretary -Treasurer City Manager APPROVED AS TO FORM: COUI'ITE:U".LTIT City Attorney ' J r� 22-10891/275053 2 Summary Costs—Two 12-hour Units with Care Coordination Support Annual Personnel Budget 1,049,513 Non Personnel Operational Costs 71,428 Total On-Goins Costs 1,079,980 Indirect 124,548 12 month Total Costs 1,245,498 This budget depicts the necessary costs to staff and operate two 12-hour per day, 7 day/week mobile crisis teams. Please see the budget for additional details. Staffing Approach Position Name Notes FTE Direct Service Positions Director, Mobile Response Delgado, Anthony Allocated 0.20 Admin Asst Shannon Parker Allocated Team Supervisor - HB Lindgren, Lance .1.,0�0 Case Manager TBD Operations Asst Frank Seitz Allocated 0.20 Data Analytics TBD 10 Hours/month QM Medical Director Dr McCarron Consultant, $1k mo allocated n/a Crisis Intervention Specialists Behavioral CIS Shift 1 (12 Hours( 15am-6pm 2.70 Physical CIS Shift 1 (12 Hours) 6am-6pm 2.70 Behavioral CIS Shift 2 (12 Hours) 3am-3pm 2.70 Physical CIS Shift 2 (12 Hours) 3am-3pm _ _ 2101 Position Role/Qualifications Director, Mobile Licensed clinician(LCSW, LMFT,or LPC);responsible for general program management Response and supervision of crisis intervention workers.They will provide capacity building and support City Supervisor Responsible for equipment maintenance,staff coordination and oversight,including licensure monitoring,and monitoring van upkeep. Medical Director The Medical Director provides oversight and guidance regarding protocols,practice and training.The costs for the medical director in the proposed budget will cover the expanded services of the Mind OC Chief Medical Officer to function in this critical leadership capacity. Crisis Intervention Must possess 2 years of relevant experience, education,or both;performs de- Specialist-- Behavioral escalation, mediation, suicide assessment and intervention,referral, crisis counseling, Health and determines transportability based on mental health symptoms. Crisis Intervention Same responsibilities as Crisis Intervention Worker--Behavioral Health Counselor as Worker-- Health well as non-emergency health support and referrals.Communication with EMS/Fire Specialist when care is indicated.Trained in trauma-informed care,harm reduction,motivational interviewing,suicide Intervention,and conflict mediation. EXHIBIT B Position Role/Qualifications Care Coordinator Must possess relevant experience,education, or both;case management services would include helping clients attain proper identification, provide assistance in completing community program intake forms and/or applications for additional support services, post-crisis intervention contact to monitor and encourage adherence to follow-up care. Data Analytics Supports reporting and analytics Operations and Support Director,Supervisor and other team members as well as overall program Administrative Assistants functions and logistics Mobile Crisis teams provide care coordination services core to the team's daily functions, including referral and transport to services as a primary intervention. Ongoing, individual case management provides extended individual support to improve individual outcomes and increase overall value of the service. Key Model Elements • Embedding the team into the police response systems, with dispatch staff trained to triage, and when appropriate divert certain calls for service to the mobile crisis response team. Such calls are carefully screened to exclude those involving violence, weapons, threats, and any other situation where the presence of a uniformed police officer would be needed. • The mobile teams handle non-emergency calls due to mental illness, substance use, homelessness, and related health conditions. • Staff of experienced professionals (crisis intervention workers)who specialize in the care and management of these frequently co-occurring challenges. Community Care The Be Well OC mobile response team will implement a community care model that delivers the following: • Specialized professional staff respond to community needs involving mental illness, substance use, homelessness, and/or related health challenges. While people in need may at times be struggling with homelessness, the team serves all residents. • The service team functions as an essential support to the Police Department and emergency services, relieving first responders of the often time-intensive mental health and social service- related calls. • Specialized response vehicles and transportation for individuals in need to appropriate care facilities, such as shelters, mental health crisis units, health clinics, hospitals, etc. • Determination of appropriate action plans specific to individual client needs, family and patient follow up care, as well as case management when indicated. • Development of a data dashboard in collaboration with the City to ensure transparency and continuous quality improvement. EXHIBIT B Ongoing Approach We will draw on our community knowledge and expertise and work closely with the City to continue to revise and develop clear plans and protocols including, but not limited to: • Multidisciplinary training • Incoming calls, triage, and team deployment • Community partner care coordination, with emphasis on police and fire • General Safety and security practices, with emphasis on high-risk response scenarios • Documentation and data, with emphasis on transparency and continuous quality improvement EXHIBIT B CITY OF HUNTINGTON BEACH i Professional Service Approval Form JAN 25 2022 ' Amendment # 1 'rr., tnlen• 1 Date Requested. 1/19/2022 2 Contract Number to be Amended PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND MIND OC FOR A PILOT MOBILE CRISS RESPONSE PROGRAM 3. Department: City Manager 4. Requested By: Travis Hopkins, Jason Austin, Grace Yoon-Taylor 5. Name of Consultant. MIND OC 6. Amount of Original/Prior Contract: $1,500,000 (General Fund $282,000, SB2 Fund, and Fund 227 for$368,000) 7. Additional Compensation Requested $1,500,000 Maximum Foe A TO 41 OIr 3 DOO OHO Nj I 8. Original Commencement Date 4/20/2021 9. Original Termination Date: 4/20/2022 10. Extended Date Requested: 6/30/2023 11. Reason for Contract Amendment. The original contract expired in April 20, 2022 for a pilot program and the City plans to extend this program for 1 year and 2 months (14 months) to confide with the end of FY22-23 SB2 Funding for Year 1 and Year 2, totaling appx $1.4 million is available and will partially fund this program (about 65%) Additional General Fund allocation will be requested for FY2021-22 through the mid-year budget adjustment. L -- f/2 SCs✓V-N/1 �. Purchasing Approval Signature Date 12 Are sufficient funds available to fund this contract? Yes ® No ❑ 13. Business Unit and Ob'ect Code where funds are budgeted Account number i Contractual Dollar Amount Business unit. object# Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2021-22 2022-23 10080201.69365 $5E5,000 $500,000 ' $ $ 126740101.69365 $650,000 $975,000 $ $ 22770105.6 3365 $26,666 ¢rs $25,00D $ $ Budget Approval Signature Dale T 22 Department Head Si ature Date professional service approval form-amendment - mind oc REV 2016 City of Huntington Beach 2000 Main Street ♦ Huntington Beach, CA 92648 (714) 536-5227 ♦ vivw.huntingtonbeachca.gov Office of the City Clerk ' Robin Estanislau, City Clerk February 18. 2022 Mind OC Attn: Marshall Moncrief, MFT, MBA 18650 MacArthur Blvd., Suite 220 Irvine, CA 92612 Dear Mr. Moncrief: Enclosed is a fully executed copy of the "Amendment No. 1 to Agreement between the City of Huntington Beach and Mind OC for Pilot Mobile Crisis Response Program" approved by the Huntington Beach City Council on February 15, 2022. Sincerely, Robin Estanislau, CIVIC City Clerk RE:ds Enclosure Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand • 2/15/2022 City of Huntington Beach FY 2020/21 Year-End Audit Results & FY 2021/22 Mid-Year Budget Update Huntington Beach City Council February 15, 2022 �VIGTO, @EACH Overview • FY 2020/21 Audit and Year-End Results • FY 2021/22 Mid-Year Budget Update & Adjustments • FY 2022/23 Budget Development Calendar SUPPLEMENTAL CO4bi11EjtJMCA) TTION /Szb ZZ / • 1 Ap,KW INin IVn.:. • 2/15/2022 FY 2020/21 Audit & Year-End Results J. I VMGIM MACH G�9 FY2020/21 Audit Results Cw��wn Errs O.m A.vvi.a Ce1L&CAle of •Auditing firm of Davis Farr LLP audited the City's Achievement for Excelleuce financial statements and internal controls W Fu anc1Al Repohmg • FY2020/21 Annual Comprehensive Financial Report (ACFR) received an Unmodified (Clean) Audit Aia Opinion Cln of Hnulluglou Bench CAurorul. •The City's ACFR is award winning— received the Pvnt®,�,. Government Finance Officers Association's (GFOA) PaY FVY Ya f MN Excellence in Financial Reporting Award for 35 years • 2 • 2/15/2022 FY 2020/21 Performance (Audited) Government-Wide Highlights: Description ASSETS Current and Other Assets $374,526 Capital Assets 879,72S Total Assets 1,254,251 Deferred Outflows-Pensions&OPEB 419,067 LIABILITIES Current and Other Liabilities 46,350 Long-Term Obligations' 915,921 Total Liabilities 962,271 Deferred Inflows-Pension&OPEB 19,317 TOTAL NET POSITION $691,730 • Reflect GASB 68 recording of Net Pension Liability of$438.4 million and GASB 75 recording of Net OPES Liability$3.2 Million FY 2020/21 General Fund (Audited) Description In Thousands7 Total Revenues $238,652 Total Expenditures 215,846 Excess of Revenues Over Expenditures 22,806 Transfers In 548 Transfers Out (10,868) Net Change In General Fund Balance $12,486 Restricted AES Revenues (4,900) Section 115 Trust Transfer (1,000) Other Restricted Changes in General Fund Balance' (1,351) General Fund (Fund 100)Surplus $5,235 •Includes restricted donations and Section 115 Trust investment returns • 3 • 2/15/2022 General Fund Balance Strategic Planning Initiative Assignment $15,998 $16,536 $16,536 Litigation Reserves - - 3,650 AES Restricted Funds - - 4,900 Pension Rate Stabilization - - 741 Section 115 Trust 8,750 10,003 12,878 Other Nonspendable, Restricted, Committed,and Assigned Fund Balancet 54,265 53,549 55,904 Total Fund Balance $79,013 $80,088 $94,609 FY 2021/22 Mid-Year Budget Update ,V NLNtwLIOM RKN • 4 • 2/15/2022 City Budget & Fiscal Position We are projecting a FY 21-22 surplus with modest surpluses over the next four years as a result of key financial decisions made by City Council and the ongoing recovery from the COVIO-19 economic downturn. Y FY2020-21 concluded with a$5 2M surplus, after year-end transfers($10.9M surplus prior to transfers) • City Council approved additional investments of$4.4M into capital infrastructure and$1 3M of essential capital equipment needs from the year-end surplus FY2021-22 is projected to conclude with a$4.3M surplus(subject to change) Y Historic Infrastructure Investments in FY2021.22 General Fund transfer to the Infrastructure Fund increased by 130%to $11 5M i CIP budget Increased 57% to $39.3M 10 NGrp4 t „ Y Additional One-Time Funding Y City received$29 6M through the American Rescue Plan Act. City Council approved an expenditure plan to invest funds in projects oQ ysF�ouN1v C'`�t General Fund Budget FY 2021/22 Projected $4.3M Surplus W iM ew Com,eunirr rM CNrrX b Cu nnr LrveX row we.•.o.wnX.M.i 1x J'.a mee.r a orop.nr „� >w now ru o„d4 wen. sx � General Fund Revenues -$245.3M General Fund Expenditures - $241.OM Property Tax$92 9M or 38% Polloe$f r 6M or 34% Sales Tu$49.SM or 20% Fir•$47 6M or 21% Motel Tu$14 4M or 6% PuWx Worn S20M or 9% Use of Morey ar16 Property$163M or 7% Cn•rge•for Curse Servloes S24 6M or 10% • 5 • 2/15/2022 Financial Outlook General Fund(F und 100) Projected Projected Protected Projecled Projected Revenue Recurr _ $245,376 _ 6251520 $256,666 6267M4 $268414 Personnel Costs _ 164,226 169,908 169,598 172.281 174 988 operatingCasts 43,045 48 880 50,842 62,370 53,953 Non t Costs' 33,768 31,364 33,643 34,388 34,940 Total Expenditures 241,040 260 132 254,093 269,019 293,840 Surplus $4,336 $1,666 $2,606 M426 62,666 'YGaY,Ab S�O.^tl•'f.w•�wa W TMW. Ongoing Challenges • Ongoing Impacts of COVID-19 • Inflationary Costs • Increased CaIPERS Costs • Capital and Infrastructure Needs • Increased Workers' Compensation Costs • Increased General Liability Costs — $11.8M in estimated General Liability Claims as of 12/31/2021 — $11.3M in reserves/available funds as of 12/31/2021 — $2.OM total legal claims expense in FY20/21 — $1.4M total legal claims expense in FY21/22 as of 12/31/2021 • 6 • 2/15/2022 FY 2021/22 Mid-Year Budget Adjustments N11111INftON .FKN Mid-Year Budget Adjustment Requests • Mid-Year budget adjustments are requested in 6 separate funds 1. General Fund (100) 2. Park Development Impact (228) 3. Emergency Operations Center (238) 4. In-Lieu Parking Improvements (308) 5. Refuse Collection Service (504) 6. Energy Efficiency (807) . 7 • 2/15/2022 General Fund Adjustments -General Fund Adjustments requested in the following departments: —Administrative Services Department —City Manager Department — Community Development Department — Finance Department — Fire Department — Police Department — Public Works Department — Non-Departmental General Fund Adjustments Administrative Services Department • $120K- increased pre-employment medical exams, labor and employee relations consulting services, and a performance evaluation system City Manager Department • $120K- executive recruitments, City Charter review, and Project Zero/Healing Center Community Development Department • $150K increased plan check services; $140K inspection services; and $SOOK sales tax sharing offset with plan check and inspection permit revenues and sales tax revenues for a net zero Impact. . 8 • 2/15/2022 General Fund Adjustments Finance Department • $100K- parking citation processing offset with parking citation revenues for a net zero impact Fire Department • $1.71M Fire Strike team reimbursement costs offset with strike team reimbursement revenues for a net zero Impact; $381K Emergency Transport deployment offset with emergency medical services revenue for a net zero impact; and $47K physical exams for suppression staff Police Department • $300K temporary retired annuitant employees to maintain essential public safety services such as pilot police officers retained to ensure proper staffing levels in the Air Support Division and to train new pilots General Fund Adjustments Public Works Department • $235K- increased janitorial and maintenance contracts due to prevailing wage requirements and general labor increases;fuel increases; shifting duties from part-time staff to contract services; and additional scope of work to meet community standards Non-Departmental • $1M COVID related expenditures disallowed for FEMA reimbursement • $300K Be Well OC (Mind OC) Mobile Crisis Response Program contract costs ineligible for federal funding 9 • 2/15/2022 General Fund Adjustment Summary Admin.strativr ie�:i;es _ $120,000 $120000 City Manager 220,000 - 120000 Community Development 790000 790,000 - Finance_ _ 100000 100DDO - Fire 2,128,584 2,D81,284 47300 Police 300,DDO 300,000 Public Works 235 000 - 235,000 Non-Departmental 1300000 - 1,300,000 General Fund Total $5,093,584 $2,97112D4 $2,122,900 Current Year General Fund Surplus with Mid-Year Adjustments d Fund(Fund 100) Projected Revenue Recurring) $246 376 Personnel Costs 164,228 Operating Costs 43,048 Non-Operstmg Costs 33,768 Totel Expenditures 241,040 surimus 1336 General Fund Requests-Net Increase 722 Surplus aftsr General Fund Re oasts 214 • 10 • 2/15/2022 Other Fund Adjustments *Other Fund Adjustments requested in the following funds: 1. Park Development Impact (228) 2. Emergency Operations Center (238) 3. In-Lieu Parking Improvements (308) 4. Refuse Collection Service (504) 5. Energy Efficiency (807) Other Fund Adjustments Park Development Impact (Fund 228) — Public Works • $150K contract administrator services to manage the large volume of park related projects currently underway Emergency Operations Center (Fund 238) — Non-Departmental •This fund accounts for citywide COVID related expenditures reimbursable by FEMA. An additional appropriation of$2M is requested to continue charging eligible COVID related expenditures which will be submitted to FEMA for reimbursement for a net zero impact. In-Lieu Parkins Improvements (Fund 308)— Community Development • $30K Parking Structure Audit and Operational Assessment of the 5th and PCH parking structure • 11 • 2/15/2022 Other Fund Adjustments Refuse Collection Service (Fund 5041 — Public Works • $19511(to fund pass-thru costs associated with the Refuse Collection and Disposal Services contract. Based on current revenue collection amounts, these adjustments will have a net zero impact. Energy Efficiency (Fund 807) — Public Works • $238K Civic Center storage system and software, which provides battery storage and energy management for the solar panel system; and the City's cost share in SCE Charge Ready 2 (CR2) grant program to install 25 dual port charging stations for a total of 50 charging ports Other Funds Adjustment Summary Fund Department Approp,whon R'w"'Itle Offset Net Increase 228 Park Development impact 150,000 - 150,000 238 Emergency Operations Center 2,000,000 2,000,000 - 308 In-Lieu Parking Improvements 30,000 - 30,000 504 Refuse Collection Service 195,000 195,000 807 Energy Efficiency 238,000 - 238,000 Other Funds Total 2,613,000 2,195,000 418,000 Sufficient revenues, cash, and/or fund balances are available to support the requested other funds adjustments • 12 • 2/15/2022 Professional Service Contract Amendments Community Development • Increase National Development Council agreement by $125,100 for community development related consulting services. No additional budget Is requested. Be Well Program • Increase Mind OC agreement by $1.5M and extend the contract by 14-months (to 6/30/2023) for the Be Well Mobile Crisis Response Program. $300K budget requested. FY 2021/22 Budget Development Calendar Nl1N1MG10N KKN • 13 • 2/15/2022 Budget Development Calendar Proposed Date Item February—May 2022 FY 2022/23 Internal Budget Development Process May 17, 2022 FY 2022/23 Proposed Budget Study Session with City Council June 7, 2022 FY 2022/23 Budget Adoption:City Council Public Hearing June 21, 2022 FY 2022123 Budget Adoption:Alternate Date July 1, 2022 Fiscal Year 2022/23 Begins Recommended Actions 1. Receive and File FY 2020/21 Annual Comprehensive Financial Report (ACFR) and other auditor issued reports 2. Approve mid-year budget adjustments to the FY 2021/22 Revised Budget 3. Approve professional service contract amendments • 14 • 2/15/2022 Questions? • 15 NW,1/ 7-a ��NTINGTp ~ •9n City of Huntington Beach FpoUNTY CP��F File #: 21-333 MEETING DATE: 4/19/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Oliver Chi, City Manager PREPARED BY: Julian Harvey, Interim Chief of Police Subject: Approve selection of Be Well OC (Mind OC) as service provider for the City's Mobile Crisis Response Program for select mental health calls for service Statement of Issue: Annually, the Huntington Beach Police Department (HBPD) responds to over 2,500 calls for service specifically involving mental health related needs. In addition, HBPD handles another 12,000 calls relating to homelessness, in which mental illness is either the primary cause or a significant contributing factor. Combined, these represent roughly 10% of all police calls for service. While our officers are capable of navigating these interactions, the City recognizes that there are other organizations throughout Orange County that have specific training to better address these unique service needs, and that a partnership may result in better outcomes for all. As such, the City issued a Request for Qualifications (RFQ) seeking respondents interested in developing and implementing a Mobile Crisis Response program model as an alternative to our current mental health response model. Three (3) responses were received by the deadline of February 17, 2021, each of which were evaluated for their responsiveness to the RFQ and capabilities in implementing a successful program. Ultimately, Be Well OC was selected among the respondents as the most qualified and with the greatest likelihood of success. Financial Impact: Restricted funding has been identified to cover the first year, and the costs are not to exceed $1.5 million for this pilot program. The following are the funding sources for this program: 1) Police Development Impact Fee Fund (Fund 227) $368,000; 2) Restricted Restitution Fund (Fund 100) $282,000; and 3) American Rescue Plan Act HOME Funding $850,000. Recommended Action: A) Approve the selection of Be Well OC (Mind OC) as the service provider for the City's trial Mobile Crisis Response program, to shift the burden of response from the police department to Be Well OC for designated, triaged mental health calls for service not involving violence, weapons, or criminal behavior. City of Huntington Beach Page 1 of 3 Printed on 4/14/2021 powereti44 LegistarTM File #: 21-333 MEETING DATE: 4/19/2021 B) Authorize the City Manager, with approval as to form by the City Attorney, to execute an agreement with Be Well OC (Mind OC) in substantial form to the attached (Attachment 1). C) Approve appropriation from the following funding sources: 1) Police Department Development Impact Fee Fund (Fund 227) $368,000; 2) Restricted Restitution Fund (Fund 100) $282.000; and 3) American Rescue Plan Act HOME Funding $850,000. Alternative Action(s): Do not approve the recommended action and continue to handle the aforementioned calls for service pursuant to current practice and protocols within the Police Department. Analysis: The City of Huntington Beach, like cities across California and the United States, is faced with a growing number of residents and visitors who suffer from some form of mental illness. Annually, the Huntington Beach Police Department (HBPD) responds to over 2,500 calls for service specifically involving mental health related needs. With each call averaging 47 minutes, these incidents occupy the labor hours of two (2) full-time police officers each year. In addition, HBPD handles another 12,000 calls relating to homelessness, in which mental illness is either the primary cause or a significant contributing factor. Combined, these represent roughly 10% of all police calls for service. While our officers perform effectively during these mental health related incidents, these types of interactions are often protracted events requiring long delays either in a residential or emergency room setting. This effectively removes the involved officers from the shift deployment during this period, making them unavailable for emergency response and preventing them from conducting crime prevention, proactive enforcement, and community policing functions. The City also recognizes that many of these calls do not require police response, and further recognize there are other organizations throughout Orange County better trained, better suited, and better equipped to navigate the patchwork of mental health care options available to individuals in need. Based on a comprehensive review and assessment of possible response options, the City has determined that an alternative approach to addressing certain mental health calls for service would result in better service delivery for those in need, while simultaneously improving public safety by freeing up officers to perform their primary function of policing the city. Equally impactful, an alternative model whereby trained clinicians conduct follow-up case management for our residents suffering from chronic mental illness will not only prevent recurrent calls for service, but will lead to the best outcomes for patients. On January 26, 2021 , the City of Huntington Beach issued a Request for Qualifications (RFQ) seeking respondents interested in developing and implementing a Mobile Crisis Response model as an alternative to the current response model to select mental health related incidents and service requests. Three (3) responses were received by the deadline of February 17, 2021, each of which were evaluated for their responsiveness to the RFQ and capabilities in implementing a successful program. At the March 15, 2021, City Council meeting, the City Manager and Chief of Police presented an City of Huntington Beach Page 2 of 3 Printed on 4/14/2021 noxere7A7j Legistar� File #: 21-333 MEETING DATE: 4/19/2021 update not only on the concept, but on the process and timeline in selecting a vendor. On March 29, 2021, two (2) of the RFQ respondents were invited to present to the selection committee comprised of the City Manager, Director of Community Services, and Chief of Police. Following that presentation, Be Well OC was selected among the respondents as the most qualified and with the greatest likelihood of success. Several factors combined to set Be Well OC apart, including the thoroughness of their proposal, their keen understanding and experience in the area of mental health services, and a proven record in Orange County of collaborating to establish exceptional mental health assessment and treatment facilities. A review of similar programs across the country including the Crisis Assistance Helping Out On The Streets (CAHOOTS: Eugene, OR); Support Team Assistance Response (STAR: Denver, CO); Integrated Mobile Police Assessment Crisis Team (IMPACT: Thunder Bay, Ontario, Canada); and the Mobile Crisis Support Team (Sacramento, CA) demonstrate that when implemented as part of a coordinated, holistic response to addressing the growing epidemic of mental illness, mobile response programs offer a more effective model by introducing mental health professionals with clinical experience at the point of primary field intervention. The diversion of select calls within the broad categories of mental health to non-police and non-government professionals allows for a higher level of police service delivery, as officers are freed from the burden of these calls and available for emergency response, proactive enforcement, and community policing activities. Further analysis concerning police use of force further supports this model as an effective alternative. Often, police unintentionally heighten the level of anxiety and acuteness of the mental health crisis, resulting in an application of force. While the vast majority of these applications of force are justifiable and within policy, they are completely avoidable in those instances where there existed no requirement or need for police presence. Environmental Status: Not applicable. Strategic Plan Goal: Community Engagement Homelessness Response Attachments 1. Professional Services Contract between the City of Huntington Beach and Mind OC for a Pilot Mobile Crisis Response Program. City of Huntington Beach Page 3 of 3 Printed on 4/14/2021 oowere748 Le ,staC- PROFESSIONAL SERVICES CONT'RACr 13GTWEEN THE CITY OF HUNTINGTON 1317ACI-I AND MIND OC FOR A PILOT MOBILE CRISIS RESPONSE PROGRAM THIS AGRF..EMEN"I' ("Agreement") is made and entered into by and between the City of Huntington Beach. a municipal corporation of the State of' California. hereinafter referred to as "CITY." and Mind OC. hereinafter referred to as "CONSULTANT." WHEREAS. CITY desires to engage the services of- a consultant to design, develop. and deploy a i%4obile Crisis Response Program: and WHEREAS. Pursuant to documentation on file in the office of the City Clerk, the provisions of- the Huntington Beach Municipal Code. Chapter 3.03. relating to procurement of professional service contracts have been complied with: and WHEREAS. CONSULTANT has been selected to perform these services. NOW, THEREFORE. it is a,—,reed by CITY and CONSULTANT as follows: I. SCOPE OF SERVICES CONSULTANT shall provide all services as described in Exhibit "A," which is attached hereto and incorporated into this Agreement by this reference. These services shall sometimes hereinafter be referred to as the "PROJECT." CONSULTANT hereby designates Marshall Moncricf. M1=T. MBA, who shall represent it and be its sole contact and agent in all consultations with CITY during the performance of this Agreement. 21-9524r'52675 I of 16 5119-20408_ 2. CITY STAFF ASSISTANCE CITY shall assign a staff coordinator to work directly with CONS U LTA NT in the performance of this Agreement. 3. TFRM: THME OF PERFORNIA\ICE Time is of the essence for this Agreement. The services of CONSULTANT are to commence on April 20. 2021 (the "Commencement Date"). and this Agreement shall automatically terminate on April 20. 2022. unless extended or sooner terminated as provided herein. All tasks specified in Exhibit "A" shall be completed no later than one month from the Commencement Date. The time for performance ol'the tasks identified in Exhibit "A" are generally to be shown in Exhibit "A." This schedule may be amended to benefit the PROJI-Cf if InUtually agreed to in writing by CITY and CONSUI..fANf. In the event the Commencement Date precedes the Effective Date. CONSULTANT shall be bound by all terms and conditions as provided herein. d. CUMPENSATION In consideration of the performance of the services described herein. CITY agrees to pay CONSULTANT on a time and materials basis at the rates specified in Exhibit "13," which is attached hereto and incorporated by reference into this Agreement. 5. EXTRA WORK In the event CITY requires additional services not included in Exhibit "A" or changes in the scope of' services described in Exhibit "A," CONSULTANT will Undertake such 21-9524252675 2 of 16 5/19-204082 work only after receiving written authorization from CITY. Additional compensation for such extra work shall be allowed only if the prior written approval of CITY is obtained. 6. METHOD Oh PAYMENT CONSULTANT shall be paid pursuant to the terns ol'Exhibit "It." 7. DISPOSITION OP PLANS. ESTIMATES AND 011-IER DOCUMENTS CONSULTANT agrees that title to all materials prepared hereunder, including. Without limitation, all original drawings. designs. reports, both field and office notices, calculations. computer code, language, data or programs. maps, memoranda, letters and other documents, shall belong to CITY, and CONSULTANT shall turn these materials over to CITY upon expiration or termination of this Agreement or upon PROJECT completion. whichever shall occur first. These materials may be used by CITY as it sees fit. It is further agreed by the PARTES that any tangible work products produced under this engagement shall be the sole property of CITY, unless and until CITY consents in writing to their use by another party- hull ownership of the copyright in all original works shall remain the sole property of CONSULTANT. CONSULTANT grants to CITY a license to use the copyright in the tangible work products produced under this engagement for an unlimited period of time. 8. 1-101-1) HARMLESS A. CONSULTANT hereby agrees to protect. defend. indemnify and hold harmless CITY. its ofliccrs, elected or appointed officials. employees. agents and volunteers from and against any and all claims, damages. losses. expenses, judgments, demands and defense costs (including, without limitation. costs and fees of litigation of every nature or liability of any kind or 2 1-9 5 2412 5 26 7) Of 16 5/1 9-2 0408 2 nature) arising out of or in connection with CONSULTANT's (or CONSULTANT's subcontractors, if any) negligent (or alleged negligent) performance of this Agreement or its failure to comply with anv of- its obligations contained in this Agreement by CONSULTANT, its officers agents or employees except such loss or damage which was caused by the sole negligence or willful misconduct of` CITY. CONSULTANT will conduct all defense at its sole cost and expense and CITY shall approve selection of CONSULTANT's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by CONSULTANT. 13. To the extent that CONSULTANT performs "Design Professional Services" within the meaning of Civil Code Section 2782.8. then the following Hold Harmless provision applies in place of subsection A above: "CONSULTANT hereby agrees to protect, defend. indemnify and hold harmless CITY and its officers. elected or appointed officials, employees. agents and volunteers. from and against any and all claims, damages. losses, expenses, demands and defense costs (including. without limitation. costs and fees of' litigation of every nature or liability of any kind or nature) to the extent that the claims against CONSULTANT arise out of. pertain to. or relate to the negligence. recklessness, or willful misconduct of'CONSULTANT. In no event shall the cost to defend charged to CONSULTANT exceed CONSULTANT's proportionate percentage of fault. However. notwithstanding the previous sentence, in the event one or more other defendants to the claims and/or litigation is unable to pay its share of defense costs due to bankruptcy or dissolution of the business. CONSULTANT shall meet and confer with CITY and other defendants regarding unpaid defense costs. The duty to indemnil;v, including the dUtV and the cost to defend. is limited as provided in California Civil Code Section 2782.8. ,i 952JGc5267i 4 of IG 5/19-204082 C. Regardless of whether subparacraph A or B applies. CITY shall be reimbursed by CONSULTANT for all costs and attorney's fees incurred by CITY in enforcing this oblivation. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable- The policy limits do not act as a limitation upon the amount of indemnif ication to be provided by CONSULTANT. 9- PROTGSSIONAL LIABILITY INSURANCE CONSULTANT shall obtain and furnish to CITY a professional liability insurance policy covering the work perfbrmed by it hereunder. '['his policy shall provide coverage for CONS ULTANT`s professional liability in an amount not less than One iMillion Dollars ($I.000.000.00) per occurrence and in the aggregate. The above-mentioned insurance shall not contain a self-insured retention without the express written consent of CITY: however an insurance policy "deductible" of Ten Thousand Dollars ($10.000.00) or less is permitted. A claims-made policy shall be acceptable if the policy further provides that: A. The policy retroactive date coincides with or precedes the initiation of the scope of work (including subsequent policies purchased as renewals or replacements). 13. CONSULTANT shall notify CITY of circumstances or incidents that might give rise to ILture claims. CONSULTANT will make every effort to maintain similar insurance during the required extended period of coverage following PROJECT completion. If insurance is terminated for anv reason. CONSULTANT agrees to purchase an extended reporting provision of at least two (2) years to report claims arising from work performed in connection with this Agreement. 21-9524r_52e75 5 of 16 5n9-2oans2 If CONSULTANT fails or refuses to produce or maintain the insurance required by this section or fails or refuses to furnish the CITY with required proof that insurance has been procured and is in force and paid for. the CITY shall have the right. at the CITY's election. to forthwith terminate this Agreement. Such termination shall not eflcct Consultants right to be paid for its time and materials expended prior to notification of termination. CONSULTANT waives the right to receive compensation and agrees to indemnify the CITY for any work performed prior to approval of insurance by the CITY. 10. CERTIFICATE- OF INSURANCE Prior to commencing performance of the work hereunder. CONSULTANT shall furnish to CITY a certificate of insurance subject to approval of the Citv Attorney evidencing the foregoing insurance coverage as required by this Agreement: the certificate shall: A. provide the name and policy number of each carrier and policy; B. state that the policy is current[\• in force: and C. shall promise that such policy shall not be suspended. voided or canceled by either party. reduced in coverage or in limits except after thirty (30) days' prior written notice: however. tcn (10) days' prior written notice in the event of cancellation for nonpayment of premium. CONSULTANT shall maintain the foregoing insurance coverage in force until the work under this Agreement is fully completed and acccpted by CITY. The requirement for carrying the foregoing insurance coverage shall not derogate from CONSULTAN 's defense. hold harmless and indemnification obligations as set forth in this Agreement. CITY or its representative shall at all times have the right to demand the original or a 21-9524P52675 6 of 16 5/19-204082 copy of the police of insurance. CONSULTANT shall pay, in a prompt and timely manner, the premiums on the insurance hereinaboye required. 11. INDEPENDENT CONTRACTOR CONS UL"T'ANT is. and shall be, acting at all times in the performance of this Agreemcnt as an independent contractor herein and not as an employee of CI"ITY. CONSULTANT shall secure at its own cost and expense, and be responsible for any and all payment of all taxes. social security. state disability insurance compensation, unemployment compensation and other payroll deductions for CONSULTANT and its officers, agents and employees and all business licenses, if any. in connection with the PROJECT" and/or the services to be performed hereunder. 12. TFRNIINATION OP r\GRE6�4ENT All work required hereunder shall be performed in a good and workmanlike manner. CITY may terminate CONSULTANT's sciA,ices hereunder at any time with or without cause. and whether or not the PROJECT is fully complete. Any termination of this Agreement by CITY shall be made in writing. notice of which shall be delivered to CONSUL;PANT as provided herein. In the event of termination, all finished and unfinished documents. exhibits, report. and evidence shall. at the option of CITY. become its properly and shall be promptly delivered to it by CONSULTANT. I3. ASSIGNML'NT AND DELEGATION This Agreement is a personal service contract and the work hereunder shall not be assigned, delegated or subcontracted by CONSULTANT to any other person or entity without the prior express written consent of'CITY. If an assignment. delegation or subcontract is approved. all 2 1"9 5 24r 52675 7 of 16 5119"2040,92 approved assignees, delegates and subconsUltants most satisfy the insurance requirements as set forth in Sections 9 and 10 hereinabove. 14. COPYRIGHTS/PATLNTS CITY shall own all riehts to any patent or copyright on any work. item or material produced as a result of this Agreement. in a manner consistent with the provisions outlined in Section 7 of'this a_reement. 15. CITY F-MI'LOYL•LS AND OFFICIALS CONSULTANT shall employ no CITY official nor any regular CITY employee in the work performed pursuant to this Agreement. No officer or employee of CITY shall have any financial interest in this Agreement in violation of the applicable provisions of the California Government Code. 16. NOTICES Anv notices. certificates. or other conununications hereunder shall be given either by personal delivery to CONSULfAN"T's agent (as designated in Section I hereinabove) or to CITY as the situation shall warrant. or by enclosing the same in a sealed envelope. postage prepaid. and depositing the same in the United States Postal Service, to the addresses specified below. CITY and CONSULTANT may designate dillerent addresses to which subsequent notices, certificates or other communications will be sent by notifying the other party via personal delivery. a reputable overnight carrier or U. S. certified mail-return receipt requested: 21-e5=4a5267; 8 of 16 ;/19-20.082 TO CITY: TO CONSULTANT: City of Fluntineton Beach Mind OC AT TN: Oliver Chi ATTN: Marshall Moncrief. MFT. MBA 2000 Main Street 18650 MacArthur Blvd.. Suite 220 Huntington Beach. CA 92648 Irvine, CA 92612 17. CONSENT When CITY's consent/approval is required under this Agreement. its consent/approval for one transaction or event shall not be deemed to be a consent/approval to any subsequent occurrence of the same or any other transaction or event. 18. MODIFICATION No waiver or modification of any language in this Agreement shall be valid unless in writing and duly exeCLIted by both parties. 19. SECTION HEADINGS The titles, captions, section, paragraph and subject headings, and descriptive phrases at the beginning of the various sections in this Agreement are merely descriptive and are included solely for convenience of reference only and are not representative of matters included or excluded From such provisions, and do not interpret, define. limit or describe, or construe the intent of the parties or afTect the construction or interpretation of any provision ol'this Agreement. 20. INTERPRETATION OF THIS AGREEMENT The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning. and not strictly for or against any of the parties. If any 2 1.9524/252675 9 ol' 16 5/19-204082 provision of' this Agreement is held by an arbitrator or court of competent .jurisdiction to be unentbrceable, void. illc,al or invalid. such holding shall not invalidate or affect the remaining covenants and provisions of this Agreement. No covenant or provision shall be deemed dependent upon any other unless so expressly provided here. As used in this Agreement, the masculine or neuter gender and singular or plural number shall be deemed to include the other whenever the context so indicates or requires. Nothing contained herein shall be construed so as to require the commission of any act contrary to law. and wherever there is any conflict between anv provision contained herein and any present or future statute, law. ordinance or regulation contrary to which the parties have no right to contract. then the latter shall prevail. and the provision of' this Agreement which is hereby affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 21. DUPLICATG ORIGINAL The original of this Agreement and one or more copies hereto have been prepared and signed in counterparts as duplicate originals. each of which so executed shall. irrespective ol'the date of its execution and delivery. be deemed an original. F3ach duplicate original shall be deemed an original instrument as against any party who has signed it. 22. IMMIGRATION CONSULTANT shall be responsible for full compliance with the immigration and naturalization laws of the United States and shall. in particular. comply with the provisions of' the United States Code regarding employment verification. 21-9524/252675 10 of 16 5/19-20d082 23. LEGAL SERVICES SUBCONTRACTING PROHIBITED CONSULTANT and CITY agree that CITY is not liable for payment of any subcontractor work involving legal services, and that such legal services arc expressly outside the scope of services contemplated hereunder. CONSULTANT understands that pursuant to Huntington Beach Ci(v Charter Section 309. the Cite Attorney is the exclusive legal counsel for CITY; and CITY shall not be liable for payment of any legal services expenses incurred by CONS U[,TA NT. 24. ATTORNEY'S FEES In the event suit is brought by either party to construe, interpret and/or enforce the terms and/or provisions of this Agreement or to secure the performance hereof, each party shall bear its own attorncv`s fees, such that the prevailing party shall not be entitled to recover its attorney's fees from the nonpreyailing party. 25. SURVIVAL Terms and conditions of' this Agreement. which by their sense and context survive the expiration or termination of this Agreement. shall so survive. 26. GOVERNING LAW This Agreement shall be governed and construed in accordance with the laws of the State ol'California. 21-95=1rz52675 11 of 16 5/19-204082 27. SIGNATORIES Each undersigned represents and warrants that its signature hercinbelow has the power. authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnily CITY fully for any injuries or damages to CITY in the event that such authority or power is not. in fact, held by the signatory or is withdrawn. 28. ENTIRETY The parties acknowledge and agree that they are entering into this Agreement freely and Voluntarily following extensive arm's length negotiation. and that each has had the opportunity to consult with legal counsel prior to executing this Agreement. The parties also acknowledge and agree that no representations,. inducements. promises, agreements or warranties, oral or otherwise. have been made by that party or anyone acting on that party's behalf which are not embodied in this Agreement. and that that party has not executed this Agreement in reliance on any representation. inducement, promise, agreement, warranty. Pact or circumstance not expressly set forth in this Agreement. This Agreement, and the attached exhibits. contain the entire agreement between the parties respecting the subject matter of this Agreement, and supersede all prior understandings and agreements whether oral or in writing between the parties respecting the subject matter hereof. 29. EFFECTIVE DATE- This Agreement shall be effective on the date of its approval by the City Council. This Agreement shall expire when terminated as provided herein. IN WITNESS '.'HEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized officers. 21.9524r52675 12 of 16 sn9 2aau82 30. GENFkAL PRINCIPLES CONSULTANT shall. compiv with generally accepted accounting principles and good business practices. including all applicable cost principles published by the Federal Office of Pvlanaecmcnt and Budget (ON'IB). including 2 CFR 200 -UNIPORNI ADMINISTRATIVE REQUIREMENTS. COST PRINCIPLES. AND AUDIT REQUIREN-TENTS 17012 FEDERAL AWARDS "The Uniform Guidance". which can be viewed at https://www.ecfr.gow/c;i- initexridx'?tpl=/ecfi-browse/"I'itle02/2cfr200_main_02.tpl. CONSULTANT shall comply with all federal. State and other funding source requirements. CONSULTANT shall. at its own expense. furnish all cost items associated with this Agreement except as herein otherwise specified in the budset or elsewhere to be furnished by CITY. CONS ULPANT shall submit annually to the CITY a cost allocation plan in accordance with The Uniform Guidance. 31. COMPLIANCE WITH LAWS AND REGULATIONS CONSULTANT shall at all times perform is obligations hereunder in compliance with all applicable Federal. State. County. and local laws. rules and regulations. current and hereinafter enacted, including facility- and professional licensing and/or certification laws and keep in effect any and all licenses. permits. notices and certificates as are required. CONSULTANT shall further comply with all laws applicable to swages and hours of employment. occupational safety. and to fire safety. health and sanitation. 32. LQUAL OPPORTUNITY CONSULTANT shall comply with the provisions of'I'itle VII of the Civil Rights Act of 1964 in that it will not discriminate against any individual with respect to his or her 21.9524a52675 13 of 16 3/19-204082 compensation, terms. conditions, or privileges of employment nor shall CONSULTANT discriminate in any way that would deprive or intend to deprive any individual of employment opportunities or otherwise adversely affect his or her status as an employee because of' such individual's race, color, religion. sex. national origin. age. handicap, medical condition, sewal orientation or marital status. 33. A F F I R NI A,r I V 17 ACTION Each CONSULTANT and subcontractor of services and supplies employing fifteen (15) or more full-time permanent employees. shall comply with all Affirmative Action Programs required by Federal or State law. 34. NON DISCRIMINATION CONSULTANT shall ensure that set-vices and facilities are provided without regard to ethnic group identilication. race, color. nation origin. creed. religion. age. sex, physical or mental disability, political affiliation or marital status in accordance with applicable laws. including. but not limited to. Titic VI of the Civil Rights Act of 1964 (42 U.S.0 200-d). Section 162 (a) of the Federal-Aid Highway Act of 1973 (23 U.S.0 324). Section 504 oi'the Rehabilitation Act of' 1973, The Civil Rights Restoration Act of 1987 (P.L. 100-209). ExeeU(IyC Order 12898 (February I I. 1994), Executive Order 13166 (August 16.2000). Title VII of' the Civil Rights Act of 1964 (42 U.S.C. 2000-d). the Age Discrimination of 1975 (42 U.S.C. 6101 ), Article 9.5. Chapter 1. Part I. Division 2. Title 2 (Section I 1135. et seq) of the California Government Code. Titic 9. Chapter 4. Subchapter 6 (Section 10800. et seq) of the CCR and California Dept of'Social Services Manual of Policies and Procedures (CDSS MIT) Division 21. 2 1-952 Ir52675 14 of 16 5/19-204082 35. BYRD ANTI-LOBBYING ANIGNDN9GNT CONSULTANT shall file Standard Form-LLL. "Disclosure Form to Report Lobbving." to ccrtit), that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee ol'any agency. a member of Congress, officer or employee of Congress. or an employee of a member of Congress in connection with obtaining anv Federal contract. grant or any other award covered by 31 U.S.C. 1352. CONSULTANT shall disclose any lobbying with non-Federal funds that takes place in connection with obtaining anv Federal award by CONSULTANT or CONSUL:TANT's Subcontractors. In accordance with 31 U.S.C. 1352. CONSULTANT shall also file a disclosure Form at the end of*each calendar quarter in which there occurs any event that requires disclosure or that materially affects the accuracy of the information contained in any disclosure form previously filed. CONSULTANT shall include this provision in all subcontracts and require each of its subcontractors to comply with the certification and disclosure requirements ofthis provision. 36. CLEAN AIR ACT AND FFDFRAL WATER POLLUTION CONTROL ACT CONSULTANT agrees to comply with all applicable standards. orders or regulations issued pursuant to the Clean Air Act. as amended. 42 U.S.C. §§ 7401 et seq. CONSULTANT agrees to report each violation to the USDA and the appropriate LPA Regional Off-ice. CONSULTANT agrees to comply with all applicable standards, orders or regulations issued pursuant to the Federal Water Pollution Control Act as amended (33 U.S.C. §§ 1251 et seq.). CONSULTANT agrees to report each violation to the USDA and the appropriate F-PA Regional Office. 21-9524rz52675 15 of 16 5/19-204082 37. CONTRACTING WITH SMALL AND MINORITY BUSINESSES. WOMEN'S BUSINESS L'- ITRPRISES. AND LABOR SURPLUS AREA FIRMS CONSULTANT shall. in accordance with 2 CPR 200.321 -Contractive with small and minority businesses, women's business enterprises. and labor surplus area firms. take afTirmativc steps to include minority business. women's business enterprises. and labor surplus area firm bv: a. Placing qualified small and minority businesses and women's business enterprises on solicitation lists: b. Assuring that small and minority businesses, and women's bLISincsS enterprises are solicited whenever they are potential sources; C. Dividing total requirements, when economically feasible. into smaller tasks or quantities to permit maximum participation by small and minority businesses,and women's business enterprises: d. Gstablishine delivery schedules. where the requirement permits. which encourage participation by small and minority businesses. and women's business enterprises: and C. Using the services and assistance, as appropriate. of'such organizations as the Small Business Administration and the iNlinorit- Business Development Agency of the Department of Commerce. A. PROCUREMENT OF RECOV --RI-D MATERIALS CONSULTANT shall comply with 2 CFR part 200.322. CONSULTANT shall procure only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CPR part 247 that contain the highest percentage of recovered materials practicable. consistent with ?1-952-1/252675 16 Of 16 ;n 9-2o4osz maintaining a satisfactory level of competition. where the purchase price of the item exceeds 510.000 or the value of the quantity acquired during the preceding fiscal year exceeded 510.000. CONSUUFANT certifies that the percentage of recovered materials to be used in the performance of this Agreement will be at least the amount required by applicable specifications or other contractual requirements. I-or contracts over SlW000 in total value. CONSULTANT shall estimate the percentage of total material utilized for the performance of the Agreement that is recovered materials and shall provide such estimate to CITY upon request. R AUDIT AND INSPECTION CONSULTANT agrees to maintain and/or make available within the CITY accurate books and accounting records relative to all its activities under this Agreement. Aut1101'I%Cd federal. State or Count\, representatives shall have the right to monitor. assess. or evaluate CONSULTANT's performance pursuant to this Agreement, said monitoring. assessments. or evaluations to include but not limited to audits. inspection ol'premises. reports, and interviews of'project stafTand participants. CONSULTANT assertions of confidentiality shall not be a bar to full access to the records. 40. AUDIT REOUlREMF-N-f CONSUL.TANTs that expend $750.000 or more of federal ,,rant funds per year shall also have an audit conducted in compliance with Government Auditing Standards. which includes Sin.-lc Audit Act Amendments and the Compliance Supplement (2 CPR part 200 App. \1). 21-9524P52975 17 of 16 5I19-204032 CONSULTANT, CITY OF HUNTINGTON BEACH, a MIND OC municipal co3xPtion of the State of Califo is � py �•�./� _ ��. ��✓ Mayor print e6nc ITS: Chief Executive Officer City Clerk A.ND AA 1NIT1 TED APPROVED: By: c prim rmwm Jolian tlirvdy, P ice Chief tTS: Director of Finance ftE D APPROVED: tty Manager AP OVED AS TO FORM: 4Ctty Attorney 21.95241252675 s,19•:oau EXHIBIT "A" EXE-EE131rA BeWell ORANGE COUNTY Be Well OC Mobile Crisis Response Team WON7mtington Beach Police Department Request for Qualifications February 17. 2021 a•. Is February 17.2021 Be Well Gty of Huntington Beall Finance Department,Purchasing Orvnpon 2000 Man Street Hunr,ngtcn Pzadh CA WC42-2702 RE. Bo Well OC Mobile Crisis Response TQim. Response to the HBPD Request for Ouallflo dons To Whom It May Concern. Be Will OC is honored to respond to this Request for OuatlhcatlonS to partner with the Cty of Huntington Beach and to support the courageous work of the Huntington Beach Poaca Department 8*W*A OC Ie uniquely posrtwnedto urnfy the efforts ol" hospital,medal dnics homeless service provides.and other oprrynwnty stakeholders to quickly activate a successful, scalable,outcomesdrlven Mobse Crisis Response Team As a resident of Hupp Mngton Beach,I a personally honored to submit this response and personally committed to the success of this new service We me grateful for the Oty's vision and bold leadership Be Well OC(Be Well)has created a c Anion of hundreds of organizations across Orange Courity, representing rrult pile sectors of the c.omptnundy.mdudng County and private health systems,law enforcemenl.fire and emergency services,schools and major universities.private business. and the faith community Through the collective power of this collaboraticrk.Be Wes has developed many innovative services and systems Be Wall has also adopted successful models of Lire from around the courntry. particularly in the area of mobile cnsis response. Leveraging the nationally-recognized CAHOOTS cuss response model for Huntington Beach.8e Well can Improve outcomes and cortmu„ty satisfaction, borer overall costs to the community.and relieve law enforcement from time-conwmng responses that hinder their rnendedfunction. The CAHOOTS modal was developed around a 2person mobile tea,Co pnsed of an EMT and Criss Counselor,to provide 24/7 community-based amss ,*nt and stablhtatlon of urgent medal need or ptychologcel erjsa along wth rriformation and referral.transportation to Nrvlces,and with the option of addition l case management and followK p support Combining the demonstrable suv sss of CAHOOTS with Be Well expert lse In designing.developing.and Implementing transforrmative systems and services for the community.will ensure Huntington Beach the best poemble foundation for creating a highly effective mobil*crisis response system for the community We are evcrted at the potential to support the Oty with the development and Implementation of this proven crlsls response model Again,on bahar of many.thank you for your vision. leadership and co.... ment tothe health and wellb*ng of our Community If you have any questions about ow response.plea*do not hesitate to contad me -spppel 'L/ - / Marshall Mo mf.MFT MBA CEO_Be Wall CC 9434004W 18650 MacArthur Blvd.Ste 220,Irvine Ca 92612 I Bewill xq EXHIBIT A 1w MM.RrtW�A[N BE WELL OC MOBILE CRISIS RESPONSE TEAM Huntington Beach Police Department Request for Qualifications BeWell BE I a EXHIBIT A lw­"� Executive Summary 's CAHOOTS (Crisis Assistance Helping Out on M ti e Streets)is a mobile crisis-intervenon program created in 1989 as a collaboration between the City of Eugene in Oregon, law enforcement.emergency medical services(EMS).and a local non-profit mental health clinic. The model was designed to support law enforcement. EMS.and the community with a clinically effective and cost-effective response to mental illness. substance abuse.and homelessness. The program—which now responds to more than 65 calls per day,n the cities of Eugene and Springfield, OR—has more than quadrupled in size during the past decade due to increased societal needs and the demonstrable effectiveness of the program. Today.the CAHOOTS model is being replicated in numer- ous cities around the country, including Denver. Oakland. Olympia, Portland.Rochester, and others The CAHOOTS model is an integrated public healthcare model made available for a broad range of problems,including mental health crises. intoxication. minor medical needs. shelter needs,and more. Traditionally,calls for help in these areas would default to police and EMS. In this model,requests for service are made through non-emergency and 911 call lines. As calls are Based on ; ., - ; , received.dispatchers triage the situation and deploy the data,a fully operational CAHOOTS team instead of police or EMS The model CAHOOTS model would succeeds in supporting first responders and the commune, divert 16,000 by utilizing a team of two specialists with complimentary mental health and medical training. The mental health team. member is an experienced crisis counselor skilled in de-escalation techniques. Support- ed by a medic who Is trained as either an EMT or a nurse. For example, if an individual is feeling suicidal and has cut themselves, the situation is both medical and psychiatric. These patients are usually seeking help, and the CAHOOTS model is designed to address both the emotional. physical,and social well-being of the patient while allev,abng the need for police and EMS involvement As needed, the team can transport patients to facilities such as a crisis center, detox center,medical clinic, shelter, etc. This model does not duplicate services In addition to supporting police. fire and EMS, the model also works as a compliment to the County s Centralize Assessment Team (CAT) The CAT team will be deployed when a situation requires an involuntary hold and transport. In this way.this model fills a major service gap found in most communities It builds a bridge between medical treatment and those experiencing homelessness. who today rely solely on ambulances and emergency rooms for assistance. It builds a bridge between clinical care and families struggling with a mental health crisis. who today call police not knowing where else to turn. It provides a prompt, supportive partner to local community-based organizations any time day or night. CAHOOTS has evolved Over 31 years Taking the lessons learned and adapting the model to the specific needs of Huntington Beach, Be Well will develop and implement a service that Supports the residents. first responders, healthcare workers. social service professionals and the entire community. Phone Dispatch Police, Fire, EMS or Mobile Crisis Response • • ' BeWeII loam 14 EXHIBIT A V11b., Qualifications A■ Overview of firm qualifications,type of organization, size, professional registration, and affiliations of company Be Well OC is pleased to submit this response to the Huntington Beach Police Department's Request for Qualifications for a Mobile Crisis Response Team Background on Be Well Orange County a • Jn � The Problem - No one sector alone can j solve the pervasive problem of mental w•Oti J illness. substance use disorders. and ...a j related challenges of suicide and —•"• homelessness. Disconnected services and funding sources create silos Absent a public-private, whole-system solution, the community will continue to suffer from less-than-adequate care in a A fragmented en"ronment j [W The Solution - Be Well OC brings O together a county-wide,cross-sector. �v O V Q� force of Orange County leaders public and private health systems, law enforce- ment and emergency services, academia. faith community, business community. I Le and others. Emboldened by a shared Q vision to create a world-class system of j`•'• " " mental healthcare for all Orange County residents, Be Well OC unifies the fragmented silos into one, public-private ecosystem of services and support._ QOO40O Be Well s EXHIBIT A lobbl., The Be Well Blueprint was created to build the transformational system- A top priority identified in the Blueprint is the development of a best-in-class crisis response system within the larger ecosystem. This includes 3 comprehensive care campuses and a robust mobile crisis response team to meet needs in the community. •rr.+nn Fv/r�� � y 4K< Background on Mind OC Advancing the Blueprint requires a responsive and accountable leadership organization with special capability and responsibility In 2017, through a partnership of Orange County hospitals. the county health care agency, and the community, Mind OC was created as a 501(c)3 non-profit organization to build the Be Well OC system of care on behalf of the public and private partners, and for the whole community In short. Be Well OC is the community-facing brand of the world-class system, Mind OC is the legal entity that can braid public and private funds. enter service contracts, and build the infrastructure to actualize the Be Well OC System. Mind OC has been entrusted as fiscal agent for over $50 million dollars in public and private funding to support Be Well OC mental health system transformation projects across Orange County. Mind OC is a core team of over 20 multi-disciplinary professionals that lead a variety of specialty teams and scores of community stakeholders to advance the strategic inr datives of Be Well OC. The team has deep expertise in healthcare administration and operations, executive and clinical leadership across the psychiatric. substance use and homeless services continuum, program development and implementation, real estate and facilities development, system performance evaluation, data analytics and academic research,as well as public policy Mind OC works in close partnership with the County Health Care Agency, CalOptima. California DHCS. the Hospital Association of Southern California(HASC), the Coalition of Orange County Community Clinics(COCCC). Orange County Department of Education(OCDE). Housing for Health OC (HHOC) - a coalition of trusted homeless service providers.City Managers across the County, and most of the law enforcement agencies in Orange County,including the Sheriff's Dept. Be Well 1 e EXHIBIT A B■ Outline of current relevant projects In Orange County; Specific details relating to expertise In developing mobile crisis response teams. Is Be Well OC is leading several aligned efforts to advance behavioral health system transformation in Orange County,and to improve the crisis response system. 199 , rta 1. Development of 3 Be Well Campuses: Building the Beacons to illuminate a hopeful path forward for Orange County.Three regional, comprehensive care campuses - North, Central $ South County - will anchor the system, increasing access and greatly improving the quality and outcomes of mental health and addiction treatment for this community. The campuses include a variety of mental health and substance use assessment. crisis stabilization, and recovery services.co-located.coordinated and uniquely available to all Orange County residents regardless of payer. The first Be Well Campus in Orange opened for care in January of this year. It is a 60.000-square-foot treatment facility.designed to meet the needs of law enforcement. mobile crisis teams.and hospitals serving those in mental health crises. When fully operational, the campus will have 93 beds and the capacity to treat approximately 100 people each day, Specific services within the state-of-the-art facility include triage. psychiatric intake and referral, SUD intake and referral, withdrawal manage- ment,crisis residential, residential mental health and SUD treatment. and an integrated education and support center. This first campus was a co-investment partnership between the County of Orange. Cal Optima.and 5 of the county's leading non-profit hospitals. Campus operations are continuously informed by a law enforcement steering committee. hospital steering committee.and a committee of family members with lived experience in mental health crisies. 2. Develop a Single Point of Access Navigation System and Crisis Response Network Orange County,like most jurisdictions in the country.offers a complicated and confusing crisis response system which often includes multiple numbers for people in mental health and SUD crisis to call and navigate. In Orange County, there are currently more than 18 crisis call lines and access points.often leading to confusion and delay in timely care. People in crisis default to calling 911 for mental health and SUD crises which lead to inappro- priate ER boarding or potentially avoidable incarceration. Be Well OC. in collaboration with the County of Orange, Cal Optima. NAMI OC.and others,are developing the plan to unify these access points and simplify services navigation and crisis response across the county. 3. Substance Use Disorder Prevention and Treatment: In the summer of 2019, a Be Well OC Substance Use Disorder(SUD)initiative was created to develop a countywide comprehen- sive SUD system of care The initiative received funding from the CA Department of Health Care Services to begin with the creation of a network of Medication Assisted Treatment (MAT)for Youth Be Well has continued to expand the SUD system, now partnering with a network of medical clinics to make MAT available for the most vulnerable adults in the community. Reduction in opioid use and overdose eases the burden on law enforcement, other first responders and hospitals, and keeps our parks and streets safe from drug-related activity. Be Well ( 7 EXHIBIT A Aw 4. Community Suicide Prevention: In March 2019, the Orange County Board of Supervisors directed funding to develop a comprehensive.county-wide suicide prevention plan, which Be Well OC continues to support. The initiative will Include law enforcement training on mental health and community education by law enforcement around gun safety. S. Supporting the County's MHSA-Funded Innovation Project for Behavioral Health System Transformation: Be Well OC is leading the alignment of legal. fiscal,and regulatory requirements to improve quality of and access to services. The goal of this effort is to plan for,develop and test the feasibility of a new public and private payment model that will create a quality-driven,culturally responsive and inclusive behavioral health system. A key piece of this work is establishing proof of concept for measurement,data sharing, and exploring value-based payment options to improve and support quality in crisis and other services at the Be Well Orange Campus. 6. Implementing a Trauma Informed Network of Care to Address Adverse Childhood Experiences (ACEs): In partnership with more than 20 health systems.county and community-based organizations, Be Well OC has been awarded $3 million over the next 17 months from the ACES Aware grant program,developed by the California Department of Health Care Services in partnership with the Office of the California Surgeon General The project alms to implement a broad and inclusive Trauma-Informed Network of Care for Orange County, which will ultimately work to prevent adverse childhood experiences(ACEs), promote ACE screening in children and adults. improve treatment of ACE-Associated Health Conditions,and prevent intergenerational toxic stress transmission. Additionally, to address a key gap In this continuum and strengthen community linkages,we will launch the Focusing On Children Under Stress(FOCUS) program, in collaboration between local police departments and the Orange County Department of Education. FOCUS will establish a notification system to decrease the negative impacts on children exposed to violence and trauma by improving communication and collaboration between first responders, schools and community resources. helping reduce impacts on the crisis response system. 15 It 1 (oh If Be Well a EXHIBIT A 'wNble, 1k D• References from current related projects, with Information to ensure easy contact. Peference Name and Contact Information ��FICT-11112=74= Don Baines She,If i,Gf�npr Development of Be WNI Orange Orange County Campus:motoraton and tup Dort Email didbarnes a ocsd org Assistant.Bonnie Fortes of noble cirrus response model Assistant Phone:714-647-1805 Assistant Email bfosteraocsd.org TDornas c-IOsew Chief of Rstloe DovWovment of Be Well city of orange Orange Campus Email:tklseloaorangapdorg Mobile Phone.714-936.6121 Jemmy Zxh Chief Esecubvo St Joseph Hospital Chmr of Hospital Association of Emal Jeromy.ZochaS[Joe.org S�thorn iabfOrn,a DevNopment Assistant Linda Palomares of Be Well Campuses Assistant Phone.714-771-8020 Aspstant Emad LrWapalonaresastloliorg Jaffrey A.Naget,Ph.D. Devolopment of Be Well Orange Behavioral Health Director Campus, Advanc,ng the Be Well Orange County H"Ith Cara Agency Blueprint:MHSA-Funded Innovation Emal. JNJgale,ochca.com protect for Behavioral Hosllth System Phone 714-834.7024 Transformation Mlchaell Rose,DrPH,L.C.S.W Advanang the Be WWI BluW,,ht. Smcoo Prevention Imbabw. Hoag Hospitals E—a, +"+eWl,Ose-hC.ay.>r9 planning for the South County :hp.p +10.763$:7F Be WNI Campus(hvrtw) Larry Maynes Executiw D.ector Advancing the Be Well Bluaprint. f my"W" Homeless and MMtal Health Email larryfea mptyhouse not Phew' 714-8%-71 sarvces coordination Q BeWell I 11 EXHIBIT A Project Team Overview 1 The Mind OC team brings extensive expertise in design, development. implementation and continuous quality improvement of systems and services Is These include crisis care, substance use treatment, and homeless support services Note Positions specific to the mobile service will be onboarded and are detailed in the staffing model (on page 16) The Leadership Team: Marshall Moncnef, MFT,MBA, Chief Executive Officer. Mr Moncrief is a co-founder of Be Well OC, and is a co-founder and CEO of Mind OC, the 501c3 non-profit entity created to build the Be Well Orange County system of mental health care for all Orange County residents Mr Moncrief will hold overall responsibility for this project, and all Be Well OC initiatives and activities Mr Moncrief has served as a clinical and administrative leader in both public and private health sectors, scaling successful services across all levels of the care continuum and within complex delivery systems He has held executive leadership positions in the St Joseph Hospital system, Hoag Hospital, and most recently Providence Southern California as the Regional Executive Director of the Institute for Mental Well- ness. In this prior role. Mr Moncrief held administrative and operational oversight for all mental health and substance use services for 14 hospitals and emergency departments, as well as 5 large medical groups Mr Moncrief is a licensed therapist specialized in treat- ing addictions and co-occurring disorders He holds an Executive MBA with an emphasis in healthcare administration. Dr Robert McCarron, DO,Chief Medical Officer.Dr McCarron completed a dual resi- dency in internal medicine and psychiatry at Rush University and received board certi- fication in psychiatry, psychosomatic medicine and internal medicine While on faculty at the University of California, Davis and Irvine Schools of Medicine, he started the only two Ca fornia-based combined Internal medicine/psychiatry residency programs. In these roles. he received grant support to create and implement a "Med Psych" curricu- lum that can be used in the public mental health system by psychiatry residency training programs. Dr. McCarron served as Director of the only Sacramento County Crisis Stabi- lization Unit and was the founding Director of Pain Psychiatry and Behavioral Medicine, within the UC Davis Division of Pain Medicine. Dr McCarron is the Founding Director for the UC Davis Train New Trainers(TNT) Primary Care Psychiatry(PCP) Fellowship,which is a one-year program designed to train primary care providers in the essentials of psy- chiatry and pediatric behavioral health. Dr McCarron now serves as Professor and Vice Chair at the University of California. Irvine School of Medicine. Department of Psychiatry and Behavioral Medicine He also serves on the ACGME Residency Review Committee for Psychiatry. Dr Karen Linkins,PhD, Chief Strategy i Innovations Officer. Dr Linkins is a co-founder of Be Well OC, and specializes in systems transformation across health, behavioral health, and human services Dr Linkins combines advocacy, implementation science, and pro- gram evaluation to improve population health and advance health equity in California and nationally. advancing frameworks like collective impact and distributed leadership. A recognized leader in integrated behavioral health nationally. Dr Linkins has led more than 70 research, evaluation, technical assistance,and strategic planning projects for Federal agencies, states, foundations, health plans,community-based organizations, and clinics Some of her current projects include. designing Sacramento's Medical Whole Person Care pilot that targets individuals experiencing homelessness with complex health needs, evaluating the CA Accountable Communities for Health Initiative, and designing a pub- lic-private continuum of behavioral health care in Orange County Dr Linkins works to develop strong strategic partnerships across safety net organizations and communities to confront and address the underlying inequities and disparities that impact population health © Be Well 12 EXHIBIT A IL Dr Lauren Brand,PsyD, Director of Operations. Dr Brand oversees all clinical and operational aspects of the Be Well campus in Orange In this capacity Dr Brand works very closely with law enforcement teams, emergency services, hospitals and homeless support services and shelters. Dr Brand is leading the community collaboration to improve transitions of care into and out of the new Be Well Campus, affording her a unique vantage point to lead mental health system improvement in support of law enforcement and first responders Dr Brand is a psychologist specializing in clinical operations and administrative oversight of high performing mental health and substance use programs Dr Brand has over 20 years of experience working in the public and private sectors Prior to her work with Be Well OC, Or Brand served as Chief Operating Officer and President& CEO, for Jewish Federation& Family Services. Dr Brand also ran the John Henry Foundation, a venerable residential campus program for those struggling with SchiZophrenia Spectrum Disorders Ban Adam Climer,EMT,Princlpal Project Lead:Mobile Crisis Response Initiative. Mr. Climer will lead the Be Well implementation of the mobile crisis response teams and hold implementation responsibility to ensure project success Previously,Mr Climer held responsibilities across all aspects of the CAHOOTS service in Oregon, serving as a crisis counselor, an EMT. as well as holding administrative and operational leadership roles Mr Climer has extensive experience in the onboarding and training of new mobile crisis teams. establishing working policies and protocols in collaboration with law enforcement and emergency services, as well as other critical community stakeholders Mr Climer applies continuous quality improvement practices to new services to ensure best outcomes early in the program life-cycle. Mr Climer has over 10 years of experience in social services, including serving as a Southern California homeless outreach worker, housing case manager, and program manager. Mr.Climer is the founder of Critical Responses in Supportive Integrated Services(C.R I S I ), assisting communities across California in the development of mobile crisis response teams Valerie Fryer,MBA,Director of Finance. Ms. Fryer will provide fiscal and administrative oversight for the project. including coordinating HR functions Valerie has more than 18 years of finance experience working with nonprofits & 10 years with corporate finance During her career, she has led all facets of operational & finance management including accounting,financials, budgets, information technology, human resources administration and audits. At OneOC, Valerie led the Business Services Dept for 12 years which was responsible for the One0C financials, over 100 community initiative oversight & finan- cials. 30 nonprofit accounting/bookkeeping clients and 20 corporate foundation finan- cials. She is well versed in all levels of government contracts and financial audits Previously,she was the Controller for Olive Crest which provided services to care for abused and neglected children in 3 states that included mental health services, prevention, foster/adoption, and education (schools) programs Ms Fryer holds a Master's degree in Business Administration © Be Well is EXHIBIT A 1h Understanding of and Proposed Approach to the Mobile Crisis Response Team in Huntington Beach Understanding Based on the information provided in the RFO and in HBFD annual reports, there are 16,000 calls for services(CFS) related to mental illness, substance use, and home- less services HBPD report that these calls make up approximately 13%of total CPS For comparison, in Eugene, Oregon, the police report that the CAHOOTS team had 16.000 CPS in 2019.diverting up to 10%of total CPS Eugene serves as a useful analogue to Huntington Beach given that it has a similar population,albeit with a dramatically larger homeless population (2019 Point in Time Count for Eugene identified 2165 individuals vs 349 in Huntington Beach). Beyond the sheer number of calls, the needed response can be very time-consuming hindering availability of first responders from more pressing, high-risk community needs Some or all of the following categories could be diverted to a mobile crisis team Bleeding (non-traumatic). Diabetic. Mental /Emotional/Psychological, Sick (Unknown)/Other This will improve response times to community needs.and optimize availability of law enforcement, EMS, and other front line community services Additionally, the model saves fuel on non-emergency medical calls by sending a single van rather than an engine and medic unit Data from the CAHOOTS team in Eugene has demonstrated the ability to divert ambulance rides, ER visits, and jail admissions saving the local community$8.5 million annually. The CAHOOTS model was originated in Oregon more than 30 years ago. It has grown in popularity based on growing societal need, low cost of the service, and high value return on investment The model has produced better outcomes for vulnerable populations and has increased satisfaction among law enforcement, first responders and the community The model has been extensively studied and reviewed in academic and industry-related journals,as well as popular media Adapting this model to the unique needs of Hunting Beach will help the City achieve enhanced outcomes and free up the Huntington Beach Police Department's resources and capacity. For more information on the CAHOOTS model, please see "CAHOOTS: A Model for Prehosprtal Mental Health Crisis Intervention" in the January 29, 2021 edition of Psychiatric Times,available at https//www psychiatrictrmes com/wew/cahoots-model•prehospdal-metal-health-crr srs-intervention Q Be Well 114 EXHIBIT A 1111116 Staffing Approach Is Leadership of this team will use a co-manager model that leverages the comple- mentary skill sets of a mental health clinician and medical professional This model increases efficiency and capacity as compared to other community crisis models.and establishes the program management team as capable of responding to calls during regular business hours For example. the leadership team would be positioned to assist the police with a barricaded. suicidal subject without interrupting the mobile crisis teams on duty e Licensed Clinician ILCSW LMF t.u LPO.responsible for general Clinical DlreCtpr program management and supervision of crisis intervention workers They will provde capacity building and support RN or EMT re ioonvble for equipment memenance.medical Medk Supervisor supplies,medical staff coordination and oversight,including licensure monitoring.and monitoring van upkeep. Under California law.EMTs must practice under the medical lican$a Of a physician.The costs for the medical director in the Medical Director proposed budget will cover the expanded services of the Mind OC Chief Medical Officer to function m this critical leadership capacity. EMT.AEMT,or EMT-P license ngmnd,performs medical EMT evaluations and wound can.rules out physical health issues presenting as mental health provides overdose intervention, and determines transpo abiidy based on physical symptoms. Must possess 2 years of relevant experience,education,or both Crisis Intervention performs tleyscalatign,mediation.suicide assessment and Worker intervention.referral,crisis counseling.and determines transportability based on mental health symptoms Must possess relevant expaend.education.or both,case mateWpev ent services woplo include helping clients attain proper m Case Manageent identihcatwn provide assistance in compietirg community program intake forms and/or applications for additional support sarvicas post-Cns6 merverition contact to mpndor and encourage adhrence to follow-up can Mobile Crisis teams provide case management services core to the team daily functions. Including referral and transport to services as a primary intervention While on-going, individual case management is not typically included in the service, such extended individual support would improve individual outcomes, and increase overall value of the service. For that reason, the staffing model and budget proposed here includes staffing capacity for enhanced case management © Be Well is EXHIBIT A This model aligns with and actualizes each of the criteria identified by the City. • Embedding the new units into the City s police response systems.with HBPD communications /dispatch staff trained to triage, and when appropriate divert certain calls for service to the proposed mobile crisis response team Such calls are carefully screened to exclude those involving violence, weapons, threats and any other situation where the presence of a uni formed police officer would be needed • Development and deployment of mobile crisis response teams to handle non-emergency calls due to mental illness.substance use. homelessness. and related medical conditions. • Mobile crisis response teams staffed by experienced professionals(crisis counselors and medical professionals)who specialize in the care and manage ment of these frequently co-occurring challenges. The Be Well OC mobile response team will implement a community care model that delivers the following • Specialized professional staff respond to incidents in the community Involving mental Illness, substance use disorders, homelessness, and/or related medical challenges While individuals in need may at times be struggling with homeless ness, the team Is responsive to all city residents • The service functions as essential an essential support and extension of the Police Department, relieving law enforcement officers of the often very time- intensive mental health and social services-related calls, also, the service is available as a co-response alongside PD for calls that may Include mental Illness with de-escalation needs. • Specialized response vehicles and transportation for individuals in need to appropriate care facilities. such as shelters, mental health crisis units, medical clinics. hospitals,etc • Determination of appropriate action plans specific to individual client needs, family and patient follow up care,as well as case management when Indicated We will draw on our community knowledge and expertise and work closely with the City and HBPD/HBFD to develop clear plans and protocols Including, but not limited to • Incoming calls, triage, and team deployment • Communication and coordination with HBPD and HBFD • Community partner care coordination • General Safety and security practices • High-risk response scenarios • Multidisciplinary training • Documentation and data • Continuous Quality Improvement Be Well 16 EXHIBIT A AW Ramp Up Approach Establishing 24 daily hours of mobile crisis response will require an appropriate scaling process. The nature of the calls in question requires skilled employees capable of managing a wide variety of difficult circumstances Training these teams requires skilled program managers who can also do the work of responding to calls A potential scaling-up process is as follows. Agency chosen to execute contract Day 1 Program Managers hired;vehicles ordered Month 1 Day shift hired,training begins',vehicb retrofit begins Month 2 Training staff;van retrofit completed Month 3 7-day,12 hours/day service begins Months 4 Overnight and weekend workers hired and begin training Months 5-6 7-day,24 hours/day servlce begin,. cn.r manager hired begins Month 7 training Fully operational 7-day,24 hwrs/dry service I Months 8-12 Vehicle ordered Month 12 12-hour overlap team hired;begin training,vehicle retrofit begins Months 13-14 7-day,36 hours/day service begins Month 15 Fully operational 7-day,36 hours/day service I Months I6-24 0 BeWell . ., 117 EXHIBIT A Vehicle Guidelines Preferred vehicle is a Ford Transit Extended Length with High Roof, or comparable A spacious mobile environment optimizes the team's ability to respond to a variety of mental and medical needs Increased space improves safety and outcomes Regardless of the make or model,vehicle modifications are needed to transition the vehicle's standard function to the specialized capabilities required tot this es- sential, specialized service < B*for*Mod lficstlon After Modificati_: j Be Well EXHIBIT A 1111116 1K Distinctive modifications listed from the front and to the back of unit: • Recommend dual alternators and a 110v/400w outlet for enhanced electrical capability • Vinyl front seats for ease of cleaning. • The Crew version comes with 3 seats in the back These are removed to accommodate a single captain's chair used for trainees, observers, supervisors, etc. • Cabinets are placed behind this single observation seat and before the dividing glass to the patient area. The cabinets and surrounding area of the vehicle store medical supply bags, AED, oxygen tanks,airway management equipment, fire extinguishers, food, blankets, tarps, and an array of needed tools and additional medical supplies. • As shown above, there is a barrier between the cargo compartment and passen- ger cab For patient safety and comfort,the vehicle requires replacement of this barrier with a metal-reinforced shatterproof-glass divider. • The floor and walls of the patient compartment are covered by hard, smooth, durable plastic The material is easily washable no seams for bodily fluids • Sharp edges are avoided and padding is added where appropriate • Interior door handles in the back patient transport area are removed. • Interior and exterior lighting is enhanced © BOW011 i;E 'h'E__O_ riesDcm.. ..BCL R-f�I 19 EXHIBIT A IWN,hkl 1K Conclusion The proven success of the CAHOOTS model combined with Be Well OC's expertise in designing. developing, and implementing transformative systems for the Orange County community offers Huntington Beach the best possible foundation for creating a measurably sucessful mobile crisis response system We are excited at the potential to partner with the city of Huntington Beach in support of law enforcement, emergency responders, and the community in the development and implementation of a nationally-recognized crisis response system with proven results. Be Well so EXHIBIT A `r9oo.Y i ftaar-t Go1111GG'florl FSGI O O �o�� HAPPENS HERE. �tM I Pcxc Infrntion rr:C� lobilhNillb- 0 EXHIBIT "13" Payment Schedule (Hourly Payment) A. Hourl, Rate CONSULTANT'S fees for such services as identified in Exhibit A shall be based upon actual costs for services rendered. and shall not exceed $1.500.000 in any given year. 13. Travel Charges for time during travel are not reimbursable. C. Billing 1. All billing shall be done monthly and matched to an appropriate breakdown of the time that was taken to perform that work and who performed it. 2. Each month's bill should include a total to date. That total should provide. at a glance. the total fees and costs incurred to date for the project. 3. A copy of memoranda, letters. reports. calculations and other documentation prepared by CONSULTANT may be required to be submitted to CITY to demonstrate progress toward completion of tasks. In the event CITY rejects or has comments on any such product. CITY shall identify specific requirements for satisfactory completion. 4. CONSULTANT shall submit to CITY an invoice for each monthly payment due. Such invoice shall: A) Reference this Aureemcnt: 13) Describe the services performed; C) Show the total amount of the payment due: D) Include a certification by a principal member of CONSULTANT's fine that the work has been performed in accordance with the provisions of this Aereement and G) For all payments include an estimate of the percentage of work completed. Upon submission of any such invoice. if CITY is satisfied that CONSULTANT is making satisfactory progress toward completion of tasks in accordance with this Agreement. CITY shall approve the invoice, in which event payment shall be made within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be unreasonably withheld. If' CITY does not approve an invoice. CITY shall notify CONS U LTA Nf in writine of the reasons for non-approval and the schedule of performance set forth in Exhibit "A" may at the option of CITY be suspended until the parties agree that past performance by CONSULTANT is in. or has been brought into compliance, or until this Agreement has expired or is terminated as provided herein. 5. Anv billines for extra work or additional services authorized in advance and in writing by CITY shall be invoiced separately to CITY. Such invoice shall contain all of the information required above, and in addition shall list the hours expended and hour] I Exhibit B rate charged for such time. Such invoices shall be approved by CITY if the work performed is in accordance with the extra work or additional services requested. and if CITY is satisfied that the statement of hours worked and costs incurred is accurate. Such approval shall not be unreasonable withheld. Any dispute between the parties concerning payment of such an invoice shall be treated as separate and apart from the ongoing performance of the remainder of this Agreement. Exhibit 13 EXIIII31T "13" Payment Schedule (Fixed Fee Payment) I. CONSULTANT shall be entitled to monthly progress payments toward the fixed fec set forth herein in accordance with the following progress and payment schedules. ? Delivery of work product: A copy of even• memorandum, letter, report, calculation and other documentation prepared by CONSULTANT shall be submitted to CITY to demonstrate progress toward completion of' tasks. In the event CITY rejects or has comments on any such product. CITY shall identify specific requirements hor satisfacton, completion. 3. CONSULTANT shall submit to CITY an invoice Im each monthly progress payment due. Such invoice shall: A) Reference this AgrecmcnC 13) Describe the services performed: C) Show the total amount of the payment due: D) Include a certification by a principal member of CONS UI_TAN 's firm that the work has been performed in accordance with the provisions of this Agreement; and I ) For all payments include an estimate of the percentage of work completed. Upon submission of' any such invoice. if, CITY is satisfied that CONSULTANT is making satislactoq progress toward completion of tasks in accordance with this Agreement. CITY shall approve the invoice, in which event payment shall be made within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be unreasonably withheld. If' CITY does not approve an invoice. CITY shall notify CONSULTANT in writing of the reasons for non-approval and the schedule of performance set forth in Exhibit "A" may at the option of CITY be suspended until the parties agree that past performance by CONSULTANT is in, or has been brought into compliance. or until this Agreement has expired or is terminated as provided herein. 4. Any billings for extra work or additional services authorized in advance and in writing by CITY shall be invoiced separately to CITY. Such invoice shall contain all of the information required above, and in addition shall list the hours expended and hourlv rate charged for such time. Such invoices shall he approved by CITY if the work performed is in accordance with the extra work or additional services requested, and if' CITY is satisfied that the statement of hours worked and costs incurred is accurate. Such approval shall not be unreasonably withheld. Any dispute between the parties concerning payment of such all invoice shall be treated as separate and apart from the ongoing performance of the remainder of this Agreement. Exhibit l3 MINDOC-001 DTORRE A�ORO CERTIFICATE OF LIABILITY INSURANCE DA5/2 612 0 21 MMJDDIYYYYI THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER.THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW, THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S),AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder Is an ADDITIONAL INSURED,the pollcy(les)must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy,certain policies may require all endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsoment s . PRODUCER License 110757776 C 11ACT Diana DeLaTorre Newport Beach,CA-HUB International Insurance Sew)ces Inc. RIONe FAX 4696 MacArthur Court AIC e,Ea: INC,NO: Suite 600 n ass:diana.delatorre@I1ubinternational.com Newport Beach,CA 92660 INSURER(S)AFFOROING COVERAGE NAIC4 _ INSURERA:Landmark American Insurance Company_33138 INSURED INSURER e:Allmerica Financial Benefit Insurance Company 41840 MIndOC INSURER C: 18650 MacArthur Blvd.Ste 220 INSURER D: Irvine, CA 92612 INSURER E: INSURER F: COVER GES CERTIFICATE UMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LIST EU BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED ON MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TOALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. WSR TYPE OF INSURANCE ADDT MUCY NUMBER POLICY EFF PDLICY EXP LLMITS IMk/ODLYYYY)..1M6'IDD/Y'r1Y) - A X COMMENCIALGENERALLIAM TY EACl/OCCURRENCE S 1'000,000 CtAVA6 MPDE OX OCCUR X LHC843148 6127/2021 5121/2022 SE IINAA,ETOR[NrED 50,000 X General Liability 5,000 MEU E%P O,a oeraon)_ X Prof.Liability PLAWNAL A AUV INJURY j 1,000,000 GENE.AGGREiGATEpqIIRMyI r APPLIES PEfi GENERAL AGGREGATE 3,000.000 POLICY❑JELpi LOC PRODUCTS-CO.W'rOP AGO S 1,000,000 OPIER Prof Liab Agg. j Included B AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT j 1,000'000 X ANY AUTO X AW3 HIS 278100 4116/2021 2/412D22 SoORYI JURY w eon OMEO I SCHEDULEO AUTOS ONLY JAUTOS BODILY INJURY(Peru«oere),_S pwnVANACEXAppOS ONLY VVOry .pp amPlX UMBRELLA j LUe OCCUR EACH OCCURRENCE _S EXCESS LIAR _ CLAWS MADE AGGREGATE _ DED RETENTIONS WORKERS COMPENSATION I PER O➢I- AND EMPLOYERS'LIAINUTY ANY PROPRIETOFVPARTNERErECUTIVE 'rN� I LFACH ACCIOEN j I, IgMFMPFR FX(10DF.Oi LL N/A Antlalory lnN I G EA PAFJgYgd D Oa tlOeCae abler D ftIPD N OFOPERATION bw �EL DISEASE-Paley UNU I DESCMPTIQ OF OPEHAnONS I LOCATIUNSI VEHICLES (ACORD 101,AdNIIoni Remarks e<Nadulo,may M attached II more space Is requlredi RE: Mobile Crisis Roponso Team City of Huntington Beach,Its officers,elected or appointed officials,employees,agents and volunteers are Additional Insured as respects to General Liability and Automobile Liability as required by written contract as per forms attached. APPROVED AS TO FORM 13 MICHAEL E. GATES CITY ATTORNEY CITY-OFHUNTINGTON BEACH CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE Cityof Huntington Beach THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN 9 ACCORDANCE WITH THE POLICY PROVISIONS. 2000 Main Street Huntington Beach,CA 92648 AUTHORIZED REPRESENTATIVE ACORD 26(2016103) ©1988-2015 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered(narks of ACORD LANDMARK AMERICAN INSURANCE COMPANY This Endorsement Changes The Policy. Please Read It Carefully. ADDITIONAL INSURED ENDORSEMENT This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART 1. In consideration of the premium charged, the following is added as an Additional Insured, but solely with regard to professional services rendered or that should have been rendered by the Named Insured: CITY OF HUNTINGTON BEACH 2. It is also agreed that the policy does not apply to: a. Claims by an Additional Insured against the Named Insured; b. Claims that include allegation or facts indicating sole liability on the part of an Additional Insured. All other terms and conditions of this policy remain unchanged. This endorsement effective 5/21/2021 Forms part of Policy Number LHC843148 Issued to MINDOC by Landmark American Insurance Company Endorsement No.: 01 RSG 55009 0212 i rr: Hanover Insurance.Group- AW3H572781 1001056 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. BLANKET ADDITIONAL INSURED -PRIMARY AND NON-CONTRIBUTORY This endorsement modifies Insurance provided under the following: BUSINESS AUTO COVERAGE PART A. The following is added to SECTION II - Primary and Non-Contributory LIABILITY COVERAGE, Paragraph A.1. Who Is If you agree in a written contract, written An Insured: agreement or written permit that the insurance Additional Insured if Required by Contract provided to a person or organization who If you agree in a written contract, written qualifies as an additional "insured' under agreement or written permit that a person or SECTION II - LIABILITY COVERAGE, Paragraph organization be added as an additional A.1. Who Is An Insured, subparagraph "Insured" under this Coverage Part, such Additional Insured If Required by Contract Is person or organization is an "insured"; but only primary and non-contributory, the following to the extent that such person or organization applies: qualifies as an "insured" under paragraph A.1.c. The liability coverage provided by this Coverage of this Section. Part is primary to any other insurance available If you agree in a written contract, written to the additional "insured" as a Named Insured. agreement or written permit that a person or We will not seek contribution from any other organization be added as an additional insurance available to the additional "insured' 'insured" under this Coverage Part, the most except: we will pay on behalf of such additional (1) For the sole negligence of the additional 'insured" is the lesser of: "Insured"; or (1) The Limits of Insurance for liability coverage (2) For negligence arising out of the ownership, specified in the written contract, written maintenance or use of any "auto" not owned agreement or written permit; or by the additional "insured or by you, unless (2) The Limits of Insurance for Liability that "auto" is a "trailer" connected to an Coverage shown in the Declarations "auto" awned by the additional "insured" or applicable to this Coverage Part. by you; or Such amount shall be part of and not In addition (3) When the additional "insured" is also an to the Limits of Insurance shown in the additional 'insured" under another liability Declarations applicable to this Coverage Part. policy. Regardless of the number of covered autos", C. This endorsement will apply only if the "insureds", premiums paid, claims made or "accident" occurs: vehicles involved in the 'accident", the most we 1. During the policy period; will pay for the total of all damages and "covered pollution cost or expense" combined 2. Subsequent to the execution of the written resulting from any one "accident" is the Limit of contract or written agreement or the Insurance for Liability Coverage shown in the issuance of the written permit; and Declarations. 3. Prior to the expiration of the period of time B. The following is added to SECTION IV - that the written contract, written agreement BUSINESS AUTO CONDITIONS, Paragraph B. or written permit requires such insurance to General Conditions, subparagraph 5. Other be provided to the additional "insured". Insurance: D. Coverage provided to an additional "insured" will not be broader than coverage provided to any other"Insured" under this Coverage Part. ALL OTHER TERMS,CONDITIONS,AND EXCLUSIONS REMAIN UNCHANGED. 461-047812 42 Includes copyrighted material of ISO Insurance Services Office, Inc.,Mth Its permission Pago 1 of 1 4 City of Huntington Beach 2000 Main Street ♦ Huntington Beach, CA 92648 (714) 536-5227 ♦ Nvwiv.huntingtonbeachca.gov N.Hp9. Office of the City Clerk Robin Estanislau, City Clerk June 7, 2021 Mind OC Attn: Marshall Moncrief, MFT, MBA 18650 Mac Arthur Blvd., Suite 220 Irvine, CA 92612 Dear Mr. Moncrief: Enclosed is a copy of the "Professional Services Agreement between the City of Huntington Beach and Mind OC for a Pilot Mobile Crisis Response Program" approved by the Huntington Beach City Council on April 19, 2021. Sincerely, A40n, �& 444j� Robin Estanislau, CIVIC City Clerk RE:ds Enclosure Sister Cities: Anjo, Japan ♦ Waitakere, New Zealand PROFESSIONAL SERVICES CONTRACT BETWEEN THE CITY OF HUNTINGTON BEACH AND MIND OC FOR A PILOT MOBILE CRISIS RESPONSE PROGRAM THIS AGREEMENT ("Agreement") is made and entered into by and between t City of Huntington Beach, a municipal corporation of the State of California, hereinafte referred to as "CITY," and Mind OC, hereinafter referred to as "CONSULTANT." WHEREAS, CITY desires to engage the services of a consultan o design, develop, and deploy a Mobile Crisis Response Program; and WHEREAS, Pursuant to documentation on file in the offi of the City Clerk, the provisions of the Huntington Beach Municipal Code, Chapter 3.03, r ating to procurement of professional service contracts have been complied with; and WHEREAS, CONSULTANT has been sele ed to perform these services. NOW, THEREFORE, it is agreed by CI and CONSULTANT as follows: 1. SCOPE OF SERVICES CONSULTANT shall p vide all services as described in Exhibit "A," which is attached hereto and incorporated ' to this Agreement by this reference. These services shall sometimes hereinafter be refe to as the "PROJECT." CONSULT T hereby designates Marshall Moncrief, MFT, MBA, who shall represent it and be its so contact and agent in all consultations with CITY during the performance of this Agreement. 2. C Y STAFF ASSISTANCE CITY shall assign a staff coordinator to work directly with CONSULTANT in the perform ce of this Agreement. 2 524252675/1� �( � 1 of 16 1 9-2 04 012 (AY� IY/'� Cf,Q1�7�Ll�Jly7C`7��2J (IdUI-74a a-�� 417 Ile?-24-'94s 3. TERM; TIME OF PERFORMANCE Time is of the essence for this Agreement. The services of CONSULTAN are to commence on April 20, 2021 (the "Commencement Date"). and this Agreement shall tomatically terminate on April 20, 2022, unless extended or sooner terminated as provide erein. All tasks specified in Exhibit "A" shall be completed no later than one month f m the Commencement Date. The time for performance of the tasks identified in Exhibit "A" are generally to be shown in Exhibit "A." This schedule may be amended to benefit the P OJECT if mutually agreed to in writing by CITY and CONSULTANT. In the event the Commencement Date p edes the Effective Date, CONSULTANT shall be bound by all terms and conditions as provi herein. 4. COMPENSATION In consideration of the perf rmance of the services described herein, CITY agrees to pay CONSULTANT on a time and terials basis at the rates specified in Exhibit "B," which is attached hereto and incorporated reference into this Agreement. 5. EXTRA WO In the eve t CITY requires additional services not included in Exhibit "A" or changes in the scope f services described in Exhibit "A," CONSULTANT will undertake such work only after eiving written authorization from CITY. Additional compensation for such extra work shall be lowed only if the prior written approval of CITY is obtained. 6. METHOD OF PAYMENT CONSULTANT shall be paid pursuant to the terms of Exhibit "B." 21-9524/252675 2 of 16 5/19-204082 150 7. DISPOSITION OF PLANS, ESTIMATES AND OTHER DOCUMENTS CONSULTANT agrees that title to all materials pr/otheocuments, der, inc ing, without limitation, all original drawings, designs, reports, both field anes, culations, computer code, language, data or programs, maps, memoranda, letteocuments, shall belong to CITY, and CONSULTANT shall turn these materials oven expiration or termination of this Agreement or upon PROJECT completion, whichur first. These i materials may be used by CITY as it sees fit. 8. HOLD HARMLESS A. CONSULTANT hereby agrees to protect, defend, indemnify and hold harmless CITY, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, demands and defense costs (including, without limitation, costs and feQS of litigation of every stature or liability of any kind or nature) arising out of or in connection 'th CONSULTANT's (or CONSULTANT's subcontractors, if any) negligent (or alleged negli nt) performance of this Agreement or its failure to comply with any of its obligations contai ed in this Agreement by CONSULTANT, its officers, agents or employees except such ss or damage which was caused by the sole negligence or willful misconduct of CITY. CONSULTANT will conduct all defense at its sole cost and expense and CITY shall appr a selection of CONSULTANTS counsel. This indemnity shall apply to all claims and li ility regardless of whether any insurance policies are applicable. The policy limits do not act limitation upon the amount of indemnification to be provided by CONSULTANT. To the extent that CONSULTANT performs "Design Professional Services'- within th meaning of Civil Code Section 2782.8, then the following Hold I larmless provision applies in place of subsection A above: 21.9524Q52675 3 of 16 5119-204082 151 "CONSULTANT hereby agrees to protect, defend, indemnify and hold harmless CITY and its officers, elected or appointed officials, employees, agents and volunteers, from and against any and all claims, damages, losses, expenses, demands and defense costs (i uding, without limitation, costs and fees of litigation of every nature or liability of any kin r nature) to the extent that the claims against CONSULTANT arise out of, pertain to, or re o the negligence, recklessness, or willful misconduct of CONSULTANT. In no event shall th cost to defend charged to CONSULTANT exceed CONSULTANT's proportionate perce age of fault. However, notwithstanding the previous sentence, in the event one or ratio other defendants to the claims and/or litigation is unable to pay its share of defense costs t�e to bankruptcy or dissolution of the business, CONSULTANT shall meet and confer with CpfY/and other defendants regarding unpaid defense costs. The duty to indemnify, including tfie duty and the cost to defend, is limited as provided in California Civil Code Section 27818. C. Regardless of whether subparagraph A or B applies, CITY shall be reimbursed by CONSULTANT for all costs and att"y's fees incurred by CITY in enforcing this obligation. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy li do not act as a limitation upon the amount of indemnification to be provided by CONSULTA 9. PROF SIGNAL LIABILITY INSURANCE CO SULTANT shall obtain and furnish to CITY a professional liability insurance policy coveri4�he work performed by it hereunder. This policy shall provide coverage for CONSUL ANT's professional liability in an amount not less than One Million Dollars (S1,000,600.00) per occurrence and in the aggregate. The above-mentioned insurance shall not contain a self-insured retention without the express written consent of CITY; however an insurance 2 1-95241252675 4 of 16 5/19-204082 152 policy "deductible" of Ten Thousand Dollars ($10,000.00) or less is permitted. A claims-made policy shall be acceptable if the policy further provides that: A. The policy retroactive date coincides with or precedes the i itiation of the scope of work (including subsequent policies purch d as renewals or replacements). B. CONSULTANT shall notify CITY of circums noes or incidents that might give rise to future claims. CONSULTANT will make every effort to aintain similar insurance during the required extended period of coverage following PROJECT completion. If insurance is terminated for any reason, CONSULTANT agrees to purchase an extended reporting provision of at least two (2) years to report claims arising from work performed in connection with this Agreement. If CONSULTANT fails or refuses to produce or maintain the insurance required by this section or fails or refuses to furnish the CITY with required proof that insurance has been procured and is in force and paid/for, the CITY shall have the right, at the CITY's election, to forthwith terminate this Agreemknt. Such termination shall not effect Consultant's right to be paid for its time and materials expended prior to notification of termination. CONSULTANT waives the right to receive compensation and agrees to indemnify the CITY for any work performed prior to approval of insurance by the CITY. 10. CERTIFICATE OF INSURANCE Prior to commencing performance of the work hereunder, CONSULTANT shall furnish to CITY a certificate of insurance subject to approval of the City Attorney evidencing the foregoing insurance coverage as required by this Agreement; the certificate shall: A. provide the name and policy number of each carrier and policy; B. state that the policy is currently in force; and /219324/Z52675 S of 16 5/19.204082 153 C. shall promise that such policy shall not be suspended, voided or canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice; however, ten (10) days' prior written notice in the event of cancellation for nonpayment of premium. CONSULTANT shall maintain the foregoing insuran/corage in force until the work under this Agreement is fully completed and accepted by CITY. The requirement for carrying the foregoing insur cc coverage shall not derogate i from CONSULTANT's defense, hold harmless and indemni cation obligations as set forth in this Agreement. CITY or its representative shall at all tim ave the right to demand the original or a copy of the policy of insurance. CONSULTANT shall pay, in a prompt and timely manner, the premiums on the insurance hereinabove required. 11. INDEPENDENT CONTRAQTOR CONSULTANT is, an�hall be, acting at all times in the performance of this Agreement as an independent contractor herein and not as an employee of CITY. CONSULTANT shall secure at its own cost and expense, and be responsible for any and all payment of all taxes, social security, state disability insurance compensation, unemployment compensation and other payroll deductions for ONSULTANT and its officers. agents and employees and all business licenses, if any, in eation with the PROJECT and/or the services to be performed hereunder. 12. T RMINATION OF AGREEMENT All work required hereunder shall be performed in a good and workmanlike manner. CITY may terminate CONSULTANTS services hereunder at any time with or without cause, and whether or not the PROJECT is fully complete. Any termination of this Agreement by CITY shall be made in writing, notice of which shall be delivered to CONSULTANT as provided herein. In the 21.9524252675 6 of 16 {/ 5/19-2M082 154 event of termination, all finished and unfinished documents, exhibits, report, and evidence shall, at the option of CITY, become its property and shall be promptly delivered to it by CONSULTANT. 13. ASSIGNMENT AND DELEGATION This Agreement is a personal service contract and th/persor all not be assigned, delegated or subcontracted by CONSULTANT to any othithout the prior express written consent of CITY. If an assignment, delegationroved, all approved assignees, delegates and subconsultants must satisfy the insurance requirements as set forth in Sections 9 and 10 hereinabove. 14. COPY RIGHTS/PATENTS CITY shall own all rights to any patent or copyright on any work, item or material produced as a result of this Agreement. 15. CITY EMPLOYEES AND OFFICIALS CONSULTANT shall employ no CITY official nor any regular CITY employee in the work performed pursuant to this Agreement. No officer or employee of CITY shall have any financial interest in this Agreement in violation of the applicable provisions of the California Government Code. 16. NOTICES Any notices, certificates, or other communications hereunder shall be given either by personal delivery to CONSULTANT's agent (as designated in Section 1 hereinabove) or to CITY as the situation shall warrant, or by enclosing the same in a sealed envelope, postage prepaid, and depositing the same in the United States Postal Service, to the addresses specified below. CITY and CONSULTANT may designate different addresses to which subsequent notices, certificates or other communications will be sent by notifying the other party via personal delivery, a reputable overnight carrier or U. S. certified mail-retum receipt requested: 21-932402675 7 of 16 5119-204082 155 TO CITY: TO CONSULTANT: City of Huntington Beach Mind OC ATTN: Oliver Chi ATTN: Marshall Moncreif, MFT, MBA 2000 Main Street 18650 MacArthur Blvd., Suite 220 Huntington Beach, CA 92648 Irvine, CA 92612 17. CONSENT When CITY's consent/approval is required under t ' Agreement, its consent/approval for one transaction or event shall not be deemed to be, consent pproval to any subsequent occurrence of the same or any other transaction or event, 18. MODIFICATION No waiver or modification of any language in this Agreement shall be valid unless in writing and duly executed by both parties. 19. SECTION HEADINGS The titles, captions, section, paragraph and subject headings, and descriptive phrases at the beginning of the various sections in this Agreement are merely descriptive and are included solely for convenience of reference only and are not representative of matters included or excluded from such provisions, and do Dot interpret, define, limit or describe, or construe the intent of the parties or affect the construction or interpretation of any provision of this Agreement. 20. INTERPRETATION OF THIS AGREEMENT The language of all parts of this Agreement shall in all cases be construed as a whole, accor/d to its fair meaning, and not strictly for or against any of the parties. If any provision of this Agreement is held by an arbitrator or court of competent jurisdiction to be unenforceable, void, illegal or invalid, such holding shall not invalidate or affect the remaining covenants and provisions of this Agreement. No covenant or provision shall be deemed dependent upon any other unless so expressly provided here. As used in this Agreement, the masculine or 21.9524/252675 8 of 16 511 9-204082 156 neuter gender and singular or plural number shall be deemed to include the other whenever the context so indicates or requires. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation c trary to which the parties have no right to contract, then the latter shall prevail, and t provision of this Agreement which is hereby affected shall be curtailed and limited only the extent necessary to bring it within the requirements of the law. 21. DUPLICATE ORIGINAL The original of this Agreement and one or more copies hereto have been prepared and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original. Each duplicate original shall be deemed an original instrument as against any party who has signed it. 22. IMMIGRATION CONSULTANT shall be responsible for full compliance with the immigration and naturalization laws of the United States and shall, in particular, comply with the provisions of the United States Code regarding gsfnployment verification. 23. LEGAL SERVICES SUBCONTRACTING PROHIBITED CONSULTANT and CITY agree that CITY is not liable for payment of any subcontractor work involving legal services, and that such legal services are expressly outside the scope of services contemplated hereunder. CONSULTANT understands that pursuant to Huntington Beach City Charter Section 309, the City Attorney is the exclusive legal counsel for CITY; and CITY shall not be liable for payment of any legal services expenses incurred by CONSULTANT. 21.9524252675 9 of 16 5119-204082 157 24. ATfORNEY'S FEES In the event suit is brought by either party to construe, interpret and/or enforce the terms and/or provisions of this Agreement or to secure the performance hereof, each party shall bear its own attorney's fees, such that the prevailing party shall not be entitled to recover its attomev's fees from the nonprevailing party. 25. SURVIVAL Terms and conditions of this Agreem/in and context survive the expiration or termination of this Agreement, shal 26. GOVERNING LAW This Agreement shall be governed an with the laws of the State of California. 27. SIGNATORIES Each undersigned represents and warrants that its signature hereinbelow has the power, authority and right to bi/theirspective parties to each of the terms of this Agreement, and shall indemnify CITY fully uries or damages to CITY in the event that such authority or power is not, in fact, held by try or is withdrawn. 28. ENTIRETY ' The part i acknowledge and agree that they are entering into this Agreement freely and voluntarily f:al/cc o tng extensive arm's length negotiation, and that each has had the opportunity to consult with leunsel prior to executing this Agreement. The parties also acknowledge and agree that no representations, inducements, promises, agreements or warranties, oral or otherwise, have been made by that party or anyone acting on that party's behalf, which are not embodied in this Agreement, and that that party has not executed this Agreement in reliance on any representation, inducement, promise, agreement, warranty, fact or circumstance not expressly set forth in this 21.024a 2s267,5 10 of 16 5 i v-zuau>+z i 158 Agreement. This Agreement, and the attached exhibits, contain the entire agreement between the parties respecting the subject matter of this Agreement, and supersede all prior understandings and agreements whether oral or in writing between the parties respecting the subject matter hereof. 29. EFFECTIVE DATE This Agreement shall he effective o/ea approv by the City Council. This Agreement shall expire when terminated as pr IN WITNESS WHEREOF, the parties herets Agreement to be executed by and through their authorized officers. 30. GENERAL PRINCIPLES CONSULTANT shall, comply with accounting principles and good business practices, including all applicably cost principles published by the Federal Office of Management and Budget (OMB), includi7 2 CFR 200 -UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLJS, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS "The Uniform Guidanc/which can be viewed at https://www.ecfr.gov/cgi- initext—idx?tpl=/ecfrbrowsefT ge02/2cfr200_main_02.tpl. CONSULTANT shall comply with all federal, State and other funding source requirements. CONSULTANT shall, at its own expense, furnish all cost items ociated with this Agreement except as herein otherwise specified in the budget or elsewher to be furnished by CITY. CONSULTANT- shall submit annually to the CITY a cost allocation an in accordance with The Uniform Guidance. 31. COMPLIANCE WITH LAWS AND REGULATIONS CONSULTANT shall at all times perform is obligations hereunder in compliance with all applicable Federal, State, County, and local laws, rules and regulations, current and hereinafter enacted, including facility and professional licensing and/or certification laws and keep in effect any and all licenses, permits, notices and certificates as are required. CONSULTANT 21-95241252675 11 of 16 5/19-204082 159 shall further comply with all laws applicable to wages and hours of employment, occupational safety, and to fire safety, health and sanitation. 32. EQUAL OPPORTUNITY CONSULTANT shall comply with the provisions of Title V 11 of the Civil Rights Act of 1964 in that it will not discriminate against any individual with re ect to his or her compensation, terms, conditions, or privileges of employment no shall CONSULTANT discriminate in any way that would deprive or intend to deprive y individual of employment opportunities or otherwise adversely affect his or her status s an employee because of such individual's race, color, religion, sex, national origin, a , handicap, medical condition, sexual orientation or marital status. 33, AFFIRMATIVE ACTION Each CONSULTANT and su ntractor of services and supplies employing fifteen (15) or more full-time permanent emplo es, shall comply with all Affirmative Action Programs required by Federal or State law. 34. NON DISCRIMIN ION CONSULTA shall ensure that services and facilities are provided without regard to ethnic group identificati , race, color, nation origin, creed, religion, age, sex, physical or mental disability, political at Ti ation or marital status in accordance with applicable laws, including, but i not limited to, TItIG VI of the Civil Rights Act of 1964 (42 U.S.0 200-d), Section 162 (a) of the Federal-Aid Highway Act of 1973 (23 U.S.0 324), Section 504 of the Rehabilitation Act of 1973, The Civil Rights Restoration Act of 1987 (P.L. 100-209), Executive Order 12898 (February 11, 1994), Executive Order 13166 (August 16,2000), Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000-d), the Age Discrimination of 1975 (42 U.S.C. 6101 ), Article 9.5, Chapter 1, Part 1, D' ision 2, Title 2 (Section 11135, et seq) of the California Government Code, Title 9, Chapter 4, 21-9524252675 12 of 16 919-20,4082 160 Subchapter 6 (Section 10800, et seq) of the CCR and California Dept of Social Services Manual of Policies and Procedures (CDSS MPP) Division 21. 35. BYRD ANTI-LOBBYING AMENDMENT CONSULTANT shall file Standard Form-I-LL, "Disclosure Form to Report Lobbying," to certify that it will not and has not used Federal appropriated f ds to pay any person or organization for influencing or attempting to influence an officer or ployee of any agency, a member of Congress, officer or employee of Congress, or an emplo a of a member of Congress in connection with obtaining any Federal contract, grant or any her award covered by 31 U.S.C. 1352. CONSULTANT shall disclose any lobbying with on-Federal funds that takes place in connection with obtaining any Federal award b CONSULTANT or CONSULTANT's Subcontractors. In accordance with 31 U.S.C. 135 , CONSULTANT shall also file a disclosure form at the end of each calendar quarter i :.w h there occurs any event that requires disclosure or that materially affects the accuracy of themation contained in any disclosure form previously filed. CONSULTANT shall include is provision in all subcontracts and require each of its subcontractors to comply with the certification and disclosure requirements of this provision. 36. CLEAN AIR ACT AND FEDERAL. WATER POLLUTION CONTROL ACT CONSULTANT agrees to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act, as amended, 42 U.S.C. §§ 7401 ct seq. CONSULTANT agrees to report each violation to the USDA and the appropriate EPA Regional Office. CONSULTANT agrees to comply with all applicable standards, orders or regulations issued pursuant to the Federal Water Pollution Control Act as amended (33 U.S.C. §§ 1251 et seq.). CONSULTANT agrees to report each violation to the USDA and the appropriate EPA Regional Office. 21-95241252675 13 of 16 5119.204082 161 37. CONTRACTING WITH SMALL AND MINORITY BUSINESSES. WOMEN'S BUSINESS ENTERPRISES, AND LABOR SURPLUS AREA FIRMS CONSULTANT shall, in accordance with 2 CFR 200.321 -Contr/firms and minority businesses, women's business enterprises, and labor surplus affirmative steps to include minority business, women's business enterprises, and firm by: a. Placing qualified small and minority businesses gxd women's business enterprises on solicitation lists; b. Assuring that small and minority bussirjesses, and women's business enterprises are solicited whenever they apt potential sources; C. Dividing total requirements, when 4nomically feasible, into smaller tasks or quantities to permit maximum participation by small and minority businesses, and women's business enterprises; d. Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority businesses, and women's business enterprises; and e. Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development A7iiS y of the Department of Commerce. 38. PROCUREMENT OF RECOVERED MATERIALS CONSULTANT shall comply with 2 CFR part 200.322. CONSULTANT shall procure only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds 21.9524/252675 14 of 16 5/19.204082 162 • $10,000 or the value of the quantity acquired during the preceding fiscal year exceeded 510,000. CONSULTANT certifies that the percentage of recovered materials to be used in the performance of this Agreement will he at least the amount required by applicable specifications or other contractual requirements. For contracts over $100,000 in total v/�v NT shall timate the percentage of total material utilized for the performance tha s recovered materials and shall provide such estimate to CITY upon request 39. AUDIT AND INSPECTION CONSULTANT agrees to maintain and/or makethe CITY accurate books and accounting records relative to all its activities tinder uthorized federal, State or County representatives shall have the right to munito assess, or evaluate CONS ULTANT's performance pursuant to this Agreement, said monitorin assessments, or evaluations to include but not limited to audits, inspection of premises, reports d interviews of project staff and participants. CONSULTANT assertions of confidentiality sha not be a bar to full access to the records. 40. AUDIT REQUIREMENT CONSULTANTS that expend S 0,000 or more of federal grant funds per year shall also have an audit conducted in compli with Government Auditing Standards, which includes Single Audit Act Amendments and the Compliance Supplement (2 CFR part 200 App. XI). l 21-9524252675 15 of 16 5119.204082 163 CONSULTANT, CITY OF HUNTINGTON BEACH, a MIND OC municipal corporation of the State of California By: Mayor print name ITS: (circle one)Chainnan/PresidentfVice President City Clerk AND INITIATED AND APP VED: By: print namc Julian Harvey, P ice Chief ITS: (circle one)Secretary/Chief Financial Officer/Asst. Secretary-Treasurer REVIE D AND APPROVED: Cj y Manager i /APPROVED AS TO FORM: City Attorney il-952Mzszb7s Ib of 16 sn9-zaoaz 164 EXHIBIT "A" EXHIBI r A 165 BeWell ORANGE COUNTY Be Well OC Mobile Crisis Response Team Huntington Beach Police Department Request for Qualifications IFebruary 17, 2021 Be Well February 17.2021 City of Huntington Beach Finance Department,Purchasing Division 2000 Main Street Huntington Beach. CA 92649-2702 RE: Be Well OC Mobile Crlas Response Team. Response to the HBPD Request for Ouallflaitlons To Whom It May Concern Be Well OC is honored to respond to this Request for C+ualrflcat ions to partner with the Coy of Huntington Beach and to support the courageous work of the Huntington Beach Police Department Be WeII OC is uniquely positioned to unify the efforts of local hospitals.medical clinics,homeless service providers, and other community stakeholders to quickly act Nate a successful, scalable.outcomes-driven Mobile Crisis Response Team Asa resident of Huntington Beach.I am personally honored to submit this response and Personally committed to the success of this new service We are grateful for the City vision and bold leadership Be Well OC(Be Well)has created a coalition of hundreds of organizations across Orange County. representing multiple sectors of the community.including County and pnvate health systems law enforcement.fire and emergency services.schools and major un nersrt ie&private bus ne ss.and the faith community. Through the collective power of this collaboration.Be Well has developed many innovative services and systems Be Well has also adopted successful models of carefrom around the country. Particularly in the area of mobile cnsis response Leveraging the nationally-recognized CAHOOTS crisis response model for Huntington Beach,Be Well can improve outcomes and community satisfaction. lower overall coststo the community,and relieve law enforcement from time-consuming responses that hinder their intended function The CAHOOTS modd was developed around a 2-person mobile team,comprised of an EMT and Crisis Counselor.to provide 24/7 community-based assessment and stabilization of urgent medical need or Psychological crisis.along wdh information and referral transportation to services, and with the option of additional case management and follow-up support Combining the demonstrable success of CAHOOTS with Be Well expertise in designing, developing,and implementing transforrmat Ne systems and services for the community, will ensure Huntington Beach the best possible foundation for creating a highly effective mobile crisis response system for the community We are excited at the potential to support the Cry with the development and implementation of this proven arsis response model Again, on behaM of many,thank you for your vision, leadership, and commitment to the health and wellbeing of our community. If you have any questions about our response, please do not hesitate to contact me Snoerely. Marshall Moncrief, MFT, MBA CEO,Be WeII OC 94 3 4 00-416 7 186SO MacArthur Blvd.Ste 220,Irvine CA 92612 ( BeWellOCorg EXHIBIT A 167 11111,11 Ilk BE WELL OC MOBILE CRISIS RESPONSE TEAM Huntington Beach Police Department Request for Qualifications ONWi oYei full BE r. ��...Gr:.= t0 ., n�.. ra 's_Ci r.�c.., z^c:'��lc. 7;]'. ( 3 EXHIBIT A 168 Executive Summary CAHOOTS (Crisis Assistance Helping Out on the Streets) is a mobile crisis-Intervention Program created in 1989 as a collaboration between the City of Eugene in Oregon, law enforcement, emergency medical services(EMS),and a local non-profit mental health clinic. The model was designed to support law enforcement. EMS,and the community with a cl,n`.cally effective and cost-effective response to mental illness. substance abuse. and homelessness The program—which now responds to more than 65 cans per day in the trues of Eugene and Springfield, OR—has more than quaorupled in size during the past decade due to increased societal needs and the demonstrable effectiveness of the program Today the CAHOOTS model is being reol-cated in numer- ous cones around the country including Denver. Oakland. Olympia. Portland Rochester and others. The CAHOOTS model is an integrated public hevthcare model made available for a broad range of problems, including mental health cases, intoxication minor medical needs. shelter needs. and more. Traditionally, calls for help in these areas would default to police and EMS. In this model, requests for service are made through non-emergency and 911 can ones. As calls are F_Based : ,, and HBF, received. dispatchers triage the situation and deploy the 1 data,a fully operational CAHOOTS team instead of police Pr EMS The model CAHOOTS model would succeeds in supporting first responders and the Community divert 16.000 by utilizing a team of two specialists with complimentary mental health and medical training. The mental health team member is an experienced Crisis counselor skiii m de-escalation techniques. sul)port- ed by a medic who is trained as either an EMT or a nurse For example, if an individual is feeling suicidal and has cut themselves the situation is both medical and psychiatric. These patients are usually seeking help,and the CAHOOTS model is designed to address both the emotional, physical,and social well-being of the patent while allev,aung the need for police and EMS involvement As needed. the team can transport patients to facilities such as a crisis center detox center. medical clinic, shelter. etc This model does not duplicate services In addition to supporting police, fire and EMS. the model also works as a complement to the County s Centralize Assessment Team (CAT) The CAT team will be deployed when a Situation requires an involuntary hold and transport In this way. this model fills a major service gap found in most communities It builds a bridge between medical treatment and those experiencing homelessness. who today rely solely on ambulances and emergency rooms for ass-stance. R builds a bridge between clinical care and families struggling with a mental health crisis.who today call police not knowing where else to turn. It provides a prompt. supportive partner to local community-based organizations any time day or night CAHOOTS has evolved over 31 years. Taking the lessons learned and adapting the model to the specific needs of Huntington Beach, Be Well will develop and implement a service that supports the residents, first responders nealthcare workers. social service croles5'Orals and the entire comm6nrry Phone > Dispatch > Police, Fire, EMS or Mobile Crisis Response Be Wel I RE WELL JC ReSoonte R H9PD PF0 6v Mnhee Cnsaa Rpspon5e ram I 4 EXHIBIT A 169 111161 Qualifications A■ Overview of firm qualifications, type of organization, size, professional registration,and affiliations of company Be Well OC is pleased to submit this response to the Huntington Beach Police Department's Request for Qualifications for a Mobile Criss Response Team Background on Be Well Orange County The Problem - No one sector alone can solve the pervasive problem of mental OL illness, substance use disorders, and related challenges suicide and ® •.«,_-•� 40 homelessness Disconnected services and funding sources create silos Absent a public-private, whole-system solution, the community will continue to suffer from less-than-adequate care m a A - fragmented environment s The Solution - Be Well OC brings 4 + together a county-wide,cross-sector, �� nkL force of Orange County leaders public and private health systems, law enforce- ment and emergency services, academia• faith community business community, and others Emboldened by a shared / s.....� vision to create a world-class system of mental healthcare for all Orange County residents, Be Well OC unifies the fragmented ecosystem f se into one. public-private ecosystem of services and support. Y �OO470 0 Be Well is EXHIBIT A 170 Aw The Be Well Blueprint Was created to build the transformational system. A top priority identified in the Blueprint is the development of a best-in-class crisis resporse system within the larger ecosystem This includes 3 comprehensive care campuses and a robust mobile crisis response team to meet needs in the community • rrr rr 44K4F' urr�•r..rrn a+ws�w.�re wri��rw� aackground on Mind OC Advancing the Blueprint requires a responsive and accountable leadership organization with special capability and responsibility In 2017. through a partnership of Orange County hospitals, the county health care agency,and the community, Mind OC was created as a 501(c)3 non-profit organization to build the Be Well OC system of care on behalf of the public and private partners, and for the whole community. In short, Be Well OC is the cc mmu nity-facing brand of the world-class system: Mind OC is the legal entity that can braid public and private funds, enter service contracts, and build the infrastructure to actualize the Be Well OC System Mind OC has been entrusted as fiscal agent for over $SO million dollars in public and private funding to support Be Well OC mental health system transformation protects across Orange County. Mind OC is a core team of over 20 multi-disciplinary professionals that lead a variety of specialty teams and scores of community stakeholders to advance the strategic ini- tiatives of Be Well OC. The team has deep expertise in healthcare administration and operations, executive and clinical leadership across the psychiatric, substance use and homeless services continuum,program development and implementation, real estate and facilities development, system performance evaluation. data analytics and academic research, as well as public policy Mind OC works in close partnership with the County Health Care Agency, CalOptima. California DHCS. the Hospital Association of Southern California(HASC), the Coalition of Orange County Community Clinics(COCCC), Orange County Department of Education (OCDE), Housing for Health OC (HHOC) - a coalition of trusted homeless service providers,City Managers across the County, and most of the law enforcement agencies in Orange County, including the Sheriff's Dept Be Well 16 EXHIBIT A 171 Bin Outline of current relevant projects in Orange County: Specific details 1W relating to expertise In developing mobile crisis response teams Is Be Well OC is leading several aligned efforts to advance behavioral health system transform,,[ xn in Orange County.and to improve the crisis response system. loiiiinil 1. Development of 3 Be Well Campuses- Budding the Beacons to illuminate a hopeful path forward for Orange County Three regional, comprehensive care campuses - North, Central & South County - will anchor the system, increasing access and greatly improving the quality and outcomes of mental health and addiction treatment for this community The campuses include a variety of mental health and substance use assessment.crisis stabilization,and recovery services, co-located, coordinated and uniquely available to all Orange County residents regardless of payer. The first Be Well Campus in Orange opened for care in January of this year. It is a 60,000-square-foot treatment facility.designed to meet the needs of law enforcement, mobile crisis teams, and hospitals serving those in mental health crises. When fully operational, the campus will have 93 beds and the capacity to treat approximately 100 people each day. Specific services within the state-of-the-art facility include triage, psychiatric intake and referral, SUD intake and referral, withdrawal manage- ment, crisis residential. residential mental health and SUD treatment, and an integrated education and support center. This first campus was a co-investment partnership between the County of Orange, Cal Optima.and S of the County's leading non-profit hospitals. Campus operations are continuously informed by a law enforcement steering committee, hospital steering committee, and a committee of family members with lived experience in mental health crisies. 2. Develop a Single Point of Access Navigation System and Crisis Response Network' Orange County, like most jurisdictions in the country, offers a complicated and confusing crisis response system which often includes multiple numbers for people in mental health and SUD crisis to call and navigate. In Orange County. there are currently more than 18 crisis call lines and access points, often leading to confusion and delay in timely care. People in crisis default to calling 911 for mental health and SUD crises which lead to inappro- priate ER boarding or potentially avoidable incarceration Be Well OC. in collaboration with the County of Orange. Cal Optima. NAMI OC, and others, are developing the plan to unify these access points and simplify services navigation and crisis response across the county. 3. Substance Use Disorder Prevention and Treatment: In the summer of 2019.a Be Well OC Substance Use Disorder(SUD) initiative was created to develop a countywide comprehen- sive SUD system of care. The initiative received funding from the CA Department of Health Care Services to begin with the creation of a network of Medication Assisted Treatment (MAT) for Youth. Be Well has continued to expand the SUD system, now partnering with a network of medical clinics to make MAT available for the most vulnerable adults in the community. Reduction in opioid use and overdose eases the burden on law enforcement. other first responders and hospitals, and keeps our parks and streets safe from drug-related activity. 0 Be Well 7 EXHIBIT A 172 a. Community Suicide Prevention: In March 2019, the Orange County Board of Supervisors directed funding to develop a comprehensive, county-wide suicide prevention plan, which Be Well OC continues to support. The initiative will include law enforcement training on mental health and community education by law enforcement around gun safety. S. Supporting the County's MHSA-Funded Innovation Project for Behavioral Health System Transformation: BeWell OC Is leading the alignment of legal, fiscal.and regulatory requirements to improve quality of and access to services. The goal of this effort is to plan for, develop and test the feasibility of a new public and private payment model that will create a quality-driven, culturally responsive and inclusive behavioral health system. A key piece of this work is establishing proof of concept for measurement,data sharing and exploring value-based payment options to Improve and support quality In crisis and other services at the Be Well Orange Campus. 6. Implementing a Trauma Informed Network of Care to Address Adverse Childhood Experiences (ACEs): In partnership with more than 20 health systems,county and community-based organizations. Be Well OC has been awarded S3 million over the next 17 months from the ACES Aware grant program, developed by the California Department of Health Care Services In partnership with the Office of the California Surgeon General. The project aims to Implement a broad and Inclusive Trauma-Informed Network of Care for Orange County. which will ultimately work to prevent adverse childhood experiences (ACES). promote ACE screening in children and adults, improve treatment of ACE-Associated Health Conditions. and prevent intergenerational toxic stress transmission. Additionally, to address a key gap in this continuum and strengthen community linkages, we will launch the Focusing On Children Under Stress (FOCUS) program. in collaboration between local police departments and the Orange County Department of Education. FOCUS will establish a notification system to decrease the negative impacts on children exposed to violence and trauma by improving communication and collaboration between first responders. schools and community resources, helping reduce impacts On the crisis response system. +j�� I1 '1 �Z t 1 BeWell _ s EXHIBIT A 173 D■ References from current related projects, with information to ensure easy contact. Reference Name and Contact Information Don Barnes Sr.enft -c aner Development of e*Well Orange orange county Campus'.exploraton and support Email cidbarnes a ocsd org Assistant Bonnie Foster of mobile cnsis response model Assistant Phone 714-647.1805 Assistant Emae bfostercocsd org Thomas C.gsele, Chief of Police Devalopmwnt of Be WW I City of Orange Orange Campus Email'tkiselaporangepd org M cbi si Phew 714.936.6121 Jan1Ry tech Chief Execut.ve St.JoaaPh HOepIul Char of Hospital Association of Emil Jeremy.$ech cStJoe.org Southern Calitom a;DevNopment Assistant LInda Palomar" of Be Wall Campuses Assistant Phone 714-771.8020 Assistant Email lindapai0mares9 stloe.org Jeftsay A.Nagel,Ph.D. Dwelopment of Be Well Orange Baravioral Health Diroctor Campus:Advancing the Be Well Orange County Health Can Agency Blueprint.MHSA-Funded Innovation Email JNagal a ochcacom Project for Behavioral Health System Phone.714-SU-7024 Transformation Mkhaell Rose.DtPH,LCS.W Adva+ung the Be Well Blueprint Dnec tor.Community Health Hoag HMPgal SWCIde Aevenlion Indiatrve, Email michaell.rosenhong.org Planning for the South County Phone 949-764.6278 Be WWI Campus(try rio) Larry Haynes Executive Director Advancing the Be Well Blueprint Mercy House HornWess and Marital Health E ma.l.la r r yh a marc y hou m net Photo'71 y-BY6-71 y services Coordination BeWell EXHIBIT A 174 Project Team Overview 1W The Mind OC team brings extensive expertise in des.gn, development. Implementation and continuous quality improvement of systems and services. Is These Include crisis care, substance use treatment, and homeless support services Note' Positions specific to the mobile service will be onboarded and are detailed in the staffing model ;on page 16) The Leadership Team: Marshall Moncnef,MFT,MBA,Chief Executive Officer. Mr Moncrnef is a co-founder of Be Well OC. and is a co-founder and CEO of Mind OC, the SOlc3 non-profit entity created to build the Be Well Orange County system of mental health care for all Orange County residents Mr Moncnef will hold overall responsibility for this protect, and all Be Well OC initiatives and activities.Mr. Moncnef has served as a clinical and administrative leader in both public and private health sectors. scaling successful services across all levels of the care continuum and within complex delivery systems He has held executive leadership positions in the St Joseph Hospital system, Hoag Hospital, and most recently Providence Southern California as the Regional Executive Director of the Institute for Mental Well- ness In this prior role. Mr Moncrief held administrative and operational oversight for all mental health and substance use services for 14 hospitals and emergency departments, as well as 5 large medical groups Mr Moncnef is a licensed therapist specialized in treat- ing addictions and co-occurring disorders. He holds an Executive MBA with an emphasis m healthcare administration. Dr Robert McCarron,DO,Chief Medical Officer. Or McCarron completed a dual resi- dency in internal medicine and psychiatry at Rush University and received board certi- fication in psychiatry, psychosomatic medicine and internal medicine. While on faculty at the University of California,Davis and Irvine Schools of Medicine, he started the only two California-based combined internal medicine/psychiatry residency programs In these roles,he received grant support to create and implement a 'Med Psych' curricu- lum that can be used in the public mental health system by psychiatry residency training programs Or McCarron served as Director of the only Sacramento County Crisis Stabi- lization Unit and was the founding Director of Pain Psychiatry and Behavioral Medicine. within the UC Davis Division of Pam Medicine. Or. McCarron is the Founding Director for the UC Davis Train New Trainers(TNT) Primary Care Psychiatry(PCP) Fellowship,which is a one-year program designed to train primary care providers in the essentials of psy- chiatry and pediatric behavioral health. Or McCarron now serves as Professor and Vice Chair at the University of Cal.forna, Irvine School of Medicine- Department of Psychiatry and Behavioral Medicine He also serves on the ACGME Residency Review Committee for psychiatry Dr Karen Llnklns, PhD, Chief Strategy d Innovations Officer. Or Linkins is a co-founder of Be We l OC, aqd spec�aazes w systerns transfurrnat on across health, behavioral health, and human services. Or Linkins combines advocacy.implementation science. and pro- gram evaluation to improve population health and advance health equity in California and nationally, advancing frameworks like collective impact and distributed leadership A recognized leader in integrated behavioral health nationally. Or. Linkins has led more than 70 research,evaluation, technical assistance, and strategic planning protects for Federal agencies,states, foundations, health plans, community-based organizations, and clinics Some or her current protects include designing Sacramento's MadiCal Whole Person Care pilot that targets individuals experiencing homelessness with complex health needs. evaluating the CA Accountable Communities for Health Initiative, and designing a pub- lic-private continuum of behavioral health care in Orange County. Or Linkins works to develop strong strategic partnerships across safety net organizations and communities to confront and address the underlying inequities and disparities that impact population health. / 1 Bili 'I $E WELL QC Wil-ti., i 1. QFO for Mob,,i:r ises ilpa[•,)nsE Igam I 12 EXHIBIT A 175 1h Dr Lauren Brand,PsyD, Director of Operations.Dr Brand oversees all clinical and operational aspects of the Be Weil campus In Orange In this capacity, Dr Brand works very closely with law enforcement teams, emergency services, hospitals and homeless support services and shelters Dr Brand is leading the community collaboration to improve transitions of care into and out of the new Be Well Campus, affording her a unique vantage point to lead mental health system improvement in support of law enforcement and first responders Dr Brand is a psychologist specializing .n clinical operations and administrative oversight of high performing mental health and substance use programs Or Brand has over 20 years of experience working in the public and private sectors. Prior to her work with Be Well OC, Dr Brand served as Chief Operating Officer and President& CEO, for Jewish Federation & Family Services Dr Brand also ran the John Henry Foundation, a venerable residential campus program for those snuggling with Schlzoohren,a Spectrum Disorders Ben Adam Clime►,EMT,Principal Project Lead Mobile Crisis Response Initiative. Mr. Chmer will lead the Be Well implementation of the mooile crisis response teams ano hold implementation respons,bdity to ensure project success Previously. Mr Chmer held responsibilities across all aspects of the CAHOOTS service in Oregon, serving as a crisis counselor, an EMT, as well as holding administrative and operational leadership roles. Mr Chimer nas extensive experience in the onboardrng and training of new mobile crisis teams. establishing working policies and protocols In collaboration with law enforcement and emergency services. as well as other critical community stakeholders Mr Comer applies continuous quality improvement practices to new services to ensure best outcomes early In the program life-cycle. Mr Chmer has over 10 years of experience in social services, including serving as a Southern California homeless outreach worker, housing case manager, and program manager Mr Chimer is the founder of Critical Responses In Supportive Integrated Services (C R I S I S ), assisting communities across California in the development of mobile crisis response teams Valerie Fryer,MBA,Director of Finance. Ms Fryer will provide fiscal and administrative oversight for the project. including coordinating HR functions. Valerie has more than 18 years of finance experience working with nonprofits& 10 years with corporate finance During her career, she has led all facets of operational & finance management including accounting, financials, budgets, Information technology, human resources administration and audits At OneOC. Valerie led the Business Services Dept for 12 years which was responsible for the Orl financials, over 100 community initiative oversight &finan- cials, 30 nonprofit accounting/bookkeeping clients and 20 corporate foundation finan- cials. She is well versed in all levels of government contracts and financial audits. Previously,she was the Controller for Olive Crest which provided services to care for abused and neglected children in 3 states that included mental health services, prevention foster/adoption, and education (schools) programs Ms.Fryer holds a Masters degree in Business Administration. o Be Well 113 EXHIBIT A 176 Understanding of and Proposed Approach to the Mobile Crisis Response Team in Huntington Beach Understanding Based on the information provided in the RFO and in HBFD annual reports, there are 16,000 calls for services (CFS)related to mental illness, substance use, and home- less services HBPD report that these calls make up approximately 13%of total CF5 For comparison, in Eugene, Oregon, the police report that the CAHOOTS team had 16.000 CFS in 2019. diverting up to 10%of total CFS Eugene serves as a useful analogue to Huntington Beach given that it has a similar population, albeit with a dramatically larger homeless population(2019 Point in Time Count for Eugene identified 2,165 individuals vs. 349 in Huntington Beach). Beyond the sheer number of calls, the needed response can be very time-consuming hindering availability of first responders from more pressing, high-risk community needs. Some or all of the following categories could be diverted to a mobile crisis team Bleeding (non-traumatic). Diabetic, Mental/ Emotional/ Psychological, Sick (Unknown)/Other. This will improve response times to community needs, and optimize availability of law enforcement, EMS,and other front line community services Additionally, the model saves fuel on non-emergency medical calls by sending a single van rather than an engine and medic unit. Data from the CAHOOTS team in Eugene has demonstrated the ability to divert ambulance rides. ER visits. and lad admissions saving the local community $8.5 million annually The CAHOOTS model was originated in Oregon more than 30 years ago it has grown in popularity based on growing societal need, low cost of the service, and high value return on investment. The model has produced better outcomes for vulnerable populations and has increased satisfaction among law enforcement, first responders and the community The model has been extensively studied and reviewed in academic and industry-related journals,as well as popular media Adapting this model to the unique needs of Hunting Beach will help the City achieve enhanced outcomes and free up the Huntington Beach Police Department's resources and capacity. For more information on the CAHOOTS model, please see "CAHOOTS A Model for Prehospdal Mental Health Crisis Intervention" in the January 29, 2021 edition of Psychiatric Times,available at. https//www.psychiatrictimes.com/view/cahoots-model-prehospital-metal-health-cr, sis-intervention Be Well 14 EXHIBIT A 177 Staffing Approach Leadership of this team will use a comanager model that leverages the comple- mentary skill sets of a mental health clinician and medical professional This model increases efficiency and capacity as compared to other community crisis models-and establishes the program management team as capable of responding to calls during regular business hours For example, the leadership team would be positioned to assist the police with a barricaded. su,cidal subject without interrupting the mobile crisis teams on duty Pole/QualificationsPosition Licensed curvaan(LCSW.LMFT or LPC),msponsibe for gareral Clinical Director program management and supervision of onus Intervention workers They will pmwde capacity building and support RN or EMT,responvble for equipment mainteriance.nsad Kill Medic Supervisor supplies medical staff coordination and oversight Including IKensure rnontonng,and monitoring van upkeep. Under California law.EMTs must practice under the medial Medical Dlradd license of a physician The costs for the medical director in the Proposed budget will cover the expanded services of the Mind OC chief Medical Officer to function in this critical leadership capacity. EMT. AEMT,or EMT•P license required,performs rnodical TMT evaluations and wound care.rules out Physical health gsuas Presenting as mental health.provides overdose intervention. and daterminas transportability based on physical symptoms. Must possess 2 yeas of relevant experience educahon.or both. Crisis Inter mill performs da-escaiation,mediation,suicide assessment and worker intervention,referral crisis counseling,and determines transportability based on mental health symptoms. Must possess mlavanl exDo once,educal Or both;use manaagqarnent services would include helping dents attain proper Case Management Id., cation provide assistance in completing community program intake forms and/or app icalipns for additional support servKM.post-cbfit nntarwnbon contact to nlorntor and encourage adher a to follow-up tare Mobile Crisis teams provide case management services core to the team"s daily functions, including referral and transport to services as a primary intervention. While ongoing, individual case management is not typically included in the service. such extended individual support would improve individual outcomes, and increase overall value or the service For that reason the staffing model and budget proposed here includes staffing capacity for enhanced case management Be Well I is EXHIBIT A 178 This model aligns with and actualizes each of the criteria identified by the City • Embedding the new units into the City police response systems, with HBPD communications /dispatch staff trained to triage, and when appropriate divert certain calls for service to the proposed mobile crisis response team Such calls are carefully screened to exclude those involving violence, weapons threats and any other situation where the presence of a ul formed police officer would be needed • Development and deployment of mobile crisis response teams to handle non-emergency calls due to mental Illness,substance use, homelessness, and related medical conditions. • Mobile crisis response teams staffed by experienced professionals(crisis counselors and medical professionals)who specialize in the care and manage ment of these frequently co-occurring challenges. The Be Well OC mobile response team will implement a community care model that delivers the following • Specialized professional staff respond to Incidents in the community involving mental Illness, substance use disorders, homelessness, and/or related medical challenges While individuals in need may at times be struggling with homeless ness, the team Is responsive to all city residents • The service functions as essential an essential support and extension of the Police Department, relieving law enforcement officers of the often very time- intensive mental health and social services-related calls, also, the service Is available as a co-response alongside PD for calls that may include mental illness with de-escalation needs • Specialized response vehicles and transportation for Individuals in need to appropriate care facilities, such as shelters. mental health crisis units. medical clinics, hospitals. etc . • Deterrninabon of appropriate actor plans specific to individual client needs. family and patient follow up care, as well as case management when indicated We will draw on our community knowledge and expertise and work closely with the City and HBPD/HBFD to develop clear plans and protocols including, but not limited to • Incoming calls, triage, and team deployment • Communication and coordination with HBPD and HBFD • Community partner care coordination • General Safety and security practices • High-risk response scenarios • Multidisciplinary training • Documentation and data • Continuous Quality Improvement EXHIBIT A 179 1W Ramp Up Approach Establishing 24 daily hours of mobtle Gns15 response will require an appropriate scaling process The nature of the calls in question requires skilled employees capable of managing a wide variety of difficult circumstances Training these teams requires skilled program managers who can also do the work of responding to calls A potential scaling-up process Is as fellows Agency chosen to execute contract Joy 1 Program Managers hlMd;vehicles ordered Month 1 Day shift hired,training begins, vehlcic retrofit bvglns Month 2 Training staff,van retrofit completed Month 3 7-day,12 hours/day service begins Months 4 Overnight and weekend workers hired and begin training Months 5-6 7-day. 24 hours/day service begins;case manager hued,begins Mnnm 7 tralning Fully operational 7-day.24 hours/day service I Months 8-12 Vehicle ordered Monts 12 12 hour overlap team hired,begin training,vehicle retrofit begins Months 13-14 7-day,36 hours/day service begins Month 15 Fully operational 7-day,36 hours/day, service I Months 16.24 0 Be Well 17 EXHIBIT A 180 Vehicle Guidelines Is Preferred vehicle is a Ford Transit Extended Length with High Roof,or comparable A spacious mobile environment optimizes the team's ability to respond to a variety of mental and medical needs Increased space improves safety and outcomes Regardless of the make or model.vehicle modifications are needed to transition the vehicle's standard function to the specialized capabilities required for this es- sential,specialized service Before,Modifkatlon Affar Modification 7 Be Well 18 EXHIBIT A 18? Distinctive modifications listed from the front and to the back of unit: • Recommend dual alternators and a 110v/400w outlet for enhanced electrical capability. • Vinyl front seats for ease of cleaning. • The Crew version comes with 3 seats in the back. These are removed to accommodate a single Captains chair used for trainees. observers. supervisors. etc • Cabinets are placed behind this single observation seat and before the dividing glass to the patient area The cabinets and surrounding area of the vehicle store medical supply bags, AED, oxygen tanks,airway management equipment, fire extinguishers,food, blankets, tarps, and an array of needed tools and additional medical supplies • As shown above, there is a barrier between the cargo compartment and passen- ger cab. For patient safety and comfort, the vehicle requires replacement of this barrier with a metal-reinforced shatterproof-glass divider • The floor and wails of the patient compartment are covered by hard,smooth, durable plastic The material Is easily washable no seams for bodily fluids • Sharp edges are avoided and padding is added where appropriate • Interior door handles in the back patient transport area are removed • Interior and exterior lighting is enhanced BeWlll :._. 119 EXHIBIT A 182 1K Conclusion The proven success of the CAHOOTS model combined with Be Well OC's expertise in designing. developing. and implementing transformative systems for the Orange County community offers Huntington Beach the best possible foundation for creating a measurably sucessful mobile crisis response system. We are excited at the potential to partner with the city of Huntington Beach in support of law enforcement, emergency responders, and the community in the development and Implementation of a nationally-recognized crisis response system with proven results. Be Well so EXHIBIT A 183 • / ' HAPPENS oBe Well RE WELL OG Pesponce to HGPD M1, . ' " -- - 121 EXHIBIT A 154 EXHIBIT "B" Payment Schedule (Hourly Payment) A. Hourly Rate CONSULTANT'S fees for such services as identified in Exhibit A shall be based upon actual costs for services rendered, and shall not exceed S1,500,000 in any given year. B. Travel Charges for time during travel are not reimbursable. C. Billintt 1. All billing shall be done monthly and matched to an appropriate breakdown of the time that was taken to perform that work and who performed it. 2. Each month's bill should include a total to date. That total should provide, at a glance, the total fees and costs incurred to date for the project. 3. A copy of memoranda, letters, reports, calculations and other documentation prepared by CONSULTANT may be required to be submitted to CITY to demonstrate progress toward completion of tasks. In the event CITY rejects or has comments on any such product, CITY shall identify specific requirements for satisfactory completion. 4. CONSULTANT shall submit to CITY an invoice for each monthly payment due. Such invoice shall: A) Reference this Agreement; B) Describe the services performed; C) Show the total amount of the payment due; D) Include a certification by a principal member of CONSULTANT's firm that the work has been performed in accordance with the provisions of this Agreement; and E) For all payments include an estimate of the percentage of work completed. Upon submission of any such invoice, if CITY is satisfied that CONSULTANT is making satisfactory progress toward completion of tasks in accordance with this Agreement, CITY shall approve the invoice, in which event payment shall be made within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be unreasonably withheld. If CITY does not approve an invoice, CITY shall notify CONSULTANT in writing of the reasons for non-approval and the schedule of performance set forth in Exhibit "A" may at the option of CITY be suspended until the parties agree that past performance by CONSULTANT is in, or has been brought into compliance, or until this Agreement has expired or is terminated as provided herein. 5. Any billings for extra work or additional services authorized in advance and in writing by CITY shall be invoiced separately to CITY. Such invoice shall contain all of the information required above, and in addition shall list the hours expended and hourly I Exhibit B 185 rate charged for such time. Such invoices shall be approved by CITY if the work performed is in accordance with the extra work or additional services requested, and if CITY is satisfied that the statement of hours worked and costs incurred is accurate. Such approval shall not be unreasonably withheld. Any dispute between the parties concerning payment of such an invoice shall be treated as separate and apart from the ongoing performance of the remainder of this Agreement. 2 Exhibit B 186 EXHIBIT "B" Payment Schedule (Fixed Fee Payment) I. CONSULTANT shall be entitled to monthly progress payments toward the fixed fee set forth herein in accordance with the following progress and payment schedules. 2. Delivery of work product: A copy of every memorandum, letter, report, calculation and other documentation prepared by CONSULTANT shall be submitted to CITY to demonstrate progress toward completion of tasks. In the event CITY rejects or has comments on any such product, CITY shall identify specific requirements for satisfactory completion. 3. CONSULTANT shall submit to CITY an invoice for each monthly progress payment due. Such invoice shall: A) Reference this Agreement; B) Describe the services performed; C) Show the total amount of the payment due; D) Include a certification by a principal member of CONSULTANTS firm that the work has been performed in accordance with the provisions of this Agreement; and E) For all payments include an estimate of the percentage of work completed. Upon submission of any such invoice, if CITY is satisfied that CONSULTANT is making satisfactory progress toward completion of tasks in accordance with this Agreement, CITY shall approve the invoice, in which event payment shall be made within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be unreasonably withheld. If CITY does not approve an invoice, CITY shall notify CONSULTANT in writing of the reasons for non-approval and the schedule of performance set forth in Exhibit "A" may at the option of CITY be suspended until the parties agree that past performance by CONSULTANT is in, or has been brought into compliance, or until this Agreement has expired or is terminated as provided herein. 4. Any billings for extra work or additional services authorized in advance and in writing by CITY shall be invoiced separately to CITY. Such invoice shall contain all of the information required above, and in addition shall list the hours expended and hourly rate charged for such time. Such invoices shall be approved by CITY if the work performed is in accordance with the extra work or additional services requested, and if CITY is satisfied that the statement of hours worked and costs incurred is accurate. Such approval shall not be unreasonably withheld. Any dispute between the parties concerning payment of such an invoice shall be treated as separate and apart from the ongoing performance of the remainder of this Agreement. Exhibit B 197 Moore, Tania From: Fikes, Cathy Sent: Sunday, April 18, 2021 2:28 PM To: Agenda Alerts Subject: FW: Agenda Item u18 Not Transparent From: <paddydogg@hotmail.com> Sent: Saturday, April 17, 2021 7:20 AM To: CITY COUNCIL<city.council@surfcity-hb.org> Subject: Agenda Item #18 Not Transparent Hello Council: Is this now the City's new procedure to remove the total dollar amount from the body of a contract (Section 4 — Compensation) and bury it at the very back on Exhibit "B"(Page 37)? If so, this is a dangerous new practice, and gives the appearance of hiding the cost of the contract. And the term of the contract? On page 37 it states "the amount shall not exceed $1,500,000 in any given year." Section 3 (Term: Time of Performance) states the contract shall automatically terminate on April 20, 2022, unless extended. The devil is in the details: clearly, it is anticipated the contract will go longer than 1 year. It appears as if staff wants carte blanche and not be bothered with having to produce an amendment or new contract next year. How will the public be kept appraised of what is being spent? I fully support this important program and feel it will benefit all of our community and provide much needed relief to our Police and Fire Departments. What I do not support or understand is the non-transparent manner in which this contract has been written and consider this as setting a bad precedence. Thank you for your time and consideration. SUPPLEMENTAL COMMUNICATION Moulft 39W u � jq`ao�l Aqw4a IMm No.; l`h 1333� t Moore, Tania From: Fikes, Cathy Sent: Monday, April 19, 2021 10:25 AM To: Agenda Alerts Subject: FW: Please vote yes on contract for Be Well OC to handle police calls regarding homeless people with mental illness From:Shevawn Ramsey<mrswumbe@gmail.com> Sent: Monday,April 19, 20219:41 AM To: CITY COUNCIL<city.council@surfcity-hb.org> Subject: Please vote yes on contract for Be Well OC to handle police calls regarding homeless people with mental illness Dear City Council members: Please vote yes tonight to approve a contract with Be Well OC to handle police calls regarding homeless people with mental illness. I am convinced that people with specialized training can help the homeless better than the police can. If BeWell OC had been called instead of the police to deal with Dylan Tabares. I bet he would still be alive today (and while 1 am well aware that Dylan would likely be facing a murder charge if he were still alive. I am also convined -even after meeting with police pr folks- that his being killed by both the policeman who shot him and the police who stood by and did nothing to assist him while he was dying - was a crime in itself that shows how unqualified the police are to deal with such situations) Yours truly; Shevawn Ramsey SUPPLEMENTAL COMMUNICATION Mm"Dft:_ NI rQlaol► t