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File #: 23-157 MEETING DATE: 2/21/2023
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
VIA: Sunny Rief, Acting Chief Financial Officer
PREPARED BY: Sunny Rief, Acting Chief Financial Officer
Subject:
Year-End Audit Results for the FY 2021/22 Annual Comprehensive Financial Report (ACFR),
Fiscal Year 2022/23 Mid-Year Budget Adjustments, and Fiscal Year 2022/23 Budget Update and
Fiscal Health Report
Statement of Issue:
Fiscal Year 2022/23 Budget Update and Fiscal Health Report
On January 17, 2023, the City Council approved Mayor Pro Tem Van Der Mark's H-Item request for a
comprehensive report on the state of the City's budget and financial health, as well as staffing levels,
vacancies, the costs of filling vacancies, and any other aspect of citywide reorganization or planned
increase in fiscal responsibility and economic efficiency. This Request for Council Action provides the
information requested for City Council's consideration.
Fiscal Year 2021/22 Year-End Audit Results
The City received an Unmodified (Clean) Audit Opinion for the City's Fiscal Year (FY) 2021/22 Annual
Comprehensive Financial Report (ACFR), which is the best highest audit result attainable. In
addition, the Government Finance Officers Association awarded their Certificate of Achievement for
Excellence in Financial Reporting to the City for the 36th consecutive year. Included as an
attachment is the FY 2021/22 ACFR to receive and file.
Fiscal Year 2022/23 Mid-Year Adjustments
The Finance Department has also spent time recently performeding a mid-year budget review for the
fiscal year that began on July 1, 2022. In interfacing with operating departments, budgetary requests
have been assessed across all City departments, and certain adjustments are being recommended
based on available resources in the General Fund, through grants and/or restricted funds.
Financial Impact:
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Fiscal Year 2022/23 Mid-Year Adjustments
1. General Fund (100) budget adjustments are requested as follows:
a. Community & Library Services Department - funding for contract class instructors and
increased printing costs for the spring and summer SANDS ($537,000) offset by additional
recreation fee revenues for a net zero impact.
b. Community Development Department - funding for increased building plan check
services ($700,000) offset with plan check revenues for a net zero impact.
c. Finance Department - funding for credit card processing fees arising from credit card
payments made through the City's Enterprise Land Management System (ELM) ($115,000)
d. Fire Department - funding for Fire Strike team reimbursement costs ($525,000) offset
with strike team reimbursement revenues for a net zero impact and emergency medical
supplies ($175,000) offset with emergency medical services revenue for a net zero impact.
e. Police Department - funding for increased costs related to the County-wide 800MHz
backbone cost sharing agreement ($189,000)
f. Public Works Department -funding for increased fuel costs ($752,000) and increased
vehicle maintenance and accident repair costs ($590,000)
g. Non-Departmental -funding for increased natural gas costs ($250,000); a transfer to
the Equipment Replacement Fund ($500,000 for item 5 below); a transfer to the Workers'
Compensation Fund ($4,300,000 for item 4 below); and a transfer to the Section 115 Trust
Fund ($2,000,000) to further protect the City from future pension cost increases.
2. The Police Department is requesting additional appropriations totaling $810,000, through the
following sources:
a. Narcotics Forfeiture - Federal Fund 212 ($60,000)
b. Supplemental Law Enforcement Services Fund 984 ($750,000)
3. The Public Works Department is requesting additional appropriations of $531,000 in the
Refuse Collection Fund 504 offset with refuse collection revenue for a net zero impact.
4. The Human Resources Department is requesting appropriations of $4,300,000 in the Workers'
Compensation Fund 551 offset with transfers in from the General Fund for a net zero impact.
5. The Non-Departmental Department is requesting appropriations of $500,000 in the Equipment
Replacement Fund 324 offset with transfers in from the General Fund for a net zero impact.
6. The Community Development Department is requesting to approve, accept and authorize
execution of a grant agreement with the State of California Energy Commission and
corresponding appropriations of $80,000 in a new CalAPP Grant Fund offset with grant revenues
for a net zero impact.
7. The Community Development Department is requesting approval to amend a professional
services contract with CSG Consultants, Inc. and corresponding increase in Professional Services
Authority of $200,000 and to amend a professional services contract with True North Compliance
Services, Inc. and corresponding increase in Professional Services Authority of$200,000.
There are sufficient revenues, cash, and/or fund balances to support the above referenced
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adjustments.
Recommended Action:
A) Receive and File the FY 2021/22 Annual Comprehensive Financial Report and other auditor-
issued reports; and
B) Receive and file the FY 2022/23 Budget Update and Fiscal Health Report (Attachment 8); and,
B) Approve mid-year budget adjustments to the FY 2022/23 Revised Budget in the funds and by the
amounts contained in Attachment 3; and,
C) Authorize additional Professional Services authority in the Fiscal Year 2022/23 Revised Budget in
the departments and by the amounts contained in Attachment 4; and,
D) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 1 to Agreement
between the City of Huntington Beach and CSG Consultants, Inc. for On-Call Building Division Plan
Review Services" (Attachment 5); and,
E) Approve and authorize the Mayor and City Clerk to execute "Amendment No. 1 to Agreement
between the City of Huntington Beach and True North Compliance Services, Inc. for On-Call Building
Division Plan Review Services" (Attachment 6); and,
F) Accept, approve and authorize the City Manager to execute the grant agreement with the State of
California Energy Commission in the amount of$80,000 (Attachment 7).
Alternative Action(s):
Do not approve the recommended action(s) and direct staff accordingly. Denial of Mid-Year budget
adjustment requests would result in insufficient funding for critical areas including Worker's
Compensation, utilities, and other core services and potential loss of grant funding.
Analysis:
Fiscal Year 2021/22 Year-End Audit Results
Auditing firm Davis Farr LLP (Auditors) audited the City's financial statements and internal control for
the FY 2021/22. The City received an Unmodified (Clean) Audit Opinion for the FY 2021/22 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 2022/23 Budget Update and Fiscal Health Report
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Fiscal Year 2022/23 Budget Update
The City ended FY 2021/22 with a $3.4 million General Fund surplus, primarily due to stronger
recovery in Sales Tax ($5.4M, or 12.1% increase from prior year) and Transient Occupancy Tax
(TOT) ($5.4M, or 51.8% increase from prior year) than originally anticipated.
General Fund revenues for FY 2022/23 remain strong, with Transient Occupancy Tax TOT expected
to increase $1.7M, or 10.8% from the prior year. Additionally, Charges for Services revenues are
also anticipated to increase ($4M, or 14% from prior year), primarily through increases in building and
planning permit activity and demand for emergency medical services. However, inflationary
pressures have impacted expenditures, with costs for construction, utilities, and contracted services
coming in above budget. In spite of this challenge, the City is expected to end FY 2022/23 with a
$3.8M surplus while still funding increased costs for planned expenditures.
General Fund Five-Year Financial Forecast (in thousands):
General FhireYear Forecast
Projetteti Projectrd Projeaed Projected Projected
1 1/sandS) F• F 2 'FY2312..; 24,1 5 FY4: 5 127
Revenue(Recurring) __L$256,246,i $273,253 $276,763f $282,097:$287,595! $293,546
Revenue(One-Time) - 29,607
;Total Revenues -iL_$256,246; $302,9001_ $276,763' $282,,097 $287,695 $_294,546
Expenditures Iess UAL 234,277 251,031 256,408 262,956 269,158, 274,718
CaIPERS UAL _L_ 4,891i 4,891tl 5,0001 5,0001 8,270[ 12,380
POB Payment 13,688 13,556 13,276 12,989 12,687 12,537
rOne-Time Expenditures
Total Expenditures 252,856 285,613. 274,684 280,945 290,115 299,635
`HB Recovery Reserves -7.._. 4 w 13,472, - —_il
Surplus/(Deficit) $3,390 $3,815 $2,078 $1,153 $ (2,421) $ (6,089)
The Five-Year Financial Forecast above shows the balance of General Fund expenditures for five
fiscal years following the audited fiscal year ended June 30, 2022. The revenue projections include
updated assumptions based on economic trends and the most recent projections by sales tax and
property tax experts. The expenditure projections include the future impacts of the FY 2021/22
CaIPERS investment return of-7.5 percent and assume a 6.8 percent rate of return thereafter (the
CaIPERS discount rate). As CaIPERS investment gains and losses are amortized over 20 years with
a five-year ramp up, only the first two years of the -7.5 percent return are shown in the Five-Year
Forecast. The projections for future fiscal years also include increased expenditures for Worker's
Compensation based on the increased cost of claims due to rising medical costs and an expanded
list of injuries that are presumed to be work related under California law, as well as the increased cost
for General Liability premiums based on the national trend of rising cyberthreats and natural disaster
losses.
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Historical Staffing Levels and Vacancies
The City's Adopted Budget includes 815.8 full-time General Fund positions, which is a reduction of
36.4 fewer positions from the compared to the City's pre-pandemic total of 852.2 positions. Since the
City's Reorganization Plan was approved by City Council on November 2, 2020, the number of
positions has increased by 19.
The City has had an average annual vacancy count of 60 positions over the past 10 fiscal years.
Currently, the City has 82 vacancies: 25 sworn positions in Police, 9 sworn positions in Fire, and 48
non-sworn positions throughout the City's departments.
Fiscal Health Report
Financial Health Indicators (FHI) are a proactive approach to monitoring or assisting local
governments in identifying early signs of fiscal stress and can be used to measure the fiscal health of
the City. The report reviews 12 different aspects of the City's finances to see how Huntington Beach
has been performing over the past five years and how the City compares to other Orange County
cities. The comparative data is derived from the Annual Comprehensive Financial Report (ACFR)
published by each City for the fiscal year ended June 30, 2022. The cities used for comparative
purposes are: Anaheim, Costa Mesa, Fullerton, Garden Grove, Irvine, Newport Beach, Orange, and
Santa Ana. The FHIs are separated into three broad categories that are generally described below:
• Financial Position - Can the City Pay its Bills Now: The City's financial position is strong if it
has plenty of cash and other liquid resources available. Without those resources, it will have to
borrow money, delay payments, or liquidate some of its other assets, all of which carry
significant financial costs.
• Financial Performance - Can the City's Revenues Cover its Expenses: The City does not only
need to pay bills now, but it needs to make sure that the money it brings in on an annual basis
is sufficient to cover its annual expenses. Missing this mark can negatively affect service levels
and the City's credit rating which is important for current loan covenants and any future
potential debt financing.
• Long-Term Solvency - Can the City Pay its Bills in the Future: The City will have bills in the
future and its current financial condition will influence its ability to pay them. For the long-term
future, the City needs to ensure that its revenue sources can cover long-term spending needs
and provide services to a growing and changing population.
Financial Position: Can the City Pay its Bills Now
FHI #1 General Fund Reserve Ratio: This indicator identifies changes (increases or decreases) in
General Fund reserves from the prior year to the current year and is useful in identifying if the City's
fund balance reserve is deteriorating. A declining fund balance reserve can be a sign of fiscal stress.
This indicator is important in identifying a trend of a deteriorating fund balance reserves as well as
how rapidly it is deteriorating. A higher ratio suggests larger reserves for dealing with unexpected
resource needs in the long run.
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FY 17-18 5-Year General Fund Reserve Ratio
(9 mos) City of Huntington Beach
35%
•
NNN
*�.. FY 207-21
Y 19-20 34%
33% •
FY 21-22
33%
FY 18-19
31%
FY 21-22 General Fund Reserve Ratio-Comparable Cities
Irvine,95%
Garden Grove,80%
Santa Ana,43%
Huntington Beach,33%
Costa Mesa,34%
Newport Beach,34%
Orange,32%
Anaheim, 31%
Fullerton,21%
The City's General Fund balance reserves increased from 33% to 34% of revenues in FY 2020/21,
then decreased slightly to 33% in FY 2021/22. This is attributed in stronger revenue growth in FY
2021/22, which is used to calculate this ratio. The overall General Fund Balance increased by
$3.39M in FY 2021/22.
FHI #2 General Fund Liquidity Ratio: This indicator assesses changes (increases or decreases) in
available cash and is useful in identifying the City's ability to pay bills on time by measuring readily
available cash, such as unrestricted cash and investments. A declining ratio indicates that the City
does not have sufficient cash available to meet its current obligations as they come due. This
indicator is important in identifying a trend of deteriorating cash as well as how rapidly it is
deteriorating. For this measure, a higher ratio suggests a greater capacity for paying off short-term
obligations.
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5-YearGeneral Fund Liquidity Ratio-
City of Huntington Beach
•
FY 20-21
sue•-►�""""" FY 18-19 8.52
FY 17-18 7.14 FY 19-20 a.
(9 mos) 6.55 FY 21-22
6.20 5.38
FY 21-22 enera Furldti.quidi y: tio-goal pAriAbfe:thies
Garden Grove `14.07
'twine, 8.25
$a nta Ana. 7.56
NeWpor Beach,:5,77
Huntington Beach.5 8
toys Me a,d.3&
Orange,.3:29
Anaheim, 2,
F(iiierton,.2,05
The City's liquidity ratio indicates that the City is able to pay its bills as payments are due by
measuring readily available cash, such as unrestricted cash and investments, compared to the total
liability obligations, such as payables and accrued payroll. The total liability obligations at year end
will vary from year to year based on pay period end dates, timing of projects, and timing of invoices
issued by suppliers.
Financial Performance - Can the City's Revenues Cover its Expenses
FHI#3 General Government Growth in Net Position Ratio: A growth in net position indicates that the
City can pay its expenses with its revenue and is able to establish appropriate reserves for future
allocation. Revenues from the City's programs ideally should cover the expenses that the City incurs
for those programs, otherwise reserves may need to be used to meet the needs. A higher ratio
suggests that annual costs are adequately funded, and the financial condition is improving.
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5-Year General GovernmentGrowth in Net Position- City of
Huntington Beach
FY 21-22
FY 18-19 8.3%
FY 17-18
(9 mos) FY 19-20
5.2°1° FY 20-21
0.8% 0.5%
FY 21-22 General Government Growth in Net Position-Comparable Cities
Costa Mesa,28.2%
Fullerton, 13.4%
Santa Aria, 12.4%
Anaheim, 12.3%
al Huntington Beach,8.3%
Garden Grove,8.3%
Orange,5.8%
Newport Beach,3.1%
Irvine, D.1%
This ratio measures the change in net position compared to the total General Government net
position. When revenues exceed expenses and assets exceed liabilities, an increase in the ratio will
be seen. The City has shown continued growth in net position. The 8.3% increase in FY 2021/22 is
largely attributed to the 21.3% CaIPERS investment return, which eliminated the 15% unfunded
pension liability remaining with CaIPERS after the FY 2020/21 Pension Obligation Bond refinancing
of 85% of the City's unfunded pension liability. It is important to note that there will be a new
unfunded pension liability created due to the -7.5% CaIPERS investment return in FY 2021/22 which
will be reported on the City's FY 2022/23 ACFR.
FHI#4 General Government Operating Margin Ratio: The City funds certain programs via grants and
intergovernmental aid from other government agencies (e.g. Federal and State) and also charges for
services that are offered to its residents. This measurement illustrates how much of the City
expenditures are funded by charges, fees, and grants rather than general tax dollars to fund program
expenditures. For this measure, a higher ratio suggests basic government services are more self-
sufficient through charges, fees, and grants and less reliant on general tax dollars to fund program
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expenditures.
5-Year General Government Operating Margin Ratio-
City of Huntington Beach
•
•
FY 1.778� ., • FY 21-22
(9 mas)
41% FY 18-1.9 FY 1.9-20 * 38%
32% 31% FY 20-21
25%
FY 21-22 General Government Operating Margin Ratio- Comparable
Cities
• Anaheim,65.3%
Fullerton,54.1%
Irvine, 53.1%
Santa Ana, 52.2%
Garden Grove,44.4%
Newport Beach,40.5%
Huntington Beach,37.6%
Orange,3D.7%
Costa Mesa,25.0%
This ratio illustrates how much of the City's expenditures were funded by charges, fees, and grants
(37.6%) rather than general tax dollars (62.4%) to fund program expenditures. The other cities
appear to fund their operations more heavily by charges, fees, and grants. This could be attributed to
the level of cost recovery implemented by each City. While there is no standard we know that most
cities do not implement 100% cost recovery.
FHI#5 General Government Own Source Revenue Ratio: The City receives grants and
intergovernmental aid from other government agencies, such as the state and federal governments.
While the City welcomes grants and aid to support City services, the less reliant the City is on money
from those sources, the more independent the City's financial condition is. Revenues from grants are
used to support some City functions. Other functions, such as public safety, are mainly funded by
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general tax dollars. This ratio illustrates the extent to which general government revenues were
supported by grants. A lower ratio suggests that the City is not heavily reliant on grants and more
reliant on general tax dollars and charges for services.
5-Year General Government Own Source Revenue
Ratio- City of Huntington Beach
Fy9-2{
#00.00,000.
9% ,
FY1.7-18
FY 18-19 FY 20-21 Fig 21-22
4
(9 mos) 6% 6°% 6%
5%
FY 21-22 General Government Own Source Revenue Ratio-Comparable
• Cities
Huntington Beach,6.0%
rdewport Beach,8.5%
Costa Mesa,10.9%
Orange,13.9%
Fullerton, 17.7%
Garden Grove,25.1%
Irvine,25.8%
Santa Ana,28.6%
Anaheim,36.6%
This ratio explains how much of our revenues are from grants (6%) compared to general tax dollars
and charges for services (94%). With the addition of the American Rescue Plan Act funding of$29.6
million, this ratio will be higher next year and is not indicative of an ongoing pattern as these funds
are considered one-time funding only.
Long-Term Solvency - Can the City Pay its Bills in the Future
FHI#6 General Government Near-Term Solvency Ratio: The City has both short-term and long-term
obligations that must be paid in the future. The fewer number of years of annual revenue needed to
pay the City's obligations, the stronger the City's financial condition. This ratio demonstrates that the
City is able to pay a larger portion of its debts with annual revenues. For this measure, a lower ratio
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indicates a stronger financial condition.
5-Year General Government Near-Term Solvency Ratio
- City of Huntington Beach
1
FY 17-18
(9 mos) 0
2.80 FY 18-1.9 FY 9-20 FY 20-21.
1..93 1.98 1.92 FY 21-22
1.65
FY 21-22 General Government Near-Term Solvency Ratio-
Comparable Cities
Irvine,0.49
Newport Beach,
L23
Fullerton, 1.47
Garden Grove, 1.57
Huntington Beach,
1.65
Anaheim, 1.78
Orange, 1.91
Costa Mesa,2.01
Santa Ana, 2.14
The City has both short-term and long-term obligations that must be paid in the future. The fewer
number of years of annual revenue needed to pay obligations, the stronger the City's financial
condition. The decrease of the City's long-term debt in FY 2020/21 is due to the refinancing of 85% of
the City's pension liability with the issuance of Pension Obligation Bonds, as well as refinancing of
two of the City's Lease Revenue Bonds (2010A and 201 IA) to lower interest rates. The decrease in
FY 2021/22 is largely attributed to the 21.3% CaIPERS investment return, which eliminated the 15%
unfunded pension liability remaining with CaIPERS after the Pension Obligation Bond refinancing. It
is important to note that there will be a new unfunded pension liability created due to the -7.5%
CaIPERS investment return in FY 2021/22 which will be reported on the City's FY 2022/23 ACFR.
FHI#7 General Government Debt, Pension Liability, and OPEB Burden per Resident Ratio: The City
issues debt for a variety of reasons and pays for employees' pensions, including other post-
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employment benefits. Having a low debt per capita would put the City in a stronger financial position.
Lower bonded debts, pension liability, and other post-employment benefits (OPEB) per capita result
in a smaller debt burden on taxpayers. For this measure, a lower ratio indicates a stronger financial
condition.
5-Year General Government Bonded Debt, Pension Liability
& OPEB Burden per Resident City of Huntington Beach
•
FY 17-18 FY 18-19 FY 19-20 FY 20-21
(9 mos) 2,227 2,275 2,328
2,305
FY 21-22
1,439
FY 21-22 General Government Bonded Debt,Pension Liability&OPEB
Burden per Resident-Comparable Cities
. Irvine, 144
Huntington Beach, 1,439
Garden Grove, 1,527
Orange, 1,624
Santa Ana, 1,986
Fullerton, 2,906
Costa Mesa, 2,932
Anaheim, 3,462
Newport Beach,3,466
As previously discussed, the sharp decrease in FY 2021/22 is largely attributed to the 21.3%
CaIPERS investment return, which eliminated the 15% unfunded pension liability remaining with
CaIPERS after the Pension Obligation Bond refinancing. It is important to note that there will be a
new unfunded pension liability created due to the -7.5% CaIPERS investment return in FY 2021/22
which will be reported on the City's FY 2022/23 ACFR.
FHI#8 Governmental Funds Coverage Ratio: If a large portion of the City's expenses go towards
paying debt principal and interest, it shows that the City is less able to spend money on services and
capital improvements. The City has principal and interest payments on debt. The lower the amount
of these payments compared to all the other expenditures it has, the stronger its financial condition.
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For this measure, a lower ratio indicates a stronger financial condition.
5-Year Governmental Funds Coverage Ratio-
City of Huntington Beach
•
FY 21-22
9.1%
FY 17-18
(9 mos)
0.8% FY 28-19 FY 19-20•
2.9% 2.7% FY 20-21
1.8%
FY 21-22 Governmental Funds Coverage Ratio- Comparable Cities
Irvine,0.01%
I Fullerton,0.2%
Garden Grove, 1.0%
Costa Mesa,2,0%
Santa Ana,2.5%
Newport Beach,4.9%
Anaheim,8.0%
Huntington Beach,9.1%
Orange, 11.3%
The City has a higher ratio than most of the comparative cities, implying the City has higher principal
and interest payments and more overall long-term debt. The City did have more long-term debt than
the comparative cities, primarily as a result of the issuance of a $363.6 million Pension Obligation
Bond in FY 2021/22 of which $341.5 million was related to general government funds. However, it is
important to note that when aggregating all of the City's bonded debt, pension, and OPEB liabilities
as shown in FHI #7, Huntington Beach has one of the lowest debt burdens per resident to
comparative cities.
FHI#9 Enterprise Funds Coverage Ratio: This measure compares the interest expense owed on
debts annually to the ongoing, typical operating revenues from which that expense will be paid. This
is similar to a small business owner making sure that the interest payments on the mortgage for her
office aren't too large compared to the revenues she brings in each year. Just like the City's
governmental services need to pay their debts (e.g., bonds) in the long-term, the City's Enterprise
Funds need to do so as well. The City's Enterprise Funds include Water, Sewer, Refuse, and Hazmat
Service Funds. For this measure, a higher ratio indicates a stronger financial condition.
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5-Year Enterprise Funds Coverage Ratio- City
of Huntington Beach
•
FY 2U-21
509.68
•
, FY 2 .-22
128.01
FY 21-22 Enterprise Funds Coverage Ratio- Comparable Cities
Newport Beach,4,631.75
■ Fullerton,218.92
Huntington Beach,128.01
1 Santa Ana, 122.38
1 Orange,83.38
IGarden Grove,60.74
Anaheim, 18.17
Irvine,0.00
Costa Mesa,0.00
Note:No Enterprise Funds in the cities of Costa Mesa and Irvine.
The City only shows two fiscal years of data as its Enterprise funds did not carry long-term debt prior
to FY 2020/21, with the issuance of a $363.6 million Pension Obligation Bond in FY 2021/22 of which
$22.1 million was related to Enterprise funds.
FHI#10 General Government Capital Asset Value Ratio: A negative ratio indicates that the City's
capital assets decreased in value- that is, the value at the end of the year was less than the value at
the beginning of the year. This indicates that the depreciation of capital assets was greater than the
value of capital assets added, and that some capital assets may need to be renovated or replaced.
Most of the City's capital assets decrease in value over time due to depreciation. The City needs to
make sure that as capital assets age, it is renovating or replacing them. Capital assets include land,
buildings, vehicles, and public infrastructure. For this measure, a higher ratio indicates a stronger
financial condition.
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5-Year Governmental Capital Assets Value Ratio- City of
Huntington Beach
•
FY 20-21
3%
+ '""" FY 18719 `'""`".40 •
FY 21-22
FY 17-18 1% FY 19-20 1%
(9 mos) 1%
1%
FY 21-22 Governmental Capital Assets Value Ratio-Comparable Cities
Fullerton,5%
Orange,3%
Santa Ma, 2%
Huntington Beach,1%
I Newport Beach,0.04%
Garden Grove,0.03%
Anaheim,0.4%Costa Mesa, -1%
Irvine, -1%
The City showed an increase in FY 2020/21 primarily due to the purchase of land which is
temporarily being used as the site for a 174-bed Navigation Center.
FHI#11 Enterprise Funds Capital Asset Age Ratio: This ratio explains the percentage of Enterprise
Funds capital assets that have been depreciated. Depreciable capital assets include buildings,
vehicles, and public infrastructure. Assets are depreciated over their useful life as they age, and their
value is reduced. A lower ratio indicates Enterprise Funds capital assets are newer and may not
require as much replacement and/or maintenance costs compared to older capital assets.
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5-Year Enterprise Funds Capital Asset Ratio-City of
Huntington Beach
FY 20-21 FY21-22
5 poi
"-""" FY 19-20 50%
0."„""""."°° FY 3.8-19 48%
FY 17-18 47%
(9 mos}
46%
FY 21-22 Enterprise Funds Coverage Ratio- Comparable Cities
Irvine, 0%
Costa Mesa,0%
Fullerton, 37%
Newport Beach,38%
Anaheim, 40%
Garden Grove,45%
Huntington Beach,50%
Santa Ana,52%
Orange,63%
Note:No Enterprise Funds in the cities of Costa Mesa and Irvine.
This ratio explains the percentage of Enterprise Fund capital assets that have been depreciated. The
City's Enterprise Funds capital assets have aged over the past five years which is evidenced by the
annual increase in the ratio. While the ratio is higher when compared to a majority of its comparative
cities, the increasing trend in this ratio could be indicative of other issues which require additional
analysis.
Indicator#12 General Fund Public Safety Costs Ratio: This ratio compares the total costs of the
General Fund public safety, which includes police and fire, to the total General Fund expenditures. A
higher ratio indicates more funds are dedicated to public safety.
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5-Year General Fund Public Safety Costs Ratio-
City of Huntington Beach
Y 8-19 FY I9-20 FY 20-21. FY 21-22
FY 1^^gg"�O pp ��3� 63% 3 61%
f
(9 mos)
52%
FY 21-22 General Fund Public Safety Costs Ratio-Comparable Cities
Irvine,40%
Newport Beach,42%
Anaheim, 49%
Santa Ana, 54%
Costa Mesa,55%
Orange,61%
Huntington Beach,61%
Fullerton, 70%
Garden Grove,70%
The Public Safety costs ratio increased over the four fiscal years prior to FY 2021/22, then declining
primarily due to the refinancing of 85% of the City's pension liability with the issuance of Pension
Obligation Bonds in FY 2020/21, with cost savings first realized in the prior fiscal year. It is important
to note that the remaining 15% pension liability held with CaIPERS may incur increasing annual UAL
payments in the future due to the -7.5% CaIPERS investment return in FY 2021/22.
Fiscal Year 2022/23 Mid-Year Adjustments
The FY 2022/23 Budget was adopted by City Council on June 7, 2022, for the fiscal year beginning
July 1, 2022. 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.
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General Fund
The Community & Library Services Department is requesting appropriations to meet increased
demand for recreational and Art Center class contract instructors and increased costs to print the
spring and summer editions of the SANDS ($537,000). These costs will be offset by additional
recreation fee revenues, resulting in a net zero impact to the General Fund.
The City received higher than anticipated requests for development services from multiple large
projects, solar permits, accessory dwelling unit (ADU) permits and commercial construction and
tenant improvements. The Community Development Department is requesting to increase its
professional services appropriation for building plan check services by $700,000, which will be offset
by permit fee revenues and result in a net neutral impact to the General Fund.
The Community Development Department is also requesting to amend professional services
agreements and corresponding professional services authority with CSG Consultants, Inc. and True
North Compliance Services, Inc. for on-call building division plan review services. Each contract will
be increased by $200,000 for a new not to exceed amount of$1,000,000.
The Finance Department is requesting an appropriation of$115,000 to cover credit card fees for
payments made through the City's ELM system. The City currently does not charge for use of credit
cards, which has resulted in higher credit card fees being absorbed by 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 15.94% administrative rate applied to these allowable
expenditures.
The CAL FIRE 2023 Fire Season'Outlook states that the weather outlook for January through April
calls for mixed temperature and precipitation anomalies, with some months being a bit wetter while
others on the drier side. The Fire Department has incurred $525,000 in Strike Team expenditures for
FY 22/23 so far. 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$525,000, which will be fully reimbursed by the State.
To meet the operational demands of increased vendor prices and increased medical calls, the Fire
Department is requesting a budget appropriation of$175,000 for emergency medical supplies.
Additional emergency medical service revenues are anticipated to offset the added costs.
The Police Department is requesting an appropriation of$189,000 to fund the City's portion of the
800MHz backbone cost sharing agreement that is managed by the Orange County Sheriffs
Department. A new Joint Agreement, beginning July 1, 2022, has re-allocated each city's share
based on radio count, removed the County's 40 percent share, and includes increased operational
costs and capital project funding.
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The Public Works Department is requesting appropriations of$752,000 for increased citywide fuel
costs and $590,000 for increased vehicle maintenance and accident repair costs. Inflationary
pressures have significantly impacted fuel prices and costs for vehicle parts and repairs.
Staff is requesting appropriations totaling $7,050,000 in the Non-Departmental Department to pay for
increased utility bill costs due to the recent spike in natural gas prices ($250,000) and transfers to the
Equipment Replacement Fund ($500,000), Workers' Compensation Fund ($4,300,000) and the
Section 115 Trust ($2,000,000). Equipment Fund transfers are needed to ensure adequate funding
for essential capital equipment needs and address rising equipment costs. The Workers'
Compensation transfer is requested to pay for the increased cost of claims due to rising medical
costs and an expanded list of injuries that are presumed to be work related under California law.
Transfers to the Section 115 Trust are requested to further protect the City from future pension cost
increases.
Other Funds
Narcotics Forfeiture - Federal (Fund 212)
Federal narcotics forfeiture revenues are equitably shared federal financial assistance, used to
supplement local law enforcement resources. An appropriation of$60,000 is needed in the Narcotics
Forfeiture - Federal Fund for detective overtime costs arising from participation in the Orange County
Regional Narcotics Suppression Program (OC RNSP).
Equipment Replacement (Fund 324)
This fund accounts for citywide vehicle and capital equipment purchases. An additional appropriation
of$500,000 is requested to ensure adequate funding for essential capital equipment needs and
address rising equipment costs. This appropriation is funded by the requested $500,000 transfer
from the General Fund.
Refuse Collection Service (Fund 504)
The residential curbside collection rate increased by $1.92 effective July 1, 2022, based on the
formula adopted in Resolution 2021-05, and is estimated to provide an additional $1,103,000 in
revenues. Part of this increase was included in the FY 2022/23 Adopted Budget. However, due to
higher than anticipated inflation and increased fuel costs, the Public Works Department is requesting
an expenditure appropriation of$531,000 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.
Workers' Compensation (Fund 551)
California Workers' Compensation Law provides state mandated benefits to employees for work-
related illness or injury. Benefits may include payments for medical treatment, salary continuation,
Total Temporary Disability (TTD) benefits, and permanent disability benefits. The City is self-insured
for its workers' compensation program and is liable for all costs up to $1 million dollars per claim.
The costs related to claims are paid for by the City as the Employer.
An appropriation of$4,300,000 is needed for increased costs of Workers' Compensation claims
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File #: 23-157 MEETING DATE: 2/21/2023
driven by rising medical costs and an expanded list of injuries that are presumed to be work related
under California law, including cancer and post-traumatic stress.
Supplemental Law Enforcement Services (Fund 984)
Supplemental Law Enforcement Services Fund (SLESF) revenues are provided by the State of
California to fund front line law enforcement activities. An appropriation of$600,000 is requested for
temporary relocation of the 9-1-1 center to the Central Net facility at Gothard Fire Station. The
current 9-1-1 center will undergo a remodel, expected to begin in the fall of 2023. Relocation of
dispatch services requires the coordination and assistance of several vendors and stakeholders to
move the Computer Aided Dispatch (CAD) and phone monitors, modems, desks and other computer
accessories to Central Net.
An appropriation of$150,000 is requested for the purchase of investigative software offered through
Peregrine. This technology platform provides a single point of access to view and analyze large-
scale and real-time data from various sources, streamlining criminal analysis and utilizing secure
links to quickly share information and reports with other law enforcement agencies. There is
sufficient fund balance in this fund to cover the requested appropriations.
CalAPP Grant (new fund)
The Community Development Department has been approved for a grant from the State of California
Energy Commission for expenses associated with adopting an automated solar permit platform
called SolarAPP+. The platform verifies code compliance and issues permits in real time to a
licensed contractor for a solar energy system. The grant will reimburse software,costs, staff time and
other related expenses, up to $80,000.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(5), administrative activities of governments that will
not result in direct or indirect physical changes in the environment do not constitute a project.
Not applicable
Strategic Plan Goal:
Economic Development & Housing
Infrastructure and Parks
Fiscal Sustainability, Public Safety and other
Attachment(s):
1. FY 2021/22 Annual Comprehensive Financial Report (ACFR)
2. Other Auditor Issued Reports
3. Fiscal Year 2022/23 Recommended Mid-Year Adjustments
4. Fiscal Year 2022/23 Recommended Mid-Year Professional Services Authority
5. Amendment No. 1 to Agreement between the City of Huntington Beach and CSG Consultants,
Inc. for On-Call Building Division Plan Review Services
,vf 6. Amendment No. 1 to Agreement between the City of Huntington Beach and True North
Compliance Services, Inc. for On-Call Building Division Plan Review Services
City of Huntington Beach Page 20 of 21 Printed on 2/16/2023
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. f 7. Grant Agreement with the State of California Energy Commission (Number APP-22-038)
8. City of Huntington Beach Financial Health Indicators Report
9. Financial Update & FY 2022/23 Mid-Year Budget Adjustments Presentation
City of Huntington Beach Page 21 of 21 Printed on 2/16/2023
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C I TY OF
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ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE YEAR ENDED
J U N E 30, 2022
Prepared by the Finance Department
350
THIS PAGE INTENTIONALLY LEFT BLANK
351
INTRODUCTORY SECTION
352
THIS PAGE INTENTIONALLY LEFT BLANK
353
City of Huntington Beach
Annual Comprehensive Financial Report
For the Year Ended June 30, 2022
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents
Letter of Transmittal iii-x
City Officials xi
Organizational Chart xii
Certificate of Achievement in Excellence in Financial Reporting xiii
FINANCIAL SECTION
Independent Auditor's Report 1-3
Management's Discussion and Analysis (Required Supplementary Information) 4-21
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position 23
Statement of Activities 24
Fund Financial Statements:
Balance Sheet—Governmental Funds 25
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 26
Statement of Revenues, Expenditures and Changes in Fund Balances—Governmental Funds 27
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances
of Governmental Funds to the Statement of Activities 28
Statement of Net Position— Proprietary Funds 29
Statement of Revenues, Expenses and Changes in Fund Net Position— Proprietary Funds 30
Statement of Cash Flows—Proprietary Funds 31
Statement of Fiduciary Fund Net Position— Fiduciary Funds 32
Statement of Changes in Fiduciary Fund Net Position— Fiduciary Funds 33
Notes to Financial Statements 34-124
Required Supplemental Information:
Notes to Required Supplementary Information 128
Schedule of Revenues, Expenditures and Changes in Fund Balance— Budget
And Actual—General Fund 129
Schedule of Revenues, Expenditures and Changes in Fund Balance— Budget
And Actual—Grants Special Revenue Fund 130
Schedule of Changes in the Net Pension Liability and Related Ratios 131-133
Schedule of Changes in the Net OPEB Liability and Related Ratios 134
Schedule of Contributions 135-137
Schedule of Money Market Weighted Rate of Return 137
Schedule of Contributions for the OPEB Plan 138
i
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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 149-156
Statement of Net Position— Internal Service Funds 159
Statement of Revenues, Expenses, and Changes in Fund Net Position
Internal Service Funds 160
Statement of Cash Flows— Internal Service Funds 161
Combining Statement of Fiduciary Fund Assets and Liabilities 165
Combining Statement of Changes in Fiduciary Net Position 165
STATISTICAL SECTION
Net Position by Component— Last Ten Fiscal Years 169-170
Changes in Net Position— Last Ten Fiscal Years 171-172
Fund Balances—Governmental Funds— Last Ten Fiscal Years 173
Changes in Fund Balances—Governmental Funds— Last Ten Fiscal Years 175-176
Assessed and Actual Valuation of All Taxable Property (Excluding Redevelopment Agency)-
Last Ten Fiscal Years 177
Property Tax Rates—All Direct and Overlapping Government Tax Rate 04-001
Largest Area in City— Last Ten Fiscal Years 177
Property Tax Levies and Collections— Last Ten Fiscal Years 178
Top Ten Property Tax Payers—Current Year and Nine Years Ago 179
Ratios of Outstanding Debt by Type— Last Ten Fiscal Years 181-182
Legal Debt Margin—Last Ten Fiscal Years 183
Statement of Direct and Overlapping Bonded Debt 184
Principal Private Employers—Current Year and Nine Years Ago 185
Full-Time Actual and Budgeted City Employees by 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
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i F9
�witii 'N Ja
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�'4:f ° �i CITY OF HUNTINGTON BEACH
December 21, 2022
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, 2022.
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, 2022. The auditor's opinion can
be found in the Financial Section of this report. GAAP requires that management provide a
narrative introduction, overview and analysis to accompany the financial statements in the form
of a Management Discussion and Analysis (MD&A). This transmittal letter is designed to
complement and should be read in conjunction with it. The MD&A can be found immediately
following the independent auditor's report.
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Profile of the City of Huntington Beach
The City of Huntington Beach is home to a thriving beach community, located on the Orange
County coast, 35 miles south of Los Angeles and 90 miles north of San Diego. With a population
of 197,437 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 #1 for "Best-Run City" in the State of California by
WalletHub (June 2022). Huntington Beach was also ranked#1 and#18 in the state and country,
respectively, for "Best City for People with Disabilities" by WalletHub (September 2022). 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 104,300 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 980 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. Air Force
Thunderbirds, U.S. Navy F-35C Demo Team, PACAF F-16 Viper Demo Team, 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 three-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," spans a four-day period that
includes the Pier Plaza Festival with live music, carnival rides, and other family-friendly
activities, Surf City 5K Run, and spectacular fireworks show overlooking the pier.
The City also hosts a variety of other exciting events for families and visitors such as the annual
Concours d'Elegance, Civil War Days, and other events. In September 2022, the City hosted
the International Surfing Association (ISA) World Surfing Games for the first time since 2006.
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Economic Condition and Outlook
After more than two years of contending with the pandemic, the economy is showing continuing
signs of recovery as seen through the major decline in COVID-19 cases and expansion of the
nation's economy to 93 percent of pre-pandemic levels. While global tensions and supply chain
shortages remain prevalent, the City is experiencing sustained increases to its major revenue
sources, such as Sales Tax and Transient Occupancy Tax, through remarkable improvements
to the local economy. However, continuing volatility in the financial and equity markets, along
with the rapidly changing economic picture and the length and continuing impacts of the COVID-
19 pandemic, add a layer of uncertainty to the City's financial projections.
The City of Huntington Beach continues to thrive together through the motto "OneHB." On
November 29th, Al Zelinka presented his "100 Days Report," which included the City's
commitment to the following seven key principles:
• Reaffimation of the City's OneHB Mission to stay committed to being One Team,
working together to have One Focus, and continuing to pursue One Goal, through the
City's core values of humility, exceptionality, social awareness, passion, teamwork, and
integrity.
• Accountability to the Huntington Beach community using best practices and placing the
"Triple Bottom Line"approach of sustainability- which includes the City's environment,
people, and economy- as the authentic and central platform to uphold and advance
Huntington Beach's sense of community and quality of life.
• Dedication to Transparency, striving to continuously expand access to public
information and increasing the visibility of programs, services, Boards, Committees, and
Commissions as opportunities for community participation and public information.
• Responsiveness to the needs of the Huntington Beach community, committing to
continuous all-hands training to provide exceptional customer service and diversifying
communication efforts so that the City's residents can access City information, provide
input, and receive needed services in a timely manner.
• Commitment to remaining Effective & Efficient, promoting high performance and
financial responsibility to maximize the value of services provided to HB taxpayers,
residents, and businesses while simultaneously working to streamline and improve the
City's customer service experience and address problems effectively.
• Fostering a culture which supports Diversity, Equity, & Inclusivity, serving all
residents, visitors, and businesses with an open mind and provide a sense of welcoming
and belonging and respecting the diverse viewpoints within the community which
contribute to our collective strength.
• Investment in public Engagement & Consensus Building to provide continuous,
meaningful engagement with the community in order to establish relationships and build
trust by providing a platform that facilities inclusive civic engagement.
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 2022/23 assessed property
value grew 6.3 percent to $50.3 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,
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358
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 $62.9 million, reflecting a 3 percent increase.
City of Huntington Beach
Total Assessed Valuation
Fiscal Years 2013/14-2022/23
(in billions)
$55.0
$50.3
$50.0 _ $46.1 $47 3 s -
$45.0
$438
$39 441 5 r
$361
$343
$35.0 — $32.4 _.___, ___._., - . _...
$30.0 -___
$25.0 —
$20.0
$15.0
$5.0
$0.0 .
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
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.
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City of Huntington Beach
Composition of Sales Tax Revenue
Fiscal Year 2021/22
Other
State and County 5% Autos and
Pools Transportation
16% 21%
Building and
`" Construction
8%
Restaurants and
Hotels
14% Business and
Industry
9%
General Consumer Fuel and Service
Goods Stations
18% 9%
City of Huntington Beach
Historical Sales Tax Revenue
$55.0 ... .. $53.4...._
$50.0
$45.0 — $43.9
$40.4 $41.1
$40.0
$36.1
$35.0
$31.4
M. $29.5
o $30.0 $27.2 $27.2 _._
2$25.0
$20.0
$15.0 ...
$10.0
$5.0 __
$0.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18• 2018/19 2019/20 2020/21 2021/22
*Fiscal Year 2017/18 reflects nine months of data only due to the change in the City's fiscal 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. With a full fiscal year of TOT collections since the lifting of the Shelter-in-Place orders,
the City collected $15.8M in TOT revenues during Fiscal Year 2021/22, with the $5.4M, or 51.8
percent increase, exceeding even pre-pandemic levels.
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City of Huntington Beach
Transient Occupancy Tax Revenue
$18.0 .
$15.8
$16.0 -
514.0
$14.0
$12.0 _.__.. _.___.. .__.__.._. _ _-__._._.--- ----.__. .....-. _-___ $11.4---
$10.0 $10.4
o $10.0 - - 58.4 $9.2 -. ._ $8.8
57.6
$4.0
$2.0
2012/13 2013/14 2014/15 2015/16 2016/17 2017/18• 2018/19 2019/20 2020/21 2021/22
*Fiscal Year 2017/18 reflects nine months of data only due to the change in the City's 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 30th and may amend or revise
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,
2022 was 1.19 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 held a Strategic Planning Workshop on February 4, 2022, affirming four of the five policy
goals set in 2021 (excluding COVID-19 response). The five Strategic Goals for 2022 are listed
below:
• Community Engagement
• Homelessness Response
• Economic Development & Housing
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• Infrastructure and Parks
• Fiscal Sustainability, Public Safety, Other
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.
Sustainability Master Plan
The City is in the process of developing a comprehensive Sustainability Master Plan ("SMP")
that not only ties together past, current, and planned City sustainability efforts, but also outlines
a bold, inclusive vision for growth that balances the co-equal values of environment, equity, and
economy. The plan will define an achievable pathway to sustainability that supports the health
and well-being of all residents, responsible stewardship of the natural and built environment,
and long-term economic growth. Focus areas of the plan include, but are not limited to, the
following areas: Water, Energy, Climate, Biodiversity, Land use and Transportation, Resource
Recovery and Waste Management, and Public Health and Well-Being.
Citywide Mobility Plan
The City has adopted policies and built infrastructure to help people shift from driving alone to
walking, biking, utilizing transit, and carpooling. The Mobility Implementation Plan will help us
more aggressively advance these goals and will need to adhere to criteria set forth in the City's
existing and ongoing plans. The Plan will ensure a diverse set of travel options that meet the
access and mobility needs for people of all ages and abilities, based in transportation justice
and the idea that infrastructure should equally and equitably address the needs of all people.
The Plan will provide clarity and specific, practical direction for strategies that support diverse
transportation options and technological innovations, such as micromobility devices, electric
vehicles, and autonomous vehicles, while ensuring that these changes do not adversely impact
progress towards other City commitments related to safety, equity, vehicular traffic congestion,
and GHG emissions.
Oak View Streetscape Improvements and Community Center and Library Plans
The City is working collaboratively with the Ocean View School District and the general
community to prepare a master plan to redevelop the Community Center and adjacent Oak
View Park, as well as expand and modernize Oak View Library to better meet the needs of this
neighborhood. The City has been awarded a $5 million grant from the California Department
of Transportation to add beautification elements, trees, and art in public spaces, as well as
remove litter and debris to enhance spaces for walking and recreation.
Comprehensive 311 System
The City is in the pre-planning stages of developing and implementing a robust, citywide 311
System to centralize all community requests, inquiries, information resources and engagements
in one platform. This "one-stop-shop" will address non-emergency inquiries and requests for
services. Establishing this one portal has the potential to improve our community's customer
service experience and improve operational efficiencies, in keeping with the City's ongoing
commitment to timely and efficient responsiveness.
362
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 36th 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, 2021, is valid for one
year only. The City believes that this Annual Comprehensive Financial Report continues to
conform to the Certificate of Achievement Program requirements and will be submitted to the
GFOA for its consideration for another award.
I wish to thank the City Council, City Manager, and City Departments for their continued
diligence in their role as fiscal stewards for the City of Huntington Beach. Without their
leadership and support, the favorable financial results contained in this report would not have
been possible. I would also like to thank the Finance Commission, a seven member body
appointed by the City Council, which has been instrumental in helping the City maintain its long
term goal of financial sustainability.
The preparation of this report would also not have been possible without the professional
dedicated staff of the Finance Department. Specifically, I would like to thank Sunny Rief, Zack
Zithisakthanakul, Ian Wuh, Tara Mukund, Ming Zhai, Leslie Zimmer, Michael Dolan, and Thuy
Vi for their hard work and dedication.
Respectfully,
Dahle Bulosan
Chief Financial Officer
x
363
City of Huntington Beach
City Council
Tony Strickland, Mayor
Gracey Van Der Mark, Mayor Pro Tern
Rhonda Bolton, Councilmember
Casey McKeon, Councilmember
Dan Kalmick, Councilmember
Natalie Moser, Councilmember
Pat Burns, Councilmember
Executive Team
Al Zelinka, 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
Chief Eric Parra, Police
Ursula Luna-Reynosa, Community Development
Brittany Mello, Administrative Services
Chris Slama, Community & Library Services
xi
364
City of Huntington Beach
Organizational Chart
Adopted Budget — FY 2022/23
THE PEOPLE .
CITY CITY COUNCIL CITY
ATTORNEY CITY CLERK Mayor
TREASURER `
pf:
a_r Mayor Pro-Tem
Administration. City Council Members
Advisory Public Support \. J Investments
&Elections
r 1
Litigation Records CITY
Management
MANAGER
Comrrwrity t i
Prosecution
ASSISTANT
POLICE ( \ COMMUNITY& --(CITY MANAGER
FIRE )
LIBRARY SERVICES
Administrative Professional Facilities& PUBLIC
Operations Standards Events INFORMATION SUSTAINABILITY
Investigations Emergency Programs&
Response Services
Marine Library& (ccouNcIL) HOMELESS
Patrol SUPPORT &BEHAVIORAL
Safety Cultural Services HEALTH SERVICES
Special
Operations
Support I
Services N COMMUNITY PUBLIC ADMINISTRATIVE
( FINANCE ) DEVELOPMENT WORKS SERVICES
Accounting Maintenance Human Resources
Services Planning &Operations &Risk
Management
Budget Permit Counter Utilities Information
Management Services
e
Revenue Building Transportation
Services
Housing Engineering
Code Enforcement
Economic
Development
xii
365
0 hk
_ .
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Huntington Beach
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30. 2021
' P 71)4014.4_ :A1
Executive Director/CEO
Xiii
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THIS PAGE INTENTIONALLY LEFT BLANK
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FINANCIAL SECTION
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•
Eai i CJ Fa r r Davis Farr LLP
18201 Von Karman Avenue I Suite 1100 I Irvine,CA 92612
CERTIFIED PUBLIC ACCOUNTANTS Main:949.474.2020 I Fax:949.263.5520
Independent Auditor's Report
City Council
City of Huntington Beach
Huntington Beach, California
Report on the Audit of the Financial Statements
Opinions
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 (City), as of and for the year June 30, 2022, and the related notes to the
financial statements, which collectively comprise the City's basic financial statements as
listed in the table of contents.
In our opinion, the accompanying financial statements 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 as of June 30, 2022, 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.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America (GAAS) and the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the United States.
Our responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the Financial Statements section of our report. We are
required to be independent of the City and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audit. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
Emphasis of Matter
As described further in Note 14 to the financial statements, during the year ended June 30,
2022, the City implemented Governmental Accounting Standards Board (GASB) Statement
No. 87, Leases. Our opinion is not modified with respect to this matter.
Responsibilities of Management for the Financial Statements
The City's management is responsible for the preparation and fair presentation of the
financial statements in accordance with accounting principles generally accepted in the
United States of America, and for 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.
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In preparing the financial statements, management is required to evaluate whether there
are conditions or events, considered in the aggregate, that raise substantial doubt about the
City's ability to continue as a going concern for one year after the date that the financial
statements are issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor's report that includes our opinions. Reasonable assurance is a high level of
assurance but is not absolute assurance and therefore is not a guarantee that an audit
conducted in accordance with GAAS will always detect a material misstatement when it
exists. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control. Misstatements are considered
material if there is a substantial likelihood that, individually or in the aggregate, they would
influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the
audit.
• Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, and design and perform audit procedures responsive
to those risks. Such procedures include examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit 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 City's internal control.
Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the
overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the City's ability to continue as a going
concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among
other matters, the planned scope and timing of the audit, significant audit findings, and
certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, budgetary comparison information and pension and
other post employment benefit schedules be presented to supplement the basic financial
statements. Such information is the responsibility of management and, 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
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2
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.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the City's basic financial statements. The combining and individual
nonmajor fund financial statements are presented for purposes of additional analysis and
are not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements are the responsibility of
management and were derived from and relate directly to the underlying accounting and
other records used to prepare the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial statements
and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures
in accordance with auditing standards generally accepted in the United States of America. In
our opinion, the combining and individual nonmajor fund financial statements are fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the Comprehensive Annual
Financial Report. The other information comprises the introductory section and statistical
section but does not include the financial statements and our auditor's report thereon. Our
opinions on the financial statements do not cover the other information, and we do not
express an opinion or any form of assurance thereon. In connection with our audit of the
financial statements, our responsibility is to read the other information and consider
whether a material inconsistency exists between the other information and the financial
statements, or the other information otherwise appears to be materially misstated. If, based
on the work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 21, 2022 on our consideration of the City's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and 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 the effectiveness of 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 the City's
internal control over financiiall reporting and compliance.
''-. - of
Irvine, California
December 21, 2022
371
3
MANAGEMENT DISCUSSION
AND
ANALYSIS
372
4
•�4U7INGtp �
City of Huntington Beach
p} W g Management's Discussion and Analysis
For the Year Ended June 30, 2022
zCQUNTY
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, 2022. 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-x 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
Increase Increase
June 30,2022 June 30,2021 (Decrease) (Decrease)
Assets $ 1,418,959 $ 1,254,251 $ 164,708 13.1%
Deferred Outflows of Resources 30,890 419,067 (388,177) -92.6%
Liabilities 548,996 962,271 (413,275) -42.9%
Deferred Inflows of Resources 146,115 19,317 126,798 656.4%
Total Net Position 754,738 691,730 63,008 9.1%
Unrestricted Net Position (189,318) (236,030) 46,712 19.8%
Long-Term Obligations 485,613 915,921 (430,308) -47.0%
Program Revenues 154,221 136,519 17,702 13.0%
Taxes 205,853 186,787 19,066 10.2%
Other General Revenues 107 26,660 (26,553) -99.6%
Expenses 297,173 346,399 (49,226) -14.2%
• 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$754,738,000. Total net position increased by $63,008,000 or
9.1 percent primarily as a result of the decrease in liabilities related to pension
contributions made with the issuance of Pension Obligation Bonds in prior year,
and the reduction of Net Pension and Other Post-Employment Benefit (OPEB)
Liabilities due to strong investment returns during the fiscal year.
• Long-term obligations decreased by $430,308,000 or 47.0 percent. This decrease
is primarily due to prior year's 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. The effects of this issuance, along with strong investment returns,
reduced Net Pension Liability by $423,225,000. In addition, the City paid down
$35,342,000 of long-term obligations but added $31,479,000, of which
$24,271,000 is in claims payable.
• Deferred outflows of resources decreased by $388,177,000 or 92.6 percent
primarily due to the timing of prior year's pension contributions made subsequent
to the June 30, 2021 measurement date. This includes the unfunded liability
payment to CaIPERS totaling $362,430,000 made from proceeds of the Pension
Obligation Bonds. Deferred inflows of resources increased by $126,798,000 or
656.4 percent primarily due to the differences between projected and actual
373
5
,ric
�.o �� City of Huntington Beach
Management's Discussion and Analysis
0o0 'cP�,e,�! For the Year Ended June 30, 2022
earnings on Pension Plan investments used to determine the City's net pension
liability.
• Program revenues increased by $17,702,000 or 13.0 percent. The increase is
primarily due to easing of COVID-19 restrictions in Fiscal Year 21/22. As of June
15, 2021, the Governor terminated the executive orders that put into place the Stay
at Home Order. With businesses and events permitted to operate at full capacity,
the City saw revenue increases across the board. There was a $5,559,000
increase in Community Services revenues related to concessionaires, recreation
classes, special events, and parking revenue. Parking related fees increased as
of June 2, 2021. Community Development related program revenue saw an
increase of $4,073,000 which can be attributed to increase in permits issued,
development projects, and grant reimbursements primarily related to Navigation
Center operations. Fire saw an increase of $4,572,000 primarily related to an
increase in emergency transport fees as the number of transports rose as hospital
wait times decreased due to a reduction in the number of COVID-19 patients.
• Expenses decreased by $49,226,000 or 14.2 percent largely due to prior year's
$363,645,000 issuance of Pension Obligation Bonds to refinance 85 percent of the
City's unfunded pension liability with CaIPERS. The effects of this issuance
reduced the overall expenses related to the City's CaIPERS Unfunded Actuarial
Liabilities.
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).
374
6
City of Huntington Beach
,!Jz Management's Discussion and Analysis
For the Year Ended June 30, 2022
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 23-24 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 24 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 20 smaller funds are combined into a single, aggregated presentation.
Individual fund data for each of these other governmental funds is provided in combining
statements elsewhere in this report.
The City provides an annual appropriated budget for its governmental funds. Budgetary
comparison schedules for the General Fund and Grants Special Revenue Fund are
required to be presented and are included on pages 129-130. Other major governmental
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7
° .BF: City of Huntington Beach
afi Management's Discussion and Analysis .
•„•F k�' For the Year Ended June 30, 2022
N.CDUNTY
funds (LMIHAF Capital Projects Fund and Pension Liability Debt Service Fund) are
presented in the Supplementary Information section on page 156 of this report and
demonstrate compliance with the budget.
The basic governmental fund financial statements can be found on pages 25 and 27 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 29-31 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 32-33 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 35-124 of this report.
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8
,,;' `'"���v City of Huntington Beach
4 _ x Management's Discussion and Analysis
y ,a
vOv o,��Q�� For the Year Ended June 30, 2022
ri
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 128-138 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 $754,738,000.
Below is a summary schedule of the City's net position at June 30, 2022 (in thousands):
Amount Percent
Increase Increase
Governmental Activities June 30,2022 June 30,2021 (Decrease) (Decrease)
Current and Other Assets $ 331,062 $ 276,665 $ 54,397 19.7%
Non-Current Assets 106,219 - 106,219 N/A
Capital Assets 746,371 737,256 9,115 1.2%
Total Assets 1,183,652 1,013,921 63,512 16.7%
Deferred Outflows of Resources 28,739 393,130 (364,391) -92.7%
Current and Other Liabilities 57,250 34,751 22,499 64.7%
Long-Term Obligations 461,797 864,784 (402,987) -46.6%
Total Liabilities 519,047 899,535 (380,488) -42.3%
Deferred Inflows of Resources 136,033 17,716 118,317 667.9%
Net Position:
Net Investment in Capital Assets 712,289 699,204 13,085 1.9%
Restricted 68,460 65,755 2,705 4.1%
Unrestricted (223,438) (275,159) 51,721 18.8%
Total Net Position $ 557,311 $ 489,800 $ 67,511 13.8%
Amount Percent
Increase Increase
Business-Type Activities June 30,2022 June 30,2021 (Decrease) (Decrease)
Current and Other Assets $ 82,651 $ 97,861 $ (15,210) -15.5%
Non-Current Assets 8,658 - 8,658 N/A
Capital Assets 143,998 142,469 1,529 1.1%
Total Assets 235,307 240,330 (13,681) -2.1%
Deferred Outflows of Resources 2,151 25,937 (23,786) -91.7%
Current and Other Liabilities 6,133 11,599 (5,466) -47.1%
Long-Term Obligations 23,816 51,137 (27,321) -53.4%
Total Liabilities 29,949 62,736 (32,787) -52.3%
Deferred Inflows of Resources 10,082 1,601 8,481 529.7%
Net Position:
Net Investment in Capital Assets 143,998 142,469 1,529 1.1%
Restricted 19,309 20,332 (1,023) -5.0%
Unrestricted 34,120 39,129 (5,009) -12.8%
Total Net Position $ 197,427 $_ 201,930 L (4,503 -2.2%
377
9
City of Huntington Beach
Management's Discussion and Analysis
V A��Q' For the Year Ended June 30, 2022
• Prior year's 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 and
strong investment returns resulted in a decrease of Long-Term Obligations in the
amount of $402,987,000 and $27,321,000 for Governmental Activities and
Business Activities, respectively. At the same time, the refinance and strong
investment returns generated a Net Pension Asset for the first time of
$100,849,000 for Governmental Activities and $8,018,000 for Business Activities.
Analysis of the City's Net Position
Current and Other Assets: The increase in current and other assets of$54,397,000 for
governmental activities is mainly due to the increase in cash and receivables balances
related to increased property, sales tax revenues, and transient occupancy tax. A majority
of the increase is due to the implementation of new GASB Statement No. 87, Leases.
Under this Statement, the lessor of a lease contract is required to recognize a lease
receivable and a deferred inflow of resources. As a result, $12,570,000 in lease
receivable was recognized. The overall combined asset increase by $63,512,000 or 16.7
percent for governmental activities.
The decrease in current and other assets of $15,210,000 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 2021/22, including water main replacements and
the City's share of sliplining the OC-44 imported water transmission line. The overall
combined asset decrease by $13,681,000 or 2.1 percent.
Current and Other Liabilities: Current and Other Liabilities for governmental activities
increased by $22,499,000 and decreased by $5,466,000 for business-type activities. For
governmental activities, the majority of the increase is related to the second tranche of
American Rescue Plan Act (ARPA) funds totaling $14,803,463 received in June 2022
recorded as unearned revenue. The decrease in business-type activities is due to normal
fluctuations in accounts payable and payroll cycles.
Deferred Outflows and Inflows of Resources: The decrease in deferred outflows of
resources of $364,391,000 and $23,786,000 for governmental activities and business-
type activities, respectively, is mainly due to deferral of pension contributions made in
prior year 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$118,317,000 for governmental activities
and $8,481,000 for business-type activities is primarily related to the actuarially
determined amortization 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. The actuarially
determined amortization difference also increased Net Pension Asset and Net Other
378
10
City of Huntington Beach
(9� gqk Management's Discussion and Analysis
For the Year Ended June 30, 2022
comi
Postemployment Benefits Asset. See Notes 6, 7, and 8 for additional information. In
addition, the City implemented GASB Statement No. 87, Leases. Under this Statement,
the lessee is required to recognize a lease liability. This increased Governmental Deferred
Inflows of Resources by $12,400,000. See Note 14 for additional information.
Long-Term Obligations: Long-term obligations decreased by $402,987,000 for
governmental activities and $27,321,000 for business-type activities primarily due to the
City issuing a$363,645,000 Pension Obligation Bond in prior year to refinance 85 percent
of its Unfunded Pension Liability with CaIPERS. The refinance and strong investment
returns resulted in a decrease in Net Pension Liability of$396,763,000 and $26,462,000
in Governmental Activities and Business-type Activities, respectively.
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
activities increased $13,085,000 or 1.9 percent, primarily due to street improvements and
construction projects such as improvements to Bluff Top Trail, Rodger's Senior Center
Repurposing, Central Park Improvements and Downtown Fiber Expansion. Net position
invested in capital assets net of related debt from business-type activities increased
$1,529,000 or 1.1 percent primarily due to replacement of water and sewer pipelines
throughout the City and improvements to Lift Stations on Slater/Springdale and
Saybrook/Heil.
Restricted Net Position: An additional portion of the City's net position is subject to
external (legally imposed or statutory) restrictions ($68,460,000 for governmental
activities, and $19,309,000 for business-type activities). These amounts represent 12.3
percent and 9.8 percent of net position for governmental activities and business-type
activities, respectively. Restricted net position from governmental activities increased
$2,705,000 or 4.1 percent, largely due to the change in restricted net position in the
Pension Liability Fund largely due to revenues set aside from the voter-approved property
tax override dedicated to the payment of pension costs. Restricted net position from
business-type activities decreased by $1,023,000 or 5.0 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 $223,438,000 for
governmental activities and $34,120,000 for business-type activities) represent negative
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f�°, '". y4p< City of Huntington Beach
�. x Management's Discussion and Analysis
V�gaNT„ ', For the Year Ended June 30, 2022
40.1 percent and 17.3 percent, respectively, of net position for governmental activities
and business-type activities. Unrestricted net position for governmental activities
increased $51,721,000 or 18.8 percent. Unrestricted net position for business-type
activities decreased by $5,009,000 or 12.8 percent during the year due to the City having
Net Pension and Other Postemployment Benefit Assets in Fiscal Year 2021/22.
A condensed summary of governmental activities (in thousands) follows:
Governmental Activities
Amount Percent
Increase Increase
Revenues: June 30,2022 June 30,2021 (Decrease) (Decrease)
Program Revenues:
Charges for Current Services $ 68,051 $ 53,683 $ 14,368 26.8%
Operating Grants and Contributions 9,301 6,013 3,288 54.7%
Capital Grants and Contributions 8,537 10,192 (1,655) -16.2%
Total Program Revenues 85,889 69,888 16,001 22.9%
General Revenues:
Property Taxes 102,539 99,958 2,581 2.6%
Sales Taxes 57,652 51,162 6,490 12.7%
Utility Taxes 19,528 18,374 1,154 6.3%
Franchise Taxes 10,380 8,040 2,340 29.1%
Transient Occupancy Tax 15,754 9,253 6,501 70.3%
Use of Money and Property(Loss) (1,895) 4,399 (6,294) -143.1%
From Other Agencies-Unrestricted 4,631 22,000 (17,369) -79.0%
Gain on Sale of Property 1,699 - 1,699 N/A
Total General Revenues 210,288 213,186 (2,898) -1.4%
Total Revenues 296,177 283,074 13,103 4.6%
Expenses:
City Council 382 423 (41) -9.7%
City Manager 5,412 11,163 (5,751) -51.5%
City Treasurer 259 340 (81) -23.8%
City Attorney 2,183 3,140 (957) -30.5%
City Clerk 1,060 1,147 (87) -7.6%
Finance 5,581 6,828 (1,247) -18.3%
Community Development 11,634 19,716 (8,082) -41.0%
Fire 52,808 65,960 (13,152) -19.9%
Information Services 6,469 6,230 239 3.8%
Police 73,964 102,415 (28,451) -27.8%
Community Services 11,517 11,365 152 1.3%
Library Services 5,212 6,181 (969) -15.7%
Public Works 42,598 40,270 2,328 5.8%
Interest on Long-Term Debt 9,548 2,706 6,842 252.8%
Total Expenses 228,627 277,884 (49,257) -17.7%
Change in Net Position Before Transfers 67,550 5,190
Transfers (39) (38)
Change in Net Position 67,511 5,152
Net Position-Beginning of Year 489,800 478,901
Cumulative Effect of Changes in
Accounting Principles - 5,747
Net Position-Beginning of Year as Restated 489,800 484,648
Net Position-End of Year $ 557,311 $ 489,800
380
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��NTINGTp Z
{)''�°� - "°F City of Huntington Beach
$9m,j,kk Managements Discussion and Analysis
y _ Mo For the Year Ended June 30, 2022
21
CF�UNTY tt,
The cost of all governmental activities this year was $228,627,000. However, as shown.
in the Statement of Activities, the amount that taxpayers ultimately financed for these
activities was $142,738,000, as costs of $68,051,000 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 $9,301,000, and capital
grants and contributions of $8,537,000. Overall, the City's governmental program
revenues were $85,889,000. The City paid for the remaining "public benefit" portion of
governmental activities with $210,288,000 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 increased $14,368,000, or 26.8 percent. As noted in the
financial highlights section, the easing of COVID-19 restrictions has allowed the City to
provide services at full capacity. The City saw revenue increases across the board, with
the most significant increase from Community Development, Community Services, and
Fire. There was $5,559,000 increase in Community Services related to concessionaire,
recreational, special events, and facility rental revenues as well as increase in parking
fees rates. Community Development related program revenue saw an increase of
$2,600,000 which can be attributed to increase in permit issuance, fees collected for
development projects such as Main Street Mixed-Use and Gisler Residential, and
reimbursements received for operational cost of the Navigation Center. Fire saw an
increase of $4,524,000 due to increased billable call volume from emergency transport
services.
Operating Grants and Contributions increased by$3,288,000 or 54.7 percent and Capital
Grants and Contributions have decreased by $1,655,000 or 16.2 percent. The increase
in Operating Grant and Contributions primarily due to an increase in grant funds received
by Community Development, Police, and Public Works. Community Development saw an
increase primarily related to reimbursements for Navigation Center operating costs.
Police and Public Works had increases in Office of Traffic Safety grants and Highway
Bridge Replacement and Rehabilitation grants, respectively. The decrease in Capital
Grants and Contributions is related to the completion of the City's federal grant-funded
Highway Safety Improvement project.
Program expenses decreased by $49,257,000, or 17.7 percent primarily due to prior
year's issuance of Pension Obligation Bonds to refinance the City's Unfunded CaIPERS
Pension Liability. The refinance reduced the City's required employer contribution by
$26,012,000. Additionally, Police and Fire overtime costs decreased as a result of the
slowdown in COVID-19 related activities.
Total resources available during the year to finance governmental operations were
$785,977,000 consisting of net position at July 1, 2021 of $489,800,000, program
revenues of $85,889,000, and general revenues of $210,288,000. Total expenses for
381
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/1,,U 71 y��
�ces City of Huntington Beach
Management's Discussion and Analysis
�y , w 1 °: 4` For the Year Ended June 30, 2022
UoNTY
governmental activities during the year were $228,627,000 plus transfers of $39,000.
Thus, net position increased by $67,511,000 or 13.8 percent, to $557,311,000.
A condensed summary of business-type activities (in thousands) follows:
Business-Ty a Activities
Amount Percent
Increase Increase
June 30,2022 June 30,2021 (Decrease) (Decrease)
Program Revenues:
Charges for Current Services $ 68,332 $ 66,631 $ 1,701 2.6%
Total Program Revenues 68,332 66,631 1,701 2.6%
Use of Money and Property(Loss) (4,328) 261 (4,589) -1758.2%
Total Revenues 64,004 66,892 (2,888) -4.3%
Expenses:
Water Utility 44,182 46,054 (1,872) -4.1%
Sewer Service 10,390 9,284 1,106 11.9%
Refuse Collection 13,738 12,936 802 6.2%
Hazmat Service 236 241 (5) -2.1%
Total Expenses 68,546 68,515 31 0.0%
Increase(Decrease)in Net Position
Before Transfers (4,542) (1,623)
Transfers 39 38
Total Change In Net Position (4,503) (1,585)
Net Position-Beginning of Year 201,930 203,515
Net Position-End of Year $ 197,427 $ 201,930
The City's net position from business-type activities decreased by $4,542,000 before
transfers. This is mainly due to unrealized market losses in the City's investments.
The cost of all business-type activities this;year was $68,546,000. As shown in the
Statement of Activities, the amount paid by users of the systems was $68,332,000,
unrealized market losses of $4,328,000, and transfers totaling $39,000. Beginning net
position was $201,930,000 and ending net position was $197,427,000, a decrease of
$4,503,000, or 2.2 percent. Of the ending net position, $143,998,000, or 72.9 percent,
was invested in capital assets, $19,309,000 or 9.8 percent was restricted for expenses
for the Water Master Plan, and $34,120,000, or 17.3 percent was unrestricted.
Transfers in for business-type activities were $39,000 for the current year, similar to prior
year.
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, ,��NTINcro
City of Huntington Beach
Management's Discussion and Analysis
For the Year Ended June 30, 2022
yOUNT �
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
Increase Increase
June 30,2022 June 30,2021 (Decrease) (Decrease)
Total Fund Equity:
General Fund $ 102,824 $ 94,609 $ 8,215 8.7%
Grants Special Revenue Fund (4,311) 2,354 (6,665) -283.1%
LMIHAF Capital Projects Fund 4,856 3,622 1,234 34.1%
Pension Liability Fund 20,729 16,943 3,786 0.0%
Total Fund Equity $ 124,098 $ 117,528 $ 6,570 5.6%
The General Fund Balance increased by $8,215,000 largely due to increases in property
taxes, sales taxes, other taxes revenues and charges for current services. As previously
discussed, the easing of COVID-19 restrictions had an overall positive effect on revenues.
Businesses reopened, which in turn resulted in increased sales tax revenue and other tax
revenue. The City was able to provide services at full capacity. Many of the services and
events that were not permitted during COVID are now being provided.
The Grants Special Revenue Fund Balance decreased by $6,665,000 primarily due to
the increase in COVID-19 related expenditures that are anticipated to be reimbursed with
FEMA Public Assistance Disaster Relief funds, and other capital projects that have not
yet been reimbursed by the granting agencies.
The LMIHAF Capital Projects Fund Balance increased by$1,234,000 primarily due to the
City restructuring their loan with Jamboree Housing Corporation. In Fiscal Year 2021/22,
the City used HOME grant funds to reimburse the LMIHAF Capital Project Fund $900,000
that was lent to Jamboree Housing Corporation.
The Pension Liability Fund increased by $3,786,000, largely due to revenues set aside
from the voter-approved property tax override dedicated to the payment of Public Safety
pension costs.
383
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a
City of Huntington Beach
1.i r_ )q'1 Management's Discussion and Analysis
sF�f ,, For the Year Ended June 30, 2022
`i NTY C ,r
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 30,2022 June 30,2021 (Decrease) (Decrease)
Net Position:
Water Fund $ 118,766 $ 121,825 $ (3,059) -2.5%
Sewer Fund 78,509 79,953 (1,444) -1.8%
Refuse Fund 16 48 (32) 66.7%
Hazmat Service Fund 136 104 32 30.8%
Total Net Position $ 197,427 $ 201,930 $ (4,503) -2.2%
Unrestricted Net Position:
Water Fund $ 9,104 $ 10,246 $ (1,142) -11.1%
Sewer Fund 24,977 28,865 (3,888) -13.5%
Refuse Fund (97) (86) (11) -12.8%
Hazmat Service Fund 136 104 32 30.8%
Total Unrestricted Net Position $ 34,120 $ 39,129 $ (5,009) -12.8%
The Water Fund total net position decreased by $3,059,000 due to planned capital
expenditures exceeding revenues in Fiscal Year 2021/22, which caused the unrestricted
net position to decline by $1,142,000. The Sewer Fund net position decreased by
$1,444,000 and unrestricted net position decreased by$3,888,000 due to planned sewer
projects during the year. In addition, all enterprise funds with the exception of the Hazmat
Services Fund did not generate revenue that exceeded the expenses incurred for the
current fiscal year. This is primarily a result of the fair market value adjustment to the
City's investments, which generated unrealized losses in Fiscal Year 2021/22.
Long-Term Obligations
Below is a schedule of the changes to the City's long-term obligations (in thousands):
Governmental Activities: June 30,2021 Additions Retirements June 30,2022
Revenue Bonds $ 29,545 $ - $ (2,180) $ 27,365
Compensated Absences 13,405 5,243 (3,603) 15,045
Claims Payable 46,779 24,271 (14,619) 56,431
Pollution Remediation 2,000 - - 2,000
LED Lighting Phase I 432 - (118) 314
I-Bank CLEEN Loan 1,882 - (296) 1,586
CEC Loan 2,457 - (394) 2,063
Pension Obligation Bonds 341,501 - (10,859) 330,642
Finance Purchase Agreement 12,753 868 (1,907) 11,714
Leases Payable - 448 (201) 247
Total Long-Term Obligations
Governmental Activities 450,754 30,830 (34,177) 447,407
Business-Type Activities:
Compensated Absences 1,426 649 (389) 1,686
Pension Obligation Bonds 22,144 - (776) 21,368
Business-Type Activities: 23,570 649 (1,165) 23,054
Total Long-Term Obligations $ 474,324 $ 31,479 $ (35,342) $ 470,461
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16
J��q�TINGtOy .
j `° g\ City of Huntington Beach
�t- Management's Discussion and Analysis
For the Year Ended June 30, 2022
Additional information on the City's long-term debt is shown in Note 11 and Note 14 to
the financial statements. Note 14, Leases, provides detail related to GASB 87 related
Lease Payable while Note 11 provides detail related to all other long-term debt. The City
of Huntington Beach is legally restricted to issuing general obligation bonds to 12 percent
of its assessed valuation. Since the City has no general obligation bonds outstanding, the
limit does not apply. The City's total long-term obligations decreased by $3,863,000 or
0.8 percent from the prior fiscal year as the reduction in total debt related to annual debt
service payments was partially offset by new claims payable liabilities and lease
obligations.
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
February 2022.
The following are the ratings as determined by Standard and Poor's and Fitch Ratings as
of June 30, 2022.
Debt Instrument S & P Fitch
1999 Tax Allocation Refunding Bonds AA- AA
2002 Tax Allocation Refunding Bonds AA- N/A
2014 Lease Revenue Bonds, Series A AA AM-
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.
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h
' °F City of Huntington Beach
cj; Management's Discussion and Analysis
For the Year Ended June 30, 2022
i N
Below is a schedule of the City's capital assets, net of accumulated depreciation (in
thousands):
Amount Percent
Increase Increase
Governmental Activities: June 30,2022 June 30,2021 (Decrease) (Decrease)
Land $ 369,538 $ 368,795 $ 743 0.2%
Buildings 127,310 126,122 1,188 0.9%
Machinery and Equipment 19,510 19,583 (73) -0.4%
Construction in Progress 12,235 8,584 3,651 42.5%
Infrastructure 217,525 214,172 3,353 1.6%
Right to Use Leased Asset 253 - 253 N/A
Total Governmental Activities 746,371 737,256 9,115 1.2%
Business-Type Activities:
Land 3,907 3,907 - 0.0%
Buildings 68,693 65,847 2,846 4.3%
Machinery and Equipment 6,863 6,786 77 1.1%
Construction in Progress 109 1,782 (1,673) -93.9%
Infrastructure 64,426 64,147 279 0.4%
Total Business-Type Activities 143,998 142,469 1,529 1.1%
Total Capital Assets $ 890,369 $ 879,725 $ 10,644 1.2%
Capital assets from governmental activities increased $9,115,000 or 1.2 percent. This
increase is largely due to street replacement infrastructure costs and construction
improvements throughout the City. Capital assets from business-type activities increased
$1,529,000 or 1.1 percent largely due to improvement to lift stations on Slater/Springdale
and Saybrook/Heil. Further information on the City's capital assets can be found in Note
12 of the financial statements.
Furthermore, the newly implemented GASB Statement No. 87, Leases, requires a lessee
to recognize a lease liability and intangible right-to-use lease asset. As noted above, the
right-to-use lease asset is to be included as a capital asset. For Fiscal Year 2021/22, the
City reported $253,000 in right-to-use lease assets.
General Fund Budgetary Highlights
Changes to Original Budget
Comparing the Fiscal Year 2021/22 General Fund Original (i.e. Adopted) Budget
expenditures amount of $228,540,000 to the final budgeted amount of $257,714,000
shows a net increase of $29,174,000, or 12.8 percent. This overall increase is primarily
due to budget carryovers of $4,000,000, increased transfers to Emergency Operations
Center Fund of $1,000,000, Equipment Fund of $1,037,000, Infrastructure Fund of
$2,550,000, Retiree Insurance Fund of $1,038,000, Retirement Supplement Fund of
$4,576,000, Section 115 Trust of $3,000,000, Self Insurance General Liability Fund of
$1,488,000, Self Insurance Worker's Compensation Fund of $3,000,000, and personnel
increase of$5,094,000.
386
18
!oTiNero
~!`.f 9• City of Huntington Beach
Management's Discussion and Analysis
9t ^'-fir ,l
9�F 4oe��a For the Year Ended June 30, 2022
BOUNTY
Final budgeted revenues for the General Fund increased $27,232,000 or 11.9 percent
from the original (adopted) budget for the Fiscal Year ended June 30, 2022. 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 from other funds.
Variance with Final Budget
General Fund actual revenues were less than the final budget by $269,000 for the Fiscal
Year ended June 30, 2022. This budget variance is due in large part to actual investment
returns underperforming budgeted amounts.
General Fund expenditures were $8,011,000 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 $1,698,000
in savings primarily due to differences in projected versus actual cost of providing
services.
• The Public Works and Community Development Departments realized $2,649,000
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 $6,665,000 largely
due to COVID-19 related expenditures that are expected to be reimbursed through FEMA
Public Assistance funds.
LMIHAF Capital Proiects Fund
The fund balance in the LMIHAF Capital Projects Fund increased by $1,234,000 due to
the City restructuring their loan with Jamboree Housing Corporation. In Fiscal Year
2021/22, the City transferred HOME grant funds to payback LMIHAF Capital Project Fund
$900,000 that was loanded to Jamboree Housing Corporation.
Pension Liability Debt Service Fund
The fund balance in the Pension Liability Debt Service Fund increased by $3,786,000
due to revenues set-aside from the voter-approved property tax override dedicated to the
payment of Public Safety pension costs.
387
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,� ��1TINCTpy
occ .A City of Huntington Beach
Management's Discussion and Analysis
z9��F o�N tv,\ For the Year Ended June 30, 2022
Economic Factors and Next Year's Budget
The Adopted Fiscal Year 2022/23 Budget is structurally balanced, totaling $532.0 million
in All Funds. This reflects a $107.6 million, or 25.3 percent, increase from the Fiscal Year
2021/22 Adopted All Funds Budget of$424.4 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, as well as use of the City's ARPA funds
totaling $29.6 million for public safety personnel costs. The larger increases were due to
the following funds: Infrastructure Fund ($25.1 million), Equipment Fund ($11.6 million),
Water Fund ($47.9 million), and Sewer Fund ($19.4 million).
The General Fund budget, which provides the majority of public services to the
community, totals $269.0 million, reflecting a $41.0 million, or 18.0 percent increase from
the Fiscal Year 2021/22 budget of $228.0 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 49 cents for every dollar spent in the
General fund. With approximately half of the General Fund Budget committed to the
Police and Fire Departments, the City has dedicated the greatest share of its resources,
or $132.7 million to these core services.
In the Police Department, the budget includes $1.2 million in equipment funds for the
replacement of 16 police vehicles and other front line safety equipment. The CIP includes
$2,952,000 for relocation and expansion of the Police Department Communications
Center and Traffic Office, Heliport Hangar improvements, updates to the women's locker
room, fiber installations at the Bella Terra Police substation, and funding for a Joint Youth
Training Center to be shared between the Police and Fire Departments.
In the Fire Department, the Adopted Budget includes $1.1 million for equipment
replacement comprising the replacement of two Ambulances and the purchase of self-
contained breathing apparatus (SCBA) and cardiac monitors/defibrillators. The General
Fund CIP includes $1.3 million for a traffic signal at Heil Fire Station and the Fire
Department's share of the Joint Youth Training Center.
The Fiscal Year 2022/23 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 2022/23 Adopted Budget includes the
continuation of Citywide restructuring measures implemented during Fiscal Year 2020/21,
388
20
�,✓�ptuacay
City of Huntington Beach
pi. Q Management's Discussion and Analysis
wFe49' For the Year Ended June 30, 2022
restores a number of operating cuts made in response to the COVID-19 pandemic,
includes mandated savings along with the debt service payment for the City's recently
issued Pension Obligation Bonds, and prioritizes improvements to the City's facilities,
roads and parks. The Fiscal Year 2022/23 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 $283.2 million, a $55.2 million or 24.2 percent
increase from the Fiscal Year 2021/22 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 $98.3 million, reflecting an increase of 5.5 percent
due to the housing market boom 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 $53.3 million, an increase of 19.5 percent
from Fiscal Year 2021/22. Transient Occupancy Taxes are anticipated to increase
$3.8 million, or 35.5 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, re-opening of businesses and
an increase in visitors to the City's beaches and downtown businesses.
• Licenses and Permits, estimated at $8.2 million, reflect a 5.1 percent increase, as
economic and development activity are anticipated to increase in the coming year.
Franchise Taxes are anticipated at $8.6 million, a 21.1 percent increase. Use of
Money & Property, which includes parking revenues and lease concessions, is
projected to increase $0.7 million, or 4.3 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.
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BASIC FINANCIAL STATEMENTS
390
22
CITY OF HUNTINGTON BEACH
STATEMENT OF NET POSITION
JUNE 30,2022
(In Thousands)
Governmental Business-Type
ASSETS Activities Activities Total
Current Assets:
Cash and Investments $ 261,867 $ 72,717 $ 334,584
Cash and Investments with Fiscal Agent 9,838 - 9,838
Receivables,Net 43,348 6,674 50,022
Advances to Successor Agency 1,363 - 1,363
Lease Receivable 12,570 - 12,570
Inventories - 1,444 1,444
Prepaids 1,877 - 1,877
Joint Venture 199 1,816 2,015
Total Current Assets 331,062 82,651 413,713
Non-Current Assets:
Net Pension Asset 100,849 8,018 108,867
Net Other Postemployment Benefits Asset 5,370 640 6,010
Total Non-Current Assets 106,219 8,658 114,877
Capital Assets:
Non-Depreciable 381,773 4,016 385,789
Depreciable,Net 364,598 139,982 504,580
Total Capital Assets 746,371 143,998 890,369
Total Assets 1,183,652 235,307 1,418,959
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 24,515 1,647 26,162
Deferred Outflows Related to Other Postemployment Benefits 4,224 504 4,728
Total Deferred Outflows of Resources 28,739 2,151 30,890
LIABILITIES
Current Liabilities:
Accounts Payable 18,309 3,825 22,134
Accrued Payroll 5,702 766 6,468
Unearned Revenue 31,157 - 31,157
Accrued Interest Payable 587 22 609
Deposits 1,495 1,520 3,015
Total Current Liabilities 57,250 6,133 63,383
Long-Term Obligations:
Long-Term Obligations Due Within One Year 35,611 1,348 36,959
Long-Term Obligations Due in More than One Year 411,796 21,706 433,502
Net Pension Liability 14,390 762 15,152
Total Long-Term Obligations 461,797 23,816 485,613
Total Liabilities 519,047 29,949 548,996
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 113,840 8,916 122,756
Deferred Inflows Related to Other Postemployment Benefits 9,793 1,166 10,959
Deferred Inflows Lease Related 12,400 - 12,400
Total Deferred Inflow of Resources 136,033 10,082 146,115
NET POSITION
Net Investment in Capital Assets 712,289 143,998 856,287
Restricted for:
Debt Service 4,432 - 4,432
Capital Projects 19,024 19,309 38,333
Public Works and Community Services Projects 45,004 - 45,004
Total Restricted Net Position 68,460 19,309 87,769
Unrestricted (223,438) 34,120 (189,318)
Total Net Position $ 557,311 $ 197,427 $ 754,738
See Notes to the Financial Statements 391
23
CITY OF HUNTINGTON BEACH
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30,2022
(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 Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities:
City Council $ 382 $ 162 $ - $ - $ (220) $ - $ (220)
City Manager 5,412 4,131 56 13 (1,212) - (1,212)
City Treasurer 259 149 - - (110) - (110)
City Attorney 2,183 5 - - (2,178) - (2,178)
City Clerk 1,060 269 - - (791) - (791)
Finance 5,581 3,036 - - (2,545) - (2,545)
Community Development 11,634 10,953 3,993 586 3,898 - 3,898
Fire 52,808 13,401 73 - (39,334) - (39,334)
Information Services 6,469 604 - - (5,865) - (5,865)
Police 73,964 6,687 1,838 - (65,439) - (65,439)
Community Services 11,517 21,117 854 95 10,549 - 10,549
Library Services 5,212 302 492 - (4,418) - (4,418)
Public Works 42,598 7,235 1,995 7,843 (25,525) - (25,525)
Interest on Long-Term Debt 9,548 - - - (9,548) - (9,548)
Total Governmental Activities 228,627 68,051 9,301 8,537 (142,738) _ - (142,738)
Business-type Activities:
Water Utility 44,182 43,590 - - - (592) (592)
Sewer Service 10,390 10,791 - - - 401 401
Refuse Collection 13,738 13,675 - - - (63) (63)
Hazmat Service 236 276 - - - 40 40
Total Business-Type Activities 68,546 68,332 - - - (214) (214)
Total Governmental and
Business Type Activities $ 297,173 $ 136,383 $ 9,301 $ 8,537 $ (142,738) $ (214) $ (142,952)
General Revenues:
Taxes:
Property Taxes $ 102,539 $ - $ 102,539
Sales Taxes 57,652 - 57,652
Utility Taxes 19,528 - 19,528
Franchise Taxes 10,380 - 10,380
Transient Occupancy Tax 15,754 - 15,754
Total Taxes 205,853 - 205,853
Other:
Use of Money and Property(Loss) (1,895) (4,328) (6,223)
From Other Agencies-Unrestricted 4,631 - 4,631
Gain on Sale of Property 1,699 - 1,699
Total General Revenues 210,288 (4,328) 205,960
Transfers (39) 39 -
Total General Revenues and Transfers 210,249 (4,289) 205,960
Change in Net Position 67,511 (4,503) 63,008
Net Position-Beginning of Year 489,800 201,930 691,730
Net Position-End of Year $ 557,311 $ 197,427 $ 754,738
See Notes to the Financial Statements 392
24
CITY OF HUNTINGTON BEACH
BALANCE SHEET
GOVERNMENTAL FUNDS
JUNE 30,2022
(In Thousands)
LMIHAF Other
Grants Special Capital Pension Governmental
ASSETS General Fund Revenue Projects Liability Funds Total
Cash and Investments $ 99,943 $ 26,669 $ 3,484 $ 20,551 $ 73,211 $ 223,858
Cash and Investments with Fiscal Agent - - - - 9,838 9,838
Taxes Receivable 14,026 - - 118 1,942 16,086
Other Receivables,Net 9,833 8,446 8,210 62 609 27,160
Lease Receivable 12,570 - - - - 12,570
Advances to Successor Agency - - 1,363 - - 1,363
Prepaids 82 - - - 1,000 1,082
Total Assets 136,454 35,115 13,057 20,731 86,600 291,957
LIABILITIES,DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
LIABILITIES
Accounts Payable 11,707 1,396 - 2 4,539 17,644
Accrued Payroll 5,380 74 2 - 227 5,683
Unearned Revenue 1,217 29,940 - - - 31,157
Deposits Payable 1,495 - - - - 1,495
Total Liabilities 19,799 31,410 2 2 4,766 55,979
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Lease Related 12,400 - - - - 12,400
Unavailable Revenue 1,431 8,016 8,199 - 65 17,711
Total Deferred Inflows of Resources 13,831 8,016 8,199 -
65 30,111
FUND BALANCES
Nonspendable
Prepaids 82 - - - - 82
Restricted
Underground Utilities 364 - - - - 364
Restitution 296 - - - - 296
Donations 777 - - - - 777
Section 115 Trust 12,427 - - - - 12,427
Pollution Remediation - - - - 355 355
Debt Service - - - 20,729 4,432 25,161
Highways,Streets and Transportation - - - - 13,637 13,637
Low Income Housing - - 4,856 - 5,816 10,672
Air Quality - - - - 1,214 1,214
Other Capital Projects - - - - 22,769 22,769
Other Purposes 759 - - - 1,966 2,725
Committed
Economic Uncertainties 26,114 - - - - 26,114
Parks - - - - 1,257 1,257
Other Capital Projects 551 - - - 23,474 24,025
Other Purposes - - - - 3,828 3,828
Assigned
Litigation Reserves 3,650 - - - - 3,650
AES Reserve 4,900 - - - - 4,900
Capital Improvement Reserve 8,597 - - - 3,021 11,618
Equipment Replacement 8,295 - - - - 8,295
General Plan Maintenance 1,143 - - - - 1,143
General Liability Plan Migration 2,801 - - - - 2,801
Pension Rate Stabilization 2,206 - - - - 2,206
Cityview Replacement 1,028 - - - - 1,028
Section 115 Trust 3,500 - - - - 3,500
Triple Flip 109 - - - - 109
Strategic Initiatives 16,536 - - - - 16,536
Housing Agreement 1,657 - - - - 1,657
Year-End Fair Value 1,983 - - - - 1,983
Other Purposes 5,049 - - - - 5,049
Unassigned - (4,311) - - - (4,311)
Total Fund Balances 102,824 (4,311) 4,856 20,729 81,769 205,867
Total Liabilities,Deferred Inflows
of Resources and Fund Balances $ 136,454 $ 35,115 $ 13,057 $ 20,731 $ 86,600 $ 291,957
See Notes to the Financial Statements 393
25
CITY OF HUNTINGTON BEACH
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
JUNE 30,2022
(In Thousands)
Amounts reported for governmental activities in the statement of net position are
different because:
Total Fund Balances Governmental Funds $ 205,867
Net Pension Asset is not available to pay in the current period and therefore are not reported
in the funds.
Net Pension Asset 100,461
Net Other Postemployment Benefits Asset 5,341 105,802
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 1,132,022
Accumulated Depreciation (392,130)
Total Capital Assets 739,892
Joint Venture 199
Right to Use Leased Assets used in governmental activities are not current financial
resources and,therefore,are not reported in the governmental funds.
Right to Use Assets 448
Accumulated Amortization (195)
Total Right to Use Assets 253
Internal Service Funds are used by management to charge the cost of various city
activities to individual governmental and business-like funds.The assets and
liabilities of the Internal Service Fund must be added to the Statement of Net Position. (13,052)
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. 17,711
Deferred Outflows Related to Pensions 24,437
Deferred Outflows Related to Other Postemployment Benefits(OPEB) 4,201
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. (14,356)
Deferred Inflows Related to Pensions (113,411)
Deferred Inflows Related to Other Postemployment Benefits(OPEB) (9,740)
Other long-term liabilities are not due in the current period and,therefore,are not recorded in
the governmental funds.
Accrued Interest Payable (586)
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 (22,118)
Long-Term Obligations Due in More than One Year (367,788)
Net Position of Governmental Activities $ 557,311
See Notes to the Financial Statements 394
26
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30,2022
(In Thousands)
LMIHAF Other
General Grants Special Capital Pension Governmental
REVENUES Fund Revenue Projects Liability Funds Total
Property Taxes $ 94,627 $ - $ - $ 7,912 $ - $ 102,539
Sales Taxes 53,362 - - - 4,290 57,652
Utility Taxes 19,528 - - - - 19,528
Other Taxes 26,136 - - - 7,584 33,720
Licenses and Permits 8,666 - - - 930 9,596
Fines and Forfeitures 5,144 - - - - 5,144
Use of Money and Property(Loss) 12,215 96 614 192 1,248 14,365
Intergovernmental 5,130 5,682 - - 2,248 13,060
Charges for Current Services 29,364 - - 16,764 3,774 49,902
Other 2,882 - - - 25 2,907
Total Revenues 257,054 5,778 614 24,868 20,099 308,413
EXPENDITURES
Current:
City Council 426 - - - - 426
City Manager 4,616 13 - - 636 5,265
City Treasurer 326 - - - - 326
City Attorney 2,995 - - - - 2,995
City Clerk 1,295 - - - - 1,295
Finance 6,869 359 - 2 29 7,259
Community Development 10,716 2,716 56 - 924 14,412
Fire 60,643 2,164 - - 73 62,880
Information Services 7,389 7 - - 475 7,871
Police 91,970 1,856 - - 150 93,976
Community Services 11,133 714 - - 6,608 18,455
Library Services 6,014 202 - - 84 6,300
Public Works 24,285 2,405 - - 23,468 50,158
Debt Service:
Principal 2,917 - - 10,821 2,180 15,918
Interest 260 - - 10,259 780 11,299
Total Expenditures 231,854 10,436 56 21,082 35,407 298,835
Excess(Deficiency)of Revenues Over
(Under)Expenditures 25,200 (4,658) 558 3,786 (15,308) 9,578
OTHER FINANCING SOURCES(USES)
Transfers In 416 1,104 900 - 19,222 21,642
Lease(as Lessee) 448 - - - - 448
Issuance of Finance Purchase Agreement - - - - 868 868
Transfers Out (17,849) (3,111) (224) - (497) (21,681)
Total Other Financing Sources(Uses) (16,985) (2,007) 676 - 19,593 1,277
Net Change In Fund Balances 8,215 (6,665) 1,234 3,786 4,285 10,855
Fund Balances-Beginning of Year 94,609 2,354 3,622 16,943 77,484 195,012
Fund Balances-End of Year $ 102,824 $ (4,311) $ 4,856 $ 20,729 $ 81,769 $ 205,867
See Notes to the Financial Statements 395
27
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 30,2022
(In Thousands)
Amounts reported for governmental activities in the statement of activities
are different because:
Net Changes in Fund Balances-Total Governmental Funds $ 10,855
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 20,294
Depreciable Assets Disposition (208)
Non-Depreciable Assets Purchased 8,285
Non-Depreciable Assets Disposition (3,891)
Capital Asset Depreciation (16,287)
Joint Venture 14
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 7,311
Prior Year Grant and Other Revenue Accrual (3,010)
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. (1,350)
Pension income reported in the statement of activities includes the change in the
the net pension liability and related changes in pension amounts for deferred outflows
and deferred inflows of resources. 33,027
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). 2,372
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. (4,611)
Internal Service Funds repayment of long-term debt is not reported as governmental
activities. 37
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 (586)
Prior Year Interest Accrual 2,337
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.
15,918
The issuance of long-term debt provides current financial resources to governmental
funds. (1,316)
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.
(1,680)
Change in Net Position of Governmental Activities $ 67,511
See Notes to the Financial Statements 396
28
CITY OF HUNTINGTON BEACH
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
June 30,2022
(In Thousands)
Governmental
Business-Type Activities-Enterprise Funds Activities
Water Sewer Service Refuse Hazmat Internal Service
Fund Fund Fund Service Fund Total Funds
ASSETS
Current Assets:
Cash and Investments $ 21,744 $ 30,957 $ 246 $ 461 $ 53,408 $ 38,009
Restricted Cash and Investments 19,309 - - - 19,309 -
Other Receivables,Net 2,808 579 771 10 4,168 102
Prepaids - - - - - 795
Joint Ventures 1,816 - - - 1,816 -
Inventories 1,444 - - - 1,444 -
Unbilled Receivables 1,562 412 532 - 2,506 -
Total Current Assets 48,683 31,948 1,549 471 82,651 38,906
Non-Current Assets:
Net Pension Asset 5,608 2,098 188 124 8,018 388
Net Other Postemployment Benefits Asset 460 157 16 7 640 29
Total Non-Current Assets 6,068 2,255 204 131 8,658 417
Capital Assets:
Land 3,907 - - - 3,907 -
Buildings and Improvements 57,933 47,690 - - 105,623 -
Machinery and Equipment 17,576 4,597 215 - 22,388 8,598
Infrastructure 106,236 45,432 - - 151,668 -
Construction in Progress - 109 - - 109 -
Less Accumulated Depreciation (95,299) (44,296) (102) - (139,697) (2,372)
Total Capital Assets 90,353 53,532 113 - 143,998 6,226
Total Assets 145,104 87,735 1,866 602 235,307 45,549
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 1,155 432 38 22 1,647 78
Deferred Outflows Related to Other Postemployment Benefits 362 124 13 5 504 23
Total Deferred Outflows of Resources 1,517 556 51 27 2,151 101
Total Assets and Deferred Outflows of Resources 146,621 88,291 1,917 629 237,468 45,650
LIABILITIES
Current Liabilities:
Accounts Payable 2,057 688 1,080 - 3,825 665
Accrued Payroll 519 214 21 12 766 19
Deposits Payable 1,520 - - - 1,520 -
Interest Payable 15 6 1 - 22 1
Current Portion of Claims Payable - - - - - 13,439
Current Portion of Compensated Absences 321 125 11 2 459 11
Total Current Liabilities 4,432 1,033 1,113 14 6,592 14,135
Non-Current Liabilities:
Compensated Absences 857 335 30 5 1,227 30
Long-Term Obligations Due Within One Year 622 233 21 13 889 43
Long-Term Obligations Due in More than One Year 14,330 5,360 481 308 20,479 986
Net Pension Liability . 537 200 18 7 762 34
Claims Payable - - - - - 42,992
Total Non-Current Liabilities 16,346 6,128 550 333 23,357 44,085
Total Liabilities 20,778 7,161 1,663 347 29,949 58,220
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 6,239 2,334 209 134 8,916 429
Deferred Inflows Related to Other Postemployment Benefits 838 287 29 12 1,166 53
Total Deferred Inflows of Resources 7,077 2,621 238 146 10,082 482
NET POSITION
Investment in Capital Assets 90,353 53,532 113 - 143,998 6,226
Restricted for:
Capital Projects 19,309 - - - 19,309 -
Unrestricted 9,104 24,977 (97) 136 34,120 (19,278)
Total Net Position 118,766 78,509 16 136 197,427 (13,052)
Total Liabilities,Deferred Inflows
of Resources,and Net Position $ 146,621 $ 88,291 $ 1,917 $ 629 $ 237,458 $ 45,650
See Notes to the Financial Statements 397
29
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30,2022
(In Thousands)
Governmental
Business-Type Activities-Enterprise Funds Activities
Water I Sewer Service Refuse Hazmat Internal Service
Fund Fund Fund Service Fund Total Funds
OPERATING REVENUES
Sales $ 39,245 $ - $ - $ - $ 39,245 $ -
Fees and Charges for Service - 10,719 13,606 276 24,601 22,081
Other 4,345 72 69 - 4,486 152
Total Operating Revenues 43,590 10,791 13,675 276 68,332 22,233
OPERATING EXPENSES
Water Purchases 17,291 - - - 17,291 -
Supplies and Operations 8,359 7,904 13,704 228 30,195 3,499
Engineering 1,982 - - - 1,982 -
Production and Distribution 8,744 - - - 8,744 -
Maintenance 564 - - - 564 -
Water Meters 1,757 - - - 1,757 -
Water Quality 809 - - - 809 -
Water Use Efficiency 247 - - - 247 -
Claims and Judgments - - - - - 22,113
Depreciation 4,053 2,345 21 - 6,419 1,012
Total Operating Expenses 43,806 10,249 13,725 228 68,008 26,624
Operating Income(Loss) (216) 542 (50) 48 324 (4,391)
NON-OPERATING REVENUES(EXPENSES)
Investment Income(Loss) (2,468) (1,845) (20) 5 (4,328) (1,890)
Interest Expense (376) (141) (13) (8) (538) (29)
Proceeds from Sale of Equipment - - - - - 1,699
Total Non-Operating Revenues(Expenses) (2,844) (1,986) (33) (3) (4,866) (220)
Income(Loss)Before Transfers (3,060) (1,444) (83) 45 (4,542) (4,611)
TRANSFERS
Transfers In 1 - 51 - 52 -
Transfers Out - - - (13) (13) -
Total Transfers 1 - 51 (13) 39 -
Change in Net Position (3,059) (1,444) (32) 32 (4,503) (4,611)
Net Position-Beginning of Year 121,825 79,953 48 104 201,930 (8,441)
Net Position-End of Year $ 118,766 $ 78,509 $ 16 $ 136 $ 197,427 $ (13,062)
•
See Notes to the Financial Statements 398
30
CITY OF HUNTINGTON BEACH
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30,2022
(In Thousands)
Governmental
Business-Type Activities-Enterprise Funds Activities
Water Sewer Service Refuse Hazmat Internal Service
Fund ' Fund Fund Service Fund Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers and Users $ 43,551 $ 10,820 $ 13,537 $ 275 $ 68,183 $ 22,227
Cash Paid to Employees for Services (9,113) (1,585) (149) (93) (10,940) (378)
Cash Paid to Suppliers of Goods and Services (38,443) (7,034) (13,561) (179) (59,217) (15,502)
Net Cash and Investment Provided(Used)by
Operating Activities (4,005) 2,201 (173) 3 (1,974) 6,347
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers In 1 - 51 - 52 -
Transfers Out - - - (13) (13) -
Debt Service (544) (203) (17) (12) (776) (37)
Interest Paid (452) (170) (15) (10) (647) (32)
Net Cash and Investments Provided(Used)by
Noncapital Financing Activities (995) (373) 19 (35) (1,384) (69)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of Capital Assets (3,159) (4,789) - - (7,948) (1,934)
Proceeds from Sale of Plant,Property,and Equipment - - - - - 1,699
Net Cash and Investments Provided(Used)by
Capital and Related Financing Activities (3,159) (4,789) - - (7,948) (235)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment Income(Loss) (2,468) (1,845) (20) 5 (4,328) (1,890)
Net Cash and Investments Provided(Used)by
Investing Activities (2,468) (1,845) (20) 5 (4,328) (1,890)
Net Increase(Decrease)in Cash and Investments (10,627) (4,806) (174) (27) (15,634) 4,153
Cash and Investments-Beginning of Year 51,680 35,763 420 488 88,351 33,856
Cash and Investments-End of Year $ 41,053 $ 30,957 $ 246 $ 461 $ 72,717 $ 38,009
RECONCILIATION OF OPERATING
INCOME(LOSS)TO NET CASH AND INVESTMENTS
PROVIDED(USED)BY OPERATING ACTIVITIES
Operating Income(Loss) $ (216) $ 542 $ (50) $ 48 $ 324 $ (4,391)
Adjustments to Reconcile Operating
Income(Loss)to Net Cash and Investments
Provided(Used)by Operating Activities
Depreciation 4,053 2,345 21 - 6,419 1,012
(Increase)in Other Receivables,Net (233) - (165) (1) (399) (6)
Decrease in Unbilled Receivables 165 29 27 - 221 -
Decrease in Prepaids - - - - - 282
(Increase)in Joint Ventures (244) - - - (244) -
(Increase)in Inventory (2) - - - (2) -
(Increase)in Net Pension Asset (5,608) (2,098) (188) (124) (8,018) (388)
(Increase)in Net Other Postemployment Benefits Asset (460) (157) (16) (7) (640) (29)
Increase(Decrease)in Accounts Payable (5,573) (5) 57 - (5,521) (50)
Increase in Accrued Payroll 86 40 7 2 135 3
Increase in Deposits Payable 29 - - - 29 -
Increase in Claims Payable - - - - - 9,652
Increase(Decrease)in Compensated Absences 173 82 7 (2) 260 (3)
Decrease in Deferred Pension Outflow 16,770 6,273 562 364 23,969 1,156
Increase in Deferred Pension Inflow 5,316 1,989 178 119 7,602 368
(Decrease)in Net Pension Liability (18,516) (6,926) (621) (399) (26,462) (1,275)
(Increase)in Deferred Other Postemployment Benefits Outflow (131) (45) (5) (2) (183) (8)
Increase in Deferred Other Postemployment Benefits Inflow 632 216 22 9 879 40
(Decrease)in Net Other Postemployment Benefits Liability (246) (84) (9) (4) (343) (16)
Net Cash and Investments Provided
by Operating Activities $ (4,005) $ 2,201 $ (173) $ 3 $ (1,974) $ 6,347
NONCASH INVESTING,CAPITAL,AND FINANCING ACTIVITIES
There were no noncash investing,capital,or financing activities during the year ended June 30,2022.
See Notes to the Financial Statements 399
31
CITY OF HUNTINGTON BEACH
STATEMENT OF FIDUCIARY FUND NET POSITION
FIDUCIARY FUNDS
JUNE 30, 2022
(In Thousands)
Huntington Beach
Pension Trust Fund- Redevelopment
Retirement Successor Agency
ASSETS Custodial Funds Supplemental Fund Private Purpose Trust
Current Assets:
Cash and Investments $ 4,725 $ - $ 6,500
Cash and Investments with Fiscal Agent 3,268 - 2,587
Mutual Funds - 58,101 -
Money Market Funds - 898 -
Accounts Receivable, Net 760 2 -
Interest Receivable - - 25
Total Assets 8,753 59,001 9,112
LIABILITIES
Current Liabilities:
Accounts Payable 2,070 - 393
Accrued Payroll - - 8
Advances from City of Huntington Beach - - 1,363
Total Current Liabilities 2,070 - 1,764
Long-Term Obligations:
Long-Term Obligations Due Within One Year - - 4,505
Long-Term Obligations Due in More than One Year - - 20,793
Total Long-Term Obligations - - 25,298
Total Liabilities 2,070 - 27,062
NET POSITION
Restricted for Pension Benefits - 59,001 -
Held in Trust For Other Purposes - - (17,950)
Restricted for Individuals and Organizations 6,683 - -
Total Net Position $ 6,683 $ 59,001 $ (17,950)
See Notes to the Financial Statements 400
32
CITY OF HUNTINGTON BEACH
STATEMENT OF CHANGES IN FIDUCIARY FUND NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2022
(In Thousands)
Huntington Beach
Pension Trust Fund- Redevelopment
Retirement Successor Agency
ADDITIONS Custodial Funds Supplemental Fund Private Purpose Trust
Employer Contributions $ - $ 6,005 $ -
Special Assessments or Special Taxes
Collected from Property Owners 1,542 - 6,008
Business Improvement District Taxes 6,355 - -
Parking Assessments 2,433 - -
Other Income - - 10
Total Additions Before Investment Income 10,330 6,005 6,018
Investment Income:
Investment Income(Loss) 19 (11,226) 75
Less: Investment Expense - (136) -
Net Investment Income(Loss) 19 (11,362) 75
Total Additions 10,349 (5,357) 6,093
DEDUCTIONS
Benefits - 5,668 -
Administrative Costs 20 338 -
Payments to Other Organizations 7,022 - -
Economic Development - - 250
Interest and Fiscal Agency Expenses 1,435 - 1,525
Principal 1,715 - -
Total Deductions 10,192 6,006 1,775
Change in Net Position 157 (11,363) 4,318
Net Position-Beginning of Year 6,526 70,364 (22,268)
Net Position-End of Year $ 6,683 $ 59,001 $ (17,950)
See Notes to the Financial Statements 401
33
/ TING7:17N'
�o ..; m City of Huntington Beach
Notes to Financial Statements
9� s+: lj
351eOQ�, For the Year Ended June 30, 2022
Footnote
Number Description Page
1. Summary of Significant Accounting Policies 39-52
2. Cash and Investments Notes 53-60
3. Other Receivables 60-61
4. Unearned Revenue 62
5. Unavailable Revenue 62
6. Retirement Plan — Normal 63-74
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 93-103
12. Capital Assets 104-105
13. Investment in Joint Ventures 106
14. Leases 106-112
15. Successor Agency Trust for Assets of the Former
Redevelopment Agency of the City of Huntington Beach 112-118
16. Commitments and Contingencies 118-123
17. Other Information 123-124
402
34
,1NTI T y�
e�.��, City of Huntington Beach
IV Notes to Financial Statements
rfit For the Year Ended June 30, 2022
cFzNTY
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.
403
35
NO if 0/ City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
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.
404
36
miry
010NiIN6T
. °"F�', City of Huntington Beach
Notes to Financial Statements
may. a4, For the Year Ended June 30, 2022
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 $68,460,000 of governmental
activities restricted net position, of which $40,364,000 is restricted by enabling
legislation. The government-wide Statement of Net Position reports $19,309,000 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.
405
37
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
.LINTY�"
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 $223,438,000 of
governmental activities unrestricted net position, which is largely a result of the
issuance of Pension Obligations Bonds to pay down the City's CaIPERS Unfunded
Accrued Liability. The City's Long-Term Obligations at June 30, 2022 is
$485,613,000, of which, $461,797,000 is payable from Governmental Activities.
The government-wide Statement of Net Position reports $34,120,000 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.
406
38
Nor
�✓��N11NGT0
City of Huntington Beach
Notes to Financial Statements
N. For the Year Ended June 30, 2022
cUN Nei�r
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.
407
39
4,V7 4r°" City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
F' UN7Y a
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, 2022, by major fund (in thousands):
General Fund $ 5,100
Grants Special Revenue 3,024
Other Governmental Funds 32,979
Total Encumbrance All Funds $ 41,103
Economic Uncertainties Reserve
The City Council established an Economic Uncertainties Reserve in the General
Fund through a resolution with a goal to commit the value of two months of the
General Fund expenditure adopted budget amount. Appropriations from the
Economic Uncertainties Reserve commitments can only be made by formal City
Council action. Generally, appropriations and access to these funds will be reserved
for emergency situations. Examples of such emergencies include, but are not
limited to:
• An unplanned, major event such as catastrophic disaster requiring expenditures
over 5% of the General Fund adopted budget;
• Budgeted revenue in excess of$1 million taken by another government entity;
• Drop in projected/actual revenue of more than 5% of the General Fund adopted
revenue budget; and,
• Should the Economic Uncertainties Reserve be used, and its level falls below
the minimum amount of two months of General Fund expenditures adopted
budget, the goal is to replenish the fund within three fiscal years.
408
40
,ed� �� City of Huntington Beach
�" Notes to Financial Statements
For the Year Ended June 30, 2022
z��UN7Y tpti
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.
409
41
City of Huntington Beach
o -- Notes to Financial Statements
For the Year Ended June 30, 2022
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.
410
42
‘, A\17INGT z
,gip; Ny City of Huntington Beach
o' s � Notes to Financial Statements
''� For the Year Ended June 30, 2022
�bG r��Y�a �p
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 State's Dissolution Act.
411
43
City of Huntington Beach
,
� x� -iNotes to Financial Statements
�9'a '' For the Year Ended June 30, 2022
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 53.
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.
412
44
�� 4. �s'Vt City of Huntington Beach
, t ` Notes to Financial Statements
Ix .
4 'Q= For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Capital Assets
Capital assets are tangible and intangible assets, which include property, plant,
equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar
items), 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. The reported value excludes normal maintenance and repairs, which are
amounts spent in relation to capital assets that do not increase the asset's capacity
or efficiency or increase its estimated useful life. Donated capital assets are
recorded at acquisition value at the date of donation. Acquisition value is the price
that would be paid to acquire an asset with equivalent service potential on the date
of the donation. Intangible assets follow the same capitalization policies as tangible
capital assets and are reported with tangible assets in the appropriate capital asset
class.
In the government-wide and proprietary funds financial statements, tangible and
intangible property, plant, . equipment, the right to use leased assets, and
infrastructure are depreciated/amortized using the straight-line method over the
estimated useful life of the assets as shown below and charged to the respective
activity or fund. Land and construction in progress are not depreciated. 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. Leases
The City is a lessee for a noncancellable lease of equipment and property. The City
recognizes a lease liability and an intangible right-to-use lease asset (lease asset)
in the government-wide financial statements. The City recognizes lease liabilities
with an initial, individual value of$50,000 or more.
At the commencement of a lease, the City initially measures the lease liability at the
present value of payments expected to be made during the lease term.
Subsequently, the lease liability is reduced by the principal portion of lease
payments made. The lease asset is initially measured as the initial amount of the
lease liability, adjusted for lease payments made at or before the lease
413
45
�o<UNoyo
i
c� � City of Huntington Beach
,( - -Icat
) Notes to Financial Statements
For the Year Ended June 30, 2022
?a1�(!fl'TY� fo4
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
commencement date, plus certain initial direct costs. Subsequently, the lease asset
is amortized on a straight-line basis over its useful life.
Key estimates and judgments related to leases include how the City determines (1)
the discount rate it uses to discount the expected lease payments to present value,
(2) lease term, and (3) lease payments.
• The City uses the interest rate charged by the lessor as the discount rate.
When the interest rate charged by the lessor is not provided, the City
generally uses its estimated incremental borrowing rate as the discount rate
for leases.
• The lease term includes the noncancellable period of the lease. Lease
payments included in the measurement of the lease liability are composed
of fixed payments and purchase option price that the City is reasonably
certain to exercise.
The City monitors changes in circumstances that would require a remeasurement
of its lease and will remeasure the lease asset and liability if certain changes occur
that are expected to significantly affect the amount of the lease liability.
Lease assets are reported with other capital assets and lease liabilities are reported
with long-term debt on the statement of net position.
The City is a lessor for a noncancellable lease of a building, land, and infrastructure.
The City recognizes a lease receivable and a deferred inflow of resources in the
government-wide and governmental fund financial statements.
At the commencement of a lease, the City initially measures the lease receivable at
the present value of payments expected to be received during the lease term.
Subsequently, the lease receivable is reduced by the principal portion of lease
payments received. The deferred inflow of resources is initially measured as the
initial amount of the lease receivable, adjusted for lease payments received at or
before the lease commencement date. Subsequently, the deferred inflow of
resources is recognized as revenue over the life of the lease term.
Key estimates and judgments include how the City determines (1) the discount rate
it uses to discount the expected lease receipts to present value, (2) lease term, and
(3) lease receipts.
• The City uses its estimated incremental borrowing rate as the discount rate
for leases.
414
46
0 67- City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
�a�UUNTY��i�
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
• The lease term includes the noncancellable period of the lease. Lease
receipts included in the measurement of the lease receivable is composed
of fixed payments from the lessee.
The City monitors changes in circumstances that would require a remeasurement
of its lease, and will remeasure the lease receivable and deferred inflows of
resources if certain changes occur that are expected to significantly affect the
amount of the lease receivable.
g. 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.
h. 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 assets 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 assets that
applies to 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.
4. Lease related deferrals
415
47
5z,�Ni l�;y`t
� .,����� City of Huntington Beach
w jq Notes to Financial Statements
For the Year Ended June 30, 2022
ZCF���,Q�
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. 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.
j. 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.
k. 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.
I. 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.
416
48
o tiegl
d City of Huntington Beach
- - ;x Notes to Financial Statements
K11 For the Year Ended June 30, 2022
zNTYi'
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
m. 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
417
49
City of Huntington Beach
x
Notes to Financial Statements
zEt
For the Year Ended June 30, 2022
�ZGFL NTY GPI\r�
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
n. Redevelopment Property Tax Trust Funds
Under ABX1 26, revenues that were previously distributed to redevelopment
agencies (prior to their dissolution) in the form of property tax increment will no
longer be received. Instead, revenues are deposited by County Auditors into
Redevelopment Property Tax Trust Funds (RPTTF) created in the County Treasury
for each Successor Agency. The County Auditor administers the RPTTF and
disburses twice annually from this fund pass-through payments to affected taxing
entities, an amount equal to the total of obligation payments that are required to be
paid from tax increment as denoted on the Recognized Obligation Payment
Schedules (ROPS) to Recognized Obligation Retirement Funds (RORF)
established in the treasury of the Successor Agencies, and various allowed
administrative fees and allowances. Any remaining balance is then distributed by
the County Auditor back to affected taxing entities under a prescribed method that
accounts for pass-through payments.
The calendar for distribution of RPTTF funds is as follows:
• Annual ROPS submission due to Department of Finance, February 1
• Distribution of RPTTF to Successor Agencies for the July-December ROPS
period, June 1
• Distribution of RPTTF to Successor Agencies for the January-June ROPS
period, January 2
o. 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.
p. Estimates
The accompanying financial statements require management to make estimates
and assumptions that affect certain reported amounts and disclosures. Actual
results could differ from those estimates.
418
50
4- NGj�z
� City of Huntington Beach
Notes to Financial Statements
Q� For the Year Ended June 30, 2022
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
q. Pensions and OPEB
For purposes of measuring the net pension liability, net OPEB liability, related
deferred outflows of resources and deferred inflows of resources, pension/OPEB
expense, information about the fiduciary net position of the Plan and additions
to/deductions from the Plan's fiduciary net position have been determined on the
same basis as they are reported by the 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 CaIPERS Post-Employment
Retirement Plan Pension Plans Benefit Plan
Valuation Date(VD) June 30, 2021 June 30, 2020 June 30, 2021
Measurement Date (MD) June 30, 2022 June 30,2021 June 30, 2021
Measurement Period (MP) July 1, 2021 to July 1, 2020 to July 1, 2020 to
June 30, 2022 June 30, 2021 June 30, 2021
419
51
1�o� NGTpy�4
��z City of Huntington Beach
:i , )Q Notes to Financial Statements
9 �a
For the Year Ended June 30, 2022
-ouuNTY�V F'
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
r. 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.
420
52
filOTINGT .
fi o °
; ' ,m�, City of Huntington Beach
(qx--- 59c- Notes to Financial Statements
PW For the Year Ended June 30, 2022
2. CASH AND INVESTMENTS
Investments Authorized by the California Government Code and the City's
Investment Policy
The table below identifies the investment types that are authorized for the City by the
California Government Code (or the City's investment policy, where more restrictive).
The table also identifies certain provisions of the California Government Code Section
53601 (or the City's investment policy, where more restrictive) that address interest
rate risk and concentration of credit risk. This table does not address investments of
debt proceeds held by bond trustees that are governed by the provisions of debt
agreements of the City, rather than the general provisions of the California Government
Code or the City's investment policy.
INVESTMENT TYPE MAXIMUM MATURITY MAXIMUM SPECIFIED%OF PORTFOLIO,./ MINIMUM RATING
MAXIMUM PER ISSUER REQUIREMENTS
Bankers'Acceptances 180 days 25%(up to 40%with Council approval)/ Al/P1,"A"Rating
10%
Negotiable Certificates of Deposit 3 years(Up to 5 years 30%/10% Al/Pi,"A"Rating
with Council approval)
Commercial Paper 270 days 25%/10% Al,"A"Rating
State Obligations--CA And Others 5 years None/10% "A"Rating
City/Local Agency of CA Obligations 5 years None/10% "A"Rating
U.S.Treasury Obligations 5 years None None
U.S.Government Agency Obligations 5 years None None
Supranationals:IBRD,IFC,1DB 5 years 10% "AA"Rating
Repurchase Agreements 3 Months None None
Reverse Repurchase Agreements 92 days 20%of the base value of the portfolio. None
Requires City Council Approval
Medium-Term Corporate Notes 5 years 30%/10% "A"Rating
Non-negotiable Certificates of Deposit 3 years None/10% Al/P1,"A"Rating
Money Market Mutual Funds 60 days 15%/10% "AAA"Rating
Local Agency Investment Fund(LAIF) N/A Up to$75,000,000 None
Orange County Investment Pool(OCIP) N/A Up to$75,000,000 None
Joint Powers Authority N/A None/$20,000,000 None
421
53
/0111NG�
- ' City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
fUNTV
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.
-eM . 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
Investment Agreements Life of Bond No Limit No Limit
Corporate Bonds 5 Years No Limit No Limit
California Asset Mgmt. Program N/A No Limit No Limit
Forward Purchase/Delivery Agreements Life of Bond No Limit No Limit
422
54
49ING0:.
City of Huntington Beach
Notes to Financial Statements
moQ For the Year Ended June 30, 2022
our
2.
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 or Equivalents 0% 0% 10%
Money Market 0% 0% 10%
Fixed Income 30% 40% 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%
Foreign Equity 11% 21% 31%
Foreign Large Equity(Value,Blend,Growth) 7% 17% 27%
Foreign Sm/Mid Equity(Value,Growth) 0% 0% 10%
Emerging Markets 0% 4% 14%
Real Estate 0% 10% 20%
Real Estate 0% 10% 20%
Commodities 0%° 2% 12%
Natural Resources 0% 2% 12%
423
55
City of Huntington Beach
---; Notes to Financial Statements
>a��F, For the Year Ended June 30, 2022
2. CASH AND INVESTMENTS (Continued)
At year-end, the City had the following deposits and investments (amounts in
thousands):
Primary Government:
Cash and Investments $ 334,584
Cash and Investments with Fiscal Agent 9,838
Total Primary Government 344,422
Fiduciary Funds:
Cash and Investments 11,225
Cash and Investments with Fiscal Agent 64,854
Total Fiduciary Funds 76,079
Total Deposits and Investments $ 420,501
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)
Less than More than
INVESTMENTS: Fair Value 1 1 to 3 3 to 5 5 Total
• US Treasuries $ 74,943 $ 2,975 $ 47,848 $ 24,120 $ - $ 74,943
US Agency Securities* 140,790 35,962 51,389 53,439 - 140,790
Mutual Funds 58,101 58,101 - - - 58,101
Commercial Paper 4,967 4,967 - - - 4,967
Money Market Funds 2,007 2,007 - - - 2,007
Medium Term Notes-IADB 33,552 5,965 13,831 13,756 - 33,552
Corporate Bonds 26,063 7,992 18,071 - - 26,063
Local Agency Investment Fund 28,417 28,417 - - - 28,417
Orange County Investment Pool 10,447 10,447 - - - 10,447
California Asset Mgmt Program 2,776 2,776 - - - 2,776
PARS Pension Rate Stabilization Program 12,427 12,427 - - - 12,427
Total Investments $ 394,490 $ 172,036 $ 131,139 $ 91,315 $ - 394,490
Total Deposits 26,011
Total Deposits and Investments $ 420,501,
*Security is callable,but classified above according to original maturity date
424
56
40TING
, , ,�"�F� City of Huntington Beach
i .'"�.- '^, '.9
_ Notes to Financial Statements
9t 'w- °Q� 2022
\���lorA For the Year Ended June 30,
Zzcof/NTY CP O
2. CASH AND INVESTMENTS (Continued)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation
to the holder of the investment. This is measured by the assignment of a rating by a
nationally recognized statistical rating organization. Presented below are the minimum
ratings required by, where applicable, the California Government Code or the City's
investment policy, or debt agreements, and the actual rating as of the year-end for each
investment type (in thousands):
Remaining as of Year End
INVESTMENTS: Minimum Total AAA AA A BBB+ Not Rated
Legal Rating
US Treasuries N/A $ 74,943 $ 74,943 $ - $ - $ - $ -
US Agency Securities* N/A 140,790 140,790 - - - -
Mutual Funds N/A 58,101 - - - - 58,101
Commercial Paper A 4,967 - - 4,967 - -
Money Market Funds AAA 2,007 2,007 - - - -
Medium Term Notes-IADB AA 33,552 33,552 - - - -
Corporate Bonds A 26,063 - 6,992 16,165 2,906 -
Local Agency Investment Fund N/A 28,417 - - - - 28,417
Orange County Investment Pool N/A 10,447 - - - - 10,447
California Asset Mgmt Program N/A 2,776 2,776 - - - -
PARS Pension Rate Stabilization Program N/A 12,427 - - - - 12,427
Total Investments $ 394,490 $ 254,068 $ 6,992 $ 21,132 $ 2,906 $ 109,392
Note:All US Agencies are rated AAA by Moody's and AA by S&P
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 $ 112,472
Intl Bk Recon& Development Medium Term Notes $ 18,596
US Treasury Notes Obligations of the United States Treasury $ 74,943
425
57
/WII NGtp,1,
,�o t� , <� City of Huntington Beach
14
�` - Y-= x Notes to Financial Statements
,tip .,I. o For the Year Ended June 30, 2022
- o0N7Y C;��
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, 2022, the City's deposits with financial institutions were covered by FDIC
up to $250,000, and the remaining amounts were collateralized as described above.
None of the City's investments were subject to custodial credit risk. Per the Investment
Policy's statement, the City of Huntington Beach is the registered owner of all
investments in the portfolio.
Investment in State Investment Pool
The City is a voluntary participant in LAIF, which is regulated by California Government
Code Section 16429 under the oversight of the Treasurer of the State of California.
The fair value of the City's investment in this pool is reported in the accompanying
financial statements at amounts based upon the City's pro-rata share of the fair value
provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that
portfolio). The balance available for withdrawal is based on the accounting records
maintained by LAIF, which are recorded on an amortized cost basis. Currently, LAIF
does not have an investment rating.
426
58
4��NT{NGT yy
o y$ City of Huntington Beach
f I Notes to Financial Statements
Avsott j,
For the Year Ended June 30, 2022
UNTY)
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, 2022 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.
427
59
o .r °F City of Huntington Beach
-- --4-�- ; Notes to Financial Statements
�t a For the Year Ended June 30, 2022
vycF ��o4�
�UN�Y �
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, 2022 (in thousands):
Fair Value Hierarchy
INVESTMENTS: Level 1 I Level 2 I Level 3 Total
U.S.Treasuries $ - $ 74,943 $ - $ 74,943
U.S.Agency Securities - 140,790 - 140,790
Commercial Paper - 4,967 - 4,967
Medium Term Notes-IADB - 33,552 - 33,552
Corporate Bonds - 26,063 - 26,063
Total Investments $ - $ 280,315 $ - $ 280,315
3. OTHER RECEIVABLES
A summary of Other Receivables as of June 30, 2022 is as follows (in thousands):
FY2021-22
Description Amount
Developer Loans Receivable $ 39,316
Emerald Cove Loan Receivable 6,569
Housing Rehabilitation Loans Receivable 2,201
First Time Homebuyers Receivable 1,630
Emergency Medical Fee Receivable 2,214
CDBG Program Receivable 554
Affordable Housing In-Lieu Receivable 152
Other Grants Receivable 3,347
Other Receivable 10,493
Total Other Receivables 66,476
Allowance for Uncollectible Developer Loans (39,316)
Net Other Receivables on Governmental Fund Financial Statements $ 27,160
Other Receivables Reconciliation
Net Receivable on Government-wide Financial Statements $ 43,348
Taxes Receivable on Governmental Fund Financial Statements (16,086)
Other Receivables on Internal Service Fund (102)
Net Other Receivables on Governmental Fund Financial Statements $ 27,160
428
60
4 TT:ING
eo� �;�° "�T City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
3. OTHER RECEIVABLES (Continued)
a. Developer Loans
Loans made to developers to construct or rehabilitate certain facilities under
deferred loan agreements total $39,316,000 at year-end. These loans are allowed
until a future event occurs. Loans to the Low and Moderate Income Housing Asset
Fund total $20,207,000, loans made under the Home Program total $14,167,000
and loans made under the Affordable Housing In-Lieu Program total $4,942,000.
Interest rates on these loans range from 0%to 10%. The allowance for uncollectible
developer loans is $39,316,000 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
$8,000,000 to acquire and rehabilitate Emerald Cove Senior Apartments. The loan
has an interest rate of 3% and is to be repaid annually from residual receipts over
60 years. The loan was transferred to the Low and Moderate Income Housing Asset
Fund in Fiscal Year 2011/12. The loan balance as of June 30, 2022 is $6,569,000.
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 $2,201,000 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 $1,630,000 at year-end. These loans are deferred
until a future event occurs.
429
61
, o SIN6TpyL
, ,• �F City of Huntington Beach
0,F _ Notes to Financial Statements
For the Year Ended June 30, 2022
8UNT1 t ,""'
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
Community Services Unearned Revenue(Classes) $ 1,217 $ - $ 1,217
Grants - 29,940 29,940
Total $ 1,217 $ 29,940 $ 31,157
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 $ - $ 5,815 $ - $ - $ 5,815
Deferred Loans:
Emerald Cove - - 6,569 - 6,569
Housing Rehabilitation - 2,201 - - 2,201
First Time Homebuyers - - 1,630 - 1,630
Other Unavailable Revenue 1,431 - - 65 1,496
Total $ 1,431 $ 8,016 $ 8,199 $ 65 $ 17,711
Deferred Loans to developers and qualified individuals for housing rehabilitation and to
first time homebuyers are discussed in Note 3.
430
62
/ TI oyz,
,� � �� City of Huntington Beach
I: Notes to Financial Statements
4 '' For the Year Ended June 30, 2022
6. RETIREMENT PLAN — NORMAL
a. Summary
Net Pension Liability/(Asset)
Net Pension Liability/(Asset) is reported in the accompanying statement of net
position as follows:
Net Pension
Liability/(Asset)
CaIPERS Miscellaneous Plan $ (51,599)
CalPERS Safety Plan (57,268)
Supplemental Plan (Note 7) 15,152
Total $ (93,715)
Deferred Outflows of Resources
Deferred Outflows of Resources are reported in the accompanying statement of net
position as follows:
Change to Net Deferred employer
Difference Between pension contributions
Projected and Actual made after
Investment Earnings measurement date Total
CaIPERS Miscellaneous Plan $ - $ 6,951 $ 6,951
CaIPERS Safety Plan - 13,578 13,578
Supplemental Plan(Note 7) 5,633 - 5,633
Total $ 5,633 $ 20,529 $ 26,162
Deferred Inflows of Resources
Deferred Inflows of Resources are reported in the accompanying statement of net
position as follows:
Change to Net
Difference Between Differences between
Projected and Actual Expected and
Investment Earnings Actual Experience Total
CaIPERS Miscellaneous Plan $ 52,113 $ 1,534 $ 53,647
CaIPERS Safety Plan 63,641 5,468 69,109
Total $ 115,754 $ 7,002 $ 122,756
431
63
�W7 IN 6
T Dy
City of Huntington Beach
�{ - - l'*1 Notes to Financial Statements
o{,, For the Year Ended June 30, 2022
6. RETIREMENT PLAN — NORMAL (Continued)
Pension expenses for the measurement period ending June 30, 2021 (the
measurement date), are included in the accompanying financial statements as
follows:
Net Pension
Expense/(Income)
CalPERS Miscellaneous Plan $ (7,825)
CalPERS Safety Plan (2,508)
Supplemental Plan (Note 7) 880
Total $ (9,453)
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 (CaIPERS), 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. CaIPERS 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 CaIPERS
website. Copies of the CaIPERS annual financial report may be obtained from the
CaIPERS Executive Office —400 P Street, Sacramento, CA 95814.
432
64
� �oNsra
�a � City of Huntington Beach
l _ Notes to Financial Statements
oQ For the Year Ended June 30, 2022
6. RETIREMENT PLAN — NORMAL (Continued)
Benefits Provided
CalPERS provides retirement and disability benefits, annual cost-of-living
adjustments, and death benefits to plan members and beneficiaries. Benefits are
based on years of credited service, equal to one year of full time employment.
Benefit provisions and all other requirements are established by State statute and
may be amended by city contracts with employee bargaining groups.
Participant is eligible for non-industrial disability retirement if becomes disabled and
has at least 5 years of credited service. There is no special age requirement. The
standard non-industrial disability retirement benefit is a monthly allowance equal to
1.8 percent of final compensation, multiplied by service.
Industrial disability benefits are not offered to miscellaneous employees. The City
provides industrial disability retirement benefit to safety employees. The industrial
disability retirement benefit is a monthly allowance equal to 50 percent of final
compensation.
An employee's beneficiary may receive the basic death benefit if the employee dies
while actively employed. The employee must be actively employed with the City to
be eligible for this benefit. An employee's survivor who is eligible for any other pre-
retirement death benefit may choose to receive that death benefit instead of this
basic death benefit. The basic death benefit is a lump sum in the amount of the
employee's accumulated contributions, where interest is currently credited at 7.5
percent per year, plus a lump sum in the amount of one month's salary for each
completed year of current service, up to a maximum of six months' salary. For
purposes of this benefit, one month's salary is defined as the member's average
monthly full-time rate of compensation during the 12 months preceding death.
Upon the death of a retiree, a one-time lump sum payment of$500 will be made to
the retiree's designated survivor(s), or to the retiree's estate.
Benefit terms provide for annual cost-of-living adjustments to each employee's
retirement allowance. Beginning the second calendar year after the year of
retirement, retirement and survivor allowances will be annually adjusted on a
compound basis by 2 percent.
433
65
¢'071NGT0
City of Huntington Beach
Notes to Financial Statements 7.0 For the Year Ended June 30, 2022
aCCOUNTY� I�
6. RETIREMENT PLAN — NORMAL (Continued)
The Plans' provisions and benefits in effect at June 30, 2022 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 1,2021 -June 30,2022 41.790% 41.790%
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% 11.75%/13.00%(Fire PEPRA)
Required employer contribution rates
July 1,2021 -June 30,2022 64.400% 64.400%
434
66
0c 4Q City of Huntington Beach
%`;i Notes to Financial Statements
For the Year Ended June 30, 2022
' Co ,1"
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, 2021, 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.
Fire PEPRA participants are now required to contribute 13%. In addition, the City is
required to make employer contributions at the actuarially determined rates of
41.790% and 64.400% for the miscellaneous and safety plans, respectively, for the
period July 1, 2021 through June 30, 2022.
At June 30, 2020, the valuation date, the following employees were covered by the
benefit terms for each Plan:
Miscellaneous Safety
Active members 600 380
Transferred members 446 72
Terminated members 350 57
Retired members and beneficiaries 1024 622
435
67
,g,� .'�4F4 City of Huntington Beach
-i-.- `-� x Notes to Financial Statements
For the Year Ended June 30, 2022
6. RETIREMENT PLAN — NORMAL (Continued)
d. Net Pension Asset
The City's net pension asset is measured as the total pension liability, less the
pension plan's fiduciary net position. The net pension asset 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 net pension liability is illustrated
below:
Actuarial Assumptions—The total pension liability in the June 30, 2020 actuarial
valuation, rolled forward to June 30, 2021 using standard update procedures, were
determined using the following actuarial assumptions:
Actuarial Methods and Assumptions Used to Determine Total Pension Liability
Actuarial Cost Method Entry Age Normal in accordance with the requirement of GASB Statement No.68
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Investment Rate of Return 7.15% Net of Pension Plan Investment and Administrative Expenses; includes
Inflation
Mortality Rate Table* Derived using CaIPERS'Membership Data for all Funds.
Post Retirement Benefit Increase The lesser of contract COLA or 2.50% until Purchasing Power Protection Allowance
floor on purchasing power applies,2.50%thereafter.
*The mortality 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 CaIPERS Experience
Study and projected mortality improvement using Review of Actuarial Assumptions report from December 2017 that can be found on
the CaIPERS website.
436
68
"�F� City of Huntington Beach
ti t9
r Notes to Financial Statements
. -- . For the Year Ended June 30, 2022
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, CaIPERS 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 1-102 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
Securities and Global Debt Securities.
2An expected inflation of 2.00% used for this period
3An expected inflation of 2.92% used for this period.
437
69
e��C1i NGTp-,
o ,.., aF City of Huntington Beach
/ per
�f < ,x Notes to Financial Statements
For the Year Ended June 30, 2022
..,e121,1Fi ty
6. RETIREMENT PLAN — NORMAL (Continued)
Discount Rate — The discount rate used to measure the total pension liability at
June 30, 2021 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 — On July 12, 2021, CaIPERS reported a preliminary 21.3%
net return on investments for Fiscal Year 2020/21. Based on the thresholds specified
in CaIPERS Funding Risk Mitigation policy, the excess return of 14.3% prescribes a
reduction in investment volatility that corresponds to a reduction in the discount rate
used for funding purposes of 0.20%, from 7.00% to 6.80%. Since CaIPERS was in
the final stages of the four-year Asset Liability Management (ALM) cycle, the board
elected to defer any changes to the asset allocation until the ALM process
concluded, and the board could make its final decision on the asset allocation in
November 2021.
On November 17, 2021, the board adopted a new strategic asset allocation. The
new asset allocation along with the new capital market assumptions, economic
assumptions and administrative expense assumption support a discount rate of
6.90% (net of investment expense but without a reduction for administrative
expense) for financial reporting purposes. This includes a reduction in the price
inflation assumption from 2.50% to 2.30% as recommended in the November 2021
CaIPERS Experience Study and Review of Actuarial Assumptions. This study also
recommended modifications to retirement rates, termination rates, mortality rates
and rates of salary increases that were adopted by the board. These new
assumptions will be reflected in the GASB 68 accounting valuation reports for the
June 30, 2022, measurement date.
438
70
F
��o�U siNG _ City of Huntington Beach
q
- r x Notes to Financial Statements
%pt' ,' For the Year Ended June 30, 2022
0
6. RETIREMENT PLAN — NORMAL (Continued)
e. Changes in the Net Pension Liability/(Asset)
The following table shows the changes in net pension liability/(asset) recognized
over the measurement period:
Miscellaneous Plan
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability(Asset)
Balance at June 30,2020(Valuation Date) $ 604,027 $ 443,586 $ 160,441
Changes in the year:
Service cost 8,005 - 8,005
Interest on the total pension liabilities 42,217 - 42,217
Differences between expected and actual experience (891) - (891)
Benefit payments,including refunds of members contributions (33,392) (33,392) -
Contributions-employer - 150,917 (150,917)
Contributions-employee - 3,450 (3,450)
Net investment income - 107,447 (107,447)
Administrative expenses - (443) 443
Net changes 15,939 227,979 (212,040)
Balance at June 30,2021 (Measurement Date) $ 619,966 $ 671,565 $ (51,599)
Safety Plan
Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability(Asset)
Balance at June 30,2020(Valuation Date) $ 804,181 $ 532,653 $ 271,528
Changes in the year:
Service cost 13,386 - 13,386
Interest on the total pension liabilities 56,114 - 56,114
Differences between expected and actual experience (3,882) - (3,882)
Benefit payments,including refunds of members contributions (44,362) (44,362) -
Contributions-employer - 257,381 (257,381)
Contributions-employee - 4,395 (4,395)
Net investment income - 133,170 (133,170)
Administrative expenses - (532) 532
Net changes 21,256 350,052 (328,796)
Balance at June 30,2021 (Measurement Date) $ 825,437 $ 882,705 $ (57,268)
439
71
,'o� ifNG�yd
City of Huntington Beach
�� Notes to Financial Statements
For the Year Ended June 30, 2022
�.2CFr
6. RETIREMENT PLAN — NORMAL (Continued)
Sensitivity of the Net Pension Liability/(Asset) 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 $ 26,963 $ (51,599) $ (116,560)
Safety Plan 49,752 (57,268) (145,461)
Aggregate Total $ 76,715 $ (108,867) $ (262,021)
Pension Plan Fiduciary Net Position — Detailed information about each pension
plan's fiduciary net position is available in the separately issued CaIPERS financial
reports.
Pension Income and Deferred Outflows/Inflows of Resources Related to
Pensions
As of the start of the measurement period (July 1, 2020), the net pension liability
was $160,441,000 for the Miscellaneous Plan and $271,528,000 for the Safety
Plan. For the measurement period ending June 30, 2021 (the measurement date),
the City earned pension income of $7,825,000 and $2,508,000 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.
440
72
City of Huntington Beach
(i6-/ x Notes to Financial Statements
9
Apo ���o�� For the Year Ended June 30, 2022
cQ �
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 2020-21
measurement period, the EARSL for each plan is as follows:
Miscellaneous Safety
Expected Average Remaining Service Lifetime 2.4 3.9
At June 30, 2022 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 $ - $ (52,113)
Difference between expected and actual experience - (1,534)
Contributions made subsequent to the
measurement date 6,951 -
Total $ 6,951 $ (53,647)
Safety Plan
Deferred outflows Deferred inflows
of Resources of Resources
Difference between projected and actual earning on
pension plan investments $ - $ (63,641)
Difference between expected and actual experience - (5,468)
Contributions made subsequent to the
measurement date 13,578 -
Total $ 13,578 $ (69,109)
441
73
�+i���y71M6T��A City of Huntington Beach
c> s Notes to Financial Statements
.._ t x
R I For the Year Ended June 30, 2022
1 2
-couNTY�ALt
6. RETIREMENT PLAN — NORMAL (Continued)
For the Miscellaneous Plan and Safety Plan, $6,951,000 and $13,578,000,
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,
2023. 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
2022 $ (14,571) $ (18,533)
2023 (12,266) (16,911)
2024 (12,508) (16,195)
2025 (14,302) (17,470)
$ (53,647) $ (69,109)
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.
442
74
o
�04 �. City of Huntington Beach
of Q Notes to Financial Statements
For the Year Ended June 30, 2022
7. RETIREMENT PLAN —SUPPLEMENTAL (Continued)
The Supplemental Plan will pay the retiree an additional amount to his or her
CaIPERS 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, 2021, the date
of the Plan's most recent actuarial valuation, the average monthly benefit received
by inactive plan members and beneficiaries receiving benefits is $626. 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, 2022, the measurement date, the following
employees were covered by the benefit terms for the Plan:
Inactive employees receiving benefits 742
Active employees 59
Total 801
c. 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 June 30, 2019 actuarial valuation. The City is required to contribute the
actuarially determined rate of 2.9% of total payroll for all permanent employees for
the year ended June 30, 2022. 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, 2022, the contributions were (in thousands):
Contributions - employer $ 6,006
443
75
AA City of Huntington Beach
x Notes to Financial Statements
yc U Ao For the Year Ended June 30, 2022
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 2022 with an effective
date of July 1, 2022. Please refer to Note 2 for a detailed description of the
Supplemental Plan's Investment Policy. The major asset class allocation for the
Supplemental Plan as of June 30, 2022 is listed below:
Long-Term
Allocation as of Expected Rate of
Asset Class Strategic Allocation June 30,2022 Return
Fixed Income 40.00% 40.72% 1.55%
Equities 27.00% 51.86% 5.35%
Real Estate 10.00% 5.90% 0.00%
Commodities 2.00% 0.00% 0.00%
Cash and Equivalents 0.00% 1.52% 0.45%
Total 79.00% 100.00%
Quoted market prices have been used to value investments as of June 30, 2022.
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, 2022:
Concentration of Investments Equaling or Exceeding 5%
Vanguard Ftse Developed Etf 11.96%
Vanguard Equity Income Fund Admiral Shares 7.97%
Parnassus Core Equity Fund 7.41%
Fidelity US Bond Index 7.16%
Baird Aggregate Bond Fd Instl 7.16%
Doubleline Total Ret Bd I 7.14%
Pgim Return Bond CI R6 7.13%
Tiaa Cref 7.09%
Harbor Capital Appreciation Inst 6.76%
(shares Core US Reit Etf 5.90%
Federated Inst High Yield Bond Fund 5.04%
444
76
+1 N or
o 4 � City of Huntington Beach
,; Notes to Financial Statements
For the Year Ended June 30, 2022
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 Fiscal Year ended June 30, 2022, the annual money-weighted rate of return
on the Plan's investments, net of pension plan investment expenses, was -15.97%.
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, 2022, using an annual actuarial valuation as of June 30,
2021 rolled forward to June 30, 2022 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.
445
77
City of Huntington Beach
-- `x Notes to Financial Statements
Q For the Year Ended June 30, 2022
�UNT to
7. RETIREMENT PLAN — SUPPLEMENTAL (Continued)
Actuarial Assumptions—The total pension liabilities in the June 30, 2021 actuarial
valuations for the June 30, 2022 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 5.50%
Inflation 2.50%
Salary Increases CaIPERS 1997-2015 Experience Study plus 2.75%aggregate increase
Investment Rate of Return 5.50%Net of Investment Expenses
CaIPERS 1997-2015 Experience Study,mortality projected fully
Mortality Rate Table generational with Scale MP-2021
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, 2021 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 5.50%, 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.
446
78
City of Huntington Beach(di Notes to Financial Statements
For the Year Ended June 30, 2022
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 5.50
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.
447
79
City of Huntington Beach
- ,xt Notes to Financial Statements
For the Year Ended June 30, 2022
7. RETIREMENT PLAN — SUPPLEMENTAL (Continued)
Changes in the Net Pension Liability
The following table shows the changes in net pension liability recognized over the
measurement period (in thousands):
Supplemental Plan
Total Plan
Pension Fiduciary Net Pension
Liability Net Position Liability
Balance at June 30,2021 $ 76,769 $ 70,361 $ 6,408
Changes in the year:
Service cost 299 - 299
Interest on the total pension liabilities 3,897 - 3,897
Differences between expected and actual experience 492 - 492
Changes of Assumptions (1,638) - (1,638)
Benefit payments, including refunds of members contributions (5,668) (5,668) -
Contributions-employer - 6,006 (6,006)
Net investment income - (11,362) 11,362
Administrative expenses - (338) 338
Net changes (2,618) (11,362) 8,744
Balance at June 30,2022 $ 74,151 $ 58,999 $ 15,152
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)
Current
Discount Rate - Discount Rate Discount Rate +
1% (4.50%) (5.50%) 1% (6.50%)
$ 22,488 $ 15,152 $ 8,904
448
80
<p City of Huntington Beach
is Notes to Financial Statements
; oe For the Year Ended June 30, 2022
7. RETIREMENT PLAN — SUPPLEMENTAL (Continued)
f. Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions
For the year ended June 30, 2022, the City recognized pension expense in the
amount of$880,000 for the Supplemental Plan.
At June 30, 2022, the City reported deferred outflows of resources related to the
supplemental pension plan from the following source (in thousands):
Deferred Outflows
of Resources
Difference between projected and actual earnings on
pension plan investments $ 5,633
For the Supplemental Plan, $5,633,000 was reported as deferred outflows 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
2023 $ 1,103
2024 914
2025 604
2026 3,012
$ 5,633
449
81
NGtoN
'Pc"'OWN'1 "'ON' City of Huntington Beach
;x Notes to Financial Statements
N. Z' t;W For the Year Ended June 30, 2022
L yOUNT -
8. OTHER POST EMPLOYMENT BENEFITS
a. Plan Description
The City administers the following two other post employment benefit(OPEB) plans:
Postemployment Medical Insurance
The City agreed, via contract, with each employee association to provide
postemployment medical insurance to retirees. These Other Postemployment
Benefits (OPEB) are based on years of service and are available to all retirees who
meet all three of the following criteria:
• At the time of retirement, the employee is employed by the City.
• At the time of retirement, the employee has a minimum of ten years of service
credit or is granted a service connected disability retirement.
• Following official separation from the City, CaIPERS 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 $344 per month after 25 years of service. If a retiree dies,
the benefits that would be payable for his or her insurance are provided to the
spouse or family for 12 months. The retiree may use the subsidy for any of the
medical insurance plans that the City's active employees may enroll in. Employees
hired on or after October 1, 2014 are not eligible for this benefit.
PEMHCA
The City provides an agent multiple-employer defined benefit healthcare plan to
retirees through CaIPERS under the California Public Employees Medical and
Hospital Care Act (PEMHCA), commonly referred to as PERS Health. PEMHCA
provides health insurance through a variety of Health Maintenance Organization
(HMO) and Preferred Provider Organization (PPO) options. The PEMHCA benefits
are applied to all safety employee groups, based on retirement plan election. The
benefits continue to the surviving spouse for one year. The Huntington Beach
Firefighters' Association (HBFA)joined PEMHCA in 2011. All other safety groups -
Fire Management Association (FMA), Marine Safety Management Association
(MSOA), Police Management Association (PMA), and Police Officers' Association
(POA) -joined in 2004.
450
82
City of Huntington Beach
,x,$ Notes to Financial Statements
y�F.,.�; 'aQ� For the Year Ended June 30, 2022
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, 2021 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 308 212
Inactive employees not yet receiving benefits 315 -
Active Plan Members 810 391
Total Plan Participants 1,433 603
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 $955,000 for year ended June 30, 2022. The
assets of the CERBT are excluded from the accompanying financial statements
since they are in an irrevocable trust administered by CaIPERS. Copies of
CaIPERS' 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 ($139 in 2020, $143
in 2021 and $149 in 2022). 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 $81.95 per employee for the Huntington Beach Firefighter's
Association (HBFA) and $134.10 for all other Safety groups in 2022. 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.
451
83
� City of Huntington Beach
fr - - x Notes to Financial Statements
9' Q For the Year Ended June 30, 2022
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
The City's net OPEB liability was measured as of June 30, 2021 and the total OPEB
liability used to calculate the net OPEB liability was determined by an actuarial
valuation dated June 30, 2021, based on the following actuarial methods and
assumptions:
• Actuarial Cost Method - Entry Age Normal
• Discount rate- 5.50%
• Projected salary increases for covered employees due to inflation - aggregate
increases of 2.75% per annum
• Investment Rate of Return - 5.50%, assuming actuarially determined
contributions funded into CERBT Investment Strategy 2
• Mortality Rate1 - Derived using CaIPERS' membership data for all funds
• Pre-Retirement Turnover2- Derived using CaIPERS' membership data for all
funds
• PEMHCA minimum increases for actives - $149 in 2022, with 4.00% 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 forth the inflation trend assumption used for the
valuation:
Calendar Annual Rate Calendar Annual Rate
Year Non-Medicare Medicare Year Non-Medicare Medicare
2022 7.00% 6.10% 2030 4.95% 4.45%
2023 6.50% 5.65% 2031-35 4.80% 4.35%
2024 6.25% 5.45% 2036-45 4.65% 4.25%
2025 6.00% 5.25% 2046-55 4.50% 4.20%
2026 5.75% 5.05% 2056-65 4.35% 4.15%
2027 5.55% 4.90% 2066-75 4.05% 3.95%
2028 5.35% 4.75% 2076+ 3.75% 3.75%
2029 5.15% 4.60%
'Mortality information was derived from data collected during 1997 to 2015 CaIPERS Experience Study dated December
2017,which may be accessed on the CaIPERS website www.calpers.ca.qov under Forms and Publications. Post-
retirement mortality rates include mortality projected fully generational with Scale MP-21.
2.The pre-retirement turnover information was developed based on CaIPERS' specific data. For more details, please
refer to the 2007 to 2011 Experience Study Report.The Experience Study Report may be accessed on the CalPERS
website www.calpers.ca.gov under Forms and Publications.
452
84
,4\\_sro
-. City of Huntington Beach
4 tS Notes to Financial Statements
For the Year Ended June 30, 2022
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 Rate
Asset Class Allocation of Return
Global Equity 40% 4.56%
Fixed Income 43% 0.78%
Treasury Inflation-Protected Securities ("TIPS") 5% -0.08%
Commodities 4% 1.22%
Real Estate Investment Trusts ("REITS") 8% 4.06%
Total 100%
* Long-term expected rate of return is 5.50%
Discount Rate
The discount rate used to measure the total OPEB liability was 5.50 percent. The
projection of cash flows used to determine the discount rate assumed that City
contributions will be made at rates equal to the actuarially determined contribution
rates. Based on those assumptions, the OPEB plan's fiduciary net position was
projected to be available to make all projected OPEB payments for current active
and inactive employees and beneficiaries. Therefore, the long-term expected rate
of return on OPEB plan investments was applied to all periods of projected benefit
payments to determine the total OPEB liability.
453
85
,�✓� NGra
,moo; ct?� City of Huntington Beach
Notes to Financial Statements
‘Ntterwei For the Year Ended June 30, 2022
0UNT1 C�r�
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
The changes in the net OPEB Liability/(Asset)for the plan are as follows (in thousands):
Increase/(Decrease)
Total OPEB Plan Fiduciary Net OPEB Liability
Liability Net Position /(Asset)
(a) (b) (c)_(a)-(b)
Balance at June 30,2021 $ 33,859 $ 30,639 $ 3,220
(Measurement Date June 30,2020)
Changes recognized for the measurement period:
Service Cost 1,120 - 1,120
Interest 2,119 - 2,119
Actual vs.Expected Experience (6,296) - (6,296)
Assumption Changes 1,603 - 1,603
Contributions-Employer 1,882 (1,882)
Net Investment Income - 6,025 (6,025)
Benefit Payments (2,129) (2,129) -
Administrative Expenses - (131) 131
Net Changes (3,583) 5,647 (9,230)
Balance at June 30,2022 $ 30,276 $. 36,286 $ (6,010)
(Measurement Date June 30,2021)
Sensitivity of the Net OPEB Liability/(Asset) 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, 2021 (in thousands):
1% Decrease Current Discount Rate 1% Increase
(4.50%) (5.50%) (6.50%)
Net OPEB Liability $ (2,124) $ (6,010) $ (9,197)
454
86
0:11 NGR p
I OA City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
Sensitivity of the Net OPEB Liability/(Asset) 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, 2021 (in
thousands):
1% Decrease Current Trend 1%Increase
(6.25% Non-Medicare/ (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 $ (9,234) $ (6,010) $ (1,909)
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 investments 5 Years
455
87
1NN
e o� fNGlp v
,���^; � �. City of Huntington Beach
x t ,tix
Notes to Financial Statements
;
k
9 For the Year Ended June 30, 2022
4
8. OTHER POST EMPLOYMENT BENEFITS (Continued)
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
As of June 30, 2022, the City recognized OPEB income of $173,000. As of June 30,
2022, 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 $ 2,499 $ -
Difference between expected and actual experience 832 5,489
Changes in Assumptions 1,397 2,198
Net difference between projected and actual earnings on
OPEB Plan Investments - 3,272
$ 4,728 $ 10,959
The $2,499,000 reported as deferred outflows of resources related to contributions
subsequent to the June 30, 2021 measurement date will be recognized as a reduction
of the net OPEB liability during the Fiscal Year ending June 30, 2023. 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
2023 $ (1,725)
2024 (1,766)
2025 (1,680)
2026 (1,729)
2027 (718)
Thereafter (1,112)
$ (8,730)
456
88
�✓4,aINGTp�
0. ,;a, p� City of Huntington Beach
x Notes to Financial Statements
For the Year Ended June 30, 2022
9. RISK MANAGEMENT
The City is exposed to various risks of losses related to torts; theft of, damage to and
destruction of assets; errors and omissions; injuries to employees; and natural
disasters. The City records the liability claims as expenditures in the Self Insurance
General Liability Internal Service Fund and the workers' compensation claims in the
Self Insurance Workers' Compensation Internal Service Fund.
BICEP was created in 1988 by a joint powers agreement between the City of
Huntington Beach and four other local entities including Oxnard, Ventura, Santa Ana,
and West Covina, for the purpose of providing joint insurance coverage and related risk
management services for member cities. BICEP allows member entities to finance a
claims payment pool for certain liability claims in excess of $1,000,000 to a maximum
coverage limit of $27,000,000 for claims incurred through June 30, 2015, and
$24,000,000 thereafter.
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 $1,000,000. The maximum
coverage limit is $30,000,000, which is inclusive of the self-insured retention. Claims
that exceed the maximum limit of liability are covered by the City's Self-Insurance
General Liability Internal Service Fund.
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 18b. 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.
457
89
.........= City of Huntington Beach
ii -- ;x Notes to Financial Statements
s� j For the Year Ended June 30,-2022
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 $26.7 million deficit at
year-end at the 55 percent confidence level. The City has established plans to help
reduce the deficit in this fund. This will be accomplished by additional transfers from
the General Fund, Proprietary funds, and other governmental funds in which
employees are charged over the next nine years.
Claims activity and liabilities relating to the current and prior year are (in thousands):
Workers'
Compensation General Liability Total
Balance 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
Additions 16,278 7,993 24,271
Reductions (8,309) (6,310) (14,619)
Net Increase (Decrease) 7,969 1,683 9,652
Balance June 30,2022 $ 42,763 $ 13,668 $ 56,431
458
90
,, ,, t��- City of Huntington Beach
c, ) 1 Notes to Financial Statements
'yF..... =�Q;' For the Year Ended June 30, 2022
°OuNry to
10. INTERFUND TRANSACTIONS
a. Advances to/from Other Funds
The amounts at year-end were (in thousands):
Advances to
(Payable):
Redevelopment
Agency Private
Purpose Trust
Advances from (Receivable):
Major Governmental Funds
LMIHAF Capital Projects $ 1,363
There is a $1,363,000 advance from the LMIHAF Capital Projects Fund to the
Redevelopment Agency Private Purpose Trust Fund as of June 30, 2022 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.
•
459
91
°y
City of Huntington Beach
am
Notes to Financial Statements
471
For the Year Ended June 30, 2022
10. INTERFUND TRANSACTIONS (Continued)
b. Transfers In/Out
The amounts at year-end were (in thousands):
Transfers Out
Grants LMIHAF Other Total Hazmat
General Special Capital Governmental Governmental Service Total
Transfers In Fund Revenue Projects Funds Funds Fund Transfers In
General Fund $ - $ 3 $ - $ 400 $ 403 $ 13 $ 416
Grants Special Revenue 1,011 - - 93 1,104 - 1,104
LMIHAF - 900 - - 900 - 900
Other Governmental Funds 16,787 2,207 224 4 19,222 - 19,222
Total Governmental Funds 17,798 3,110 224 497 21,629 13 21,642
Water Fund - 1 - - 1 - 1
Refuse Fund 51 - - - 51 - 51
Total Enterprise Funds 51 1 - - 52 - 52
Total Transfers Out $ 17,849 $ 3,111 $ 224 $ 497 $ 21,681 $ 13 $ 21,694
The following is a summary of the significant transfers:
• $16,787,000 was transferred from the General Fund to Other Governmental
Funds for debt service payments of $2,737,000 and infrastructure related
projects including road repairs and enhancement, equipment and other capital
improvement projects totaling $14,050,000.
• $51,000 was transferred from the General Fund to the Refuse Enterprise Fund
to fund the senior citizen rate reduction on refuse charges.
• $1,011,000 was transferred from the General Fund to the Grants Special
Revenue Fund to cover payments not reimbursed by the grant program.
$1,005,000 was provided to fund COVID-related expenditures. The remaining
$6,000 was provided to cover HOME program expenditures.
• $224,000 was transferred from the LMIHAF Fund to Other Governmental Funds
for debt service payments.
• $900,000 was transferred from HOME Fund to LMIHAF Fund to restructure a
developer loan originally issued from the LMIHAF fund.
• $13,000 was transferred from the Hazmat Service Enterprise Fund to the
General Fund to cover administrative and overhead expenditures.
• $2,207,000 was transferred from Grant Special Revenue Funds to Other
Governmental Funds to reimburse the funds for grant eligible expenditures paid
out of Other Governmental Funds. $1,930,000 of the transfer is related to use
of HOME funds to pay back a developer loan originally issued Affordable
Housing Funds.
460
92
fr-
��U"�INGT°".s.t. City of Huntington Beach
2° x Notes to Financial. Statements
"- .. q For the Year Ended June 30, 2022
N.-'a0.UN5 c
gti N
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: 2021 Additions Retirements 2022 Interest One Year
Public Financing Authority:
2014(a)Lease Revenue Bonds $ 11,880 $ - $ (665) $ 11,215 $ 132 $ 685
2020(a)Lease Revenue Bonds 4,835 - - 4,835 36 -
2020(b)Lease Revenue Bonds 12,830 - (1,515) 11,315 23 1,520
Total Public Financing Authority 29,545 _ - (2,180) 27,365 - 191 2,205
Other Long-Term Obligations:
Compensated Absences 13,405 5,243 (3,603) 15,045 - 4,432
Claims Payable 46,779 24,271 (14,619) 56,431 - 13,439
Pollution Remediation 2,000 - - 2,000 - -
LED Lighting Phase I 432 - (118) 314 2 122
I-Bank CLEEN Loan 1,882 - (296) 1,586 15 303
CEC Loan 2,457 - (394) 2,063 - 266
Pension Obligation Bonds 341,501 - (10,859) 330,642 349 12,637
Finance Purchase Agreement 12,753 868 (1,907) 11,714 30 2,068
Leases Payable - 448 (201) 247 - 139
Total Other Long-Term Obligations 421,209 30,830 (31,997) 420,042 396 33,406
Total Long-Term Obligations-
Governmental Activities $ 450,754 $ 30,830 $ (34,177) $ 447,407 $ 587 $ 35,611
461
93
City of Huntington Beach
(-i Notes to Financial Statements
For the Year Ended June 30, 2022
11. LONG-TERM OBLIGATIONS (Continued)
a. Public Financing Authority
(1) 2014(a) Public Financing Authority Lease Revenue Bonds
Year of Issuance 2014
Type of Debt Lease Revenue Bonds
Original Principal Amount $15,295,000
Security Lease with City
Interest Rates 3.0% to 5.0%
Interest Payment Dates March 1st, September 1st
Principal Payment Dates September 1st
Purpose of Debt Finance the construction of a new Senior
Center
Debt service requirements to maturity are (in thousands):
Year Ending Principal Interest Total
June 30
2023 $ 685 $ 384 $ 1,069
2024 720 352 1,072
2025 750 319 1,069
2026 785 289 1,074
2027 810 265 1,075
2028-2032 4,440 931 5,371
2033-2035 3,025 181 3,206
Total $ 11,215 $ 2,721 $ 13,936
462
94
11 �9* City of Huntington Beach
13/ -7--, Notes to Financial Statements
NFV �\�a� For the Year Ended June 30, 2022
aeUNTY ',
11. LONG-TERM OBLIGATIONS (Continued)
(2) 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 1st, November 1st
Principal Payment Dates May 1st
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 Principal Interest Total
June 30
2023 $ - $ 223 $ 223
2024 - 224 224
2025 - 224 224
2026 - 224 224
2027 - 224 224
2028-2032 _ 4,835 902 5,737
Total $ 4,835 $ 2,021 $ 6,856
463
95
City of Huntington Beach
.; 'J_1Q Notes to Financial Statements
fr( .,
r y
For the Year Ended June 30, 2022
z, UNTY-1
11. LONG-TERM OBLIGATIONS (Continued)
(3) 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 0.329% to 1.831%
Interest Payment Dates May 1st, November 1st
Principal Payment Dates May 1st
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
2023 $ 1,520 $ 138 $ 1,658
2024 1,530 129 1,659
2025 1,545 117 1,662
2026 1,560 103 1,663
2027 1,575 83 1,658
2028-2030 3,585 103 3,688
Total $ 11,315 $ 673 $ 11,988
464
96
�o� ,-A City of Huntington Beach
1x. Notes to Financial Statements
F'„ For the Year Ended June 30, 2022
'1'C rm'n �° pQ
%of/ATI
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 $15,045,000 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$56,431,000 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 2014
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 Rate 2.32%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt To purchase and upgrade street,
area and pole lighting to energy
efficient LED light sources
465
97
i 11;6
of,-• `� � City of Huntington Beach
Notes to Financial Statements
AFc o;&i� For the Year Ended June 30, 2022
-N F
11. LONG-TERM OBLIGATIONS (Continued)
Debt service requirements to maturity are (in thousands):
Year Ending Principal Interest Total
June 30
2023 $ 123 $ 10 $ 133
2024 126 5 131
2025 65 1 66
Total $ 314 $ 16 $ 330
(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 Rate 2.32%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt To purchase and upgrade street
pole lighting to energy efficient
LED light sources
Debt service requirements to maturity are (in thousands):
Year Ending Principal Interest Total
June 30
2023 $ 303 $ 33 $ 336
2024 310 26 336
2025 317 19 336
2026 324 11 335
2027 332 4 336
Total $ 1,586 $ 93 $ 1,679
466
98
BFp� City of Huntington Beach
mot, 1x
Notes to Financial Statements
For the Year Ended June 30, 2022
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 Rate 1.00%
Interest Payment Dates June 22nd and December 22nd
Principal Payment Dates June 22nd and December 22nd
Purpose of Debt To upgrade street pole lighting to
energy efficient LED light sources
Debt service requirements to maturity are (in thousands):
Year Ending Principal Interest Total
June 30
2023 $ 266 $ 20 $ 286
2024 269 17 286
2025 272 13 285
2026 274 12 286
2027 277 9 286
2028-2030 705 11 716
Total $ 2,063 $ 82 $ 2,145
467
99
City of Huntington Beach
1-5WINp Notes to Financial Statements
*c "�`!*oQ For the Year Ended June 30, 2022
�d
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 15th and December 15th
Principal Payment Dates June 15th
Purpose of Debt Pay 85% of CaIPERS UAL as of
the June 30, 2019 valuation report.
Debt service requirements to maturity are (in thousands):
Year Ending
June 30 Principal Interest Total
2023 $ 12,637 $ 8,511 $ 21,148
2024 12,683 8,463 21,146
2025 12,768 8,385 21,153
2026 12,898 8,248 21,146
2027 13,076 8,074 21,150
2028-2032 69,360 36,379 105,739
2033-2037 78,712 27,020 105,732
2038-2042 91,848 13,896 105,744
2043-2044 26,660 1,357 28,017
Total $ 330,642 $ 120,333 $ 450,975
468
100
✓�UNSIN6t0
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
CF 8UNTY~t i'
Fir
11. LONG-TERM OBLIGATIONS (Continued)
(8) Finance Purchase Agreement
Year of Issuance 2021
Type of Debt Capital Purchase Agreement
Principal Amount Various
Security Master Lease Agreement
Interest Rates 1.249% and 1.775%
Interest Payment Dates Semi-Annually
Principal Payment Dates Semi-Annually
Purpose of Debt Public Safety Equipment Financing
Debt service requirements to maturity are (in thousands):
Year Ending Principal Interest Total
June 30
2023 $ 2,068 $ 195 $ 2,263
2024 2,100 163 2,263
2025 1,441 131 1,572
2026 1,199 108 1,307
2027 1,220 87 1,307
2028-2031 3,686 165 3,851
*Total $ 11,714 $ 849 $ 12,563
(9) Lease Payable
On July 1, 2021, the City of Huntington Beach entered into a 16 month lease
as a lessee for the use of Ricoh copiers. An initial lease liability was recorded
in the amount of$81,195. As of June 30, 2022, the value of the lease liability
is $20,325. The City of Huntington Beach is required to make monthly fixed
payments of$5,084. The lease has an interest rate of 0.308%. The estimated
useful life was 16 months as of the contract commencement. The value of
the right to use asset as of June 30, 2022, was $81,195 with accumulated
amortization of$60,896.
On July 1, 2021, the City of Huntington Beach entered into a 19 month lease
as a Lessee for the use of Ricoh copiers.An initial lease liability was recorded
in the amount of$93,080. As of June 30, 2022, the value of the lease liability
is $34,359. The City of Huntington Beach is required to make monthly fixed
payments of$4,916. The lease has an interest rate of 0.435%. The estimated
useful life was 19 months as of the contract commencement. The value of
the right to use asset as of June 30, 2022, was $93,080 with accumulated
amortization of$57,774.
469
101
,o%51NGT�y� City of Huntington Beach
(G-31
C Notes to Financial Statements
For the Year Ended June 30, 2022
2cF it
�QUNTY CA
11. LONG-TERM OBLIGATIONS (Continued)
On July 1, 2021, the City of Huntington Beach entered into a 39 month lease
as a lessee for the use of land with Tank Farms, LLC as the lessor. An initial
lease liability was recorded in the amount of$273,597. As of June 30, 2022,
the value of the lease liability is $191,965. The City of Huntington Beach is
required to make monthly fixed payments of $6,918. The lease has an
interest rate of 0.648%. The Land estimated useful life was 39 months as of
the contract commencement. The value of the right to use asset as of June
30, 2022, was $273,597 with accumulated amortization of$84,184.
The future principal and interest lease payment as of June 30, 2022, were
as follows:
Year Ending Principal Interest Total
June 30
2023 $ 139 $ 1 $ 140
2024 86 - 86
2025 22 - 22
Total $ 247 $ 1 $ 248
c. Long-Term Obligations — Business-Type Activities
Below is a schedule of the long-term obligations of business-type activities (in
thousands):
Long-Term Obligations-Business-Type June 30, June 30, Accrued Due Within
Activities: 2021 Additions Retirements 2022 Interest One Year
Compensated Absences $ 1,426 $ 649 $ (389) $ 1,686 $ - $ 460
Pension Obligation Bonds 22,144 - (776) 21,368 22 888
Total Long-Term Obligations-
Business-Type Activities $ 23,570 $ 649 $ (1,165) $ 23,054 $ 22 $ 1,348
(1) Compensated Absences
There is no repayment schedule for the compensated absences amount of
$1,686,000 relating to business-type activities. The balance for the
outstanding business-type compensated absences is predominately related
to the Water and Sewer funds.
470
102
tON
��r o"11510.W1/ "w City of Huntington Beach
U = �- c.1
Notes to Financial Statements
�� a For the Year Ended June 30, 2022
zC�t3UN1��Afoid
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 15th and December 15th
Principal Payment Dates June 15th
Purpose of Debt Pay 85% of CaIPERS UAL as of
the June 30, 2019 valuation report.
Debt service requirements to maturity are (in thousands):
Year Ending Principal Interest Total
June 30
2023 $ 888 $ 535 $ 1,423
2024 892 531 1,423
2025 897 527 1,424
2026 907 518 1,425
2027 919 504 1,423
2028-2032 4,875 2,241 7,116
2033-2037 5,533 1,583 7,116
2038-2042 6,457 660 7,117
Total $ 21,368 $ 7,099 $ 28,467
d. Long-Term Conduit Debt Obligations
Below is a schedule of the conduit debt obligations for which the City is not liable in
any manner (in thousands):
June 30, June 30,
Community Facilities Districts: 2021 Additions Retirements 2022
Community Facilities District No. 2000-1
2013 Special Tax Refunding Bonds $ 9,050 $ - $ (645) $ 8,405
Community Facilities District No.2002-1
Special Assessment Tax Bonds 3,785 - (180) 3,605
Community Facilities District No.2003-1
2013 Special Tax Refunding Bonds 15,560 - (890) 14,670
Total Community Facilities Districts 28,395 - (1,715) 26,680
Total Obligations Not Recorded in
Financial Statements $ 28,395 $ - $ (1,715) $ 26,680
471
103
,-NTNG
,+ •:•` -1:-- s; City of Huntington Beach
-(- git Notes to Financial Statements
./.. ��6o-� For the Year Ended June 30, 2022
12. CAPITAL ASSETS
a. Changes in Capital Assets
Capital asset activity for the year was (in thousands):
June 30, June 30,
Governmental Activities 2021 Additions Dispositions 2022
Capital Assets,Not Depreciated:
Land $ 368,795 $ 841 $ (98) $ 369,538
Construction in Progress 8,584 7,444 (3,793) 12,235
Total Capital Assets-Not Depreciated 377,379 8,285 (3,891) 381,773
Capital Assets Being Depreciated
Buildings 215,506 6,253 - 221,759
Machinery and Equipment 76,536 4,373 (5,811) 75,098
Infrastructure 451,001 11,494 (505) 461,990
Right to Use Leased Asset _ - 448 - 448
Total Capital Assets Being Depreciated 743,043 22,568 (6,316) 759,295
Less Accumulated Depreciation:
Buildings (89,384) (5,065) - (94,449)
Machinery and Equipment (56,953) (3,898) 5,263 (55,588)
Infrastructure (236,829) (8,141) 505 (244,465)
Right to Use Leased Asset - (195) - (195)
Total Accumulated Depreciation (383,166) (17,299) 5,768 (394,697)
Total Depreciated-Net 359,877 5,269 (548) 364,598
Total Capital Assets 1,120,422 30,853 (10,207) 1,141,068
Total Accumulated Depreciation (383,166) (17,299) 5,768 (394,697)
Capital Assets of Governmental Activities-Net $ 737,256 $ 13,554 $ (4,4) $ 746,371
472
104
It/3 N
�o� ,.4„1y�� ,� City of Huntington Beach
`.; Notes to Financial Statements
0Fc outiric,��, For the Year Ended June 30, 2022
12. CAPITAL ASSETS (Continued)
June 30, June 30,
Business-Type Activities: 2021 Additions Dispositions 2022
Capital Assets,Not Depreciated:
Land $ 3,907 $ - $ - $ 3,907
Construction in Progress 1,782 109 (1,782) 109
Total Capital Assets-Not Depreciated 5,689 109 (1,782) 4,016
Capital Assets Being Depreciated
Buildings 100,082 5,541 - 105,623
Machinery and Equipment 21,596 1,331 (539) 22,388
Infrastructure 149,304 2,749 (385) 151,668
Total Capital Assets Being Depreciated 270,982 9,621 (924) 279,679
Less Accumulated Depreciation:
Buildings (34,235) (2,695) - (36,930)
Machinery and Equipment (14,810) (1,254) 539 (15,525)
Infrastructure (85,157) (2,470) 385 (87,242)
Total Accumulated Depreciation (134,202) (6,419) 924 (139,697)
Total Depreciated-Net 136,780 3,202 - 139,982
Total Capital Assets 276,671 9,730 (2,706) 283,695
Total Accumulated Depreciation (134,202) (6,419) 924 (139,697)
Capital Assets of Business Activities-Net $ 142,469 $ 3,311 $ (1,782) $ 143,998
b. Depreciation Expense
Depreciation in governmental activities was charged to the following
functions/programs in the Statement of Activities (in thousands):
Department:
City Manager $ 23
Finance 30
Community Development 123
Fire 268
Information Services 25
Police 120
Community Services 2,605
Library Services 335
Public Works 12,758
Internal Service Fund depreciation charged to functions 1,012
Total $ 17,299
Depreciation in business-type activities was charged to the following
functions/programs in the Statement of Activities (in thousands):
Fund:
Water $ 4,053
Sewer Service 2,345
Refuse 21
Total $ 6,419
473
105
spa
City of Huntington Beach
ti tz't
,x Notes to Financial Statements
y� o�r For the Year Ended June 30, 2022
couNTY Gp e
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. LEASES
For the year ended June 30, 2022, the financial statements include the adoption of
GASB Statement No. 87, Leases. The primary objective of this statement is to
enhance the relevance and consistency of information about governments' leasing
activities. This statement establishes a single model for lease accounting based on
the principle that leases are financings of the right to use an underlying asset. Under
this Statement, a lessee is required to recognize a lease liability and an intangible
right-to-use lease asset, and a lessor is required to recognize a lease receivable and
a deferred inflow of resources. For additional information, refer to the disclosures
below.
On July 1, 2021, the City of Huntington Beach entered into a 67 month lease as a
lessor for the use of a building with Shor (Hyatt) as the lessee. An initial lease
receivable was recorded in the amount of$75,163. As of June 30, 2022, the value of
the lease receivable is $62,670. The lessee is required to make monthly fixed
payments of $1,104 in addition to variable payments based on percentage of
revenue. The percentage of revenue fluctuates based on the months of the year. The
rates are 5% during November-February, 10% during March, April, and October and
12% during May-September. The lease has an interest rate of 1.138%. The value of
the deferred inflow of resources as of June 30, 2022, was $61,735, and the City of
Huntington Beach recognized lease revenue of$12,651 and interest revenue of$778
during the fiscal year. No percentage rent was received in Fiscal Year 2021/22. The
lessee has two extension options, each for 60 months.
On July 1, 2021, the City of Huntington Beach entered into a 187 month lease as a
lessor for the use of land with Huntington Harbour Yacht Club as the lessee. An initial
lease receivable was recorded in the amount of $537,872. As of June 30, 2022, the
value of the lease receivable is $511,095. The lessee is required to make monthly
fixed payments of $3,067 or 10% of gross receipts from facility rental and boat
docking rental and 6% of gross receipts from food, beverage and carting sales,
whichever is greater. The lease has an interest rate of 1.942%. The value of the
deferred inflow of resources as of June 30, 2022, was $503,491, and Huntington
Beach recognized lease revenue of$24,222 and interest revenue of$10,159 during
the fiscal year. The City did not receive revenue related to percentage of gross
receipts in the current fiscal year.
474
106
P yQ� City of Huntington Beach
z Notes to Financial Statements
y.-- `"; a4a For the Year Ended June 30, 2022
� CP��i
14. LEASES (Continued)
On July 1, 2021, the City of Huntington Beach entered into a 74 month lease as a
Lessor for the use of a building located along the beach with Kokomo's Surfside Grill
as the lessee. An initial lease receivable was recorded in the amount of$74,526. As
of June 30, 2022, the value of the lease receivable is $63,381. The lessee is required
to make monthly fixed payments of$1,648. The lease has an interest rate of 1.138%.
The value of the deferred inflow of resources as of June 30, 2022, was $62,462, and
Huntington Beach recognized lease revenue of $11,288 during the fiscal year and
interest revenue of$776. The lessee has one extension option for 60 months.
On July 1, 2021, the City of Huntington Beach entered into a 96 month lease as a
lessor for the use of a building located in Huntington Central Park with Kathy May's
Lakeview Café as the lessee. An initial lease receivable was recorded in the amount
of$170,485. As of June 30, 2022, the value of the lease receivable is $150,177. The
lessee is required to make monthly fixed payments of $1,875. The lease has an
interest rate of 1.372%. The value of the deferred inflow of resources as of June 30,
2022, was $149,277, and Huntington Beach recognized lease revenue of $19,015
and interest revenue of$2,192 during the fiscal year.
On July 1, 2021, the City of Huntington Beach entered into a 72 month lease as a
lessor for the use of a building with Meadowlark Golf Course as the lessee. An initial
lease receivable was recorded in the amount of$3,160,906. As of June 30, 2022, the
value of the lease receivable is $2,682,427. The lessee is required to make monthly
fixed payments of$44,314 and percentage of gross sales of green fees, cart rentals,
driving range, food and beverages. The lease has an interest rate of 0.308%. The
value of the deferred inflow of resources as of June 30, 2022, was $2,635,305, and
Huntington Beach recognized lease revenue of $516,626 and interest revenue of
$8,975 during the fiscal year. The City received variable payments of$649,993 in the
current fiscal year.
On July 1, 2021, the City of Huntington Beach entered into an 88 month lease as a
lessor for the use of infrastructure located at Warner Fire Station with Verizon as the
lessee. An initial lease receivable was recorded in the amount of $180,802. As of
June 30, 2022, the value of the lease receivable is $156,761. The lessee is required
to make monthly fixed payments of$2,064. The lease has an interest rate of 0.435%.
The value of the deferred inflow of resources as of June 30, 2022, was $156,250, and
Huntington Beach recognized lease revenue of$23,825 and interest revenue of$728
during the fiscal year. The lessee has five extension options, each for 60 months.
On July 1, 2021, the City of Huntington Beach entered into a 25 month lease as a
lessor for the use of infrastructure with Zenith Energy West Coast Terminals LLC as
the lessee. An initial lease receivable was recorded in the amount of$81,023. As of
June 30, 2022, the value of the lease receivable is $54,133. The lessee is required
to make annual fixed payments of$27,135. The lease has an interest rate of 0.435%.
475
107
City of Huntington Beach
- -=-=-1�5k Notes to Financial Statements
v".
o For the Year Ended June 30, 2022
imp(��
14. LEASES (Continued)
The value of the deferred inflow of resources as of June 30, 2022, was $42,132, and
Huntington Beach recognized lease revenue of$38,647 and interest revenue of$244
during the fiscal year.
On July 1, 2021, the City of Huntington Beach entered into a 78 month lease as a
lessor for the use of a building located at Edwards Fire Station with T-Mobile as the
lessee. An initial lease receivable was recorded in the amount of $268,831. As of
June 30, 2022, the value of the lease receivable is $232,723. The lessee is required
to make monthly fixed payments of$3,039. The lease has an interest rate of 0.435%.
The value of the deferred inflow of resources as of June 30, 2022, was $227,683, and
Huntington Beach recognized lease revenue of $40,065 and interest revenue of
$1,082 during the fiscal year. The lessee has one extension option for 60 months.
On July 1, 2021, the City of Huntington Beach entered into a 58 month lease as lessor
for the use of land located at Central Library with T-Mobile as the lessee. An initial
lease receivable was recorded in the amount of $127,289. As of June 30, 2022, the
value of the lease receivable is $101,001. The lessee is required to make monthly
fixed payments of$2,246. The lease has an interest rate of 0.980%. The value of the
deferred inflow of resources as of June 30, 2022, was $100,954, and Huntington
Beach recognized lease revenue of $25,229 and interest revenue of $1,107 during
the fiscal year.
On July 1, 2021, the City of Huntington Beach entered into a 63 month lease as lessor
for the use of infrastructure at the Civic Center Rooftop with T-Mobile as the lessee.
An initial lease receivable was recorded in the amount of $259,600. As of June 30,
2022, the value of the lease receivable is $214,417. The lessee is required to make
monthly fixed payments of $3,849. The lease has an interest rate of 0.237%.The
value of the deferred inflow of resources as of June 30, 2022, was $210,152, and
Huntington Beach recognized lease revenue of$48,891 and interest revenue of$556
during the fiscal year.
On July 1, 2021, the City of Huntington Beach entered into a 287 month lease as
lessor for the use of land located at Murdy Park with T-Mobile as the lessee. An initial
lease receivable was recorded in the amount of$1,090,068. As of June 30, 2022, the
value of the lease receivable is $1,052,770. The lessee is required to make monthly
fixed payments of$4,180. The lease has an interest rate of 0.814%. The value of the
deferred inflow of resources as of June 30, 2022, was $1,044,585, and Huntington
Beach recognized lease revenue of $36,801 and interest revenue of $8,682 during
the fiscal year. The lessee has four extension options, each for 60 months.
476
108
04, City of Huntington Beach
t�v
ai.. `: Notes to Financial Statements
_ O For the Year Ended June 30, 2022
14. LEASES (Continued)
On July 1, 2021, the City of Huntington Beach entered into an 85 month lease as
lessor for the use of land located at Edwards Fire Station with Verizon as the lessee.
An initial lease receivable was recorded in the amount of $395,925. As of June 30,
2022, the value of the lease receivable is $347,702. The lessee is required to make
monthly fixed payments of $4,003. The lease has an interest rate of 0.435%. The
value of the deferred inflow of resources as of June 30, 2022, was $340,421, and
Huntington Beach recognized lease revenue of $53,898 and interest revenue of
$1,606 during the fiscal year. The lessee has three extension options, each for 60
months.
On July 1, 2021, the City of Huntington Beach entered into a 322 month lease as
lessor for the use of land located at Warner Fire Station with American Tower as the
lessee. An initial lease receivable was recorded in the amount of $823,137. As of
June 30, 2022, the value of the lease receivable is $794,239. The lessee is required
to make monthly fixed payments of$2,700. The lease has an interest rate of 0.435%.
The value of the deferred inflow of resources as of June 30, 2022, was $792,534, and
Huntington Beach recognized lease revenue of $27,101 and interest revenue of
$3,501 during the fiscal year. The lessee has five extension options, each for 60
months.
On July 1, 2021, the City of Huntington Beach entered into a 78 month lease as lessor
for the use of land located at Greer Park with T-Mobile as the lessee. An initial lease
receivable was recorded in the amount of $353,458. As of June 30, 2022, the value
of the lease receivable is $304,639. The lessee is required to make monthly fixed
payments of $4,214. The lease has an interest rate of 0.435%. The value of the
deferred inflow of resources as of June 30, 2022, was $299,079, and Huntington
Beach recognized lease revenue of $52,957 and interest revenue of $1,421 during
the fiscal year. The lessee has one extension option for 60 months.
On July 1, 2021, the City of Huntington Beach entered into a 58 month lease as lessor
for the use of infrastructure located at Bushard Fire Station with T-Mobile a the lessee.
An initial lease receivable was recorded in the amount of $159,632. As of June 30,
2022, the value of the lease receivable is $127,252. The lessee is required to make
monthly fixed payments of $2,817. The lease has an interest rate of 0.980%. The
value of the deferred inflow of resources as of June 30, 2022, was $126,604, and
Huntington Beach recognized lease revenue of$31,639 and interest revenue $1,388
during the fiscal year.
477
109
.dM4
'�es7iNcr
A;\ City of Huntington Beach
� . ---NC,%. Notes to Financial Statements
` Q For the Year Ended June 30, 2022
i ouh He �d
14. LEASES (Continued)
On July 1, 2021, the City of Huntington Beach entered into an 87 month lease as
lessor for the use of infrastructure located at Main Street Parking with Verizon as the
lessee. An initial lease receivable was recorded in the amount of $172,296. As of
June 30, 2022, the value of the lease receivable is $149,748. The lessee is required
to make monthly fixed payments of$2,051. The lease has an interest rate of 1.296%.
The value of the deferred inflow of resources as of June 30, 2022, was $148,649, and
Huntington Beach recognized lease revenue of $21,580 and interest revenue of
$2,067 during the fiscal year. The lessee has five extension options, each for 60
months.
On July 1, 2021, the City of Huntington Beach entered into a 360 month lease as
lessor for the use of infrastructure located at Edwards Fire Station with AT&T as the
lessee. An initial lease receivable was recorded in the amount of $1,296,802. As of
June 30, 2022, the value of the lease receivable is $1,296,092. The lessee is required
to make monthly fixed payments of$3,500. The lease has an interest rate of 2.678%.
The value of the deferred inflow of resources as of June 30, 2022, was $1,293,200,
and Huntington Beach recognized lease revenue of $812 and interest revenue of
$2,790 during the fiscal year. The lessee has four extension options, each for 60
months.
On July 1, 2021, the City of Huntington Beach entered into a 61 month lease as a
lessor for the use of a building with Oceanside Properties LLC as a lessee. An initial
lease receivable was recorded in the amount of $223,865. As of June 30, 2022, the
value of the lease receivable is$178,557. The lessee is required to make annual fixed
payments of $48,073. The lease has an interest rate of 1.525%. The value of the
deferred inflow of resources as of June 30, 2022, was $179,826, and Huntington
Beach recognized lease revenue of $41,274 and interest revenue of $2,765 during
the fiscal year.
On July 1, 2021, the City of Huntington Beach entered into a 102 month lease as a
lessor for the use of a building with Chevron USA INC. An initial lease receivable was
recorded in the amount of $312,544. As of June 30, 2022, the value of the lease
receivable is $278,413. The lessee is required to make annual fixed payments of
$35,333. The lease has an interest rate of 0.435%. The value of the deferred inflow
of resources as of June 30, 2022, was $275,774, and Huntington Beach recognized
lease revenue of$35,567 and interest revenue of$1,203 during the fiscal year.
478
110
P�O�NT ,
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
14. LEASES (Continued)
On July 1, 2021, the City of Huntington Beach entered into a 31 month lease as a
lessor for the use of infrastructure with Cardinal Pipeline L.P. as the lessee. An initial
lease receivable was recorded in the amount of $336,607. As of June 30, 2022, the
value of the lease receivable is $225,131. The lessee is required to make annual fixed
payments of $113,294. The lease has an interest rate of 0.648%. The value of the
deferred inflow of resources as of June 30, 2022, was $208,174, and Huntington
Beach recognized lease revenue of$126,686 and interest revenue of$1,818 during
the fiscal year.
On July 1, 2021, the City of Huntington Beach entered into 293 month lease as a
lessor for the use of land with Hyatt as the lessee. An initial lease receivable was
recorded in the amount of $327,310. As of June 30, 2022, the value of the lease
receivable is $314,147. The lessee is required to make annual fixed payments of
$14,146. The lease has an interest rate of 0.308%. The value of the deferred inflow
of resources as of June 30, 2022, was $313,937, and Huntington Beach recognized
lease revenue of$12,390 and interest revenue of$983 during the fiscal year.
On July 1, 2021, the City of Huntington Beach entered into an 86 month lease as a
lessor for the use of infrastructure located at Booster Pump Station with DCOR LLC
as the lessee. An initial lease receivable was recorded in the amount of$63,583. As
of June 30, 2022, the value of the lease receivable is $55,498. The lessee is required
to make annual fixed payments of$8,823. The lease has an interest rate of 1.296%.
The value of the deferred inflow of resources as of June 30, 2022, was $54,766, and
Huntington Beach recognized lease revenue of$8,079 and interest revenue of$738
during the fiscal year. The lessee has one extension option for 60 months.
On July 1, 2021, the City of Huntington Beach entered into a 79 month lease as a
lessor for the use of infrastructure with DCOR LLC as the lessee. An initial lease
receivable was recorded in the amount of $238,884. As of June 30, 2022, the value
of the lease receivable is $205,199. The lessee is required to make annual fixed
payments of $34,647. The lease has an interest rate of 0.435%. The value of the
deferred inflow of resources as of June 30, 2022, was $202,871, and Huntington
Beach recognized lease revenue of$35,050 and interest revenue of$962 during the
fiscal year.
On July 1, 2021, the City of Huntington Beach entered into a 72 month lease as a
lessor for the use of a building with HB Employee Credit Union as the lessee. An
initial lease receivable was recorded in the amount of$215,913. As of June 30, 2022,
the value of the lease receivable is $184,573. The lessee is required to make monthly
fixed payments of$3,020. The lease has an interest rate of 0.237%. The value of the
deferred inflow of resources as of June 30, 2022, was $179,927, and Huntington
Beach recognized lease revenue of$35,521 and interest revenue of$465 during the
fiscal year. The lessee has one extension option for 60 months.
479
111
�� " City of Huntington Beach
US x
Notes to Financial Statements
2 Q For the Year Ended June 30, 2022
z��ou`Nn `� '�
14. LEASES (Continued)
On July 1, 2021, the City of Huntington Beach entered into an 88 month lease as a
lessor for the use of a building with Duke's Surf City Restaurant as the lessee. An
initial lease receivable was recorded in the amount of $1,764,623. As of June 30,
2022, the value of the lease receivable is $1,544,901. The lessee is required to make
monthly fixed payments of$37,265 and variable payments based on a percentage of
gross sales. The percentage rent is on a tiered system. The first 4% is collected on
the first $8 million. Then 5% on all gross sales above $8 million. The lease has an
interest rate of 0.237%. The value of the deferred inflow of resources as of June 30,
2022, was $1,525,262, and Huntington Beach recognized lease revenue of$235,493
and interest revenue of $3,868 during the fiscal year. The lessee has two extension
options, each for 240 months. The City received variable payments of $236,572 in
the current fiscal year.
On July 1, 2021, the City of Huntington Beach entered into a 131 month lease as a
lessor for the use of a building located on Huntington Beach Pier with Ruby's
Huntington Beach Restaurant, Ltd as the lessee. An initial lease receivable was
recorded in the amount of $1,392,508. As of June 30, 2022, the value of the lease
receivable is $1,282,852. The lessee is required to make monthly fixed payments of
$10,984.47. The lease has an interest rate of 1.594%. The value of the deferred inflow
of resources as of June 30, 2022, was $1,264,950, and the City of Huntington Beach
recognized lease revenue of $106,400 and interest revenue of $21,160 during the
fiscal year.
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 was
previously reported as a Redevelopment Agency within 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.
480
112
City of Huntington Beach
Notes to Financial Statements
For the Year Ended June 30, 2022
oQ
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued)
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.
b. Long-Term Debt
Below is a schedule of changes in long-term obligations of the Successor Agency
for the year (in thousands):
June 30, June 30, Accrued Due Within
Successor Agency: 2021 Additions Retirements 2022 Interest One Year
Bonds Payable
1999 Tax Allocation Refunding Bonds $ 1,570 $ - $ (380) $ 1,190 $ 25 $ 405
2002 Tax Allocation Bonds 3,415 - (840) 2,575 54 875
Total Bonds Payable 4,985 - (1,220) 3,765 79 1,280
Other Long-Term Obligations
Mayer DDA 1,254 - (628) 626 10 626
Bella Terra OPA(Parking) 4,985 - (1,504) 3,481 6 1,504
Bella Terra AHA(Phase II) 12,867 - (749) 12,118 12 749
CIM DDA(Parking&Infrastructure) 5,279 - (308) 4,971 260 330
CIM DDA(Additional Parking) 351 - (14) 337 25 16
Total Other Long-Term Obligations 24,736 - (3,203) 21,533 313 3,225
Total Long-Term Obligations $ 29,721 $ - $ (4,423) $ 25,298 $ 392 $ 4,505
481
113
Jr,N1ING y�.
o; , 9�. City of Huntington Beach
- e �r Notes to Financial Statements
For the Year Ended June 30, 2022
AUNTY��
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued)
(1) 1999 Tax Allocation Refunding Bonds
Year of Issuance 1999
Type of Debt Tax Allocation Refunding Bonds
Original Principal Amount $10,835,000
Security Tax Increment
Interest Rates 3.00% to 5.05%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt Prepay Agency's 1992 Loans to
Public Financing Authority
Debt service requirements to maturity are (in thousands):
Year Ending Principal Interest Total
June 30
2023 $ 405 $ 49 $ 454
2024 425 29 454
2025 360 9 369
Total $ 1,190 $ 87 $ 1,277
482
114
to �q City of Huntington Beach
Notes to Financial Statements
744WA For the Year Ended June 30, 2022
�zouhry
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued)
(2) 2002 Tax Allocation Refunding Bonds
Year of Issuance 2002
Type of Debt Tax Allocation Refunding Bonds
Original Principal Amount $20,900,000
Security Tax Increment
Interest Rates 2.00% to 5.00%
Interest Payment Dates February 1st and August 1st
Principal Payment Dates August 1st
Purpose of Debt Prepay Agency's 1992 Loans to
Public Financing Authority and
fully defease 1992 Public
Financing Authority bonds
•
Debt service requirements to maturity are (in thousands):
Year Ending Principal Interest Total
June 30
2023 $ 875 $ 107 $ 982
2024 920 62 982
2025 780 20 800
Total $ 2,575 $ 189 $ 2,764
Pledged Revenues
The Successor Agency will repay a total of$4,041,000, principal and interest,
for the outstanding 1999 and 2002 Tax Allocation Refunding Bonds as of
June 30, 2022 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.
483
115
`` City of Huntington Beach
�, s=1Notes to Financial Statements
ca For the Year Ended June 30, 2022
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
$626,000. 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 $3,481,000. Project-generated revenues
as available will repay these amounts over the time needed to fully amortize
the advance. The interest rate of this obligation is 6.94%. The agreement has
been approved as an enforceable obligation by the DOF.
(5) Bella Terra Phase II
In Fiscal Year 2010/11, the Agency entered into an affordable housing
agreement with BTDJM Phase II Associates (DJM). The agreement would
facilitate the construction of a 467 unit mixed use project, including 43
moderate units and 28 very low units. Under the terms of the agreement, the
Agency would reimburse DJM for the construction of the affordable units up
to $17,000,000. DJM has transferred the site to UDR, and as of year-end,
the Successor Agency obligation under the agreement amounted to
$12,118,000. 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.
484
116
,r a City of Huntington Beach
}]}] Notes to Financial Statements
For the Year Ended June 30, 2022
oe
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued)
(6) CIM/Huntington Disposition and Development Agreement — Strand
Parking Structure and Infrastructure
Year of Issuance 2009
Type of Debt Loan from CIM Group, LLC
Original Principal Amount $7,900,000
Security Tax Increment
Interest Rates 7.00%
Interest Payment Dates September 30th
Principal Payment Dates September 30th
Purpose of Debt Strand Parking Structure and
Infrastructure
As of year-end, the Successor Agency obligation under the agreement
amounted to $4,971,000. 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.
485
117
City of Huntington Beach
v.' -7 Notes to Financial Statements
9t ' For the Year Ended June 30, 2022
94s4QUNTY ,,!� .
15. SUCCESSOR AGENCY TRUST FOR ASSETS OF THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Continued)
(7) CIM/Huntington Disposition and Development Agreement — Additional
Strand Parking
Year of Issuance 2009
Type of Debt Loan from CIM Group, LLC
Original Principal Amount $950,000
Security Tax Increment
Interest Rates 10.00%
Interest Payment Dates September 30th
Principal Payment Dates September 30th
Purpose of Debt Additional Strand Parking
Structure and Infrastructure
As of year-end, the Successor Agency obligation under the agreement
amounted to $337,000. 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 (DOE). The DDA has been approved
as an enforceable obligation by the DOF.
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.
486
118
���UNI1NGTp��
'��. . No. City of Huntington Beach
Notes to Financial Statements
�2F, `\v�o� For the Year Ended June 30, 2022
c`aCOuNT
16. COMMITMENTS AND CONTINGENCIES (Continued)
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
$1,414,320 for the year ended June 30, 2022. Sales tax sharing agreements include
an agreement with Surf City Auto Group II, 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.
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 2016/17. The State Department of Finance (DOF)
has denied the validity of the loans and the City has filed suit against the State. On
April 22, 2022, the Superior Court of California issued a Proposed Judgment stating
that the agreement did not constitute an enforceable obligation and that repayment
was not required. The City has requested a hearing with the Court to appeal this
determination.
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.
487
119
iecTiror"TF
• N.cN.o City of Huntington Beach
p1ffi�._r Notes to Financial Statements
. For the Year Ended June 30, 2022
>�UUAT`t
16. COMMITMENTS AND CONTINGENCIES (Continued)
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 reauthorized the loans
between the City and former Redevelopment Agency in FY 2016/17. The State
Department of Finance has denied the validity of the loans and the City has filed
suit against the State. On April 22, 2022, the Superior Court of California issued a
Proposed Judgment stating that the majority of the agreements between the City
and the former Redevelopment Agency were not considered enforceable
obligations and that repayment was not required, with the exception of the
$22,400,000 loan for the purchase of the Waterfront property. The DOF denied this
obligation in a follow up letter to the City dated August 24, 2022. The City has
requested a hearing with the Court to appeal this determination.
Below is a schedule of the activity for the year (in thousands):
June 30, June 30,
2021 Additions Reductions 2022
General Fund
Direct Advances $ 2,312 $ - $ - $ 2,312
Indirect Advances 6,567 - - 6,567
Land Sales 32,833 - - 32,833
Interest 30,884 279 - 31,163
Total General Fund 72,596 279 - 72,875
Sewer Fund
Direct Advances 300 1 - 301
Deferred Development Fees 187 1 - _ _ 188
Total Sewer Fund 487 2 - 489
Drainage Fund
Direct Advances 724 3 - 727
Deferred Development Fees 200 1 - 201
Total Drainage Fund 924 4 - 928
Park Acquisition and Development Fund
Direct Advances 5,960 23 - 5,983
Deferred Development Fees 442 2 - 444
Total Park Acquisition and Development Fund 6,402 25 - 6,427
Water Fund
Direct Advances 4,486 17 - 4,503
Total Water Fund 4,486 17 - 4,503
Total All Funds $ _._ 84,895 $ 327 $ - $ 85,222
488
120
,"IA.TINGTp
+� �p City of Huntington Beach
Notes to Financial Statements
Fi For the Year Ended June 30, 2022
yUUN NC�rA
16. COMMITMENTS AND CONTINGENCIES (Continued)
e. Low Moderate Income Housing Asset Fund Debt to City
In May 2009, a Promissory Note was issued by the Redevelopment Agency to the
City to pay for outstanding bonded debt related to the Emerald Cove Housing
Project. The note is secured by a pledge of Set-Aside Funds. Based on the
Promissory Note, the interest rate for the loan is 0% and the loan 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). On April 22, 2022, the Superior Court of
California issued a Proposed Judgment stating that this loan is considered an
enforceable obligation to be paid on the FY 2023-24 Recognized Obligation
Payment Schedule (ROPS). Below is a schedule of the activity for the year (in
thousands):
June 30, June 30,
2021 Additions Reductions 2022
General Fund
Emerald Cove $ 3,245 $ - $ - $ 3,245
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.
489
121
��✓�Nlirrcr y�
City of Huntington Beach
pi- ,--- . Notes to Financial Statements
For the Year Ended June 30, 2022
oQ
16. COMMITMENTS AND CONTINGENCIES (Continued)
On April 22, 2022, the Superior Court of California issued a Proposed Judgment
stating that the majority of the agreements between the City and the former
Redevelopment Agency were not considered enforceable obligations and that
repayment was not required, with the exception of the $22,400,000 loan for the
purchase of the Waterfront property and the Promissory Note related to the Emerald
Cove Housing Project. The DOF denied this obligation in a follow up letter to the
City dated August 24, 2022. The City has requested a hearing with the Court to
appeal this determination.
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.
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.
g. 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 3rd. The oil spill was declared
a State emergency by the Governor on October 4th, 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.
490
122
_
City of Huntington Beach
.� '
�tq Notes to Financial Statements
aV6�F o�' For the Year Ended June 30, 2022
zn
16. COMMITMENTS AND CONTINGENCIES (Continued)
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 was established to investigate the oil spill incident.
The City has submitted a claim for $653,259 with Amplify for lost revenues and
expenditures incurred for response efforts. The claim is still under review with
Amplify at this time.
h. 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 Appeal's 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.
17. OTHER INFORMATION
Fund and Accumulated Deficits
The following funds have total fund deficits at year-end (in thousands):
Governmental Fund:
Grant Special Revenue $ 4,311
Internal Service Fund:
Self Insurance Workers'Comp $ 26,708
Self Insurance General Liability $ 3,807
491
123
4 4) City of Huntington Beach
Notes to Financial Statements
-Z* A� For the Year Ended June 30, 2022
Z p�CoQ=
17. OTHER INFORMATION (Continued)
The Grant Special Revenue fund has a deficit due to expenditures incurred in
response to the COVID-19 pandemic that are currently under review for
reimbursement by the Federal Emergency Management Agency (FEMA). The Self
Insurance Workers' Compensation fund has a deficit due to increases in statutory
benefits related to workers' compensation claims and rising healthcare costs. The
Self Insurance General Liability fund has a deficit due to increases in claims
judgements, cost of litigation and rising number of lawsuits against the City. As
such, the City has set aside $3,650,000 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 deficits in the
Self Insurance Workers' Compensation and General Liability Internal Service
Funds.
•
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oi NGTpy
- City of Huntington Beach
Wl ���o� Notes to Required Supplementary Information
For the Year Ended June 30, 2022
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 28th of each year, each department submits data to the City Manager for
budget preparation. Staff prepares the budget by fund, function, and activity. The budget
includes information on past years, current year estimates and requested appropriations for the
next fiscal year. Before May 1st, the City Council receives the proposed budget. The City Council
holds public hearings and may amend the budget by a majority vote. Changes to the budget
must be within the available revenues and reserves.
These financial schedules show budgetary data for the General and Grants Special Revenue.
The original budget, revised budget, actual expenditures, and variance amounts are shown.
The City uses an encumbrance system as an aid in controlling expenditures. When the City
issues a purchase order for goods or services, it records an encumbrance until the vendor
delivers the goods or performs the service. At year-end, the City reports all outstanding
encumbrances as restricted, committed, or assigned fund balance in governmental fund types.
The City reappropriates these encumbrances into the new fiscal year.
The following pages present schedules of budget to actual comparison of the General and
Grants Special Revenue Fund's Revenues, and Expenditures and Changes in Fund Balance (in
thousands).
496
128
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
(In Thousands)
General Fund
Variance with
Final Budget
Positive
REVENUES Original Budget Final Budget Actual (Negative)
Property Taxes $ 93,213 $ 94,627 $ 94,627 $ -
Sales Taxes 44,641 53,362 53,362 -
Utility Taxes 16,884 19,528 19,528 -
Other Taxes 17,813 26,133 26,136 3
Licenses and Permits 7,779 8,668 8,666 (2)
Fines,Forfeitures and Penalties 3,794 5,144 5,144 -
Use of Money and Property 16,282 12,357 12,215 (142)
Intergovernmental 2,427 5,103 5,130 27
Charges for Current Service 24,502 29,533 29,364 (169)
Other 908 2,837 2,882 45
Total Revenues 228,243 257,292 257,054 (238)
EXPENDITURES
Current:
City Council 392 451 426 25
City Manager 3,673 5,423 4,616 807
City Treasurer 260 326 326 -
City Attorney 2,500 3,114 2,995 119
City Clerk 817 1,549 1,295 254
Finance 5,798 7,714 6,869 845
Community Development 9,075 12,702 10,716 1,986
Fire 47,192 60,643 60,643 -
Information Services 6,970 8,881 7,389 1,492
Police 75,659 91,970 91,970 -
Community Services 8,942 12,114 11,133 981
Library Services 4,864 6,731 6,014 717
Public Works 20,348 24,948 24,285 663
Debt Service:
Principal 1,750 2,946 2,917 29
Interest 158 324 260 64
Total Expenditures 188,398 239,836 231,854 7,982
Excess of Revenues Over Expenditures 39,845 17,456 25,200 7,744
OTHER FINANCING SOURCES(USES)
Transfers In 2,264 447 416 (31)
Leases(as Lessee) - - 448 448
Transfers Out (40,142) (17,878) (17,849) 29
Total Other Financing Sources(Uses) (37,878) (17,431) (16,985) 446
Net Change In Fund Balance 1,967 25 8,215 8,190
Fund Balance-Beginning of Year 94,609 94,609 94,609 -
Fund Balance-End of Year $ 96,576 $ 94,634 $ 102,824 $ 8,190
See Accompanying Notes to Required Supplementary Information 497
129
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
(In Thousands)
Grants Special Revenue
Variance with
Final Budget
Positive
REVENUES Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 96 $ 96
Intergovernmental 4,540 11,848 5,682 (6,166)
Total Revenues 4,540 11,848 5,778 (6,070)
EXPENDITURES
Current:
City Manager 6 32 13 19
City Clerk - 10 - 10
Finance - 370 359 11
Community Development 3,358 7,237 2,716 4,521
Fire - 2,353 2,164 189
Information Systems - 11 7 4
Police 742 3,242 1,856 1,386
Community Services 427 758 714 44
Library Services 69 294 202 92
Public Works 374 4,853 2,405 2,448
Total Expenditures 4,976 19,160 10,436 8,724
Excess of Revenues Over(Under)
Expenditures (436) (7,312) (4,658) 2,654
OTHER FINANCING USES
Transfers In - 1,966 1,104 (862)
Transfers Out ( 4) (4,391) (3,111) 1,280
Total Other Financing Sources(Uses) (54) (2,425) (2,007) 418
Net Change In Fund Balance (490) (9,737) (6,665) 3,072
Fund Balance-Beginning of Year 2,354 2,354 2,354 -
Fund Balance-End of Year $ 1,864 $ (7,383) $ (4,311) $ 3,072
See Accompanying Notes to Required Supplementary Information 498
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*
CaIPERS City Miscellaneous Plan-99
Measurement Period 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14
Total Pension Liability
Service cost $ 8,005 $ 7,779 $ 8,327 $ 8,314 $ 8,084 $ 7,436 $ 7,102 $ 7,263
Interest on total pension liability 42,217 41,058 40,150 38,769 37,749 37,194 35,653 34,412
Differences between expected and actual experience (891) (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 (33,392) (30,321) (28,508) (26,685) (25,312) (24,316) (23,377) (22,444)
Net change in total pension liability 15,939 12,429 19,786 14,722 42,135 21,386 7,913 19,231
Total pension liability-beginning 604,027 591,598 571,812 557,090 514,955 493,569 485,656 466,425
Total pension liability-ending(a) $ 619,966 $ 604,027 $ 591,598 $ 571,812 $ 557,090 $ 514,955 $ 493,569 $ 485,656
Plan Fiduciary Net Position
Contributions-employer $ 150,917 $ 16,879 $ 14,816 $ 13,495 $ 12,316 $ 10,982 $ 9,747 $ 9,066
Contributions-employee 3,450 3,630 3,779 3,649 3,869 3,736 3,790 3,909
Investment income 107,447 21,485 27,288 32,963 40,328 1,856 8,230 56,429
Administrative Expense (443) (609) (296) (614) (536) (226) (418) (472)
Benefit payments (33,392) (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 227,979 11,064 17,067 21,643 30,665 (7,968) (2,026) 46,488
Plan fiduciary net position-beginning 443,586 432,522 415,455 393,812 363,147 371,115 373,141 326,653
Plan fiduciary net position-ending(b) $ 671,565 $ 443,586 $ 432,522 $ 415,455 $ 393,812 $ 363,147 $ 371,115 $ 373,141
Net pension liability-beginning 160,441 159,076 156,357 163,278 151,808 122,454 112,515 139,771
Net pension liability(asset)-ending(a)-(b) $ (51,599) $ 160,441 $ 159,076 $ 156,357 $ 163,278 $ 151,808 $ 122,454 $ 112,515
Plan fiduciary net position as a percentage of the
total pension liability(asset) 108.32% 73.44% 73.11% 72.66% 70.69% 70.52% 75.19% 76.83%
Covered payroll $ 45,740 $ 45,952 $ 45,419 $ 45,431 $ 44,848 $ 44,365 $ 44,233 $ 41,142
Net pension liability as a percentage of covered
payroll N/A 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 on or before the Measurement Date.
However,offers of Two Years Additional Service Credit(a.k.a.Golden Handshakes)that occurred after the 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 2019 or 2021.In 2018,demographic assumptions and inflation rate were changed in accordance to the CaIPERS 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 eight years are shown.
*For covered employee payroll,the measurement period of July 1,2020 to June 30,2021 was used.
499
131
City of Huntington Beach
Required Supplementary Information(Unaudited)
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 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14
Total Pension Liability
Service cost $ 13,386 $ 13,226 $ 13,644 $ 13,509 $ 13,657 $ 12,159 $ 11,119 $ 11,096
Interest on total pension liability 56,114 54,597 53,048 51,223 49,350 48,390 46,160 44,246
Differences between expected and actual experience (3,882) (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 (44,362) (41,247) (38,958) (37,128) (34,222) (32,116) (30,535) (29,540)
Net change in total pension liability 21,256 21,855 26,514 26,531 58,318 31,111 14,870 25,802
Total pension liability-beginning 804,181 782,326 755,812 729,281 670,963 639,852 624,982 599,180
Total pension liability-ending(a) $ 825,437 $ 804,181 $ 782,326 $ 755,812 $ 729,281 $ 670,963 $ 639,852 $ 624,982
Plan Fiduciary Net Position
Contributions-employer $ 257,381 $ 25,848 $ 23,063 $ 21,058 $ 20,629 $ 18,703 $ 17,791 $ 15,152
Contributions-employee 4,395 4,355 4,337 4,164 4,570 4,058 4,110 3,850
Investment income 133,170 25,784 32,776 39,336 48,413 2,144 9,661 66,805
Administrative Expense (532) (731) (355) (736) (640) (270) (497) (555)
Benefit payments (44,362) (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) - - - -
Net change in plan fiduciary net position 350,052 14,009 20,877 25,293 38,750 (7,510) 530 55,712
Plan fiduciary net position-beginning 532,653 518,644 497,767 472,474 433,724 441,234 440,704 384,992
Plan fiduciary net position-ending(b) $ 882,705 $ 532,653 $ 518,644 $ 497,767 $ 472,474 $ 433,724 $ 441,234 $ 440,704
Net pension liability-beginning 271,528 263,682 258,045 256,807 237,239 198,618 184,278 214,188
Net pension liability(asset)-ending(a)-(b) $ (57,268) $ 271,528 $ 263,682 $ 258,045 $ 256,807 $ 237,239 $ 198,618 $ 184,278
Plan fiduciary net position as a percentage of the
total pension liability(asset) 106.94% 66.24% 66.30% 65.86% 64.79% 64.64% 68.96% 70.51%
Covered payroll $ 45,665 $ 43,783 $ 43,684 $ 43,371 $ 43,283 $ 42,619 $ 42,252 $ 38,397
Net pension liability as a percentage of covered
payroll N/A 620.17% 603.61% 594.97% 593.32% 556.65% 470.08% 479.93%
Notes to Schedule:
Benefit changes:the figures above include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the Measurement Date.However,
offers of Two Years Additional Service Credit(a.k.a.Golden Handshakes)that occurred after the 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 2019 or 2021.In 2018,demographic assumptions and inflation rate were changed in accordance to the CaIPERS 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 eight years are shown.
For covered employee payroll,the measurement period of July 1,2020 to June 30,2021 was used.
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132
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*
Supplemental Retirement Plan
Total Pension Liability 2021-22 2020-21 2019-20 2018-19 2017-18" 2016-17 2016-16 2014-15 2013-14
Service cost $ 299 $ 350 $ 338 $ 398 $ 344 $ 487 $ 552 $ 495 $ 544
Interest on total pension liability 3,897 4,292 3,954 3,990 2,964 3,976 3,945 3,919 3,828
Differences between expected and actual experience 492 - 4,594 - (794) - 982 - -
Changes in assumptions (1,638) 6,547 1,756 - 2,115 1,515 2,928 - -
Benefit payments,including refunds of employee contributions (5,668) (5,494) (5,012) (4,771) (3,388) (4,144) (3,773) (3,588) (3,548)
Net change in total pension liability (2,618) 5,695 5,630 (383) 1,241 1,834 4,634 826 824
Total pension liability-beginning 76,769 71,074 65,444 65,827 64,586 62,752 58,118 57,292 56,468
Total pension liability-ending(a) $ 74,151 $ 76,769 $ 71,074 $ 65,444 $ 65,827 $ 64,586 $ 62,752 $ 58,118 $ 57,292
Plan Fiduciary Net Position
Contributions-employer $ 6,006 $ 1,435 $ 3,506 $ 4,962 $ 3,507 $ 5,346 $ 7,277 $ 4,678 $ 4,539
Investment income (11,362) 15,717 2,114 2,582 2,128 6,373 4,282 (1,313) 3,465
Administrative Expense (338) (314) (444) (191) (145) (182) (189) (170) (176)
Benefit payments (5,668) (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 net position (11,362) 11,344 164 2,582 (1,686) 7,393 7,597 2,790 4,538
Plan fiduciary net position-beginning 70,361 59,017 58,853 56,271 57,957 50,564 42,967 40,177 35,639
Plan fiduciary net position-ending(b) $ 58,999 $ 70,361 $ 59,017 $ 58,853 $ 56,271 $ 57,957 $ 50,564 $ 42,967 $ 40,177
Net pension liability-beginning 6,408 12,057 6,591 9,556 6,629 12,188 15,151 17,115 20,829
Net pension liability-ending(a)-(b) $ 15,152 $ 6,408 $ 12,057 $ 6,591 $ 9,556 $ 6,629 $ 12,188 $ 15,151 $ 17,115
Plan fiduciary net position as a percentage of the
total pension liability 79.57% 91.65% 83.04% 89.93% 85.48% 89.74% 80.58% 73.93% 70.13%
Covered payroll $ 6,670 $ 7,684 $ 8,469 $ 12,863 $ 10,890 $ 17,167 $ 19,517 $ 22,069 $ 22,004
Net pension liability as a percentage of covered payroll 227.17% 83.39% 142.37% 51.24% 87.75% 38.61% 62.45% 68.65% 77.78%
• Fiscal year 2013/14 was the first year of implementation,therefore only nine years are shown.
"The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1,2017 to June 30,2018.
•
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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 2021 2020 2019 2018 2017
Total OPEB Liability
Service cost $ 1,120 $ 1,096 $ 1,241 $ 1,205 $ 877
Interest on the total OPEB liability 2,119 2,064 1,859 1,787 1,293
Actual and expected experience difference (6,296) - 1,411 - -
Changes in assumptions 1,603 (298) (3,358) - -
Benefit payments (2,129) (1,848) (1,742) (1,683) (1,036)
Net change in total OPEB liability (3,583) 1,014 (589) 1,309 1,134
Total OPEB liability-beginning 33,859 32,845 33,434 32,125 30,991
Total OPEB liability-ending(a) $ 30,276 $ 33,859 $ 32,845 $ 33,434 $ 32,125
Plan Fiduciary Net Position
Contribution-employer" $ 1,882 $ 1,959 $ 2,270 $ 4,191 $ 1,036
Net investment income 6,025 1,580 1,901 1,126 471
Benefit payments (2,129) (1,848) (1,742) (1,683) (1,036)
Administrative expense (131) (245) (61) (131) (9)
Net change in plan fiduciary net position 5,647 1,446 2,368 3,503 462
Plan fiduciary net position-beginning 30,639 29,193 26,825 23,322 22,860
Plan fiduciary net position-ending(b) $ 36,286 $ 30,639 $ 29,193 $ 26,825 $ 23,322
Net OPEB liability(asset)-ending(a)-(b) $ (6,010) $ 3,220 $ 3,652 $ 6,609 $ 8,803
Plan fiduciary net position as a percentage of the total OPEB liability(asset) 119.85% 90.49% 88.88% 80.23% 72.60%
Covered employee payroll $ 70,881 $ 76,521 $ 79,682 $ 81,458 $ 60,985
Net OPEB liability as a percentage of covered employee payroll N/A 4.21% 4.58% 8.11% 14.43%
Notes to Schedule:
*Fiscal year 2017/18 was the first year of implementation,therefore only five years of information are shown.
**Contributions to the OPEB plan are not based on employee pay.
502
134
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30,2022
(in Thousands)
Last Ten Fiscal Years*
CaIPERS City Miscellaneous Plan-99
•
2021-221 2020-21 1 2019-201 2018-19 1 2017-18 1'2 2016-171 2015-16 I 2014-15 1 2013-141
Actuarially determined contribution $ 6,951 $ 18,086 $ 16,878 $ 14,819 $ 9,734 $ 11,921 $ 11,238 $ 10,510 $ 8,685
Contributions in relation to the actuarially
determined contributions (6,951) (18,086) (16,878) (14,819) (9,734) (11,921) (11,238) (10,510) (8,685)
Contribution deficiency(excess) $ - $ - $ - $ - $ - $ - $ - $ - $
Covered payroll $ 46,824 $ 45,740 $ 45,952 $ 45,419 $ 33,210 $ 45,118 $ 44,253 $ 46,337 $ 43,327
Contributions as a percentage of covered payroll 14.84% 39.54% 36.73% 32.63% 29.31% 26.42% 25.39% 22.68% 20.05%
Historical information is required only for measurement periods for which GASB 68 is applicable.
2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1,2017 to June 30,2018.
Notes to Schedule
Valuation date:6/30/2012 through 06/30/2019
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 30,2021.
Asset valuation method For 10/1/14-6/30/15,15 Year Smoothed Market(for details,see June 30,2012 Funding Valuation Report).For 7/1/15-6/30/21,Fair
Value(for details,see the Funding Valuation Reports for the years ended June 30,2013-2021).
Inflation 2.75%for 10/1/2013-6/30/2019,2.50%for 7/1/2019-6/30/2020,and 2.80%for 7/1/2020-6/30/2021.
Salary increases Varies by entry age and service
Payroll growth 2.75%for 10/1/2013-6/30/2020,and 2.80%for 7/1/2020-6/30/2021.
Discount Rate The prescribed discount rate assumption,adopted by the board on November 17,2021,is 6.80 percent compounded annually(net
of investment and administrative expenses)as of June 30,2021.
Retirement age For 10/1/13-6/30/16,the probabilities of retirement are based on the 2014 CaIPERS Experience study for the period from 1997 to
2007.For 7/1/16-6/30/19,the probabilities of retirement are based on the 2014 CaIPERS Experience study for the period from
1997 to 2011.For 7/1/19-6/30/20,the probabilities of Retirement are based on the 2017 CaIPERS Experience Study for the period
from 1997 to 2015.
Mortality For 10/1/13-6/30/16,the probabilities of mortality are based on the 2010 CaIPERS Experience Study for the period from 1997 to
2007.For 7/1/16-6/30/19,the probabilities of mortality are based on the 2014 CaIPERS Experience Study for the period from 1997
to 2011. For 7/1/16-6/30/18,Pre-retirement and Post-retirement mortality rates include 5 years of projected mortality improvement
using Scale AA published by the Society of Actuaries. For 7/1/18-6/30/19,Pre-retirement and Post-retirement mortality rates
include 20 years of projected mortality improvement using Scale BB published by the Society of Actuaries.For 7/1/19-6/30/21,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-2016 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
gains/losses.These changes will apply only to new UAL bases established on or after June 30,2019.
•
503
135
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30,2022
(in Thousands)
Last Ten Fiscal Years*
CaIPERS City Safety Plan-100
2021-221 2020-21 1 2019-201 2018-191 2017-18 1.2 2016-171 2015-161 2014-151 2013-141
Actuarially determined contribution $ 13,579 $ 27,691 $ 25,847 $ 23,062 $ 15,223 $ 19,468 $ 19,129 $ 18,125 $ 14,759
Contributions in relation to the actuarially
determined contributions (13,579) (27,691) (25,847) (23,062) (15,223) (19,468) (19,129) (19,125) (14,759)
Contribution deficiency(excess) $ - $ - $ - $ - $ - $ - $ - $ (1,000) $
Covered payroll $48,023 $ 45,665 $ 43,783 $43,684 $ 31,943 $43,269 $ 42,607 $ 44,055 $ 41,167
Contributions as a percentage of covered payroll 28.28% 60.64% 59.03% 52.79% 47.66% 44.99% 44.90% 43.41% 35.85%
1 Historical information is required only for measurement periods for which GASB 68 is applicable.
2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1,2017 to June 30,2018.
Notes to Schedule
Valuation date:6/30/2012 through 06/30/2019
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 30,2021.
Asset valuation method For 10/1/14-6/30/15,15 Year Smoothed Market(for details,see June 30,2012 Funding Valuation Report).For 7/1/15-
6/30/21,Fair Value(for details,see the Funding Valuation Reports for the years ended June 30,2013-2021).
Inflation 2.75%for 10/1/2013-6/30/2019,2.50%for 7/1/2019-6/30/2020,and 2.80%for 7/1/2020-6/30/2021.
Salary increases Varies by entry age and service.
Payroll growth 2.75%for 10/1/2013-6/30/2020,and 2.80%for 7/1/2020-6/30/2021.
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 30,2021.
Retirement age For 10/1/13-6/30/16,the probabilities of retirement are based on the 2014 CaIPERS Experience study for the period from
1997 to 2007. For 7/1/16-6/30/19,the probabilities of retirement are based on the 2014 CalPERS Experience study for
the period from 1997 to 2011.For 7/1/19-6/30/20,the probabilities of Retirement are based on the 2017 CaIPERS
Experience Study for the period from 1997 to 2015.
Mortality For 10/1/13-6/30/16,the probabilities of mortality are based on the 2010 CaIPERS Experience Study for the period from
1997 to 2007.For 7/1/16-6/30/19,the probabilities of mortality are based on the 2014 CaIPERS Experience Study for the
period from 1997 to 2011. For 7/1/16-6/30/18,Pre-retirement and Post-retirement mortality rates include 5 years of
projected mortality improvement using Scale AA published by the Society of Actuaries. For 7/1/18-6/30/19,Pre-retirement
and Post-retirement mortality rates include 20 years of projected mortality improvement using Scale BB published by the
Society of Actuaries.For 7/1/19-6/30/21,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-2016 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 gains/losses.These changes will apply only to new UAL bases established on or after June 30,2019.
504
136
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30,2022
(in Thousands)
Last Ten Fiscal Years*
Supplemental Retirement Plan
2021-22 1 2020-21 1 2019-20 1 2018-19' 2017-18 1,2 2016-17 1 2015-16 1 2014-15 1 2013-14'
Actuarially determined contribution $ 889 $ 933 $ 1,689 $ 2,258 $ 2,879 $ 3,895 $ 3,576 $ 3,634 $ 4,534
Contributions in relation to the actuarially
determined contributions (6,006) (1,435) (3,506) (4,962) (3,507) (5,346) (7,277) (4,678) (4,539)
Contribution deficiency(excess) $ (5,117) $ (502) $ (1,817) $ (2,704) $ (628) $ (1,451) $ (3,701) $ (1,044) $ (5)
Covered payroll $ 6,670 $ 7,684 $ 8,469 $ 12,863 $ 10,890 $ 17,167 $ 19,517 $ 22,069 $ 22,004
Contributions as a percentage of covered payroll 90.04% 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 GASB 68 is applicable.
2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine-month reporting period from October 1,2017 to June 30,2018.
Notes to Schedule
Valuation date: 6/30/2021 6/30/2019 6/30/2019 9/30/2017 9/30/2017 9/30/2015 9/30/2013 9/30/2013 9/30/2011
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry Age Normal,Level Percentage of Payroll
9/30/12 UAAL:fixed 10-year period,Gains/Losses:fixed 15-year period,Discount rate change loss:10-year period,6/30/18 UAAL:fixed
Amortization method/period 5-year period fresh start.19-year closed period for 2021/2022. Level dollar amortization.
Asset valuation method Investment gains/losses spread over a 5-year rolling period.
Inflation 3%for 10/1/2013-6/30/2020 and 2.50%per annum for 7/1/2020-6/30/2022.
Salary increases Aggregate-2.75%annually.Merit-CaIPERS 1997-2015 Experience Study.
Payroll growth Merit-CaIPERS 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 1,2021-June 30,2022 period.
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-June 30,2022
Investment rate of return measurement period.
Retirement age The probabilities of retirement are based on the CaIPERS 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 1,2021 to
June 30,2022 measurement period.
Schedule of Money Weighted Rate of Return
2022 2021 2020 2019 20182 2017 2016 2015 2014
Annual Money Weighted Rate of Return,net
of investment expense -15.97% 26.88% 3.79% 4.79% 4.04% 12.87% 10.20% -2.82% 9.20%
'Historical information is required only for measurement periods for which GASB 68 is applicable.
2 The 2017-18 period reflects nine months of activity only as the fiscal year change resulted in a nine month reporting period from October 1,2017 to June 30,2018.
505
137
City of Huntington Beach
Required Supplementary Information
Schedule of Contributions
For the Year Ended June 30,2022
(in Thousands)
Last Ten Fiscal Years*
Other Post Employment Benefits Plan
Fiscal Year Ended June 30 2022 2021 2020 2019 2018**
Actuarially Determined Contribution(ADC) $ 1,401 $ 1,364 $ 1,793 $ 1,746 $ 2,022
Contributions in relation to the ADC*** (2.4991 (1,882) (1.959) (2,270) (4,192)
Contribution deficiency(excess) $ (1,098) $ (51) $ (166) $ _ (524) $ (2,170)
Covered-employee payroll** $ 72,524 $ 70,881 $ 76,521 $ 79,682 $ 59,589
Contributions as a percentage of covered-employee payroll 3.45% 2.66% 2.56% 2.85% 7.03%
Notes to Schedule:
Valuation date: 6/30/2021 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 19-year fixed period
Asset Valuation Method Investment gains and losses spread over 5-year rolling period.
Inflation 3%for 10/1/17-6/30/18 and 2.75%per annum for the measurement period 7/1/2018 to 6/30/2022.
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 30,2020.5.50%for the July 1,
2020-June 30,2021 period.Assumes investing in California Employers'Retiree Benefit Trust asset allocation
Strategy 3,moving to Strategy 2 beginning 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 6/30/21.
Mortality Pre-retirement mortality probability based on 2014 CaIPERS 1997-2011 Experience Study covering CaIPERS
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.
506
138
SUPPLEMENTARY INFORMATION
507
139
�"�NTINGT�
f�I V9
L =
1= City of Huntington Beach
COUNTI � 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 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 Housing In-Lieu Fund accounts for the Affordable Housing In-Lieu Fee from developers of housing
projects who have elected to pay the fee in-lieu of building the affordable housing in their project.
• The Infrastructure Fund records activity for certain designate infrastructure related expenditures.
• The Lease Capital Project Fund records activity for capital lease project expenditures.
• The Parking In-Lieu Fund records construction activity from developers who pay fees in-lieu of directly providing
parking facilities to the City.
• The Sewer Development Fund accounts for fees received from developers to construct and maintain sewer
facilities.
• The Technology Fund accounts for technology infrastructure project expenditures.
508
140
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30,2022
(In Thousands)
SPECIAL REVENUE FUNDS
Development Disability Strand Parking
ASSETS Air Quality Impact Fee Access Drainage Structures Gas Tax
Cash and Investments $ 1,148 $ 10,615 $ 342 $ 3,476 $ 3,970 $ 5,964
Taxes Receivable - - - - - 963
Other Receivables 69 32 1 11 12 18
Prepaids 133 - - - - -
Total Assets 1,350 10,647 343 3,487 3,982 6,945
LIABILITIES
Accounts Payable 71 991 2 1 154 1,300
Accrued Payroll - _ - - - - - 48
Total Liabilities 71 991 2 1 154 1,348
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue 65 - - - - -
Total Deferred Inflows of Resources 65 - - - - -
FUND BALANCES
Restricted
Pollution Remediation - - - - - -
Highways,Streets and Transportation - - - - - 5,597
Low Income Housing - - - - - -
Air Quality 1,214 - - - - -
Other Capital Projects - 9,656 - 3,486 - -
Other Purposes - - 341 - - -
Committed
Parks - - - - - -
Other Purposes - - - - 3,828 -
Total Fund Balances 1,214 9,656 341 3,486 3,828 5,597
Total Liabilities,Deferred Inflows
of Resources and Fund Balances $ 1,350 $ 10,647 $ 343 $ 3,487 $ 3,982 $ 6,945
509
141
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30,2022
(In Thousands)
(continued)
SPECIAL REVENUE FUNDS
Traffic
Housing Park Acquisition ELM Automation Congestion Traffic Impact Total Special
Residual Receipt and Development Surf City"3" Fund Relief Fee Transportation Revenue Funds
$ 1,271 $ 1,455 $ 1,245 $ 274 $ 2,246 $ 2,651 $ 2,692 $ 37,349
131 - 99 - 749 1,942
4 183 4 1 7 8 8 358
- - - - - 133
1,275 1,638 1,380 275 2,352 2,659 3,449 39,782
-
26 22 - 175 12 162 2,916
- - - 8 _ - - 71 127
-
26 22 8 175 12 233 3,043
- - - - - - - 65
- - - - - - - 65
355 - 355
- - - - 2,177 2,647 3,216 13,637
1,275 - - - - - - 1,275
- - - - - - 1,214
-
- _ - - - 13,142
-
1,358 267 - - -
1,966
1,257 - - - - -
1,257
- - - - - - 3,828
1,275 1,612 1,358 267 2,177 2,647 3,216 36,674
$ 1,275 $ 1,638 $ 1,380 $ 275 $ 2,352 $ 2,659 $ 3,449 $ 39,782
510
142
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30,2022
(In Thousands)
(continued)
DEBT SERVICE FUNDS CAPITAL PROJECT FUNDS
Public Financing Total Debt Service Affordable Housing
ASSETS Authority Fund In-Lieu Infrastructure
Cash and Investments $ 3,347 $ 3,347 $ 4,376 $ 21,524
Cash and Investments with Fiscal Agent 1,087 1,087 - -
Taxes Receivable - - - -
Other Receivables - - 165 58
Prepaids - - - -
Total Assets 4,434 4,434 4,541 _ 21,582
LIABILITIES
Accounts Payable 2 2 - 997
Accrued Payroll - - - 100
Total Liabilities 2 2 - 1,097
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue - - - -
Total Deferred Inflows of Resources - - - -
FUND BALANCES
Restricted
Pollution Remediation - - - -
Debt Service 4,432 4,432 - -
Highways,Streets and Transportation - - - -
Low Income Housing - - 4,541 -
Air Quality - - - -
Other Capital Projects - - - -
Other Purposes - - - -
Committed
Parks - - - -
Other Capital Projects - - - 20,485
Other Purposes - - - -
Assigned
Capital Improvement Reserve - - - -
Total Fund Balances 4,432 4,432 4,541 20,485
Total Liabilities,Deferred Inflows
of Resources and Fund Balances $ 4,434 $ 4,434 $ 4,541 $ 21,582
511
143
CITY OF HUNTINGTON BEACH
COMBINING BALANCE SHEET
OTHER GOVERNMENTAL FUNDS
June 30,2022
(In Thousands)
(continued)
CAPITAL PROJECT FUNDS
Total Capital Projects Total Other
Lease Capital Project Parking In-Lieu Sewer Development Technology Funds Governmental Funds
$ 3 $ 720 $ 2,880 $ 3,012 $ 32,515 $ 73,211
8,751 - - - 8,751 9,838
- - - - - 1,942
6 3 9 10 251 609
867 - - 867 1,000
9,627 723 2,889 3,022 42,384 86,600
- 4 619 1 1,621 4,539
- - - - 100 _ 227
- 4 619 1 1,721 4,766
- - - - - 65
- - - - - 65
- - - - - 355
- - - - - 4,432
- - - - - 13,637
- - - - 4,541 5,816
- - - - - 1,214
9,627 - - - 9,627 22,769
- - - - - 1,966
- - - - - 1,257
- 719 2,270 - 23,474 23,474
- - - - - 3,828
- - - 3,021 3,021 3,021
9,627 719 2,270 3,021 40,663 81,769
$ 9,627 $ 723 $ 2,889 $ 3,022 $ 42,384 $ 86,600
512
144
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30,2022
(In Thousands)
SPECIAL REVENUE FUNDS
Strand
Development Disability Parking
REVENUES Air Quality Impact Fee Access Drainage Structures Gas Tax
Sales Taxes $ - $ - $ - $ - $ - $ -
Other Taxes - - - - - 7,066
Licenses and Permits - - 70 - - -
Use of Money and Property(Loss) 12 101 2 (198) 1,529 -
Intergovernmental 189 - - - - 46
Charges for Current Service - 733 - 963 - -
Other - _ - - - - -
Total Revenues 201 834 72 765 1,529 7,112
EXPENDITURES
Current:
City Manager - - - - - -
Community Development - - - - 917 -
Fire - 73 - - - -
Finance - - 22 - - -
Information Systems - - - - - -
Police - 150 - - - -
Community Services - 5,171 - - - -
Library Services - 84 - - - -
Public Works 505 - - 1 - 4,271
Total Expenditures 505 5,478 22 1 917 4,271
Excess Of Revenues Over
(Under)Expenditures (304) (4,644) 50 764 612 2,841
Other Financing Sources(Uses):
Transfers In - - - - - 157
Transfers Out - - - - (400) (70) .
Total Other Financing Sources(Uses) - - - - (400) 87
Net Change in Fund Balances (304) (4,644) 50 764 212 2,928
Fund Balances-Beginning of Year 1,518 14,300 291 2,722 3,616 2,669
Fund Balances-End of Year $ 1,214 $ 9,656 $ 341 $ 3,486 $ 3,828 $ 5,597
513
145
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30,2022
(In Thousands)
(continued)
SPECIAL REVENUE FUNDS
Traffic
Housing Park Acquisition ELM Automation Congestion Traffic Impact Total Special
Residual Receipt and Development Surf City"3" Fund Relief Fee Transportation Revenue Funds
$ - $ - $ - $ - $ - $ - $ 4,290 $ 4,290
- - 518 - - - - 7,584
- - - - - - - 70
12 (89) 13 (17) 16 19 30 1,430
- - - - 1,557 - - 1,792
- 1,157 - 411 - 143 - 3,407
14 - - - - - - 14
26 1,068 531 394 1,573 162 4,320 18,587
- - 636 - - - - 636
2 - - - - - - 919
- - - - - - - 73
- - - - - - - 22
- - - 394 - - - 394
- - - - - - - 150
- 1,200 - - - - - 6,371
- - - - - - - 84
- - - - 1,447 507 3,928 10,659
2 1,200 636 394 1,447 507 3,928 19,308
24 (132) (105) - 126 (345) 392 (721)
- - 3 - 16 97 7 280
- - - - - (27) - (497)
- - 3 - 16 70 7 (217)
24 (132) (102) - 142 (275) 399 (938)
1,251 1,744 1,460 267 2,035 2,922 2,817 37,612
$ 1,275 $ 1,612 $ 1,358 $ 267 $ 2,177 $ 2,647 $ 3,216 $_ _ 36,674
514
146
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30,2022
(In Thousands)
(continued) -
DEBT SERVICE FUNDS CAPITAL PROJECT FUNDS
Public Financing Total Debt Service Affordable Housing
REVENUES Authority Funds In-Lieu Infrastructure
Sales Taxes $ - $ - $ - $ -
Other Taxes - - - -
Licenses and Permits - - 794 -
Use of Money and Property(Loss) 3 3 134 32
Intergovernmental - - 235 209
Charges for Current Service - - - -
Other - - - 11
Total Revenues 3 3 1,163 252
EXPENDITURES
Current:
City Manager - - - -
Community Development - - - -
Fire - - - -
Finance 7 7 - -
Information Systems - - - -
Police - - - -
Community Services - - - 237
Library Services - - - -
Public Works - - - 10,645
Debt Service:
Principal 2,180 2,180 - -
Interest 780 780 - -
Total Expenditures 2,967 2,967 - 10,882
Excess Of Revenues Over
(Under)Expenditures (2,964) (2,964) 1,163 (10,630)
Other Financing Sources(Uses):
Transfers In 2,961 2,961 1,931 14,050
Issuance of Long-Term Debt - - - -
Transfers Out - - - -
Total Other Financing Sources(Uses) 2,961 2,961 1,931 14,050
Net Change in Fund Balances (3) (3) 3,094 3,420
Fund Balances-Beginning of Year 4,435 4,435 1,447 17,065
Fund Balances-End of Year $ 4,432 $ 4,432 $ 4,541 $ 20,485
515
147
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30,2022
(In Thousands)
(continued)
CAPITAL PROJECT FUNDS
Total Capital Projects Total Other
Lease Capital Project Parking In-Lieu Sewer Development Technology Funds Governmental Funds
$ - $ - $ - $ - $ - $ 4,290
- - - - 7,584
66 - - 860 930
6 - (179) (178) (185) 1,248
- 12 - 456 2,248
- - 367 - 367 3,774
- - - - 11 25
6 66 200 (178) 1,509 20,099
- - - - 636
-
5 - - 5 924
- - - - - 73
- - - - 29
- - - 81 81 475
- - - - - 150
- - - - 237 6,608
- - - - - 84
- - 2,164 - 12,809 23,468
- - - - - 2,180
- - - - - 780
-
5 2,164 81 13,132 35,407
6 61 (1,964) (259) (11,623) (15,308)
- - - - 15,981 19,222
868 - - - 868 868
- - _ - (497)
868 - - - 16,849 19,593
874 61 (1,964) (259) 5,226 4,285
8,753 658 4,234 3,280 35,437 77,484
$ 9,627 $ 719 $ 2,270 $ 3,021 $ 40,663 $ 81,769
516
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 30,2022
(In Thousands)
Air Quality
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 12 $ 12
Intergovernmental 250 250 189 _ (61)
Total Revenues 250 250 201 (49)
EXPENDITURES:
Current:
Public Works 532 1,099 505 594
Total Expenditures 532 1,099 505 594
Net Change in Fund Balance (282) (849) (304) 545
Fund Balance-Beginning of Year 1,518 1,518 1,518 -
Fund Balance-End of Year $ 1,236 $ 669 $ 1,214 $ 545
Development Impact Fee
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 101 $ 101
Charges for Current Service 356 356 733 377
Total Revenues 356 356 834 478
EXPENDITURES:
Current:
Fire - 900 73 827
Police 1,124 1,607 150 1,457
Community Services 3,782 8,812 5,171 3,641
Library Services 300 422 84 338
Debt Service:
Principal 11 11 - 11
Total Expenditures 5,217 11,752 5,478 6,274
Net Change in Fund Balance (4,861) (11,396) (4,644) 6,752
Fund Balance-Beginning of Year 14,300 14,300 14,300 -
Fund Balance-End of Year $ 9,439 $ 2,904 $ 9,656 $ 6,752
Disability Access
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Licenses and Permits $ 84 $ 84 $ 70 $ (14)
Use of Money and Property - - 2 2
Total Revenues 84 84 72 (12)
EXPENDITURES:
Current:
Finance 84 84 22 62
Total Expenditures 84 84 22 62
Net Change in Fund Balance - - 50 50
Fund Balance-Beginning of Year 291 291 291 -
Fund Balance-End of Year $ 291 $ 291 $ 341 $ 50
517
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 30,2022
(In Thousands)
Drainage
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property(Loss) $ - $ - $ (198) $ (198)
Charges for Current Service 200 200 963 763
Total Revenues 200 200 765 565
EXPENDITURES:
Current:
Public Works 825 989 1 988
Total Expenditures 825 989 1 988
Net Change in Fund Balance (625) (789) 764 1,553
Fund Balance-Beginning of Year 2,722 2,722 2,722 -
Fund Balance-End of Year $ 2,097 $ 1,933 $ 3,486 $ 1,553
Strand Parking Structure
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ 1,450 $ 1,450 $ 1,529 $ 79
Total Revenues 1,450 1,450 1,529 79
EXPENDITURES:
Current:
Community Development 1,093 1,205 917 _ 288
Total Expenditures 1,093 1,205 917 288
OTHER FINANCING SOURCES(USES):
Transfers Out (400) (400) (400) -
Total Other Financing Sources(Uses) (400) (400) (400) -
Net Change in Fund Balance (43) (155) 212 367
Fund Balance-Beginning of Year 3,616 3,616 3,616 _ -
Fund Balance-End of Year $ 3,573 $ 3,461 $ 3,828 $ 367
Gas Tax
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Other Taxes $ 7,257 $ 7,257 $ 7,066 $ (191)
Intergovernmental - - 46 46
Total Revenues 7,257 7,257 7,112 _ (145)
EXPENDITURES:
Current:
Public Works 8,748 9,916 4,271 5,645
Total Expenditures 8,748 9,916 4,271 5,645
OTHER FINANCING SOURCES(USES):
Transfers In - 157 157 -
Transfers Out (128) (70) (70) -
Total Other Financing Sources(Uses) (128) 87 87 -
Net Change in Fund Balance (1,619) (2,572) 2,928 5,500
Fund Balance-Beginning of Year 2,669 2,669 2,669 -
Fund Balance-End of Year $ 1,050 $ 97 $ 5,597 $ 5,500
518
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 30,2022
(In Thousands)
Housing Residual Receipt
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 12 $ 12
Other 32 32 14 (18)
Total Revenues 32 32 26 (6)
EXPENDITURES:
Current:
Community Development 32 32 2 30
Total Expenditures 32 32 2 30
Net Change in Fund Balance - - 24 24
Fund Balance-Beginning of Year 1,251 1,251 1,251 -
Fund Balance-End of Year $ 1,251 $ 1,251 $ 1,275 $ 24
Park Acquisition and Development
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property(Loss) $ - $ - $ (89) $ (89)
Charges for Current Service 268 268 1,157 889
Total Revenues 268 268 1,068 800
EXPENDITURES:
Current:
Community Services • 260 1,626 1,200 426
Total Expenditures 260 1,626 1,200 426
Net Change in Fund Balance 8 (1,358) (132) 1,226
Fund Balance-Beginning of Year 1,744 1,744 1,744 -
Fund Balance-End of Year $ 1,752 $ 386 $ 1,612 $ 1,226
Surf City"3"
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Other Taxes $ 510 $ 510 $ 518 $ 8
Use of Money and Property - - 13 13
Total Revenues 510 510 531 21
EXPENDITURES:
Current:
City Manager 501 _ 787 636 151
Total Expenditures 501 787 636 151
OTHER FINANCING SOURCES(USES):
Transfers In - 3 3 -
Total Other Financing Sources(Uses) - 3 3 -
Net Change in Fund Balance 9 (274) (102) 172
Fund Balance-Beginning of Year 1,460 1,460 1,460 -
Fund Balance-End of Year $ 1,469 $ 1,186 $ 1,358 $ 172
519
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 30,2022
(In Thousands)
ELM Automation Fund
Variance with •
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property(Loss) $ - $ - $ (17) $ (17)
Charges for Current Service 360 360 411 51
Total Revenues 360 360 394 34
EXPENDITURES:
Current:
Information Systems 410 437 394 43
Total Expenditures 410 437 394 43
OTHER FINANCING SOURCES(USES):
Transfers Out (18) - - -
Total Other Financing Sources(Uses) (18) - - -
Net Change in Fund Balance (68) (77) - 77
Fund Balance-Beginning of Year 267 267 267 -
Fund Balance-End of Year $ 199 $ 190 $ 267 $ 77
Traffic Congestion Relief
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 16 $ 16
Intergovernmental 1,800 1,800 1,557 (243)
Total Revenues 1,800 1,800 1,573 (227)
EXPENDITURES:
Current:
Public Works 1,840 3,465 1,447 2,018
Total Expenditures 1,840 3,465 1,447 2,018
OTHER FINANCING SOURCES(USES):
Transfers In - 16 16 -
Total Other Financing Sources(Uses) - 16 16 -
Net Change in Fund Balance (40) (1,649) 142 1,791
Fund Balance-Beginning of Year 2,035 2,035 2,035 -
Fund Balance-End of Year $ 1,995 $ 386 $ 2,177 $ 1,791
Traffic Impact Fee
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 19 $ 19
Charges for Current Service 100 100 143 43
Total Revenues 100 100 162 62
EXPENDITURES: ,
Current:
Public Works 1,690 2,149 507 1,642
Total Expenditures 1,690 2,149 507 1,642
OTHER FINANCING SOURCES(USES):
Transfers In - 97 97 -
Transfers Out - (27) (27) _ -
Total Other Financing Sources(Uses) - 70 70 -
Net Change in Fund Balance (1,590) (1,979) (275) 1,704
Fund Balance-Beginning of Year 2,922 2,922 2,922 -
Fund Balance-End of Year $ 1,332 $ 943 $ 2,647 $ 1,704
520
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 30,2022
(In Thousands)
Transportation
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Sales Taxes $ 3,016 $ 3,016 $ 4,290 $ 1,274
Use of Money and Property - - 30 30
Total Revenues 3,016 3,016 4,320 1,304
EXPENDITURES:
Current:
Public Works 2,128 6,500 3,928 2,572
Total Expenditures 2,128 6,500 3,928 2,572
OTHER FINANCING SOURCES(USES):
Transfers In - 7 7 -
Transfers Out (191) - - -
Total Other Financing Sources(Uses) (191) 7 7 -
Net Change in Fund Balance 697 (3,477) 399 3,876
Fund Balance-Beginning of Year 2,817 2,817 2,817 -
Fund Balance-End of Year $ 3,514 $ (660) $ 3,216 $ 3,876
Public Financing Authority
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 3 $ 3
Total Revenues - - 3 3
EXPENDITURES:
Current:
Finance 12 12 7 5
Debt Service:
Principal 2,180 2,180 2,180 -
Interest 780 780 780 -
Total Expenditures 2,972 2,972 2,967 5
OTHER FINANCING SOURCES(USES):
Transfers In 3,376 3,376 2,961 (415)
Total Other Financing Sources(Uses) 3,376 3,376 2,961 (415)
Net Change in Fund Balance 404 404 (3) (407)
Fund Balance-Beginning of Year 4,435 4,435 4,435 -
Fund Balance-End of Year $ 4,839 $ 4,839 $ 4,432 $ (407)
Affordable Housing In-Lieu
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Licenses and Permits $ 873 $ 873 $ 794 $ (79)
Use of Money and Property - - 134 134
Intergovernmental _ - - 235 235
Total Revenues 873 873 1,163 290
OTHER FINANCING SOURCES(USES):
Transfers In - 1,931 1,931 -
Total Other Financing Sources(Uses) - 1,931 1,931 -
Net Change in Fund Balance 873 2,804 3,094 290
Fund Balance-Beginning of Year 1,447 1,447 1,447 -
Fund Balance-End of Year $ 2,320 $ 4,251 $ 4,541 $ 290
521
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 30,2022
(In Thousands)
Infrastructure
Variance with
Final Budget
' Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 32 $ 32
Intergovernmental - - 209 209
Other - - 11 11
Total Revenues - - 252 252
EXPENDITURES:
Current:
Community Services 158 533 237 296
Public Works 17,285 27,420 10,645 16,775
Total Expenditures 17,443 27,953 10,882 17,071
OTHER FINANCING SOURCES(USES):
Transfers In 11,500 14,050 14,050 -
Transfers Out (222) - - -
Total Other Financing Sources(Uses) 11,278 14,050 14,050 -
Net Change in Fund Balance (6,165) (13,903) 3,420 17,323
Fund Balance-Beginning of Year 17,065 17,065 17,065 -
Fund Balance-End of Year $ 10,900 $ 3,162 $ 20,485 $ 17,323
Lease Capital Project
Variance with
Final Budget
Positive
EXPENDITURES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ - $ - $ 6 $ 6
Total Revenues - - 6 6
EXPENDITURES:
Current:
Fire - 9,618 - 9,618
Total Expenditures - 9,618 - 9,618
OTHER FINANCING SOURCES(USES):
Issuance of Long-Term Debt - 868 868 -
Total Other Financing Sources(Uses) - 868 868 -
Net Change in Fund Balance - (8,750) 874 9,624
Fund Balance-Beginning of Year 8,753 8,753 8,753 -
Fund Balance-End of Year $ 8,753 $ 3 $ 9,627 $ 9,624
Parking In-Lieu
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Licenses and Permits $ 67 $ 67 $ 66 $ (1)
Total Revenues 67 67 66 (1)
EXPENDITURES:
Current:
Community Development 60 90 5 85
Total Expenditures 60 90 5 85
Net Change in Fund Balance 7 (23) 61 84
Fund Balance-Beginning of Year 658 658 658 -
Fund Balance-End of Year $ 665 $ 635 $ 719 $ 84
522
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 30,2022
(In Thousands)
Sewer Development
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property(Loss) $ - $ - $ (179) $ (179)
Intergovernmental 12 12 12 -
Charges for Current Service 88 _ 88 367 _ 279
Total Revenues 100 100 200 100
EXPENDITURES:
Current:
Public Works _ 700 4,063 2,164 1,899
Total Expenditures 700 4,063 2,164 1,899
Net Change in Fund Balance (600) (3,963) (1,964) 1,999
Fund Balance-Beginning of Year 4,234 4,234 4,234 -
Fund Balance-End of Year $ 3,634 $ 271 $ 2,270 $ 1,999
Technology
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property(Loss) $ - $ - $ (178) $ (178)
Total Revenues - - (178) (178)
EXPENDITURES:
Current:
Information Systems - 2,176 81 _ 2,095
•
Total Expenditures - 2,176 81 2,095
Net Change in Fund Balance - (2,176) (259) 1,917
Fund Balance-Beginning of Year 3,280 3,280 3,280 -
Fund Balance-End of Year $ 3,280 $ 1,104 $ 3,021 $ 1,917
523
155
CITY OF HUNTINGTON BEACH
SCHEDULE OF REVENUES, EXPENDITURES,AND
CHANGES IN FUND BALANCES - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2022
(In Thousands)
LMIHAF Capital Projects Fund
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Use of Money and Property $ 600 $ 600 $ 614 $ 14
Total Revenues 600 600 614 14
EXPENDITURES:
Current:
Community Development 167 187 56 131
Total Expenditures 167 187 56 131
Excess of Revenues Over(Under)Expenditures 433 413 558 145
OTHER FINANCING SOURCES(USES):
Transfers In - 900 900 -
Transfers Out (414) (406) (224) 182
Total Other Financing Sources(Uses) (414) 494 676 182
Net Change in Fund Balance 19 907 1,234 327
Fund Balance-Beginning of Year 3,622 3,622 3,622 -
Fund Balance-End of Year $ 3,641 $ 4,529 $ 4,856 $ 327
Pension Liability Debt Service Fund
Variance with
Final Budget
Positive
REVENUES: Original Budget Final Budget Actual (Negative)
Property Taxes $ 6,126 $ 6,126 $ 7,912 $ 1,786
Use of Money and Property - - 192 192
Charges for Current Service - 16,446 16,764 318
Total Revenues 6,126 22,572 24,868 2,296
EXPENDITURES:
Current:
Finance - 2 2 -
Debt Service:
Principal 11,635 11,635 10,821 814
Interest 10,937 _ 10,935 10,259 676
Total Expenditures 22,572 22,572 21,082 1,490
Excess of Revenues Over(Under)Expenditures (16,446) - 3,786 3,786
OTHER FINANCING SOURCES(USES):
Transfers In 16,446 - - -
Total Other Financing Sources(Uses) 16,446 - - -
Net Change in Fund Balance - - 3,786 3,786
Fund Balance-Beginning of Year 16,943 16,943 16,943 _ -
Fund Balance-End of Year $ 16,943 $ 16,943 $ 20,729 $ 3,786
524
156
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157
fro°"01ING7.
1 0� LB�
III r �
T 4
City of Huntington Beach
yNrct> Internal Service Funds
Internal Services Funds are used to accumulate and allocate costs internally among the City's various functions.
• The Self Insurance Workers'Comp Fund accounts for the City's self insurance workers'compensation program.
• The Self Insurance General Liability Fund accounts for the City's self insurance general liability program.
• The Equipment Replacement Fund accounts for the City's equipment replacement needs.
526
158
CITY OF HUNTINGTON BEACH
STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
June 30,2022
(In Thousands)
Governmental Activities
Equipment
Self Insurance Self Insurance Replacement Internal Service
Workers'Comp General Liability Fund Fund Total
ASSETS
Current Assets:
Cash and Investments $ 17,110 $ 9,860 $ 11,039 $ 38,009
Other Receivables,Net 46 27 29 102
Prepaids 600 - 195 795
Total Current Assets 17,756 9,887 11,263 38,906
Non-Current Assets:
Net Pension Asset 388 - - 388
Net Other Postemployment Benefits Asset 20 9 - 29
Total Non-Current Assets 408 9 - 417
Capital Assets:
Machinery and Equipment - - 8,598 8,598
Less Accumulated Depreciation - - (2,372) (2,372)
Total Capital Assets - - 6,226 6,226
Total Assets 18,164 9,896 17,489 45,549
DEFERRED OUTFLOWS OF RESOURCES
Deferred Outflows Related to Pensions 78 - - 78
Deferred Outflows Related to Other Postemployment Benefits 16 7 - 23
Total Deferred Outflows of Resources 94 7 - 101
Total Assets and Deferred Outflows of Resources 18,258 9,903 17,489 45,650
LIABILITIES
Current Liabilities:
Accounts Payable 613 26 26 665
Accrued Payroll 19 - - 19
Interest Payable 1 - - 1
Current Portion of Claims Payable 6,993 6,446 - 13,439
Current Portion of Compensated Absences 11 - - 11
Total Current Liabilities 7,637 6,472 26 14,135
Non-Current Liabilities:
Compensated Absences 30 - - 30
Long-Term Obligations Due Within One Year 43 - - 43
Long-Term Obligations Due in More than One Year 986 - - 986
Net Pension Liability 34 - - 34
Claims Payable 35,770 7,222 - 42,992
Total Non-Current Liabilities 36,863 7,222 - 44,085
Total Liabilities 44,500 13,694 26 58,220
DEFERRED INFLOWS OF RESOURCES
Deferred Inflows Related to Pensions 429 - - 429
Deferred Inflows Related to Other Postemployment Benefits 37 16 - 53
Total Deferred Inflows of Resources 466 16 - 482
NET POSITION
Net Investment in Capital Assets - - 6,226 6,226
Unrestricted (26,708) (3,807) 11,237 (19,278)
Total Net Position (26,708) (3,807) 17,463 (13,052)
Total Liabilities,Deferred Inflows
of Resources,and Net Position $ 18,258 $ 9,903 $ 17,489 $ 45,650
527
159
CITY OF HUNTINGTON BEACH
STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30, 2022
(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 $ 9,806 $ 6,238 $ 6,037 $ 22,081
Other 26 126 - 152
Total Operating Revenues 9,832 6,364 6,037 22,233
OPERATING EXPENSES
Supplies and Operations 1,528 253 1,718 3,499
Claims and Judgments 14,556 7,557 - 22,113
Depreciation - - 1,012 1,012
Total Operating Expenses 16,084 7,810 2,730 26,624
Operating Income(Loss) (6,252) (1,446) 3,307 (4,391)
NON-OPERATING REVENUES(EXPENSES)
Investment Income(Loss) (843) (527) (520) (1,890)
Interest Expense (29) - - (29)
Proceeds from Sale of Equipment - - 1,699 1,699
Total Non-Operating Revenues(Expenses) (872) (527) 1,179 (220)
Income(Loss)Before Transfers (7,124) (1,973) 4,486 (4,611)
Change in Net Position (7,124) (1,973) 4,486 (4,611)
Net Position-Beginning of Year (19,584) (1,834) 12,977 (8,441)
Net Position-End of Year $ (26,708) $ (3,807) $ 17,463 $ (13,052)
528
160
CITY OF HUNTINGTON BEACH
STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FOR THE YEAR ENDED JUNE 30,2022
(In Thousands)
Governmental Activities
Equipment
Self Insurance Self Insurance Replacement Internal Service
Workers'Comp General Liability Fund Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers and Users $ 9,834 $ 6,367 $ 6,026 $ 22,227
Cash Paid to Employees for Services (370) (8) - (378)
Cash Paid to Suppliers of Goods and Services (7,639) (6,309) (1,554) (15,502)
Net Cash and Investment Provided(Used)by
Operating Activities 1,825 50 4,472 6,347
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Debt Service (37) - - (37)
Interest Paid (32) - - (32)
Net Cash and Investments Provided(Used)by
Noncapital Financing Activities (69) _ - - (69)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of Capital Assets - - (1,934) (1,934)
Proceeds from Sale of Plant,Property,and Equipment - - 1,699 1,699
Net Cash and Investments Provided(Used)by
Capital and Related Financing Activities - - (235) (235)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment(Loss) (843) (527) (520) (1,890)
Net Cash and Investments Provided(Used)by
Investing Activities (843) (527) (520) (1,890)
Net Increase in Cash and Investments 913 (477) 3,717 4,153
Cash and Investments-Beginning of Year 16,197 10,337 7,322 33,856
Cash and Investments-End of Year $ 17,110 $ 9,860 $ 11,039 $ 38,009
RECONCILIATION OF OPERATING
INCOME(LOSS)TO NET CASH AND INVESTMENTS
PROVIDED(USED)BY OPERATING ACTIVITIES
Operating Income(Loss) $ (6,252) $ (1,446) $ 3,307 $ (4,391)
Adjustments to Reconcile Operating
Income(Loss)to Net Cash and Investments
Provided(Used)by Operating Activities
Depreciation - - 1,012 1,012
Decrease(Increase)in Other Receivables,Net 2 3 (11) (6)
Decrease in Prepaids - - 282 282
(Increase)in Net Pension Asset (388) - - (388)
(Increase)in Net Other Postemployment Benefits Asset (20) (9) - (29)
Increase(Decrease)in Accounts Payable 254 (186) (118) (50)
Increase in Accrued Payroll 3 - - 3
Increase in Claims Payable 7,969 1,683 - 9,652
(Decrease)in Compensated Absences (3) - - (3)
Decrease in Deferred Pension Outflow 1,156 - - 1,156
Increase in Deferred Pension Inflow 368 - - 368
(Decrease)in Net Pension Liability (1,275) - - (1,275)
(Increase)in Deferred Other Postemployment Benefits Outflow (6) (2) - (8)
Increase in Deferred Other Postemployment Benefits Inflow 28 12 - 40
(Decrease)in Net Other Postemployment Benefits Liability _ (11) (5J - (16)
Net Cash and Investments Provided(Used)
by Operating Activities $ 1,825 $ 50 $ 4,472 $ 6,347
NONCASH INVESTING,CAPITAL,AND FINANCING ACTIVITIES
There were no noncash investing,capital,or financing activities during the year ended June 30,2022.
529
161
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162
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531
163
9fQ City of Huntington Beach
Sco�N �,d 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.
532
164
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF FIDUCIARY FUND ASSETS AND LIABILITIES
FIDUCIARY FUNDS
JUNE 30, 2022
Custodial Funds
Community Business Parking
Facilities Improvement Structure-Bella Total Custodial
ASSETS: Districts Districts Terra Funds
Current Assets:
Cash and Investments $ 1,321 $ 1,409 $ 1,995 $ 4,725
Cash with Fiscal Agent 1,586 - 1,682 3,268
Accounts Receivable, Net 3 751 6 760
Total Assets 2,910 2,160 3,683 8,753
LIABILITIES:
Current Liabilities:
Accounts Payable - 1,849 221 2,070
Total Liabilities 1,849 221 2,070
NET POSITION
Restricted for:
Restricted for Individuals and Organizations 2,910 311 3,462 6,683
Total Net Position $ 2,910 $ 311 $ 3,462 $ 6,683
CITY OF HUNTINGTON BEACH
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
FOR THE YEAR ENDED JUNE 30,2022
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 $ 1,542 $ - $ - $ 1,542
Business Improvement District Taxes - 6,355 - 6,355
Parking Assessments - - 2,433 2,433
Interest Income 7 - 12 19
Total Additions 1,549 6,355 2,445 10,349
DEDUCTIONS
Administrative Costs 20 - - 20
Payments to other Organizations - 6,211 811 7,022
Interest and Fiscal Agency Expenses 664 - 771 1,435
Principal 825 - 890 1,715
Total Deductions 1,509 6,211 2,472 10,192
Change in Net Position 40 144 (27) 157
Net Position-Beginning of Year 2,870 167 3,489 6,526
Net Position-End of Year $ 2,910 $ 311 $ 3,462 $ 6,683
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166
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167
t City of Huntington Beach
�y�F�o` ;;�°� 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 over time.
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.
536
168
CITY OF HUNTINGTON BEACH
NET POSITION BY COMPONENT-LAST TEN FISCAL YEARS
(In Thousands)
Fiscal Year Ended
June 30,
Governmental Activities 2022 2021 2020 2019 2018***
Net investment in capital assets $ 712,289 $ 699,204 $ 673,498 $ 664,281 $ 650,466
Restricted 68,460 65,755 79,926 66,089 58,537
Unrestricted (223,438) (275,159) (274,523) (251,022) (254,528)
Total Governmental Activities Net Position $ 557,311 $ 489,800 $ 478,901 $ 479,348 $ 454,475
Business-Type Activities
Net investment in capital assets $ 143,998 $ 142,469 $ 142,785 $ 145,696 $ 143,954
Restricted 19,309 20,332 22,248 21,153 25,886
Unrestricted 34,120 39,129 38,482 36,747 27,492
Total Business-Type Activities Net Position $ 197,427 $ 201,930 $ 203,515 $ 2.0.3,596 $ 197,33.2
Primary Government
Net investment in capital assets $ 856,287 $ 841,673 $ 816,283 $ 809,977 $ 794,420
Restricted 87,769 86,087 102,174 87,242 84,423
Unrestricted (189,318) _ (236,030) (236,041) (214,275) (227,036)
Total Primary Government Net Position $ 754,738 $ 691,730 $ 682,416 $ 682,944 $ 651,807
CITY OF HUNTINGTON BEACH
CHANGES IN NET POSITION-LAST TEN FISCAL YEARS
(In Thousands)
Fiscal Year Ended
Expenses: June 30,
Governmental Activities: 2022 2021 2020 2019 2018***
City Council $ 382 $ 423 $ 405 $ 360 $ 218
City Manager 5,412 11,163 3,328 4,501 2,063
City Treasurer 259 340 317 246 101
City Attorney 2,183 3,140 3,136 2,886 1,536
City Clerk 1,060 1,147 949 976 475
Finance 5,581 6,828 6,661 6,245 3,455
Human Resources***** - - - 6,261 4,760
Community Development* 11,634 19,716 15,722 6,144 4,301
Fire 52,808 65,960 62,840 56,494 26,688
Information Services 6,469 6,230 8,643 7,530 4,375
Police 73,964 102,415 97,204 87,355 42,109
Economic Development** - - - - -
Community Services 11,517 11,365 12,539 13,369 6,768
Library Services 5,212 6,181 5,776 5,206 2,890
Public Works 42,598 40,270 45,834 40,803 23,898
Non-Departmental**** - - - - 18,164
Interest on Long-Term Debt 9,548 2,706 1,686 1,823 1,467
Total Governmental Activities 228,627 277,884 265,040 240,199 143,268
Business-Type Activities
Water Utility 44,182 46,054 44,463 43,405 28,414
Sewer Service 10,390 9,284 9,828 9,442 6,127
Refuse Collection 13,738 12,936 12,609 12,051 8,916
Hazmat Service 236 241 235 234 117
Total Business-Type Activities 68,546 68,515 67,135 65,132 43,574
Total Business and Government Type Activities $ 297,173 $ 346,399 $ 332,175 $ 305,331 $ 186,842
* Planning and Building departments were combined in Fiscal Year ended September 30,2011.The combined department was later renamed to
Community Development in Fiscal Year ended September 30,2016.
** Economic Development was combined with Community Development in Fiscal Year ended June 30,2020.Previously,it was combined with the City
Manager's Office as of Fiscal 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.
537
169
CITY OF HUNTINGTON BEACH
NET POSITION BY COMPONENT-LAST TEN FISCAL YEARS
(In Thousands)
(continued)
Fiscal Year Ended
September 30,
Governmental Activities 2017 2016 2015 2014 2013
Net investment in capital assets $ 646,336 $ 624,180 $ 615,512 $ 618,825 $ 617,267
Restricted 41,888 41,555 52,270 34,018 51,867
Unrestricted (262,874) (222,863) (222,787) 89,524 54,076
Total Governmental Activities Net Position $ 425,350 $ 442,872 $ 444,995 $ 742,367 $_ 723,210
Business-Type Activities
Net investment in capital assets $ 140,478 $ 142,566 $ 142,616 $ 140,770 $ 145,886
Restricted 30,444 32,049 28,096 27,951 27,488
Unrestricted 22,228 21,997 28,476 53,166 65,595
Total Business-Type Activities Net Position $ 193,150 $ 196,612 $ 199,188 $ _ 221,887 $ 238,969
Primary Government
Net investment in capital assets $ 786,814 $ 766,746 $ 758,128 $ 759,595 $ 763,153
Restricted 72,332 73,604 80,366 61,969 79,355
Unrestricted (240,646) (200,866) (194,311) 142,690 119,671
Total Primary Government Net Position $ 618,500 $ 639,484 $ 644,183 $ 964,254 $ 962,179
CITY OF HUNTINGTON BEACH
CHANGES IN NET POSITION-LAST TEN FISCAL YEARS
(In Thousands)
(continued)
Fiscal Year Ended
Expenses: September 30,
Governmental Activities: 2017 2016 2015 2014 2013
City Council $ 347 $ 321 $ 270 $ 258 $ 271
City Manager 4,691 3,849 3,302 3,878 1,583
City Treasurer 216 208 158 169 132
City Attorney 3,307 2,598 2,284 2,321 2,221
City Clerk 889 806 855 747 797
Finance 6,201 5,765 5,208 5,314 4,825
Human Resources***** 5,693 6,814 5,169 4,616 5,032
Community Development* 7,576 7,208 6,605 7,091 6,155
Fire 52,941 47,965 42,162 43,194 36,323
Information Services 7,047 6,852 6,552 6,456 6,096
Police 84,786 74,943 64,048 66,681 60,466
Economic Development** - - - - 8,395
Community Services 15,558 9,935 13,809 12,509 15,521
Library Services 5,064 4,611 4,246 4,024 3,873
Public Works 35,373 31,791 27,979 31,691 28,500
Non-Departmental**** 29,368 35,240 24,080 21,602 25,563
Interest on Long-Term Debt 2,063 2,119 2,245 - 1,946 2,289
Total Governmental Activities 261,120 241,025 208,972 212,497 208,042
Business-Type Activities
Water Utility 45,940 41,643 38,614 41,499 38,446
Sewer Service 9,351 8,729 8,192 9,712 7,253
Refuse Collection 10,821 11,277 11,308 11,145 10,882
Hazmat Service 224 244 _ 204 231 220
Total Business-Type Activities 66,336 61,893 58,318 62,587 56,801
Total Business and Government Type Activities $ 327,456 $ 302,918 $ 267,290 $ 275,084 $ 264,843
**** Beginning with 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 Manager's Office in Fiscal Year ended June 30,2020.
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CITY OF HUNTINGTON BEACH
CHANGES IN NET POSITION-LAST TEN FISCAL YEARS
(In Thousands)
Fiscal Year Ended
Program Revenues: June 30,
Governmental Activities: 2022 2021 2020 2019 2018***
Charges for Services
City Council $ 162 $ 162 $ 177 $ 149 $ 91
City Manager 4,131 4,208 5,315 3,300 2,374
City Treasurer 149 149 163 135 81
City Attorney 5 6 7 7 4
City Clerk 269 30 220 327 229
Finance 3,036 3,055 3,302 2,899 1,746
Human Resources***** - - - •
751 373
Community Development* 10,953 8,353 10,037 7,459 5,448
Fire 13,401 8,877 10,122 9,831 9,104
Information Services 604 610 636 628 381
Police 6,687 6,477 5,329 6,044 4,703
Economic Development** - - - - -
Community Services 21,117 15,558 17,631 23,530 19,245
Library Services 302 153 266 308 237
Public Works 7,235 6,045 6,614 6,368 4,392
Non-Departmental**** - - - - 916
Total Charges for Services 68,051 53,683 59,819 61,736 49,324
Operating Grants 9,301 6,013 8,141 6,644 3,976
Capital Grants 8,537 10,192 14,483 8,361 6,055
Total Governmental Activities Program Revenue 85,889 69,888 82,443 76,741 59,355
Business-Type Activities:
Water Utility 43,590 42,523 40,518 43,958 29,530
Sewer Service 10,791 10,828 10,900 11,868 8,362
Refuse Collection 13,675 13,014 12,573 12,022 8,820
Hazmat Service 276 266 279 276 25
Total Business-Type Activities Program Revenues 68,332 66,631 64,270 68,124 46,737
Total Primary Government Program Revenue 154,221 136,519 146,713 144,865 106,092
Net(Expense)Revenue:
Governmental Activities (142,738) (207,996) (182,597) (163,458) (83,913)
Business-Type Activities (214) (1,884) (2,865 2,992 3,163
Total Net(Expense)Revenue - (142,952) (209,880) (185,462) (160,466) (80,750)
General Revenue and Other Changes in Net Position
Governmental Activities:
Property Taxes 102,539 99,958 94,263 89,124 61,185
Sales Taxes 57,652 51,162 44,616 47,437 33,844
Utility Taxes 19,528 18,374 18,149 18,788 14,014
Other Taxes 26,134 17,293 18,635 20,227 14,883
Use of Money and Property (1,895) 4,399 3,208 8,746 2,158
From Other Agencies 4,631 22,000 3,317 4,046 2,263
Gain on Sale of Property 1,699 - - - -
Other - - - - 2,811
Transfers (39) (38) (38) (37) (332)
Total Governmental Activities General Revenues 210,249 213,148 182,150 188,331 130,826
Business-Type Activities:
Use of Money and Property (4,328) 261 2,746 3,235 279
Transfers 39 38 38 37 332
Total Business-Type Activities General Revenues (4,289) 299 2,784 3,272 611
Total General Revenues and Transfers 205,960 213,447 184,934 191,603 131,437
Extraordinary Gain - - - - -
Changes in Net Position-Governmental Activities 67,511 5,152 (447) 24,873 46,913
Changes in Net Position-Business-Type Activities (4,503) (1,585) (81) 6,264 3,774
Total Changes in Net Position 63,008 3,567 (528) 31,137 50,687
Net Position-Beginning of Year 691,730 682,416 682,944 651,807 618,500
Prior Period Adjustment-Governmental Activities - 5,747 - - (17,788)
Prior Period Adjustment-Business-Type Activities - - - - 408
Net Position-Beginning of Year as restated 691,730 688,163 682,944 651,807 601,120
Net Position-End of Year $ 754,738 $ 691,730 $ 682,416 $ 682,944 $ _ 651,807
* Planning and Building departments were combined in the Fiscal Year ended September 30,2011.The combined department was later renamed to
Community Development in Fiscal Year ended September 30,2016.
** Economic Development was combined with Community Development in the Fiscal Year ended June 30,2020.Previously,it was combined with the
City Manager's Office as of Fiscal Year ended September 30,2014.
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CHANGES IN NET POSITION-LAST TEN FISCAL YEARS
(In Thousands)
(continued)
Fiscal Year Ended
Program Revenues: September 30,
Governmental Activities: 2017 2016 2015 2014 2013
Charges for Services
City Council $ 108 $ 116 $ 71 $ 68 $ 66
City Manager 3,515 3,029 2,994 2,835 134
City Treasurer 100 101 639 621 602
City Attorney 5 4 143 139 135
City Clerk 257 201 199 321 248
Finance 2,047 2,277 1,353 1,313 1,275
Human Resources***** 654 513 1,263 2,499 1,236
Community Development* 7,448 9,252 10,670 9,357 9,411
Fire 10,296 9,894 8,625 8,672 9,482
Information Services 501 521 834 809 786
Police 4,968 5,958 5,512 5,170 4,653
Economic Development** - - - - 2,505
Community Services 21,693 18,853 18,569 18,055 17,832
Library Services 476 408 495 434 634
Public Works 5,392 5,733 6,474 6,367 7,315
Non-Departmental**** 1,116 1,296 327 318 306
Total Charges for Services 58,576 58,150 58,168 56,978 56,620
Operating Grants 7,329 4,723 7,458 7,958 7,303
Capital Grants 3,408 5,939 9,809 5,486 7,191
Total Governmental Activities Program Revenue 69,313 68,812 75,435 70,422 71,114
Business-Type Activities:
Water Utility 39,938 35,765 35,350 36,944 38,679
Sewer Service 10,854 11,280 11,239 10,665 12,267
Refuse Collection 11,282 11,215 11,221 11,006 10,950
Hazmat Service 287 235 222 183 278
Total Business-Type Activities Program Revenues 62,361 58,495 58,032 58,798 62,174
Total Primary Government Program Revenue 131,674 127,307 133,467 129,220 133,288
Net(Expense)Revenue:
Governmental Activities (191,807) (172,213) (133,537) (142,075) (136,928)
Business-Type Activities (3,975) (3,398) (286) (3,789) 5,373
Total Net(Expense)Revenue (195,782) (175,611) (133,823) (145,864) (131,555)
General Revenue and Other Changes in Net Position
Governmental Activities:
Property Taxes 82,925 87,128 82,615 81,355 74,795
Sales Taxes 43,551 34,289 33,063 29,243 30,276
Utility Taxes 19,303 19,482 20,229 20,621 20,764
Other Taxes 17,991 17,313 16,464 15,601 14,568
Use of Money and Property 3,370 3,618 5,551 3,725 2,816
From Other Agencies 3,896 4,397 5,653 4,279 6,003
Gain on Sale of Property - - - - -
Other 2,438 5,693 4,440 6,903 5,240
Transfers _ (51) (38) 35 (38) (38)
Total Governmental Activities General Revenues 173,423 171,882 168,050 161,689 154,424
Business-Type Activities:
Use of Money and Property 462 939 1,281 1,015 137
Transfers 51 38 (35) 38 38
Total Business-Type Activities General Revenues 513 977 1,246 1,053 175
Total General Revenues and Transfers 173,936 172,859 169,296 162,742 154,599
Extraordinary Gain - - - - (4,669)
Changes in Net Position-Governmental Activities (18,384) (331) 34,513 19,614 12,827
Changes in Net Position-Business-Type Activities (3,462) (2,421) 960 (2,736) 5,548
Total Changes in Net Position (21,846) (2,752) 35,473 16,878 18,375
Net Position-Beginning of Year 639,484 642,236 964,254 962,179 935,283
Prior Period Adjustment-Governmental Activities 862 - (333,677) (457) 719
Prior Period Adjustment-Business-Type Activities - - (23,814) (14,346) 7,802
Net Position-Beginning of Year as restated 640,346 642,236 606,763 947,376 943,804
Net Position-End of Year $ 618,500 $ 639,484 $ 642,236 $ 964,254 $ 962,179
*** 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 Manager's Office in the Fiscal Year ended June 30,2020.
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FUND BALANCES -GOVERNMENTAL FUNDS -LAST TEN FISCAL YEARS
(In Thousands)
(Modified Accrual Basis of Accounting)
Fiscal Year Ended June 30,
2022 2021 2020 2019 2018
General Fund:
Nonspendable $ 82 $ 115 $ 120 $ 23 $ 41
Restricted 14,623 13,561 9,320 8,154 6,384
Committed 26,665 25,565 25,010 25,011 25,011
Assigned 61,454 55,368 45,638 45,825 34,464
Unassigned - - - - 2,734
Total General Fund $ 102,824 $ 94,609 $ 80,088 $ 79,013 $ 68,634
Other Governmental Funds:
Nonspendable $ - $ 105 $ 50 $ 64 $ 726
Restricted 75,774 70,161 71,671 59,213 52,742
Committed 28,559 26,857 21,735 20,308 20,800
Assigned 3,021 3,280 3,527 3,614 2,701
Unassigned (4,311) - - - -
Total Other Governmental Funds $ 103,043 $ 100,403 $ 96,983 $ 83,199 $ 76,969
Fiscal Year Ended September 30,
2017 2016 2015 2014 2013
General Fund:
Nonspendable $ - $ - $ 4,479 $ 4,378 $ 4,040
Restricted 2,671 2,637 2,871 2,070 1,878
Committed 25,011 25,011 25,011 25,011 24,011
Assigned 33,498 35,199 32,431 29,595 24,578
Total General Fund $ 61,180 $ 62,847 $ 64,792 $ 61,054 $ 54,507
Other Governmental Funds:
Restricted $ 40,588 $ 40,293 $ 45,515 $ 27,214 $ 27,425
Committed 17,686 21,368 21,659 16,447 11,098
Assigned 826 838 161 151 316
Unassigned - - - - (21(q)
Total Other Governmental Funds $ 59,100 $ 62,499 $ 67,335 $ 43,812 $ 38,629
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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,
2022 2021 2020 2019 2018*
REVENUES:
Property Taxes $ 102,539 $ 99,958 $ 94,263 $ 89,367 $ 80,614
Sales Taxes 57,652 51,162 44,616 47,437 33,844
Utility Taxes 19,528 18,374 18,149 18,788 14,014
Other Taxes 33,720 25,745 24,578 27,196 18,409
Licenses and Permits 9,596 8,213 11,266 8,574 6,293
Fines and Forfeitures 5,144 4,619 3,403 4,300 3,048
From Use of Money and Property 14,365 19,163 27,863 23,276 11,600
From Other Agencies 13,060 29,836 11,309 13,072 10,384
Charges for Current Service/Other Revenue 52,809 27,428 34,772 33,787 30,216
TOTAL REVENUES 308,413 284,498 270,219 265,797 208,422
EXPENDITURES
Current:
City Council 426 1,043 394 369 279
City Manager 5,265 15,976 4,342 6,598 3,143
City Treasurer 326 837 297 248 134
City Attorney 2,995 7,714 2,898 2,874 2,037
City Clerk 1,295 2,810 886 981 602
Finance 7,259 16,173 6,200 6,484 4,376
Human Resources - - - 6,362 5,323
Community Development** 14,412 39,212 14,692 8,138 5,554
Fire 62,880 149,726 56,477 54,431 36,347
Information Systems 7,871 19,095 8,473 8,342 5,385
Police 93,976 232,438 87,682 83,546 57,916
Economic Development*** - - - - -
Community Services 18,455 25,064 14,429 11,720 7,958
Library Services 6,300 14,099 5,199 4,944 3,436
Public Works 50,158 88,007 47,655 46,878 30,357
Non-Departmental - - - - 22,432
Capital Outlay**** - - - - -
Debt Service:
Principal 15,918 3,983 5,122 5,346 311
Interest 11,299 937 1,748 1,890 965
TOTAL EXPENDITURES 298,835 617,114 256,494 249,151 186,555
EXCESS(DEFICIENCY)OF
REVENUES OVER(UNDER)EXPENDITURES 9,578 (332,616) 13,725 16,646 21,867
OTHER FINANCING SOURCES(USES):
Transfers In 21,642 13,058 10,009 11,190 13,261
Issuance of Long-Term Debt - 372,010 1,172 - -
Issuance Premium - 1,743 - - -
Issuance Discount - (649) - - -
Payments to Escrow - (28,256) - - -
Lease(as Lessee) 448 - - - -
Issuance of Finance Purchase Agreement 868 - - - -
Transfers Out (21,681) (13,096) (10,047) (11,227) (13,593)
TOTAL OTHER FINANCING SOURCES(USES) 1,277 344,810 1,134 (37) (332)
Extraordinary Item-Dissolution of RDA - - - - -
INCREASE(DECREASE)IN FUND BALANCES $ 10,855 $ 12,194 $ 14,859 $ 16,609 $ 21,535
DEBT SERVICE AS A PERCENTAGE OF
NON-CAPITAL EXPENDITURES 10.1% 0.9% 3.0% 3.3% 0.7%
* 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 Fiscal Year ended September 30,2011.The department was later renamed
to Community Development in Fiscal Year ended September 30,2016.
*** Economic Development was combined with Community Development in Fiscal Year ended June 30,2020.Previously,it was
combined with the City Manager's Office as of the Fiscal Year ended September 30,2014.
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CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS-LAST TEN FISCAL YEARS
(In Thousands)
(continued)
(Modified Accrual Basis of Accounting)
Fiscal Year Ended
September 30,
2017 2016 2015 2014 2013
REVENUES:
Property Taxes $ 80,826 $ 86,382 $ 82,472 $ 79,460 $ 74,442
Sales Taxes 43,551 39,305 32,234 30,454 29,763
Utility Taxes 19,303 19,482 20,229 20,621 20,764
Other Taxes 17,991 17,313 16,464 15,601 14,568
Licenses and Permits 8,812 9,820 9,270 7,976 9,880
Fines and Forfeitures 3,995 5,144 4,746 4,392 4,058
From Use of Money and Property 17,210 18,055 17,473 16,695 16,046
From Other Agencies 15,293 13,712 18,634 16,804 18,237
Charges for Current Service/Other Revenue 32,351 32,506 35,869 33,886 34,150
TOTAL REVENUES 239,332 241,719 237,391 225,889 221,908
EXPENDITURES
Current:
City Council 333 318 278 258 260
City Manager 4,116 3,092 2,703 3,040 1,574
City Treasurer 201 204 167 169 132
City Attorney 3,052 2,539 2,425 2,321 2,221
City Clerk 830 790 895 747 797
Finance 5,763 5,659 5,452 5,314 4,825
Human Resources****** 5,535 6,776 4,606 4,298 5,661
Community Development** 6,963 7,062 6,954 7,091 6,155 .
Fire 46,831 46,200 45,008 42,602 35,920
Information Systems 6,603 6,742 6,846 6,456 6,096
Police 75,015 72,612 68,940 66,628 60,460
Economic Development*** - - - - 7,012
Community Services 14,124 10,768 10,223 10,040 13,952
Library Services 4,422 4,247 4,146 3,739 3,588
Public Works 38,635 23,659 23,820 22,872 22,169
Non-Departmental 28,396 24,670 20,067 21,033 19,684
Capital Outlay**** - 27,269 14,986 10,729 10,745
Debt Service:
Principal 5,091 5,933 5,454 4,797 9,381
Interest 2,066 2,138 2,226 1,987 2,321
TOTAL EXPENDITURES 247,976 250,678 225,196 214,121 212,953
EXCESS(DEFICIENCY)OF
REVENUES OVER(UNDER)EXPENDITURES (8,644) (8,959) 12,195 11,768 8,955
OTHER FINANCING SOURCES(USES):
Transfers In 6,692 9,034 12,158 9,832 9,501
Issuance of Long-Term Debt 2,767 10,197 -
Issuance Premium - - - - -
Issuance Discount - - - - -
Payments to Escrow - - - - -
Lease(as Lessee) - - - - -
Issuance of Finance Purchase Agreement - - - - -
Transfers Out (6,743) (17,053) (14,238) (9,870) (10,339)
TOTAL OTHER FINANCING SOURCES(USES) 2,716 2,178 (2,080) (38) (838)
Extraordinary Item-Dissolution of RDA - - - - (4,669)
INCREASE(DECREASE)IN FUND BALANCES $ (5,928) $ (6,781) $ _ 10,115 $ 11,730 $ 3,448
DEBT SERVICE AS A PERCENTAGE OF
NON-CAPITAL EXPENDITURES 3.2% 3.6% 3.7% 3.3% 5.8%
**** 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 Manager's Office in Fiscal Year ended June 30,2020.
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CITY OF HUNTINGTON BEACH
ASSESSED AND ACTUAL VALUATION
OF ALL TAXABLE PROPERTY(EXCLUDING REDEVELOPMENT AGENCY)
LAST TEN FISCAL YEARS
(In Thousands)
Common Total Assessed Total Direct Tax
Fiscal Year Property Public Utilities Total Secured Unsecured Valuation Rate
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
2021-2022 40,789,946 518 40,790,464 1,041,429 41,831,893 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
City Basic Rate Metro Water Total Direct and
Fiscal Year (1),(2) City Other School Districts District Others Overlapping
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 0.08788 0.00350 0.84418 1.10638
2020-2021 0.15582 0.01500 0.07983 0.00350 0.84418 1.09833
2021-2022 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.
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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
2012-2013 47,162 45,722 96.9% 855 46,577 98.8% 565 1.2%
2013-2014 49,808 48,452 97.3% 656 49,108 98.6% 545 1.1%
2014-2015 52,188 50,759 97.3% 576 51,335 98.4% 519 1.0%
2015-2016 55,886 53,916 96.5% 546 54,462 97.5% 1,263 2.3%
2016-2017 58,258 56,481 96.9% 525 57,006 97.9% 1,253 2.2%
2017-2018 62,418 59,731 95.7% 474 60,205 96.5% 2,073 3.3%
2018-2019 63,934 62,222 97.3% 622 62,844 98.3% 920 1.4%
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%
2021-2022 72,014 69,871 97.0% 714 70,585 98.0% 1,510 2.1%
Unsecured Taxes
2012-2013 1,882 1,653 87.8% 23 1,676 89.1% 62 3.3%
2013-2014 1,922 1,693 88.1% 33 1,726 89.8% 76 4.0%
2014-2015 2,016 1,839 91.2% 37 1,876 93.1% 69 3.4%
2015-2016 1,925 1,740 90.4% 35 1,775 92.2% 39 2.0%
2016-2017 1,899 1,692 89.1% 23 1,715 90.3% 34 1.8%
2017-2018 1,964 1,829 93.1% 28 1,857 94.6% 26 1.3%
2018-2019 1,964 1,804 91.9% 20 1,824 92.9% 29 1.5%
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%
2021-2022 2,267 2,059 90.8% 46 2,105 92.9% 90 4.0%
Community Facilities Districts
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%
2021-2022 3,987 3,975 99.7% - 3,975 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.
2012/2013 to current fiscal year includes the following:
Secured:includes supplemental,st Itg reorg,nuisance abatement,weed abatement,retirement override,
tax admin charges,and community interest. Does not include Community Facilities District CFDs.
Unsecured:includes aircraft unsecured tax. Does not include CFDs.
Miscellaneous:excluded from all tables.
Delinquency Amount:reflects the"unpaid"amounts as stated in the OC Auditor-Controller website.
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TOP TEN PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
2021-2022
Taxable Assessed Value Percent
(In Thousands) of Total TAV
AES Huntington Beach Energy, LLC $ 731,070 1.75%
Bella Terra Associates LLC 392,816 0.94%
CMFA Special Finance Agency VII 267,496 0.64%
PCH Beach Resort LLC 225,699 0.54%
DCO Pacific City LLC 223,353 0.53%
Huntington Gateway Industrial LLC 160,803 0.38%
The Waterfront Hotel LLC 147,232 0.35%
Monogram Residential Huntington Beach 139,068 0.33%
MC Donnell Douglas/Boeing 137,448 0.33%
One Pacific Plaza Owner LLC 128,867 0.31%
Total Top Ten 2,553,852 6.11%
All Other Property Taxpayers 39,278,041 93.89%
City Total $ 41,831,893 100.00%
2012-2013
Taxable Assessed Value Percent
(In Thousands) of Total TAV
OXY USA Inc $ 552,425 1.97%
The Boeing Company/McDonnell Douglas 350,678 1.25%
Bella Terra Associates LLC 202,718 0.72%
Mayer Financial LP 201,668 0.72%
CIM Huntington LLC 154,351 0.55%
21002 HB LLC 89,155 0.32%
Pacific Sands LLC 84,093 0.30%
United Dominion Realty LP 70,059 0.25%
Harbour Lights LP 66,024 0.24%
Seacliff Village Shopping Center Inc 65,842 0.23%
Total Top Ten 1,837,013 6.55%
All Other Property Taxpayers 26,208,465 93.45%
City Total $ 28,045,478 100.00%
Source: County of Orange Auditor Controller's Office
Note:Information provided for the period from July 1st through June 30th.
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180
CITY OF HUNTINGTON BEACH
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(In Thousands)
Fiscal Year Ended
June 30,
Long-Term Indebtedness 2022 2021 2020 2019 2018***
Governmental Activities:
Judgement Obligation Bonds $ - $ - $ - $ - $ -
Public Financing Authority:
2010(a)Lease Revenue Bonds - - 7,410 8,235 9,030
2011(a)Lease Revenue Bonds - - 15,725 17,770 19,735
2014(a)Lease Revenue Bonds 11,215 11,880 12,530 13,145 13,740
2020(a)Lease Revenue Bonds 4,835 4,835 - - -
2020(b)Lease Revenue Bonds 11,315 12,830 - - -
Total Public Financing Authority 27,365 29,545 35,665 39,150 42,505
Other Long-Term Obligations:
Finance Purchase Agreement 11,714 12,753 5,241 5,083 6,079
Leases Payable 247 - - - -
PARS Payable - - - - -
Section 108 Loan City - - - - 430
LED Lighting Phase I 314 432 546 656 762
CEC 2,063 2,457 2,588 2,818 3,000
I-Bank 1,586 1,882 2,171 2,454 2,730
Pension Obligation Bonds 330,642 341,501 - - -
Total Other Long-Term Obligations 346,566 359,025 10,546 11,011 13,001
Total Long-Term Obligations-Governmental Activities 373,931 388,570 46,211 50,161 55,506
Long-Term Obligations-Business-Type Activities:
Pension Obligation Bonds 21,368 22,144 - - -
Total Long-Term Obligations-Business-Type Activities 21,368 22,144 - - -
Total Long Term Obligations-Governmental Activities and
Business-Type Activities $ 395,299 $ 410,714 $ 46,211 $ 50,161 $ 55,506
2022 2021 2020 2019 2018***
Population 197,437 198,039 200,748 202,265 201,761
Debt Per Capita $ 2,002 $ 2,074 $ 230 $ 248 $ 275
Total Personal Income(In Thousands)* $9,995,248 $9,659,154 $9,450,814 $9,222,677 $ 8,849,843
Per Capita Personal Income* $ 50,625 $ 48,774 $ 47,078 $ 45,597 $ 43,863
Unemployment Rate** 2.80% 4.70% 8.60% 2.60% 2.70%
Total Employment** 104,300 100,700 96,200 107,700 106,900
* Source:Claritas,Inc.
** Source:State of California Employment Development Department
***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.
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CITY OF HUNTINGTON BEACH
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(In Thousands)
Fiscal Year Ended
September 30, ,
Long-Term Indebtedness 2017 2016 2015 2014 2013
Governmental Activities:
Judgement Obligation Bonds $ - $ 659 $ 1,634 $ 2,574 $ 3,474
Public Financing Authority:
2010(a)Lease Revenue Bonds 9,030 9,795 10,525 11,230 11,910
2011(a)Lease Revenue Bonds 19,735 21,650 24,985 28,165 31,195
2014(a)Lease Revenue Bonds 13,740 14,315 14,865 - -
2020(a)Lease Revenue Bonds - - - - -
2020(b)Lease Revenue Bonds - - - - -
Total Public Financing Authority 42,505 45,760 50,375 39,395 43,105
Other Long-Term Obligations:
Finance Purchase Agreement 6,286 4,130 - - -
Leases Payable - - - - -
PARS Payable - - - 29 56
Section 108 Loan City 430 625 805 975 1,135
LED Lighting Phase I 866 966 1,063 - -
CEC 3,000 3,000 - - -
I-Bank 2,730 3,000 - - -
Pension Obligation Bonds - - - - -
Total Other Long-Term Obligations 13,312 11,721 1,868 1,004 1,191
Total Long-Term Obligations-Governmental Activities 55,817 58,140 53,877 42,973 47,770
Long-Term Obligations-Business-Type Activities:
Pension Obligation Bonds - - - - -
Total Long-Term Obligations-Business-Type Activities - - - - -
Total Long Term Obligations-Governmental Activities and
Business-Type Activities $ 55,817 $ 58,140 $ 53,877 $ 42,973 $ 47,770
2017 2016 2015 2014 2013
Population 202,413 201,919 198,389 195,999 193,616
Debt Per Capita $ 276 $ 288 $ 272 $ 219 $ 247
Total Personal Income(In Thousands)* $8,878,441 $8,880,801 $ 8,725,545 $8,278,410 $ 7,839,899
Per Capita Personal Income* $ 43,863 $ 43,982 $ 43,982 $ 42,237 $ 40,492
Unemployment Rate** 2.80% 3.90% 3.90% 3.60% 3.60%
Total Employment** 103,200 107,200 104,000 120,200 120,200
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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
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
2021-2022 41,831,893 5,019,827 - 5,019,827
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CITY OF HUNTINGTON BEACH
STATEMENT OF DIRECT AND
OVERLAPPING BONDED DEBT
JUNE 30, 2022
2021-22 Assessed Valuation: $45,858,082,541
Debt Repaid with Property Taxes(Tax and Assessment Debt):
Percent Debt Applicable
Overlapping Tax and Assessment Debt Applicable* to City
Metropolitan Water District 1.350% 272,363
Coast Community College District 28.354% 268,171,969
Huntington Beach Union High School District 73.071% 119,584,344
Fountain Valley School District 27.085% 15,740,448
Huntington Beach City School District 99.958% 151,575,274
Ocean View School District 93.573% 121,298,680
Westminster School District 23.889% 29,936,404
Los Alamitos Unified School District Facilities District No. 1 1.163% 2,300,824
City of Huntington Beach Community Facilities Districts(1990-1,2000-1,2002-1,2003-1) 100.000% 26,680,000
Total Overlapping Tax and Assessment Debt $ 735,560,306
Direct and Overlapping General Fund Debt
Orange County General Fund Obligations 6.728% 25,349,758
Orange County Pension Obligations 6.728% 35,105,628
Orange County Board of Education Certificates of Participation 6.728% 781,794
North Orange County Regional Occupation Program Certificates of Participation 0.086% 7,052
Coast Community College District General Fund Obligations 28.354% 528,802
Coast Community College District Pension Obligation Bonds 28.354% 517,461
Huntington Beach Union High School District Certificates of Participation 73.071% 42,677,914
Los Alamitos Unified School District Certificates of Participation 1.046% 362,251
Huntington Beach School District General Fund Obligations 99.958% 16,285,129
Ocean View School District Certificates of Participation 93.573% 15,261,756
Westminster School District General Fund Obligations 23.889% 7,085,477
City of Huntington Beach General Fund Obligations: 100.000% 45,298,393
City of Huntington Beach Pension Obligation Bonds 100.000% 352,010,000
Total Direct and Overlapping General Fund Obligation Debt $ 541,271,415
Overlapping Tax Increment Debt(Successor Agency) 100.000% 3,765,000
Total Direct Debt $ 397,308,393
Total Overlapping Debt 883,288,328
Combined Total Debt $ 1,280,596,721
(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($397,308,393) 0.87%
Combined Total Debt 2.79%
Ratios to Redevelopment Successor Agency Incremental Valuation($3,810,829,132)
Total Overlapping Tax Increment Debt 0.10%
*The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by
determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed
value.
Source:California Municipal Statistics and City of Huntington Beach Finance Department
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184
CITY OF HUNTINGTON BEACH
PRINCIPAL PRIVATE EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
2022 % of total
The Boeing Company 3,112 2.98%
Safran Cabin Inc 884 0.85%
Hyatt Regency Huntington Beach 641 0.61%
Boardriders Wholesale LLC 600 0.58%
Cambro Manufacturing 550 0.53%
Huntington Beach Hospital 527 0.51%
Wal-Mart 462 0.44%
Waterfront Hilton Beach Resort 450 0.43%
No Ordinary Moments 440 0.42%
Home Depot USA Inc 436 0.42%
Total of top 10 8,102 7.77%
All others 96,198 92.23%
Total employment(public and private) 104,300 100.00%
2013 % of total
Boeing 5,178 4.33%
Cambro MFG Co. 1,137 0.95%
Quiksilver 955 0.80%
Ensign United States Drilling 925 0.77%
Hyatt Regency Huntington Beach 641 0.54%
C & D Aerospace 555 0.46%
Huntington Beach Hospital 527 0.44%
Wal-Mart 462 0.39%
Rainbow Disposal 408 0.34%
Huntington Beach Healthcare 381 0.32%
Total of top 10 11,169 9.34%
All others 108,431 90.66%
Total employment(public and private) 119,600 100.00%
Source: Finance Department, City of Huntington Beach
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CITY OF HUNTINGTON BEACH
FULL-TIME ACTUAL AND BUDGETED CITY EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Actual
General Government: 2022 2021 2020 2019 2018*** 2017 2016 2015 2014 2013
City Council 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
City Manager 26.00 20.00 18.00 12.50 12.50 11.50 11.50 11.50 11.50 7.00
City Treasurer 1.50 1.50 1.50 2.00 2.00 2.00 1.50 1.50 1.50 1.50
City Attorney 11.00 11.00 11.00 11.00 11.00 12.00 11.00 11.00 11.00 11.00
City Clerk 5.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Finance 34.50 32.50 31.50 33.00 33.00 33.00 32.50 31.50 31.50 29.50
Human Resources** - - - 15.00 15.00 15.00 15.00 15.00 15.00 14.50
Community Development 57.50 57.50 54.00 44.00 44.00 44.00 43.50 44.00 43.00 42.75
Information Systems 26.00 26.00 22.00 30.00 30.00 30.00 30.00 30.00 30.00 29.50
Economic Development* - - - - - - - - - 4.50
Library Services 29.25 29.25 23.25 28.25 28.25 28.25 28.25 28.25 28.25 27.75
Fire 201.00 201.00 200.00 198.00 198.00 198.00 198.00 198.00 196.50 176.50
Police 353.00 357.00 356.00 365.50 364.50 364.50 364.50 361.50 360.50 358.50
Community Services 33.00 33.00 37.00 36.00 36.00 44.00 44.00 43.00 43.00 56.00
Public Works 211.00 207.00 199.00 207.00 207.00 199.00 199.00 198.00 196.00 196.00
989.75 980.75 958.25 987.25 986.25 986.25 983.75 978.25 972.75 960.00
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.
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186
CITY OF HUNTINGTON BEACH
OPERATING INDICATORS BY FUNCTION/ACTIVITY
LAST TEN FISCAL YEARS
Function/Program 2022 2021 2020 2019 2018***
Finance:
Water Bills Processed 637,956 637,920 636,708 639,245 476,290
Active Business Licenses 18,849 19,011 20,910 21,414 21,782
Accounts Receivable Billings Processed 12,437 20,183 25,687 30,217 25,000
City Clerk:
Passports Issued**** 5,721 418 4,579 7,024 5,757
Planning:
Entitlements Processed 154 112 162 221 206
Plan Reviews 606 1,955 1,358 1,542 1,466
Field Inspection Complaints 7,403 11,899 11,610 8,183 7,005
Code Violation Cases 5,051 4,473 3,260 4,786 4,219
Building:
Number of Permits Issued 10,292 9,075 8,855 9,807 7,490
Number of Inspections Completed 31,080 26,710 32,859 36,562 30,501
Value of Construction Permits(Thousands of Dollars) 237,945 166,000 169,393 135,910 109,462
Processed Number of Certificate of Occupancies* 641 655 515 686 523
Completed Plan Reviews 5,701 4,673 3,469 3,491 2,771
Counter Visits 14,289 115 14,922 21,409 16,498
Fire:
Inspections 7,311 4,008 5,965 6,140 3,963
Responses 22,076 20,428 21,068 20,354 14,490
Ocean Rescues 4,160 4,116 2,487 4,953 3,530
Estimated Beach Visitors 8,345,139 7,910,293 6,712,125 10,577,290 12,522,640
Police:
Physical Arrests 5,585 5,363 5,785 5,979 4,614
Parking Violations 97,299 95,753 59,484 79,069 54,500
Traffic Violations 8,869 10,920 12,105 13,314 11,869
Community Services:
Park/Open Space Acreage 1,072 1,072 1,066 1,066 1,065
Enrollment in Recreation Classes 34,616 15,511 28,952 37,978 27,152
Public Works:
Water Sold(Acre Feet)** 26,459 27,731 25,966 26,251 19,777
Gallons of Sewage Pumped Per Day** 19 million 19 million 19 million 19 million 19 million
Library:
Items in Collection 290,351 291,444 294,849 293,995 292,037
Items Borrowed 796,882 481,523 779,124 942,821 655,626
* Beginning the 2013/14 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 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.
****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
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187
CITY OF HUNTINGTON BEACH
OPERATING INDICATORS BY FUNCTION/ACTIVITY
LAST TEN FISCAL YEARS
(Continued)
Function/Program 2017 2016 2015 2014 2013
Finance:
Water Bills Processed 632,997 635,052 536,684 630,240 628,207
Active Business Licenses 22,074 21,420 21,424 20,450 21,127
Accounts Receivable Billings Processed 34,963 30,826 38,594 42,360 45,422
City Clerk:
Passports Issued 7,408 5,623 5,121 4,598 4,220
Planning:
Entitlements Processed 216 221 280 204 231
Plan Reviews 1,376 1,653 1,595 1,466 1,575
Field Inspection Complaints 8,459 7,951 8,233 7,030 7,301
Code Violation Cases 3,981 4,324 4,710 2,545 2,385
Building:
Number of Permits Issued 9,728 10,981 10,670 9,348 8,970
Number of Inspections Completed 38,796 39,380 38,320 36,142 33,962
Value of Construction Permits(Thousands of Dollars) 216,252 283,910 234,946 216,343 248,246
Processed Number of Certificate of Occupancies* 740 n/a n/a n/a 477
Completed Plan Reviews 4,172 4,172 3,815 3,148 n/a
Counter Visits 21,731 23,492 21,893 21,326 20,854
Fire:
Inspections 2,758 5,132 6,499 6,641 5,087
Responses 20,555 20,279 19,562 15,815 15,608
Ocean Rescues 3,639 3,977 5,371 6,426 4,195
Estimated Beach Visitors 13,339,518 12,272,030 11,803,943 12,035,134 11,016,615
Police:
Physical Arrests 5,298 5,112 4,854 4,303 4,237
Parking Violations 70,846 90,361 83,453 74,668 72,347
Traffic Violations 19,916 17,639 17,596 16,330 13,016
Community Services:
Park/Open Space Acreage 1,065 1,062 1,062 1,062 1,062
Enrollment in Recreation Classes 37,968 34,424 30,228 30,184 30,218
Public Works:
Water Sold(Acre Feet)** 25,944 24,505 24,763 29,279 28,354
Gallons of Sewage Pumped Per Day** 22 million 19 million 19 million 22 million 22 million
Library:
Items in Collection 288,599 285,814 343,655 332,092 385,901
Items Borrowed 943,642 921,105 908,656 937,533 892,543
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188
CITY OF HUNTINGTON BEACH
CAPITAL ASSET STATISTICS BY FUNCTION/ACTIVITY
JUNE 30, 2022
Library Services One Main Library and Four Branches
Fire:
Fire Stations 8
Police:
Stations One Main Station and Three Substations
Community Services:
Acreage of Parks 1,066
Community Centers 6
Public Works:
Centerline Square Miles of Streets Maintained 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
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189
Eav is F a r r Davis Farr LLP
18201 Von Karman Avenue I Suite 1100 I Irvine,CA 92612
CERTIFIED PUBLIC ACCOUNTANTS Main:949.474.2020 I Fax:949.263.5520
Honorable Mayor and City Council
City of Huntington Beach
Huntington Beach, California
We have audited the financial statements of the City of Huntington Beach (City) as of and
for the year ended June 30, 2022, and have issued our report thereon dated December 21,
2022. Professional standards require that we advise you of the following matters relating to
our audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our engagement letter dated June 6, 2022, our responsibility, as
described by professional standards, is to form and express an opinion about whether the
financial statements that have been prepared by management with your oversight are
presented fairly, in all material respects, in accordance with accounting principles generally
accepted in the United States of America. Our audit of the financial statements does not
relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit
to obtain reasonable, rather than absolute, assurance about whether the financial
statements are free of material misstatement. An audit of financial statements includes
consideration of internal control over financial reporting as a basis for designing 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 over financial reporting.
Accordingly, as part of our audit, we considered the internal control of the City solely for the
purpose of determining our audit procedures and not to provide any assurance concerning
such internal control.
We are also responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial
reporting process. However, we are not required to design procedures for the purpose of
identifying other matters to communicate to you.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously
communicated to you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, as appropriate, our firm, and our network firms
have complied with all relevant ethical requirements regarding independence under the
American Institute of Certified Public Accountants ("AICPA") independence standards,
contained in the Code of Professional Conduct.
558
Significant Risks Identified
We have identified the following significant risks:
• Implementation of GASB Statement No. 87 Leases
• Compliance with Federal grant requirements
Qualitative Aspects of the Entity's Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A
summary of the significant accounting policies adopted by the City is included in Note 1 to
the financial statements. As described in Note 14 to the financial statements, the City
changed accounting policies related to leases by adopting Statement of Governmental
Accounting Standards (GASB Statement) No. 87, Leases, in the fiscal year 2022. No matters
have come to our attention that would require us, under professional standards, to inform
you about (1) the methods used to account for significant unusual transactions and (2) the
effect of significant accounting policies in controversial or emerging areas for which there is
a lack of authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by
management and are based on management's current judgments. Those judgments are
normally based on 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 markedly from management's current judgments.
The most sensitive accounting estimates affecting the financial statements are:
• 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.
We evaluated the key factors and assumptions used to develop the estimates and
determined that it is reasonable in relation to the financial statements taken as a whole and
in relation to the applicable opinion units.
559
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly
sensitive because of their significance to financial statement users. The most sensitive
disclosures affecting the City's financial statements were:
• The disclosure of pensions in note 6 to the financial statements.
• The disclosure of OPEB in note 8 to the financial statements.
The financial statement disclosures are neutral, consistent, and clear.
Significant Unusual Transactions
For purposes of this communication, professional standards require us to communicate to
you significant unusual transactions identified during our audit. There were no significant
unusual transactions identified as a result of our audit procedures.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the
performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also require us to accumulate all
known and likely misstatements identified during the audit, other than those that we believe
are trivial, and communicate them to the appropriate level of management. Further,
professional standards require us to also communicate the effect of uncorrected
misstatements related to prior periods on the relevant classes of transactions, account
balances or disclosures, and the financial statements as a whole and each applicable opinion
unit. The following summarizes uncorrected financial statement misstatements whose
effects in the current and prior periods, as determined by management, are immaterial,
both individually and in the aggregate to the financial statements taken as a whole.
• Recording of certain lease receivables and related deferred inflows due to the
implementation of GASB Statement No. 87, leases
Uncorrected misstatements or matters underlying those uncorrected misstatements could
potentially cause future-period financial statements to be materially misstated, even though
the uncorrected misstatements are immaterial to the financial statements currently under
audit.
In addition, professional standards require us to communicate to you all material, corrected
misstatements that were brought to the attention of management as a result of our audit
procedures. None of the misstatements identified by us as a result of our audit procedures
and corrected by management were material, either individually or in the aggregate, to the
financial statements taken as a whole or applicable opinion units.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management
as a matter, whether or not resolved to our satisfaction, concerning a financial accounting,
560
reporting, or auditing matter, which could be significant to the City's financial statements or
the auditor's report. No such disagreements arose during the course of the audit.
Representations Requested from Management
We have requested certain written representations from management, which are included in
the attached letter dated December 21, 2022.
Management's Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing
and accounting matters. Management informed us that, and to our knowledge, there were
no consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a
variety of matters, including the application of accounting principles and auditing standards,
significant events or transactions that occurred during the year, operating and regulatory
conditions affecting the entity, and operational plans and strategies that may affect the risks
of material misstatement. None of the matters discussed resulted in a condition to our
retention as the City's auditors.
Other Information Included in Annual Comprehensive Financial Report
Pursuant to professional standards, our responsibility as auditors for other information,
whether financial or nonfinancial, included in the City's annual reports, does not extend
beyond the information identified in the audit report, and we are not required to perform
any procedures to corroborate such other information. However, in accordance with such
standards, we have read the information and considered whether such information, or the
manner of its presentation, was materially inconsistent with its presentation in the financial
statements.
Our responsibility also includes communicating to you any information which we believe is a
material misstatement of fact. Nothing came to our attention that caused us to believe that
such information, or its manner of presentation, is materially inconsistent with the
information, or manner of its presentation, appearing in the financial statements.
This report is intended solely for the information and use of the City Council and
management of the City and is not intended to be and should not be used by anyone other
than these specified parties.
../�
*t ra 1.:
Irvine, California
December 21, 2022
561
Eai is F a r r Davis Farr LLP
18201 Von Karman Avenue I Suite 1100 I Irvine,CA 92612
CERTIFIED PUBLIC ACCOUNTANTS Main:949.474.2020 I 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, the Air Quality
Special Revenue Fund of the City of Huntington Beach, California, as of and for the year ended
June 30, 2022, and the related notes to the financial statements, which collectively comprise
the Air Quality Special Revenue Fund of the City of Huntington Beach's basic financial
statements, and have issued our report thereon dated December 21, 2022.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Air Quality
Special Revenue 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 Special Revenue Fund's internal control.
Accordingly, we do not express an opinion on the effectiveness of the Air Quality Special
Revenue 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 Special Revenue
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,
562
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.
1-2)
Irvine, California
December 21, 2022
563
•
av I arr Davis Farr LLP
x` ° 18201 Von Karman Avenue I Suite 1100 I Irvine,CA 92612
CERTIFIED PUBLIC ACCOUNTANTS Main:949.474.2020 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, 2022.
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 XIIIB Appropriations Limitation Uniform Guidelines for the year ended June
30, 2022. 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.
564
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 XIIIB
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.
Z
1,Le
Irvine, California
December 21, 2022
565
ATTACHMENT 3
Fiscal Year 2022/2023 Recommended Mid-Year Budget Adjustments
Recommended Adjustments by Fund:
APPROPRIATION INCREASE
Fund No Fund Name Appropriation Revenue Offset Net Increase Dept
100 General Fund 537,000 537,000 - Community&Library Services
100 General Fund 700,000 700,000 - Community Development
100 General Fund 115,000 - 115,000 Finance
100 General Fund 700,000 700,000 - Fire
100 General Fund 189,000 - 189,000 Police
100 General Fund 1,342,000 - 1,342,000 Public Works
100 General Fund 7,050,000 - 7,050,000 Non-Departmental
General Fund Subtotal 10,633,000 1,937,000 8,696,000
212 Narcotics Forfeiture-Federal 60,000 - 60,000 Police
324 Equipment Replacement 500,000 500,000 - Non-Departmental
504 Refuse Collection Service 531,000 531,000 - Public Works
551 Workers'Compensation 4,300,000 4,300,000 - Human Resources
984 Supplemental Law Enforcement Services 750,000 - 750,000 Police
new CalAPP Grant 80,000 80,000 - Community Development
Other Funds Subtotal 6,221,000 5,411,000 810,000
All Funds Total 16,854,000 7,348,000 9,506,000
566
ATTACHMENT 4
Fiscal Year 2022/2023 Recommended Mid-Year Professional Services Authority
Fund No Fund Name Description Amount Department
100 General Fund On-call building plan review services 400,000 Community Development
400,000
567
AMENDMENT NO. 1 TO AGREEMENT BETWEEN
THE CITY OF HUNTINGTON BEACH AND
CSG CONSULTANTS, INC.
FOR
ON-CALL BUILDING DIVISION PLAN REVIEW SERVICES
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 CSG CONSULTANTS, INC.,hereinafter referred to as"Consultant."
WHEREAS, City and Consultant are parties to that certain agreement,dated
September 21, 2021, entitled"Professional Services Contract Between the City of
Huntington Beach and CSG Consultants, Inc., for On-Call Building Division Plan
Review Services"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. SECTION 1 - SCOPE OF WORK
Section 1, Scope of Work, of the Original Agreement is hereby amended
to include an On-Site Associate Planner.
2. SECTION 4 - COMPENSATION
Section 4, Compensation, Exhibit B, of the Original Agreement is hereby
amended to include$150.00 hourly rate for On-Site Associate Planner.
3. SECTION 4-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
22-12094/295674 1 /
incorporated by reference into this Agreement. City further agrees to pay Consultant an
additional sum not to exceed Two Hundred Thousand Dollars ($200,000.00). The
additional sum shall be added to the original sum of Eight Hundred Thousand Dollars
($800,000.00), for a new contract amount not to exceed One Million Dollars
($1,000,000.00).
4. 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 , 2023.
CSG CONSULTANTS, INC. CITY OF -IUNTINGTON BEACH, a
municipal corporation of the State of
California
By:
Cyr E•ter_
pii f name
ITS: (circle one) 't.• . President/Vita ttiessdetat Mayor
AND — '
City Clerk
By:
Nourdin ay eta
INITIATED AND APPROVED:
print name
ITS: (circle one)Secretary/Cl�i F; iai
Officer/Asst. Secretary Treasurer
Director of Community Development
APPROVED AS TO FORM:
City Attorney
22-12094/295674 2
569
incorporated by reference into this Agreement. City further agrees to pay Consultant an
additional sum notto exceed Two Hundred Thousand Dollars ($200,000.00). The
additional sum shall be added to the original sum of Eight Hundred Thousand Dollars
($800,000.00), for a new contract amount not to exceed One Million Dollars
($1,000,000.00).
4. 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 ,2023.
CSG CONSULTANTS,INC. CITY OF HUNTINGTON BEACH, a
municipal corporation of the State of
California
By:
print name
ITS: (circle one)Chairman/PresidentNice President Mayor
AND
City Clerk
By:
INITIATED AND PROVED:
print name
ITS: (circle one)Secretary/Chief Financial ( {
Officer/Asst. Secretary-Treasurer
Director of Community Development
APPROVED AS T FORM:
C. Attorney
22-12094/295674 2
570
AMENDMENT NO. 1 TO PROFESSIONAL SERVICES CONTRACT BETWEEN
THE CITY OF HUNTINGTON BEACH AND
TRUE NORTH COMPLIANCE SERVICES, INC.
FOR
ON-CALL BUILDING DIVISION PLAN REVIEW SERVICES
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 TRUE NORTH COMPLIANCE SERVICES, INC.,hereinafter referred to as
"Consultant."
WHEREAS, City and Consultant are parties to that certain agreement, dated
September 21, 2021, entitled"Professional Services Contract Between the City of
Huntington Beach and True North Compliance Services, Inc."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 Two Hundred Thousand Dollars
($200,000.00). The additional sum shall be added to the original sum of Eight Hundred
Thousand Dollars ($800,000.00), for a new contract amount not to exceed One Million
Dollars ($1,000,000.00).
23-12365/301513 1
571 ,
- ca
2. 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 , 2022.
TRUE NORTH COMPLIANCE SERVICES, CITY OF HUNTINGTON BEACI,a
INC. municipal corporation of the State of
California
By:
-ES 1- 5 - N \N
print.name Mayor
ITS: (circle one)Chairman'Presiden Vice President
AND City Clerk
By: INITIATED AND APPROVED:
print name
ITS: (circle one, Secretary/Chief Financial Director of Community Development
Officer/Asst.Secretary-Treasurer
APPROVED AS TO FORM:
City Attorney
23-12365/301513 2
572
2. 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 ,2022.
TRUE NORTH COMPLIANCE SERVICES, CITY OF HUNTINGTON BEACH, a
INC. municipal corporation o_f the State of
California
By:
print name Mayor
ITS: (circle one)Chairman/PresidentNice President
AND City Clerk
By: INITIATED AND APPROVED:
print name VAIL C— A)''t"--
ITS. (circle one)Secretary/chief Financial Director of Community Development
Officer/Asst.Secretary-Treasurer
APPROVED AS TO FORM:
City Attorney
23-12365/301513 2
573
STATE OF CALIFORNIA
x~,"\
GRANT AGREEMENT
CEC-146(Revised 3/2019) CALIFORNIA ENERGY COMMISSION `=
RECIPIENT AGREEMENT NUMBER
City of Huntington Beach APP-22-038
ADDRESS AGREEMENTTERM
11/14/2022 to 05/31/2027
2000 Main Street The effective date of this Agreement is either the start date or the approval
signature date by the California Energy Commission representative below,
Huntington Beach CA, 92648 whichever is later.The California Energy Commission shall be the last
party to sign:No work is authorized,nor shall any work begin,until on or
after the effective date.
PROJECT DESCRIPTION
The parties agree to comply with the terms and conditions of the following Exhibits which are by this reference made a
part of the agreement.
Exhibit A—Application with Scope of Work Page(s):4
Exhibit B—APP General Terms and Conditions Page(s): 5
Exhibit C—Contact List Page(s): 1
REIMBURSABLE AMOUNT
$ 80,000
MINIMUM MATCH SHARE REQUIRED
$ 0
TOTAL OF REIMBURSABLE AMOUNT AND MINIMUM MATCH
$ 80,000
The undersigned parties have read the attachments to this agreement and will comp! with the stands and requirements contained therein.
CALIFORNIA ENERGY COMMISSION CONTRACTOR
AUTHORIZED SIGNATURE DATE UTHO SIGNA E DATE
NAME NAME
Adrienne Winuk Al Zelink
TITLE TITLE
Contracts, Grants, and Loans Office Manager City Manager, City of Huntington Beach
CAUFORNIA ENERGY COMMISSION ADDRESS
715 P Street, MS 18, Sacramento, CA 95814 2000 Main St., Huntington Beach, CA 92647
APPROVED A F Pi
By:
AE E.GATES
CITY A ORNEY
C OF HUNTINGTON BEACH
574
ATTACHMENT 01
Grant Application Form—EXHIBIT A
California Automated Permit Processing (CalAPP) Program
1. APPLICANT INFORMATION (REQUIRED)
Jurisdiction Name (please use full legal name as it would appear on the executed grant):
City of Huntington Beach
Jurisdiction Type (select one):
lXl City County City and County
Current Estimated Population State of California Department of Finance Demographics
(https://dof.ca.gov/forecasting/Demographics/):
Less than 50,000 From 100,000 to 200,000
®From 50,000 to 99,999 ®Greater than 200,000
Project Manager Name Ursula Luna-Reynosa
(serves as point
of contact for all Street Address 2000 Main Street
communications) City and Huntington Beach
Zip Code 92648
Phone Number (714)536-5554
E-Mail Address ursula.luna-reynosa@surfcity-hb.org
2. FUNDING (REQUIRED)
zok4 .�.-. .tea;._ :. i � h, i�'^'- �':.�aa .� 3,,, x^� �c�- -c_ ,y '� ;�,�,��:
. .,�.�,�. ,_.�.,_y..:....... .. F-���..�t�,�,.;- sue_:;.: �.�_..���.,ru�.0 . � ,�..�� ��
® Group 1 ($40,000): Population less than 50,000
® Group 2($60,000): Population from 50,000 to 99,999
FA Group 3 ($80,000): Population from 100,000 to 200,000
® Group 4($100,000): Population greater than 200,000
January 2023 Page 1 of 4 APP-22-038
CaIAPP Attachment 01 City of Huntington Beach
575
3. PROJECT INFORMATION (REQUIRED)
A. Online,automated solar permitting platform to be adopted:
SolarAPP+
®Other. If selected, complete Section 4 ("Additional Information")
B. Please select allowable budget item(s) anticipated to be used (Select
at least one):
Ongoing in-house staff labor costs associated directly with adoption and
maintenance of the platform
0 Ongoing third-party or consultant time associated directly with adoption and
maintenance of the platform
El Ongoing staff training and education, specific to the platform
rxiOngoing training events for local installers, specific to the platform
tZl Essential hardware or equipment necessary to support adoption of the
platform
ElMaintenance, such as adding support for energy storage paired with solar
energy system permitting, and subscription cost for permit tracking software
in support of adopted permitting platform
C. Estimated Project Timeline*
*Enter actual dates if activities already began
Activity Date(Month/Year)
Begin Development/Pilot January 2023
Full Adoption September 2023
Staff Training July 2023
Training for Local Installers
January 2023 Page 2 of 4 APP-22-038
CaIAPP Attachment 01 City of Huntington Beach
576
4. ADDITIONAL INFORMATION (if applicable)
NOTE: Only complete this section if you implement a platform other than SolarAPP+
Please identify whether the following features are supported by the implemented
platform. All features are required for the platform to qualify for funding. CEC staff will
verify prior to payment approval.
Performs an automated plan review for residential solar energy
systems that completes automatic code compliance checks based
on user inputs (such as a contractor), thereby enabling or fYes ® No
otherwise issuing permits instantly when the project is confirmed
as code compliant, without the need for human review
Supports online, immediate fee payment once an application is Yes n No
complete, which may include auto-invoicing of permit fee costs 0
Supports immediate generation of a permit job card following (�Yes El No
payment confirmation
Blocks noncompliant applications from receiving a permit DYes El No
EITHER: 1) Stand-alone permitting tool; OR 2) Integrates with Yes ® No
current software and inspection platform already in use
5. REPORTING (REQUIRED)
Following adoption and verification of a qualifying platform, the
Energy Commission may request, and the Recipient will provide if
requested, annual data on the number of permits issued for solar
energy systems and a solar energy system paired with an energyvN Yes No
storage system including relevant characteristics of those systems,
such as system capacity.
Please indicate your acceptance of these terms.
January 2023 Page 3 of 4 APP-22-038
CaIAPP Attachment 01 City of Huntington Beach
577
6. CERTIFICATION(REQUIRED)
• I am authorized to complete and sign this form on behalf of the applicant.
• I authorize the California Energy Commission to make any inquiries necessary
to verify the information presented in this application.
• I have read and understand the terms and conditions contained in this
solicitation..I accept the terms and conditions contained in this solicitation on
behalf of the applicant, and the applicant is willing to enter into an agreement
with the Energy Commission to conduct the proposed project according to the
terms and conditions without negotiation.
• I certify under penalty of perjury under the laws of the State of California that
the foregoing is true and correct.
Name of Authorized Ursula Luna-Reynosa
Representative:
Title: Director of Community Development
Phone Number: (714)536-5554
E-mail Address: ursula.luna-reynosa@surfcity-hb..org
Date: 11/10/22
Signature of
Authorized •
Representative:
NOTE: Do not overlap signature with surrounding.border lines.
•
January 2023 Page 4 of 4 APP-22-038
CalAPP Attachment 01 City of Huntington Beach
578
Exhibit B
California Automated Permit Processing(CaIAPP) Program
Terms and Conditions
1. Background and Authority for this Grant
California Senate Bill 129(2021) included an appropriation to the California Energy Commission(CEC)to
support a grant program for cities,counties,or cities and counties to establish online solar permitting.
2. Documents Incorporated by Reference and Priority
Incorporated by reference into this agreement are the following documents:
A. Grant Funding Opportunity(GFO)21-402.
B. Recipient's application to CalAPP.
As between the incorporated documents and the remainder of this Agreement,the rest of this
Agreement takes priority in case of a conflict.
3. Budget,Invoices,and Payments
a) The CEC is only obligated to reimburse the Recipient for paid costs that are(1)incurred during
the Agreement Term; (2)invoiced within the required timeframes of this Agreement;(3) not
more than this Agreement's budget;and(4) reasonable,actual,and allowable expenses under
this Agreement.
b) Recipient acknowledges that the funds under this Agreement have a liquidation date of June 30,
2027,a legal timeframe after which the CEC has no authority to pay the funds. In addition, it
takes the CEC administrative time to review,approve,work with the Recipient to correct any
errors in,and request the State Controller's Office to pay invoices. Accordingly, Recipient
acknowledges that if it does not submit accurate invoices by March 30,2027,for all amounts
due under the Agreement,it risks not receiving payment, and relinquishes all rights to such
payments should the CEC not pay it by the liquidation date. Recipient acknowledges that time is
of the essence in invoicing by March 30,2027,for all amounts due under this Agreement.
The Recipient may request payment from the Energy Commission at any time during the term of this
Agreement after successful adoption of a qualifying solar permitting platform as verified by the CEC, but
no more frequently than monthly. Recipient must use the CAM provided template invoice spreadsheet.
c) If invoicing for in-house staff time,the template invoice spreadsheet must identify the
employee's name,hours worked,and billing rate to be included as a reimbursable expense.
d) Unallowable costs include:
• Software not related to the adoption of a qualifying online,automated permitting platform.
• Any costs incurred or activities conducted prior to entering into a grant agreement with the
Energy Commission or incurred after the grant agreement has ended.
January 2023 Page 1 of 5 APP-22-038
City of Huntington Beach
579
• Typically excluded items such as food and beverages.
• Advertising costs.
• Fines and penalties.
• Permit processing fees charged by operator of an online platform.
• All other costs not identified as allowable.
• Unreasonable amounts or rates.
4. Certification
By signing this Agreement, Recipient hereby certifies that all funds received pursuant to this Agreement
shall be spent exclusively for its CatAPP project in compliance with this Agreement. The Recipient
further certifies that it shall comply with all applicable laws in performing this Agreement.
5. Nondiscrimination Statement of Compliance
During the performance of this Agreement,the Recipient and its subcontractors will not unlawfully
discriminate, harass,or allow harassment against any employee or applicant for employment because of
sex,sexual orientation,race,color,ancestry,religious creed, national origin, physical disability(including
HIV and AIDS),mental disability,medical condition,age,marital status,or denial of family care leave.
The Recipient and its subcontractors will ensure that the evaluation and treatment of their employees
and applicants for employment are free from such discrimination and harassment.
The Recipient and its subcontractors shall comply with the provisions of the Fair Employment and
Housing Act(Government Code Sections 12990 et seq.)and the applicable regulations promulgated
thereunder(California Code of Regulations,Title 2,Section 11000 et seq.).The applicable regulations of
the Fair Employment and Housing Commission implementing Government Code Section 12990(a-f),set
forth in Chapter 5 of Division 4.1 of Title 2 of the California Code of Regulations,are incorporated into
this Agreement by reference and made a part of it as if set forth in full.The Recipient and its
subcontractors will give written notice of their obligations under this section to labor organizations with
which they have a collective bargaining or other Agreement.
The Recipient shall include the nondiscrimination and compliance provisions of this section in all
subcontracts to perform work under this Agreement.
6. Drug-Free Workplace Certification
By signing this Agreement,the Recipient certifies under penalty of perjury under the laws of the State of
California that it will comply with the requirements of the Drug-Free Workplace Act of 1990
(Government Code Section 8350 et seq.)and will provide a drug-free workplace by taking the following
actions:
1) Publish a statement notifying employees that unlawful manufacture, distribution,dispensation,
possession,or use of a controlled substance is prohibited,and specifying actions to be taken
against employees for violations as required by Government Code Section 8355(a).
January 2023 Page 2 of 5 APP-22-038
City of Huntington Beach
580
2) Establish a Drug-Free Awareness Program as required by Government Code Section 8355(b)to
inform employees about all of the following:
•The dangers of drug abuse in the workplace;
•The person's or organization's policy of maintaining a drug-free workplace;
•Any available counseling,rehabilitation,and employee assistance programs; and
• Penalties that may be imposed upon employees for drug abuse violations.
3) Provide,as required by Government Code Section 8355(c),that every employee who works on
the proposed project:
• Will receive a copy of the company's drug-free policy statement;and
• Will agree to abide by the terms of the company's statement as a condition of employment on
the project.
In addition to any other rights and remedies available to the CEC,failure to comply with these
requirements may result in suspension of payments under the Agreement or termination of the
Agreement or both, and the Recipient may be ineligible for any future state awards if the CEC
determines that any of the following has occurred:(1)the Recipient has made false certification,or(2)
violates the certification by failing to carry out the requirements as noted above.
7. Americans With Disabilities Act
By signing this Agreement,the Recipient assures the CEC that it complies with the Americans with
Disabilities Act(ADA)of 1990(42 U.S.C.Section 12101,et seq.),which prohibits discrimination on the
basis of disability,as well as applicable regulations and guidelines issued pursuant to the ADA.
8. Accounting and Audit
The Recipient will keep separate,complete,and correct accounting of the costs involved in completing
the Agreement. The Recipient agrees that the CEC,the Bureau of State Audits,or their designated
representative shall have the right to review and to copy any records and supporting documentation
pertaining to the performance of this Agreement.The Recipient agrees to maintain such records for
possible audit for a minimum of three(3)years after the Agreement ends in any way.The Recipient
agrees to allow the auditor(s)access to such records during normal business hours and to allow
interviews of any employees who might reasonably have information related to such records. Further,
the Recipient agrees to include a similar right of the CEC,the Bureau of State Audits,or their designated
representative,to audit records and interview staff in any subcontract related to performance of this
Agreement. These rights and responsibilities are in addition to and not restrictive of those in Section 16.
Access to Sites and Records.
9. Public Works
The Recipient is responsible for complying with all applicable laws,which can include public works
requirements under the Labor Code. Recipient acknowledges acceptance of Agreement funds may
trigger public works laws(Labor Code Section 1720 et seq.),a requirement of which is to pay prevailing
January 2023 Page 3 of 5 APP-22-038
City of Huntington Beach
581
wages,applying to its entire project. If the project is public works then it is subject to compliance
monitoring and enforcement by the Department of Industrial Relations. By signing this Agreement,
Recipient certifies that it shall comply with all applicable Public Works laws and requirements.
10. Intellectual Property
As between the Recipient and the CEC,the Recipient owns all intellectual property it or its
subcontractors create under this Agreement.The CEC has a no-cost, non-exclusive,transferable,
irrevocable, royalty-free,worldwide,perpetual license to use,publish,translate,modify,and reproduce
all intellectual property,such as the products identified in Section 2.above,for governmental purposes
the Recipient or its subcontractors create under this agreement.The Recipient shall include a provision
securing these rights for the CEC in all of its subcontractor agreements related to performance of this
Agreement.
11. Amendment
No amendment or variation of this Agreement shall be valid unless made in writing and signed by both
the Recipient and CEC.
12. Governing Law
This Agreement is governed by the laws of the State of California as to interpretation and performance.
13. Independent Capacity
In the performance of this Agreement, Recipient and its agents,subcontractors,and employees will act
in an independent capacity and not as officers,employees,or agents of the CEC or the State of
California.
14. Severability
If any provision of this Agreement is unenforceable or held to be unenforceable,all other provisions of
this Agreement will remain in full force and effect.
15. Waiver
No waiver of any breach of this Agreement constitutes waiver of any other breach.All remedies in this
Agreement will be taken and construed as cumulative, meaning in addition to every other remedy
provided in the Agreement or by law.
16. Access to Sites and Records
The Recipient shall provide during the Agreement and for at least 3 years after the Agreement ends in
any way to the CEC or its representatives reasonable access to all project sites and to all records related
to this Agreement. These rights and responsibilities are in addition to and not restrictive of those in
Section 8.Accounting and Audit.
January 2023 Page 4 of 5 APP-22-038
City of Huntington Beach
582
17. Termination Without Cause
The CEC may terminate this Agreement without cause upon giving written notice to the Recipient. In this
event,the Recipient will use all reasonable efforts to mitigate its expenses and obligations.
18. Third-Party Beneficiary
The Recipient shall in every subcontract under this Agreement include a provision indicating the CEC is a
third-party beneficiary to the agreement.
19. Survival of Terms
The following terms survive this Agreement no matter how the agreement ends,such as by its own
terms or via termination:
• 8. Accounting and Audit
• 9. Public Works
• 10. Intellectual Property
• 12.Governing Law
• 14.Severability
• 15.Waiver
• 16.Access to Sites and Records
• 18.Third-Party Beneficiary
January 2023 Page 5 of 5 APP-22-038
City of Huntington Beach
583
Exhibit C
CONTACT LIST
CaiifArnia.Endrgy Commssio .Recipient
Commission Agreement Manager: Project Manager:
Lucio Hernandez i Jasmine Daley,.Building Manager
California Energy Commission City of Huntington Beach
716 P Street, MS-45 2000 Main Street
Sacramento, CA 95814 Huntington Beach, CA, 92648
Phone: (916) 477-1799 Phone: (714) 375-5147
e-mail: Lucio.HernandezPenergy.ca.gov ! e-mail: Jasmine.Daley@surfcity-hb.org
Confidential Deliverables/Products Administrator:
California Energy Commission Al Zenika, City Manager
Contracts, Grants, and Loans Officer City of Huntington Beach
715 P Street MS-18 2000 Main Street
Sacramento, CA 95814 Huntington Beach, CA, 92648
Phone: (714) 536-5202
e-mail: Al.Zelinka@surfcity-hb.org
Invoices, Progress Reports and Non- Accounting Officer:
Confidential Deliverables to: Celeste Coggins, Admin Analyst
California Energy Commission City of Huntington Beach
Accounting Officer 2000 Main Street
715 P Street MS-2 Huntington Beach, CA, 92648
Sacramento, CA 95814 Phone: (714) 375-5157
e-mail: Celeste.Coggins@surfcity-hb.org
Email PDF of Payment Request invoice
packet to: invoicesPenerdy.ca.gov
Legal Notices: Recipient Legal Notices:
Tatyana Yakshina j Ursula Luna-Reynosa
Grants Manager City of Huntington Beach
715 P Street MS-18 ! 2000 Main Street
Sacramento, CA 95814 Huntington Beach, CA, 92648
Phone: (916) 827-9294 Phone: (714) 536-5554
e-mail: tatvana.vakshinaPeneray.ca.gov e-mail: Ursula.Luna-Reynosa@surfcity-hb.org
January 2023 Page 1 of 1 APP-22-038
City of Huntington Beach
584
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City of Huntington Beach
Financial Health Indicators
5=TEA-1 MEND AND COMPARABLE C:7,--LES
FIISC „N L YEAR' S 20: 7i- 6 - 202122
INFORMATION OBTAINED FROM AUDITED CITY ANNUAL COMPREHENSIVE FINANCIAL REPORTS (ACFR)
ti Comparable Cities FY 2021 /22
Huntington Anaheim Costa Mesa Garden Irvine Newport Santa Ana Orange Fullerton
Beach I Grove Beach
Population 197,437 . 341,245 1 1 1,394 170,526 310,250 83,727 308,459 137,676 142,732
Square miles 27 50.27 16.8 17.9 66 23.79 27.3 24 22.4
_
Electric, Water, Sewer,
Water, Refuse Water, Sewer,
Sanitation, Collections, Airport, Brea
Water Utility,
Golf Courses, Sanitation, Dam Facilities
Water, Sewer, Sewage
Convention, Internal Internal Water, Parking, Water, Recreational,
Business Type Refuse and Sports & Service Funds Collection, Service Funds Wastewater Transportation Sanitation Parking, and
Hazmat Entertainment Housing Center, and Compressed
Venues, Authority Federal Clean Natural Gas
ARTIC Water Facility
Management Protection
Full Service Yes Yes Yes Yes Yes Yes Yes Yes Yes
Year 1909 1857 1953 1956 1971 1906 1886 1888 1904
Incorporated
Yes, Fire to OC
Contract out Yes,Fire to OC Yes, Fire to OC Fire Authority
Public Safety No No No Fire Authority Fire Authority No and CARE No No
Ambulance
Service
Sales Tax Rate 7.75% 7.75% 7.75% 8.75% 7.75% 7.75% 9.25% 7.75% 7.75%
586
Financial Position
Can the City Pay its Bills Now?
A city has a strong financial position if it has sufficient cash and other liquid resources available. Without
those resources, it will have to borrow money, delay payments, or liquidate some of its other assets, all
of which carry significant financial costs.
FINANCIAL HEALTH INDICATOR#1 -GENERAL FUND RESERVE RATIO
This indicator identifies changes (increases or decreases) in General Fund reserves from the
prior year to the current year and is useful in identifying if the City's fund balance reserve is
deteriorating. A declining fund balance reserve can be a sign of fiscal stress. This indicator is
important in identifying a trend of a deteriorating fund balance reserve as well as how rapidly
it is deteriorating. A higher ratio suggests larger reserves for dealing with unexpected resource
needs in the long run.
5-Year General Fund Reserve Ratio
City of Huntington Beach
FY 17-18 ' FY 20-21
(9 mos) FY 19-20 34% FY 21-22
•35% 33% 33%
FY 18-19
31%
FY 21-22 General Fund Reserve Ratio - Comparable Cities
Irvine, 95%
Garden Grove, 80%
Santa Ana, 43%
Costa Mesa, 34%
Newport Beach, 34%
Huntington Beach, 33%
Orange, 32%
Anaheim, 31%
Fullerton, 21%
FINANCIAL HEALTH INDICATOR#1 -INSIGHT
The City's General Fund balance reserves increased from 33% to 34% of revenues in FY 2020/21,
then decreased slightly to 33% in FY 2021/22. This is attributed in stronger revenue growth in FY
2021/22, which is used to calculate this ratio. The overall General Fund Balance increased by
$3.39M in FY 2021/22.
587
Financial Position (Cont.)
Can the City Pay its Bills Now?
FHI #2 General Fund Liquidity Ratio
This indicator assesses changes (increases or decreases) in available cash and is useful in
identifying the City's ability to pay bills on time by measuring readily available cash, such as
unrestricted cash and investments. A declining ratio indicates that the City does not have
sufficient cash available to meet its current obligations as they come due. This indicator is
important in identifying a trend of deteriorating cash as well as how rapidly it is deteriorating. For
this measure, a higher ratio suggests a greater capacity for paying off short-term obligations.
5-Year General Fund Liquidity Ratio -
City of Huntington Beach
FY 20-21
FY 17-18 FY 18-19 FY 19-20 8.52 •
(9 mos) 7.14 6.55 FY 21-22
6.20 5.38
FY 21 -22 General Fund Liquidity Ratio - Comparable Cities
Garden Grove, 14.07
Irvine, 8.25
Santa Ana, 7.56
Newport Beach, 5.77
al Huntington Beach, 5.38
Costa Mesa, 4.36
Orange, 3.29
Anaheim, 2.43
Fullerton, 2.05
FINANCIAL HEALTH INDICATOR #2- INSIGHT
The City's liquidity ratio indicates that the City is able to pay its bills as payments are due by
measuring readily available cash, such as unrestricted cash and investments, compared to the
total liability obligations, such as payables and accrued payroll. The total liability obligations at
year end will vary from year to year based on pay period end dates, timing of projects, and
timing of invoices issued by suppliers.
588
Financial Position
Can the City's Revenues Cover Its Expenses?
A City does not only need to pay bills now, but it needs to make sure that the money it brings in regularly
is enough to cover its annual expenses. Missing this mark can negatively affect service levels and the
City's credit rating which is important for current loan covenants and any future potential debt
financing.
FHI # 3 General Government Growth in Net Position Ratio
A growth in net position indicates that the City can pay its expenses with its revenue and is able
to establish appropriate reserves for future allocation. Revenues from the City's programs ideally
should cover the expenses that the City incurs for those programs, otherwise reserves may need
to be used to meet the needs.A higher ratio suggests that annual costs are adequately funded,
and the financial condition is improving.
5-Year General Government Growth in Net Position - City of Huntington Beach
Y 21-22
FY 18-19 8.3%
FY 17-18
(9 mos) FY 19-20 FY 20-21
5.1% 8% 0.5%
FY 21-22 General Government Growth in Net Position - Comparable Cities
Costa Mesa, 28.2%
Fullerton, 13.4%
Santa Ana, 12.4%
Anaheim, 12.3%
Huntington Beach, 8.3%
Garden Grove, 8.3%
Orange, 5.8%
Newport Beach, 3.1%
Irvine, 0.1%
FINANCIAL HEALTH INDICATOR#3 INSIGHT
This ratio measures the change in net position compared to the total General Government net
position. When revenues exceed expenses and assets exceed liabilities, an increase in the ratio
will be seen. The City has shown continued growth in net position. The 8.3% increase in FY
2021/22 is largely attributed to the 21.3% CaIPERS investment return, which eliminated the 15%
unfunded pension liability remaining with CaIPERS after the FY 2020/21 Pension Obligation Bond
refinancing of 85% of the City's unfunded pension liability. It is important to note that there will
be a new unfunded pension liability created due to the -7.5% CaIPERS investment return in FY
2021/22 which will be reported on the City's FY 2022/23 ACFR.
589
Financial Position (Cont.)
Can the City's Revenues Cover Its Expenses?
FHI #4 General Government Operating Margin Ratio
The City funds certain programs via grants and intergovernmental aid from other government
agencies (e.g. Federal and State) and also charges for services that are offered to its residents.
This measurement illustrates how much of the City expenditures are funded by charges, fees,
and grants rather than general tax dollars to fund program expenditures. For this measure, a
higher, ratio suggests basic government services are more self-sufficient through charges, fees,
and grants and less reliant on general tax dollars to fund program expenditures.
5-Year General Government Operating Margin Ratio - City of Huntington
Beach
FY 17-18 • •
(9 mos) FY 18-19 FY 19-20 • FY 21-22
41% 32% FY 20-21 38%
31% 25%
FY 21-22 General Government Operating Margin Ratio - Comparable Cities
Anaheim, 65.3%
Fullerton, 54.1%
Irvine, 53.1%
Santa Ana, 52.2%
Garden Grove, 44.4%
Newport Beach, 40.5%
I Huntington Beach, 37.6%
Orange, 30.7%
Costa Mesa, 25.0%
FINANCIAL HEALTH INDICATOR#4-INSIGHT
This ratio illustrates how much of the City's expenditures were funded by charges, fees, and
grants (37.6%) rather than general tax dollars (62.4%) to fund program expenditures. The other
cities appear to fund their operations more heavily by charges, fees, and grants. This could be
attributed to the level of cost recovery implemented by each City. While there is no standard
we know that most cities do not implement 100% cost recovery.
590
Financial Position (Cont. )
Can the City's Revenues Cover Its Expenses?
FHI #5 General Government Own Source Revenue Ratio
The City receives grants and intergovernmental aid from other government agencies, such as
the state and federal governments. While the City welcomes grants and aid to support City
services, the less reliant the City is on money from those sources, the more independent the
City's financial condition is. Revenues from grants are used to support some City functions.
Other functions, such as public safety, are mainly funded by general tax dollars. This ratio
illustrates the extent to which general government revenues were supported by grants. A
lower ratio suggests that the City is not heavily reliant on grants and more reliant on general
tax dollars and charges for services.
5-Year General Government Own Source Revenue
Ratio - City of Huntington Beach
•, FY 19-20
FY 1°7-18 FY 18-19 9% FY 20-21 FY 21-22
(9 mos) 6% 6% 6%
5%
FY 21-22 General Government Own Source Revenue Ratio - Comparable Cities
Huntington Beach, 6.0%
Newport Beach, 8.5%
Costa Mesa, 10.9%
Orange, 13.9%
Fullerton, 17.7%
Garden Grove, 25.1%
Irvine, 25.8%
Santa Ana, 28.6%
Anaheim, 36.6%
FINANCIAL HEALTH INDICATOR#5 -INSIGHT
This ratio explains how much of our revenues are from grants (6%) compared to general tax
dollars and charges for services (94%). With the addition of the American Rescue Plan Act
funding of $29.6 million, this ratio will be higher next year and is not indicative of an ongoing
pattern as these funds are considered one-time funding only.
591
Long -Term Solvency
Can the City Pay Its Bills in the Future?
A city will have bills in the future and its current financial condition will influence its ability to pay them.
For the long-term future, a city needs to ensure that its revenue sources can cover long-term spending
needs and provide services to a growing and changing population.
FHI #6 General Government Near-Term Solvency Ratio
The City has both short-term and long-term obligations that must be paid in the future.The fewer
number of years of annual revenue needed to pay the City's obligations, the stronger the City's
financial condition. This ratio demonstrates that the City is able to pay a larger portion of its
debts with annual revenues. For this measure, a lower ratio indicates a stronger financial
condition.
5-Year General Government Near-Term Solvency Ratio - City of
Huntington Beach
•
FY 17-18
(9 mos)
2.80 FY 18-19 FY 19-20 FY 20-21
1.93 1.98 1.92 FY 21-22
1.65
FY 21-22 General Government Near-Term Solvency Ratio - Comparable Cities
Irvine, 0.49
Newport Beach, 1.23
Fullerton, 1.47
Garden Grove, 1.57
Huntington Beach, 1.65
Anaheim, 1.78
Orange, 1.91
Costa Mesa, 2.01
Santa Ana, 2.14
FINANCIAL HEALTH INDICATOR #6 -INSIGHT
The City has both short-term and long-term obligations that must be paid in the future.The fewer
number of years of annual revenue needed to pay obligations, the stronger the City's financial
condition. The decrease of the City's long-term debt in FY 2020/21 is due to the refinancing of
85% of the City's pension liability with the issuance of Pension Obligation Bonds, as well as
refinancing of two of the City's Lease Revenue Bonds (2010A and 2011 A) to lower interest rates.
The decrease in FY 2021/22 is largely attributed to the 21.3% CaIPERS investment return, which
eliminated the 15% unfunded pension liability remaining with CaIPERS after the Pension
Obligation Bond refinancing. It is important to note that there will be a new unfunded pension
liability created due to the -7.5% CaIPERS investment return in FY 2021/22 which will be reported
on the City's FY 2022/23 ACFR.
592
Long -Term Solvency (Cont. )
Can the City Pay Its Bills in the Future?
FHI #7 General Government Debt, Pension Liability, & OPEB Burden per Resident Ratio
The City issues debt for a variety of reasons and pays for employees' pensions, including other
post-employment benefits. Having a low debt per capita would put the City in a stronger
financial position. Lower bonded debts, pension liability, and other post-employment benefits
(OPEB) per capita result in a smaller debt burden on taxpayers. For this measure, a lower ratio
indicates a stronger financial condition.
5-Year General Government Bonded Debt, Pension Liability& OPEB Burden
per Resident - City of Huntington Beach
FY 17-18 FY 18-19 FY 19-20 FY 20 21
(9 mos) 2,227 2,275 2,328 •
2,305 FY 21-22
1,439
FY 21-22 General Government Bonded Debt, Pension Liability & OPEB Burden
Irvine, 144 per Resident - Comparable Cities
I. Huntington Beach, 1,439
Garden Grove, 1,527
Orange, 1,624
Santa Ana, 1,986
Fullerton, 2,906
Costa Mesa, 2,932
Anaheim, 3,462
Newport Beach, 3,466
FINANCIAL HEALTH INDICATOR #7-INSIGHT
As previously discussed, the sharp decrease in FY 2021/22 is largely attributed to the 21.3%
CaIPERS investment return, which eliminated the 15% unfunded pension liability remaining with
CaIPERS after the Pension Obligation Bond refinancing. It is important to note that there will be
a new unfunded pension liability created due to the -7.5% CaIPERS investment return in FY
2021/22 which will be reported on the City's FY 2022/23 ACFR.
593
Long -Term Solvency (Cont. )
Can the City Pay Its Bills in the Future?
FHI #8 Governmental Funds Coverage Ratio
If a large portion of the City's expenses go towards paying debt principal and interest, it shows
that the City is less able to spend money on services and capital improvements. The City has
principal and interest payments on debt. The lower the amount of these payments compared
to all the other expenditures it has, the stronger its financial condition. For this measure, a lower
ratio indicates a stronger financial condition.
5-Year Governmental Funds Coverage Ratio -
City of Huntington Beach
•
Y 21-22
9.1%
FY 17-18
(9 mos) •
0.8% FY 18-19 FY 19-20
2.9% 2.7% FY 20-21
1.8%
FY 21-22 Governmental Funds Coverage Ratio - Comparable Cities
Irvine, 0.01%
I Fullerton, 0.2%
Garden Grove, 1.0%
Costa Mesa, 2.0%
Santa Ana, 2.5%
Newport Beach, 4.9%
Anaheim, 8.0%
Huntington Beach, 9.1%
Orange, 11.3%
FINANCIAL HEALTH INDICATOR#8- INSIGHT
The City has a higher ratio than most of the comparative cities, implying the City has higher
principal and interest payments and more overall long-term debt. The City did have more long-
term debt than the comparative cities, primarily as a result of the issuance of a $363.6 million
Pension Obligation Bond in FY 2021/22 of which $341.5 million was related to general
government funds. However, it is important to note that when aggregating all of the City's
bonded debt, pension, and OPEB liabilities as shown in FHI #7, Huntington Beach has one of the
lowest debt burdens per resident to comparative cities.
594
Long -Term Solvency (Cont. )
Can the City Pay Its Bills in the Future?
FHI #9 Enterprise Funds Coverage Ratio
This measure compares the interest expense owed on debts annually to the ongoing, typical
operating revenues from which that expense will be paid. This is similar to a small business
owner making sure that the interest payments on the mortgage for her office aren't too large
compared to the revenues she brings in each year. Just like the City's governmental services
need to pay their debts (e.g., bonds) in the long-term, the City's Enterprise Funds need to do
so as well. The City's Enterprise Funds include Water, Sewer, Refuse, and Hazmat Service Funds.
For this measure, a higher ratio indicates a stronger financial condition.
5-Year Enterprise Funds Coverage Ratio - City of Huntington Beach
FY 20-21
509.63
•
FY 21-22
128.01
FY 21-22 Enterprise Funds Coverage Ratio - Comparable Cities
Newport Beach,4,631.75
- Fullerton,218.92
ri Huntington Beach, 128.01
11 Santa Ana, 122.38
I Orange,83.38
I Garden Grove, 60.74
Anaheim, 18.17
Irvine,0.00
Costa Mesa,0.00
FINANCIAL HEALTH INDICATOR#9- INSIGHT
The City only shows two fiscal years of data as its Enterprise funds did not carry long-term debt
prior to FY 2020/21, with the issuance of a $363.6 million Pension Obligation Bond in FY 2021/22
of which $22.1 million was related to Enterprise funds.
•
595
Long -Term Solvency (Cont. )
r
Can the City Pay Its Bills in the Future?
FHI #10 General Government Capital Asset Value Ratio
A negative ratio indicates that the City's capital assets decreased in value— that is, the value
at the end of the year was less than the value at the beginning of the year. This indicates that
the depreciation of capital assets was greater than the value of capital assets added, and that
some capital assets may need to be renovated or replaced. Most of the City's capital assets
decrease in value over time due to depreciation. The City needs to make sure that as capital
assets age, it is renovating or replacing them. Capital assets include land, buildings, vehicles,
and public infrastructure. For this measure, a higher ratio indicates a stronger financial condition.
5-Year Governmental Capital Assets Value Ratio - City of Huntington
Beach
•
FY 20-21
3% ,• .
FY 17-18 FY 18-19 ' FY 21-22
(9 mos) 1%% FY 19-20 1%
1% 1%
FY 21-22 Governmental Capital Assets Value Ratio - Comparable Cities
Fullerton, 5%
Orange, 3%
Santa Ana, 2%
Huntington Beach, 1%
I Newport Beach, 0.04%
I Garden Grove, 0.03%
Anaheim, 0.4% NI
Costa Mesa, -1%
Irvine,-1%
FINANCIAL HEALTH INDICATOR #10-INSIGHT
The City showed an increase in FY 2020/21 primarily due to the purchase of land which is
temporarily being used as the site for a 174-bed Navigation Center.
596
Long -Term Solvency (Cont. )
Can the City Pay Its Bills in the Future?
FHI #11 Enterprise Funds Capital Asset Value Ratio
This ratio explains the percentage of Enterprise Funds capital assets that have been
depreciated. Depreciable capital assets include buildings, vehicles, and public infrastructure.
Assets are depreciated over their useful life as they age, and their value is reduced. A lower
ratio indicates Enterprise Funds capital assets are newer and may not require as much
replacement and/or maintenance costs compared to older capital assets.
5-Year Enterprise Funds Capital Asset Ratio - City of Huntington Beach
FY 20-21 FY 21-22
FY 19-20 50% 50%
FY 18-19 48%
FY 17-18 47%
(9 mos)
46%
FY 21-22 Enterprise Funds Coverage Ratio - Comparable Cities
Irvine,0%
Costa Mesa,0%
Fullerton,37%
Newport Beach, 38%
Anaheim,40%
Garden Grove,45%
Huntington Beach,50%
Santa Ana,52%
Orange, 63%
FINANCIAL HEALTH INDICATOR #11 -INSIGHT
This ratio explains the percentage of Enterprise Fund capital assets that have been depreciated.
The City's Enterprise Funds capital assets have aged over the past five years which is evidenced
by the annual increase in the ratio. While the ratio is higher when compared to a majority of its
comparative cities, the increasing trend in this ratio could be indicative of other issues which
require additional analysis.
597
Long -Term Solvency (Cont.)
_ e
Can the City Pay Its Bills in the Future?
FHI #12 General Fund Public Safety Costs Ratio
This ratio compares the total costs of the General Fund public safety, which includes police and
fire, to the total General Fund expenditures. A higher ratio indicates more funds are dedicated
to public safety.
5-Year General Fund Public Safety Costs Ratio - City of Huntington Beach
FY 18-19 FY 19-20 FY 20-21 FY 21-22
FY 17-18 60% 63% 65% 61%
(9 mos)
52%
FY 21-22 General Fund Public Safety Costs Ratio - Comparable Cities
Irvine,40%
Newport Beach, 42%
Anaheim, 49%
Santa Ana,54%
Costa Mesa,55%
Orange, 61%
/, e' Huntington Beach,61%
Fullerton, 70%
Garden Grove, 70%
FINANCIAL HEALTH INDICATOR#12-INSIGHT
The Public Safety costs ratio increased over the four fiscal years prior to FY 2021/22, then
declining primarily due to the refinancing of 85% of the City's pension liability with the issuance
of Pension Obligation Bonds in FY 2020/21, with cost savings first realized in the prior fiscal year.
It is important to note that the remaining 15% pension liability held with CaIPERS may incur
increasing annual UAL payments in the future due to the -7.5% CaIPERS investment return in FY
2021/22.
598
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Presentation Overview
• City FY 2022/23 Budget Update
• FY 2022/23 Mid-Year Budget Adjustment Requests
• Staffing Levels and Vacancies
• Financial Health Indicators
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Financial Update
• The City ended FY 2021/22 with a $3.4 million surplus primarily due to a stronger
recovery in sales tax and transient occupancy tax than originally anticipated
• Recent economic indicators in 2022 signal caution
-Ai ,�_ �,.�;� ,.. �;, sl�t� - �;. ,y�� '�'4�95< < x,�'," 4 '.Y .I6`,► "�, da �.y ..
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Interest a :e Inflation E, z GD
,.. � �� � ,.r Mar�k�tl�ndex• Fed raised rates 7 • 9.1%June 2022 1Q2022: -1.6% •i • 2022
times in 2022 to ' • 8.2% Sept 2022 • 2Q2022: -0.6% , • Bond: -12.3%
' 4.25-4.50% 6.5% I
Dec 2022 • 3Q2022: +3.2% • US Stock:-19.4%
• Inverted yield curve
• 4Q2022: +2.9% j • Intl Stock: -14.79%
• These economic factors are creating headwinds for expansion, investment, and consumer
demand
• Consumers are saving less, drawing from savings, and increasing credit usage
• State unemployment December 2022 is 4.1 % after 16.1 % COVID peak (May 2020)
although ratio of job openings to job seekers is starting to decline
4
602
General Fund Long-Term Financial Plan
6 .8% CaIPERS Return FY22/23
Actual Adopted Projected Projected Projected Projected`. Projected
-t . ousands: : , �FY21 22. Y2 g 2�3.' Y22 °23= ' fY23 24 �F�f24 25� FY25' 26. FY 6 ti7
�. mom •:� �� ��r� �����- . - I' �_- --_ b - _- � . �. .. ..__ �, . • _._ ��s
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Revenue (Recurring) $256,246 $253,552:� $273,293 $276,7631 $282,097' $287,6955, $293,546
Revenue (One-Time) ts, 29,607' 29,607 -it-
-
Total Revenues i $256,246 $283,159� $302,900 w $276,763� $282,097s $287,695 M $294,546
Expenditures less UAL " 234,277 ' 234,415 251,031 256,408 262,956 269,158 274,718
CaIPERS UAL 4,891� 4,891� 4,8 �� 1` 1: '� �� f _ � 1 � 5 000� 5 OOOn.� a. 8,270I 12 380
POB Payment. 13,688 13,556 13,556, 13,276 12,989 12,687 12,537
1 1 �
One-Time Expenditures i ` 16,1355 .16,135'r i �1
Total Expenditures 252,856 268,997 285,613 274,6841 280,945 290,115 299,635
- B RecoveryReserves H (13,472)� — (13,4 E. 2I
Surplus/(Deficit) $3,390 $690, $3,815 $2,078, $1,153 ($2,421), ($6,089)
• Requires use of Section 115 Trust reserves (per UAL Policy) starting in FY25/26
• Insufficient funds projected to be available in Section 115 Trust and Pension Stabilization Reserve to
structurally balance the budget starting FY28/29 5
603
CaIPERS Update
> FY2021/22 CaIPERS return of -7.5% (original estimate -6.1 %) requiring escalating UAL
payments by the City
> October 18 — City Council approved $3 million to fund the Section 115 Trust to address
CaIPERS' unfavorable return
> Section 115 Trust balance as of June 30, 2022: $15.4M
> CaIPERS Gains & Losses amortized over 20 years with a 5 year ramp-up
> Projections assumes CalFERS earns 6.8% in FY23/24 going forward which is CaIPERS'
discount rate
CaIPERS
A,.
> CaIPERS' investment policy ..Years ,s Plan Return,.
focuses on long-term plan e 1 Year i� -7.5/
cc D ecrease il�C�G2 —_.-- �_r.
returns * o
°� UAL UAL 5 Years 6.7/.
W
Paym'e Payme R. m > POB is financially advantageous 10 Y Years 7/
as long as CaIPERS long-term 20 Years* 6.9/
return is > 2.925%
\ / 30 Years* 7.7%
* Based on original est. -6.1%return 6
604
CalPERS UAL Payment Projection
30
25 - - - -
20
u, 15
0
10
5
x
6
6 6
�
4
*4
25
26 26 26 26
21
20
20
20
20
16
15
15
15
15
6/30/2023 6/30/2024 6/30/2025 6/30/2026 6/30/2027 6/30/2028 6/30/2029 6/30/2030 6/30/2031 6/30/2032 6/30/2033
3.4% Return o 6.8% Return ■ 10.2 % Return
CaIPERS UAL Payments based on projected FY22/23 CaIPERS Returns scenarios, with 6.8% return from
FY 2023/24 onward.
605
CaIPERS UAL Payment Projection
25
20.5 20.4 20.3 20.2 20.1 20.0
1
15
12.0
o' 8.8
8.3,/' 6.1
4.9 5.0
5 - -- --- ---- - -
i
2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33 2033-34
® Baseline - Addfl General Fund Section 115 Trust ®Shortfall —c—UAL Payment
CaIPERS UAL Payments based on projected CaIPERS 6.8% Return in FY22/23 and moving forward 8
606
FY 2022/23 Mid -Year Budget Adjustments
....
i�� TIN'
0 ATF •',.....0 I :
• .V \k e3 "z 1
. : 1
'Nik • $
=��UNPi C;V,il 9
607
Mid-Year Budget Adjustment Requests
Mid-year budget adjustments are requested in 6 separate funds:
1. General Fund (100)
2. Asset Forfeiture (212)
3. Equipment Replacement (324)
4. Workers' Compensation (551)
5. Supplemental Law Enforcement Services Fund (SLESF) (984)
6. New grant fund (TBD)
Adequate funding is available for all requested budget adjustments
10
608
General Fund Adjustments
Community & Library Services Department
• $537K - increased demand for contract class instructors and increased printing
costs for Spring & Summer SANDS offset with recreational and art class revenues
for a net zero impact
Community Development Department
• $700K - increased building plan check services offset with plan check permit
revenues for a net zero impact
Finance Department
• $115K - increase in credit card processing fees for payments made through the
City's Enterprise Land Management (ELM) system
11
609
General Fund Adjustments
Fire Department
• $525K - Fire strike team reimbursement costs offset with strike team
reimbursement revenues for a net zero impact
• $175K - Medical & safety supplies for City ambulances offset with emergency
medical response revenues for a net zero impact
Police Department
• $189K increased payment to County for 800MHz cost sharing
Public Works Department
• $752K - increased citywide fuel costs
• $590K - increased vehicle maintenance and accident repair costs
12
610
General Fund Adjustments
Non-Departmental
• $250K — increased utility costs for natural gas
• $500K transfer to the Equipment Fund to ensure adequate funding for essential
capital equipment needs and address rising equipment costs
• $4.3M transfer to the Workers' Compensation Fund to ensure adequate funding
for workers' compensation claims
• $2.0M transfer to the Section 115 Trust to protect the City from future pension
cost increases
13
611
General Fund Adjustment Summary
.... ... . .„_..„,. ........ ,, _.. „ , ..„:„...„ , - „,„,:-... -.- ''''''7 77;' - ' . - :'17',"!:' " ' -'"'4T: ' "' - '' 7r-,:-- ' ''. - '.!,-1. ' - -;:k-,;".R
Department Apropration Revenue Offset m _ Net_In 7. crease _pi A
Community & Library 1_ __$537,000 _._v _ ,- _.__. $537,000
Community Development 700,000 700,000 -
Finance 115000 ,! - 115 000
°
Fire 700,000 700,000
ir---
Police _ ___.________ ___ ._ -_ 189,000 d� 189 000
_ It
'Public Works 1,342,000 - 1,342,000 -
iNon-De artmental 7 050 000 7 050,000 s
General Fund Total $8,633,000 $1,937,000 $8,696,000
14
612
Other Fund Adjustments
• Other Fund Adjustments requested in the following funds:
• Narcotics Forfeiture - Federal (212)
• Equipment Replacement (324)
• Refuse Collection Service (504)
• Workers' Compensation (551)
• Supplemental Law Enforcement Services Fund (SLESF) (984)
• CalAPP Grant Fund (new)
15
613
Other Fund Adjustments
Workers' Compensation (Fund 551) — Human Resources
• $4.3M for increased costs of claims due to rising medical costs and an expanded list of
injuries that are presumed to be work related under California law, including cancer, post-
traumatic stress, and long-term impacts of COVID. Appropriation is funded by requested
$4.3M transfer in from the General Fund.
Supplemental Law Enforcement Services Fund (SLESF) (Fund 984) — Police
• $750K appropriation for temporary relocation of the dispatch center to Central Net and
for the purchase and implementation of a new software to facilitate efficient real-time,
fact-based decision making. _
CalAPP Grant (new Fund) - Community Development
• $80K CaIAPP Grant for solar permit platform. Offsetting grant revenues and expenditures
for net zero impact.
16
614
Other Fund Adjustments
Narcotics Forfeiture - Federal (Fund 212) — Police
• $60K for overtime costs arising from participation in the Orange County Regional
Narcotics Suppression Program.
Equipment Replacement (Fund 324) — Non-Departmental
• $500K appropriation in the Equipment Replacement Fund to ensure adequate funding for
essential capital equipment needs and address rising equipment costs. Appropriation is
funded by requested $500K transfer in from the General Fund.
Refuse Collection Service (Fund 504) — Public Works
• $531K 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.
17
615
Other Funds Adjustment Summary
> Sufficient revenues, cash, and/or fund balances are available to support the
requested other funds adjustments
Fund Fund Name Appropriation Revenue Offset Net Increase
L22arcocsFdrfeiture - FderaI �j _ F $60 000;[77 $60,0000
324 Equipment Replacement 500,000 500,000 ,
mm
I 504 ;Refuse Collection Services �' 531,000 1 531,000
551 Workers' Compensation 4,300,000 4,300,000 -
If-
L 984 Supplemental Law Enforcement Services j�LL__ LL LL 750 000 it 1----
750,000„
New 'CalAPP Grant 80,000 80,000
ETTTIEiia ±IIII1IIIILILJiiiióiààL iII $810,000 1
18
616
Summary of Mid-Year Budget Requests
Fund Description m Aount Total
'' '' .. ._` _. J m F`i_ _` .,t.,, _- _ _ ________ _, .teas^'!_
Department appropriation requests: ' $3,833,000
• Approve appropriations Equipment Transfer 500,0
00 General 10 633^000
and/or transfers of ���
Fund ,I Workers' Compensation Transfer 4 300 000 ' '
$16.8M Section _ _� .__,__ 115 Trust Transfer 2,000,000 ,
• Projected General Fund r-_ -.:_. _ -_ -- ----:-__ .__ __------_ ..,; _:--_.._ ___
'I Narcotics Forfeiture - Federal I 60,000 ;
FY22/23 surplus after ... - -. - — ___ 4 � _ ,
appropriation: $3.8M Equipment Fund Appropriation 500,000 I^
Refuse Collection Services 1531,000 ,
Other .� _�__,;_ ___ _- :: _ _=�
• Approve professional ---__W--_. -_ --- -- --- - -_-----_-, - -- - - -- $6,221,000
Funds Workers' Compensation Appropriation 4,300,000 I
service contract c
increases Supplemental Law Enforcement ' 1 750,000 ' °
• Approve CalAPP Solar __ - CaIAPP Grant 80,000 I
Total L$16,854,000 j
Permit Grant ___ _ _e. _ ^w w� _ _ � __ - _ _ = - _ �
Less: Offsetting revenues . ($7,348,000)
Net Increase $9,506,000
19
617
Staffing Levels and Vacancies
. .
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- ��iii// 20
618
FY 2022/23 Full Time Equivalent — General Fund
870.00 --.-
861.85
859.5 859.77
860.00 _ 854.4 _ .,___ __ - ___ __
, 852.05 852.2
Pre-COVID
852.04
__-�___ __ ____._._____...___--
840.00 -- ___ ___ -_____
F_Y 2022/23
Adopted
Budget
820.00 _ __ _ __- _ v___ w___ _ _
818.82
810.7
810.00
_ _ — -
796.87
Restructure
- ---- Plan
790.00 -----
FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 i
21
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Financial Health Indicators
„,.............
�,i NTINGT .....
,/ ......
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• �'40.-...,,,,,/,,, 23
621
Financial Position
Can the City Pay Its Bills Now?
• FHI # 1 General Fund Reserve Ratio — Building up reserves which is useful in
identifying deteriorating fund balance reserves.
• FHI #2 General Fund Liquidity Ratio — Ability to pay expenses which is useful
in identifying the City's ability to pay bills on time.
Ate NTINGT
, ottAP0RArep..
1 %
1o's .
2F ;.:.'; �\�o,0l
=coUNT'(c: 41, 24
622
FHI #1 General Fund Reserve Ratio
A declining fund balance reserve can be a sign of fiscal stress. This indicator is important in identifying a trend of a
deteriorating fund balance reserves as well as how rapidly it is deteriorating. A higher ratio suggests larger reserves
for dealing with unexpected resource needs in the long run.
5-Year General Fund Reserve Ratio
FY 17-18 City of Huntington Beach
(9 mos)
35%
•�
o•
FY 20-21 •
• FY339/20 34% FY 21�-22
FY 18-19
33/o FY 21-22 General Fund Reserve Ratio-Comparable Cities
31%
Irvine,95%
Garden Grove,80%
Santa Ana,43%
Costa Mesa,34%
Newport Beach,34%
Huntington Beach,33%
Orange,32%
Anaheim,31%
Fullerton,21%
25
623
FHI #2 General Fund Liquidity Ratio
A declining ratio indicates a city does not have sufficient cash available to meet its current obligations as they come
due. This indicator is important in identifying a trend of deteriorating cash as well as how rapidly it is deteriorating.
Ideally, a higher ratio suggests a greater capacity for paying off short-term obligations.
5-Year General Fund Liquidity Ratio-
City of Huntington Beach
• FY 21-22 General Fund Liquidity Ratio-Comparable Cities
FY 20-21
• Y 18-19 8.52
FY 17-18 7.14 FY 19 20 Garden Grove,14.07
(9 mos) 6.55 FY 21-22
6.20 5.38 Irvine,8.25
Santa Ana,7.56
Newport Beach,5.77
Huntington Beach,5.38
Costa Mesa,4.36
Orange,3.29
Anaheim,2.43
Fullerton,2.05
26
624
Financial Performance
Can the City's Revenues Cover Its Expenses?
• FHI # 3 General Government Growth in Net Position Ratio — Change in Net
Assets where growth in net position indicates City can pay its expenses with
ongoing revenue and establish appropriate reserves for future allocation.
• FHI # 4 General Government Operating Margin Ratio — City services are more
self-sufficient through charges, fees, and grants.
• FHI #5 General Government Own Source Revenue Ratio — Reliance on tax
dollars versus the City's reliance on federal and state grants. #i1�NTING `
00 c . cOAPOR44 .... \
--- _= % tom
1
I
_°1/NTY27
625
FHI #3 General Government Growth in Net
Position Ratio
Revenues from programs ideally should cover the expenses that are incurred for those programs, otherwise reserves
may need to be used to meet the needs. A higher ratio suggests that annual costs are adequately funded, and the
financial condition is improving.
5-Year General Government Growth in Net Position-City of
Huntington Beach
/FY2122
FY 18-19 8.3%
4.6% FY 21-22 General Government Growth in Net Position-Comparable Cities
FY 17-18
(9 mos) FY 19-20 Costa Mesa,28.2%
5.1% FY 20-21
0.8% 0.5%
Fullerton,13.4%
•
Santa Ana,12.4%
Anaheim,12.3%
Huntington Beach,8.3%
Garden Grove,8.3%
Orange,5.8%
Newport Beach,3.1%
Irvine,0.1% 28
626
FHI #4 General Government Operating Margin
Ratio
A city charges for services and may receive grants and aid from other governments (e.g., Federal and State). For this
ratio, a higher ratio suggests basic government services are more self-sufficient through charges, fees, and grants
and less reliant on general tax dollars to fund program expenditures.
5-Year General Government Operating Margin Ratio-
City of Huntington Beach
FY 21-22 General Government Operating Margin Ratio-Comparable Cities
•
F m •
os)
FY 21-22
(9 os) FY 18-19 • 38%
41% FY 19 20
32% 31% FY 20-21 Anaheim,65.3%25%
Fullerton,54.1%
Irvine,53.1%
Santa Ana,52.2%
Garden Grove,44.4%
Newport Beach,40.5%
Huntington Beach,37.6%
Orange,30.7%
Costa Mesa,25.0%
29
627
FHI #5 General Government Own Source
Revenue Ratio
Revenues from grants are used to support some City functions. Other functions, such as public safety, are mainly
funded by general tax dollars. This ratio illustrates the extent to which government revenues were supported by
grants. A lower ratio suggests that the City is not heavily reliant on grants and more reliant on general tax dollars and
charges for services.
5-Year General Government Own Source Revenue
Ratio-City of Huntington Beach
FY 19 20 FY 21-22 General Government Own Source Revenue Ratio-Comparable Cities
FY 17 18 FY 18-19 FY 20-21 FY 201-22 ;6/
C Huntington Beach,6.0%
(9 mos) 6% 6%
5% Newport Beach,8.5%
Costa Mesa,10.9%
Orange,13.9%
Fullerton,17.7%
Garden Grove,25.1%
Irvine,25.8%
Santa Ana,28.6%
Anaheim,36.6%
30
628
Long -Term Solvency
Can the City Pay Its Bills in the Future?
• FHI # 6 General Government Near-Term Solvency Ratio — Ability to pay obligations
with annual revenues where fewer number of years of annual revenue needed to pay
City obligations the stronger its financial condition.
• FHI # 7 General Government Debt, Pension Liability & Other Post-Employment
Benefits (OPEB) Burden per Resident — Amount of liability per resident where lower
liability per capita results in smaller debt, pension, and OPEB burden on taxpayers.
• FHI # 8 Governmental Funds Coverage Ratio — A larger portion of expenses used for
debt means the City is less able to spend money on services and capitalPO•�dCI,��N �NGTp
improvements. �� _ •,.<<N
• FHI # 9 Enterprise Funds Coverage Ratio — Availability of resources for Enterprise o = = k
Funds to make bond payments. V26.•+.• e`�
=OUNTY ci 31
629
FHI #6 General Government Near-Term Solvency
Ratio
This ratio demonstrates a City's ability to pay a larger portion of its debts with annual revenues. For this measure, a
lower ratio indicates a stronger financial condition.
5-Year General Government Near-Term Solvency Ratio
-City of Huntington Beach
• FY 21-22 General Government Near-Term Solvency Ratio-Comparable Cities
FY 17-18
(9 mos) •��•— --�•�_!
2.80 FY 18-19 FY 19-20 FY 20-21
1.93 1.98 1.92 FY 21-22 Irvine,0.49
1.65
Newport Beach,1.23
Fullerton,1.47
Garden Grove,1.57
Huntington Beach,1.65
Anaheim,1.78
Orange,1.91
Costa Mesa,2.01
Santa Ana,2.14
32
630
FHI #7 General Government Debt, Pension
Liability, & OPEB Burden per Resident Ratio
Lower bonded debts, pension liability, and other post-employment benefits (OPEB) per capita result in a smaller
debt burden on taxpayers. For this measure, a lower ratio indicates a stronger financial condition.
5-Year General Government Bonded Debt,Pension Liability
&OPEB Burden per Resident-City of Huntington Beach
� • r
FY 17-18 FY 18-19 FY 19-20 FY 20-21
(9 mos) 2,227 2,275 2,328
•
2,305
FY 21-22 FY 21-22 General Government Bonded Debt, Pension Liability&OPEB Burden
1,439
per Resident-Comparable Cities
Irvine,144
Huntington Beach,1,439
Garden Grove,1,527
Orange,1,624
Santa Ana,1,986
Fullerton,2,906
Costa Mesa,2,932
Anaheim,3,462
Newport Beach,3,466
33
631
FHI #8 Governmental Funds Coverage Ratio
A City has principal and interest payments on debts. The lower the amount of these payments compared to all the
other expenditures it has, the stronger its financial condition. For this measure, a lower ratio indicates a stronger
financial condition.
5-Year Governmental Funds Coverage Ratio-
City of Huntington Beach
•
FY 21-22
9.1% FY 21-22 Governmental Funds Coverage Ratio- Comparable Cities
FY 17-18
•
0.87 FY 18-19 FY 19-20 • Irvine,0.01%
2.9% FY 20-21
2. %7
0
1.8% Fullerton,0.2%
Garden Grove,1.0%
Costa Mesa,2.0%
Santa Ana,2.5%
Newport Beach,4.9%
Anaheim,8.0%
Huntington Beach,9.1%
Orange,11.3%
34
632
FHI #9 Enterprise Funds Coverage Ratio
Just like a City's governmental services need to pay their debts (i.e., bonds) in the long-term, a city's enterprise funds
need to do so as well. The City's Enterprise Funds include Electric, Water, Sewer, Refuse, and Hazmat Service Funds.
For this measure, a higher ratio indicates a stronger financial condition.
5-Year Enterprise Funds Coverage Ratio- City
of Huntington Beach
•
FY 20-21
509.63
FY 21-22 Enterprise Funds Coverage Ratio- Comparable Cities
•
FY 21-22
128.01
Newport Beach,4,631.75
■ Fullerton,218.92
Huntington Beach,128.01
Santa Ana,122.38
1 Orange,83.38
Garden Grove,60.74
Anaheim,18.17
Irvine,0.00
Costa Mesa,0.00
Note:No Enterprise Funds in the cities of Costa Mesa and Irvine.
35
633
Long-Term Solvency - Continued
Can the City Pay Its Bills in the Future?
• FHI # 10 General Government Capital Asset Value Ratio — Change in value of
capital assets where if City doesn't replace or renovate its capital assets, value
over time decreases.
• FHI # 11 Enterprise Funds Capital Asset Age Ratio — Percentage of Enterprise
Funds capital assets that have been depreciated.
• FHI #12 Public Safety Costs Ratio — Compares and determines the funding
level of the General Fund public safety costs.
• O�•••• tORP0RAr '•. \
111� .~ yc��\
COUNT`I i�
634
FHI #10 General Government Capital Asset
Value Ratio
Capital assets include land, buildings, vehicles, and public infrastructure. Most of the City's capital assets decrease in
value over time due to depreciation. A negative ratio means that the overall value of a city's assets decreased over
the year indicating some assets may need to be renovated or replaced. For this measure, a higher ratio indicates a
stronger financial condition.
5-Year Governmental Capital Assets Value Ratio-City of
Huntington Beach
FY 21-22 Governmental Capital Assets Value Ratio-Comparable Cities
•
FY 20-21
3% Fullerton,5%
• •
• FY 18 19 • Orange,3%
FY 21-22
FY 17-18 1% FY 19-20 1%(9 mos) 1% Santa Ana,2%
1% Huntington Beach,1%
INewport Beach,0.04%
IGarden Grove,0.03%
Anaheim,0.4% ■
Costa Mesa,-1%
Irvine,-1% 37
635
FHI #11 Enterprise Funds Capital Asset Value
Ratio
Depreciable capital assets include buildings, vehicles, and public infrastructure. Assets are depreciated over their
useful life as they age, and their value is reduced. A lower ratio indicates Enterprise Funds capital assets are newer
and may not require as much replacement and/or maintenance costs compared to older capital assets.
5-Year Enterprise Funds Capital Asset Ratio-City of FY 21-22 Enterprise Funds Coverage Ratio- Comparable Cities
Huntington Beach
®•FY 21-22 Irvine,0%
FY 20 21
50%
+�*�19 20 50% Costa Mesa,0%
18 19 48%
FY 17-18 47% Fullerton,37%
(9 mos)
46% Newport Beach,38%
Anaheim,40%
Garden Grove,45%
Huntington Beach,50%
Santa Ana,52%
Orange,63%
Note:No Enterprise Funds in the cities of Costa Mesa and Irvine. 38
636
FHI #12 General Fund Public Safety Costs Ratio
This ratio compares the total costs of the General Fund public safety, which includes police and fire, to the total
General Fund expenditures. A higher ratio indicates more funds are dedicated to public safety.
5-Year General Fund Public Safety Costs Ratio-
City of Huntington Beach
'�18-19 FY 19-20 FY 20-21 FY 21-22 FY 17-18 600/ 63% 65% 61% FY 21-22 General Fund Public Safety Costs Ratio-Comparable Cities
(9 mos)
52%
Irvine,40%
Newport Beach,42%
Anaheim,49%
Santa Ana,54%
Costa Mesa,55%
Orange,61%
Huntington Beach,61%
Fullerton,70%
Garden Grove,70%
39
637
ONGOING CHALLENGES
• Inflationary Costs
• Increased CaIPERS Costs
• Increased Workers' Compensation CostsICHALLEP4G1\.AHEAD! � �
• Increased General Liability Costs
• Increasing General Fund Reserves
• Capital and Infrastructure Needs
40
638
Fiscal Health Summary
• Healthy available General Fund reserves and liquidity maintained at very
strong levels during the past several years, including during the COVID-19
pandemic.
• General Fund fund balance equivalent to 34% of FY 2021/22 revenues
• Property tax base provides a stable revenue source with significant amount of
untapped assessed valuation
• Diverse sales tax base (no single dominant industry or business)
• AAA Fitch rating maintained since first received in 2014
• Credit rating could lower if City's available General Fund reserves are reduced
to weaker levels in the future without a plan to restore balance within two
fiscal years.
• Addressing upcoming challenges proactively will determine the future of the
City's continued financial health.
41
639
Recommended Actions
• Receive and File the FY 2021/22 Annual Comprehensive Financial Report and
other auditor issued reports
• Receive and File the Fiscal Health Report
• Approve mid-year budget adjustments to the FY 2022/23 Revised Budget
• Authorize additional Professional Services authority in the Fiscal Year 2022/23
Revised Budget
• Approve and authorize the Mayor and City Clerk to execute "Amendment No. 1 to
Agreement between the City of Huntington Beach and CSG Consultants, Inc. for
On-Call Building Division Plan Review Services"
• Approve and authorize the Mayor and City Clerk to execute "Amendment No. 1 to
Agreement between the City of Huntington Beach and True North Compliance
Services, Inc. for On-Call Building Division Plan Review Services"
• Accept, approve and authorize the City Manager to execute the grant agreement
with the State of California Energy Commission in the amount of $80,000
42
640
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