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Fiscal Year Ending June 30, 2006
Comprehensive Annum Financial Report
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Comprehensive Annual Financial Report
For the Year Ended June 30, 2006
Prepared by the Administrative Services Department
Dennis C. Danner, Director
The City of Newport Beach was incorporated September 1, 1906
The present City Seal was adopted July 22, 1957
Introductory Section
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CITY OF NEWPORT BEACH
Comprehensive Annual Financial Report
Year Ended June 30, 2006
TABLE OF CONTENTS
INTRODUCTORY SECTION
(Unaudited)
Tableof Contents ............................................................ ...............................
Letter of Transmittal ........................................................ ...............................
GFOA Certificate of Achievement for Excellence in Financial Reporting ......
CSMFO Certificate of Award for Outstanding Financial Reporting ................
List of City Officials ......................................................... ...............................
OrganizationChart .......................................................... ...............................
FINANCIAL SECTION
Independent Auditors' Report ............................................................... .............................23
Management's Discussion and Analysis ............................................. .............................25
(Required Supplementary Information)
Basic Financial Statements
Government -wide Financial Statements:
Statement of Net Assets .................................................................... .............................43
Statement of Activities ........................................................................ .............................44
Fund Financial Statements:
Governmental Funds:
BalanceSheet ................................................................................. .............................50
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets ............................................................ .............................51
Statement of Revenues, Expenditures and Changes in Fund Balances ......................
52
Reconciliation of Statement of Revenues, Expenditures and Changes
In Fund Balances of Governmental Funds to the Statement of Activities ..............53
Budgetary Comparison Statements:
GeneralFund ............................................................................ .............................54
Tide and Submerged Land Fund ............................................... .............................56
Newport Coast Annexation ........................................................ .............................57
Proprietary Funds:
Statement of Net Assets ............................................................... .............................61
Statement of Revenues, Expenses and Changes in Fund Net Assets .....................62
Statementof Cash Flows ........................................................... ...............................
63
Fiduciary Funds:
Statement of Fiduciary Assets and Liabilities — Agency Funds ....... .............................67
Notes to the Financial Statements ..................................................... .............................69
1
Supplementary Schedules
Non -Major Governmental Funds:
Combining Balance Sheet .................................. ............................... ............................118
Combining Statement of Revenues, Expenditures and Changes in
FundBalances ................................................... ............................... ............................124
Budgetary Comparison Schedules:
StateGas Tax Fund ........................................... ............................... ............................130
AssetForfeiture Fund ........................................ ............................... ............................131
ContributionsFund ............................................. ............................... ............................132
161
Circulation and Transportation Fund .................. ............................... ............................133
Building Excise Tax Fund ................................... ............................... ............................134
Combined Transportation Fund ......................... ............................... ............................135
Arterial Highway Rehabilitation Fund ................. ............................... ............................136
Community Development Block Grant Fund ...... ............................... ............................137
Air Quality Management District Fund ............... ............................... ............................138
Environmental Liability Fund .............................. ............................... ............................139
Supplemental Law Enforcement Fund ............... ............................... ............................140
Traffic Congestion Relief .................................... ............................... ............................141
Internal Service Funds:
Combining Statement of Net Assets .................. ............................... ............................145
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets.......
146
Combining Statement of Cash Flows ................. ............................... ............................147
Fiduciary Funds:
Combining Statement of Fiduciary Assets and Liabilities ................. ............................151
Statement of Changes in Fiduciary Net Assets .. ............................... ............................152
STATISTICAL SECTION (Unaudited)
StatisticalContents ........................................................ ............................... ............................153
Financial Trends:
Net Assets by Component ....................................... ............................... ............................155
Changesin Net Assets .............................................. ............................... ...........................156
Fund Balances of Governmental Funds ................... ............................... ............................158
Changes in Fund Balance of Governmental Funds . ............................... ............................159
Revenue Capacity:
Assessed Value and Estimated Actual Value of Taxable Property .......... ...........................160
Property Tax Rates, Direct and Overlapping Governments, Last Ten Fiscal Years ...........
161
Principal Property Taxpayers as of June 30, 2006 ... ............................... ...........................162
Property Tax Levies & Collections ............................ ............................... ...........................163
Debt Capacity:
Ratio of Outstanding Debt by Type .......................... ............................... ............................164
Ratio of General Bonded Debt Outstanding ............. ............................... ............................166
Schedule of Direct and Overlapping Debt ................ ............................... ............................167
Computation of Legal Debt Margin .......................... ............................... ............................168
Revenue Bond Coverage, Last Ten Fiscal Years .... ............................... ............................170
Demographic and Economic Information:
Demographic and Economic Statistics, Last Ten Fiscal Years ............... ............................171
V
PrincipalEmployers ................................................. ...............................
............................172
Operating Information:
Full Time City Employees by Function ..................... ...............................
............................173
Operating Indicators by Function .............................. ...............................
...........................174
Capital Asset Statistics by Function .......................... ...............................
...........................176
Water Sold by Customer Type ................................. ...............................
............................178
WaterRates ............................................................. ...............................
............................179
Major Water Customers ........................................... ...............................
............................180
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CITY OF NEWPORT BEACH
ADMINISTRATIVE SERVICES
Dennis Danner, Director /Treasurer
December 15, 2006
Honorable Mayor and Members of the
City Council,
and Citizens of the City of Newport Beach
Newport Beach, California
The City Charter and California state law require that the City of Newport Beach issue
annually a complete set of financial statements and that an independent firm of certified
public accountants audit this report in conformance with generally accepted auditing
standards (GAAS). The Comprehensive Annual Financial Report (CAFR) of the City of
Newport Beach for the year ended June 30, 2006, is hereby submitted.
The CAFR was prepared in conformance with generally accepted accounting principles
(GAAP) as promulgated by the Governmental Accounting Standards Board (GASB).
This report consists of City management's representations concerning the finances of
the City of Newport Beach. Responsibility for the accuracy and completeness of the
data presented rests with the City. Management of the City is also responsible for
establishing and maintaining an internal control structure designed to ensure that the
assets of the government are protected from loss, theft, or misuse, and to ensure that
adequate accounting data is compiled to allow for the preparation of financial
statements in conformity with generally accepted accounting principles. The internal
control structure is designed to provide reasonable, but not absolute, assurance that
these objectives are met. The concept of reasonable assurance recognizes that: (1) the
cost of a control should not exceed the benefits likely to be derived; and (2) the
valuation of costs and benefits requires estimates and judgments by management. We
believe the information presented in this report is complete and accurate in all material
respects, and that it is reported in a manner designed to fairly present the financial
position and results of operations of the various activities of the City of Newport Beach.
Further, the City of Newport Beach's financial statements have been audited by Mayer
Hoffman McCann P.C., a firm of licensed certified public accountants. The goal of the
audit was to provide reasonable assurance that the financial statements of the City of
Newport Beach for the fiscal year ended June 30, 2006, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and
evaluating the overall financial statement presentation. The independent auditor
concluded, based on the audit, that there was a reasonable basis for rendering an
unqualified opinion that the City of Newport Beach's financial statements for the year
ended June 30, 2006, are fairly presented in conformity with GAAP. The independent
auditor's report is presented as the first component of the financial section of this report.
3300 Newport Boulevard • Post Office Box 1768 - Newport Beach, California 92658 -8915
Telephone: (949) 644 -3127 - Fax: (949) 644 -3339 -Website: www.city.newport- beach.ca.us
5
A narrative introduction, overview, and analysis accompany the basic financial
statements in the form of the Management's Discussion and Analysis (MD &A). The
letter of transmittal is designed to complement the MD &A and should be read in
conjunction with it. The City of Newport Beach MD &A can be found immediately
following the report of the independent auditors and will provide further information
regarding the format and content of this report.
CALIFORNIA IN PERSPECTIVE
California's gross state product is over $1.6 trillion, making it one of the largest
economies of the world according to the Legislative Analyst's Office (LAO). California
accounts for over 13% of the nation's output. Our nation's next largest state economy is
Texas which is approximately 60% the size of California.
California Ranks Among the
World's Top Ten Economies
Unit
United
4 6 0 10 12 14
Gross Product in 2006
Source: 2006 Cal Facts (LAO)
PROFILE OF THE CITY
The City of Newport Beach is located in the coastal center of Orange County, in the
heart of Southern California, with Los Angeles County to the north and San Diego
County to the south. There are currently 34 cities within the County offering one of the
finest climates in the United States. Orange County is now the second largest county in
California trailing only Los Angeles and surpassing San Diego and is the sixth largest
county in the nation. In fact, according to the 2000 Census, Orange County now has a
greater number of residents than twenty of the Country's states including Montana,
Mississippi and New Hampshire.
L^'
The City of Newport Beach is one of Southern California's most scenic and dynamic
communities. It surrounds Newport Bay, well known for its picturesque islands and one
of the greatest natural yacht harbors in the world, accommodating over 9,000 boats of
all types docked within its 21 square mile harbor area. This bay area and the ten miles
of ocean beach offer outstanding fishing, swimming, surfing, and aquatic sports
activities. The City has a permanent population of 83,361. During the summer months,
the population grows to over 100,000 with 20,000 to 100,000 tourists daily. There are
fine residential areas, modern shopping facilities, and a quality school system. A major
campus of the University of California is located immediately adjacent to the City, and
eight other colleges are within a 30 -mile radius.
The City of Newport Beach was incorporated September 1, 1906. The current City
Charter was adopted in 1954. The City operates under a Council- Manager form of
government. Council members are elected by district but voted on by the population as
a whole, and serve four -year staggered terms. The governing council consists of the
mayor and six other members and is responsible for among other things, policy- making,
passing local ordinances, adopting the budget, appointing committees and hiring the
City Manager, City Attorney, and City Clerk. The City Manager is responsible for
carrying out the policies and ordinances of the City Council, for overseeing the day to
day operations of the City, and for appointing heads of departments. The City of
Newport Beach is a full service city providing its residents and visitors with the following
functional services: general governance, legal, financial, information technology, and
administrative management; police, fire, paramedic, lifeguard, and emergency medical
transport services; engineering, construction, and maintenance of public facilities, public
streets, beaches, and parks; planning, zoning, and economic development services;
building inspection, plan check, and code enforcement services; libraries and cultural
and arts services; recreation and senior services; water, wastewater, rubbish disposal,
and street light utility services. The City provides water and sewer service to most
areas within City limits, but it does not provide gas, electrical, or other utility service.
Public elementary and secondary education is provided by school districts, which are
separate government entities.
The City's financial statements present the financial activity of the City of Newport
Beach (the primary government) and the Newport Beach Public Facilities Corporation (a
component unit of the City). The Corporation is blended into the City's financial
statements because of its operational and financial relationship with the City. Even
though it is a legally separate organization, City of Newport Beach elected officials have
continuing accountability for fiscal matters of the Corporation. Additional information
about the Newport Beach Public Facilities Corporation and the reporting entity in
general can be found in Footnote 1 a of the notes to the financial statements.
7
I116Zy_\a=Wo]ki 101'jI lot j I1:1
From 1950 -2006, the population of the City increased from 12,120 to 83,361. As vacant
land becomes increasingly scarce, population growth is expected to flatten considerably
as the City becomes relatively built -out. According to the Center for Demographic
Research at California State University Fullerton, the City of Newport Beach will be
home to an estimated 89,528 residents by 2010 and 91,409 residents by the year 2015.
Newport Beach's physical setting encompasses about 25.2 square miles of land, of
which approximately 75% is developed and 25% is undeveloped including the City's
coastal beaches used for recreation and open space. The developed land is 70%
residential and 30% non - residential.
This current land use mix produces General Fund revenues of approximately $136
million. The top three revenue categories include Property Taxes, Sales Taxes, and
Transient Occupancy Taxes (TOT). These account for 70% of General Fund revenues.
The remaining 30% of revenue is generated by significantly smaller and very diverse
sources.
General Fund Revenues
30.0%
• Property Taxes
42.7%
• Sales Taxes
• Transient Occupancy Taxes
72% ❑ All Other Sources
20.1%
Property Taxes — Largely a residential community, residential property accounts for
nearly 80% of all City Property Tax. Of the City's 41,850 dwelling units, 60% of the
housing is single - family units and 40% is multi - family units. The City receives, on
average, approximately 16.5% of the property taxes generated within City limits. The
remainder goes to the school district, the County, and other government entities.
Sales Taxes — The chart below demonstrates the diversity of the City Sales Tax
revenue. The largest segment, "Restaurants," accounts for only 19% of total sales
taxes and is represented by 345 restaurants. The next largest segment, "New Auto
Sales," accounts for 18% of total sales taxes and is represented by five dealerships.
tr
The "All- Other," categorization accounts for another 15% and is represented by 1,308
businesses. The City's sales tax base is largely diverse and is not dependent on any
one segment or any one individual merchant.
Sales Taxes by Business Segment
15% 19%
2%
a °i°
a/
a/
6%
77% 10%
7%
0 Restaurants - 345 ■ New Auto Sales - 5
❑ Department Stores - 40
❑ Miscellaneous Retail - 947
■Apparel Stores - 202
■ Leasing - 54
• Furniture / Appliance - 382
❑ Service Stations - 17
• Misc. Vehicle Sales - 56
■ Food Markets - 42
❑Office Equipment - 121 ■ Other - 1,308
Transient Occupancy Taxes (TOT) — The TOT accrues to the City at a rate of 10% of
room charges (with 18% of the collection going to the local Conference and Visitors
Bureau). The City distinguishes its transient occupancy taxpayers in two broad property
type categories, commercial and residential property. The commercial category is
composed of approximately twenty inns, motels, hotels and resorts and accounts for
89% of TOT revenues. The residential category is made up of some 700 vacation
rentals representing only 11% of TOT revenue. Together, they account for nearly $9.8
million in annual TOT revenue.
Annual
Revenues
Percent
(In Millions) of Total
Commercial Property:
Inns, Motels and Hotels $ 8.7 89%
Residential Property:
Vacation Rentals $ 1.1 11%
$ 9.8 100%
W
ECONOMIC OUTLOOK & FACTORS EFFECTING FISCAL PLANNING
U.S. Economy — Amidst mixed economic news, the Federal Reserve Board (FRB)
eased off the successive interest rate hikes during the latter half of the year as
inflationary pressures seemed to lull and the gross domestic product growth fell
relatively flat. The outlook of fewer interest rate hikes and easing energy costs seemed
to spur the equities markets as broad based gains were enjoyed by almost all capital
markets as we approached the close of 2006. While inflationary pressure and the
resulting FRB response continues to be of interest to the general public, there is much
more at stake hinging on the scope and persistence of low and possibly negative
economic growth rates.
State of California — The State of California has had significant structural budget
shortfalls since 2001 -02 when revenues plunged following the recession and steep
stock market decline. The annual gap between projected revenues and expenditures
had been massive and continues to exist as demonstrated in the chart below.
$0
-$1
-$2
-$3
-$4
-$5
California Operating Budget Shortfalls
as Estimated by Legislative Analyst's Office
(In Billions)
11i4fy IJSi fi icily MR R
While the State has addressed the annual shortfalls with limited -term solutions such as
substantial borrowing and spending deferrals, the State has frequently resolved their
budget issues with long -term and sometimes permanent diversions of local government
tax revenues, often with devastating impacts on local government finances.
10
With the passage of California Proposition 1A in 2004, voters elected to make it much
more difficult for State legislators to raid local government finances. Proposition 1A
does the following:
1. It strengthens prohibitions against unfunded State mandates by requiring the State
to suspend State mandates in any year the Legislature does not fully fund the
reimbursement of costs associated with those mandates;
2. It expands definition of a State mandate to include transfer of responsibility of a
program for which the State previously had full or partial responsibility;
3. It prohibits the State from:
• Reducing the local Bradley -Burns Uniform Sales & Use Tax rate or altering its
method of allocation, except to comply with federal law or an interstate compact;
• Decreasing Vehicle License Fee revenue from the 0.65 percent rate without
providing replacement funding to cities and counties;
• Shifting property taxes from cities, counties or special districts, with the following
exceptions:
a) The State may reallocate among cities, counties and special districts (but not
schools or any other local entity) with a two - thirds vote of both houses of the
Legislature.
b) Beginning in FY 2008 -09, the State may borrow up to 8 percent of the
property tax revenue within a county (currently about $1.3 billion on a
statewide basis) if:
— The governor declares a "fiscal hardship ";
— The Legislature enacts an urgency statute by a two - thirds vote;
— The funds are repaid within three years;
— The FY 2003 -04 VLF backfill gap has been repaid;
— Any previous borrowing of this kind has been repaid; and
— The State has not borrowed from the revenues more than twice in 10
years.
Although the State will continue to face substantial budget shortfalls for the next several
years, this proposition limits the State's ability to divert tax revenues that were intended
for local government. California's policymakers therefore face an even more difficult
challenge in resolving their budget problems.
11
Local Economy —
Property Taxes: Due to the limited supply of scenic coastal property and the unique
access to the scenic Newport Bay and one of the best recreational yacht harbors, the
Newport Beach community consists of 70% affluent residential neighborhoods and 30%
high -end commercial districts. Sales data as reported by DataQuick Information
Systems, for the month of October, 2006 demonstrates the relatively high density of
affluence through the residential communities with the following median home sales
prices.
CITY OF NEWPORT BEACH
Median Home Sales*
Month Ending October 2006
* Source: DataQuick Information Systems
Unlike many cities, property taxes, not sales taxes, are the number one source of
revenue for the City representing nearly 43% of all General Fund revenues. The limited
data above presents a dramatic reduction in the number of sales but offers mixed
results in the market value of the sales.
In the last year, the housing market has been the topic of much speculation. Most
experts seem to agree that the current downtrend in sales will result in a gradual
"correction" and not a "crash." Irrespective of one's view of the depth and scope of the
correction, it might seem reasonable to assume that the City property tax revenues
would also follow a similar pattern. However, since Californians passed Proposition 13
in 1978, the increase in assessed property value has been limited to 2% per annum.
Since market values have realized enormous gains since 1978, the unintended result of
Proposition 13 has been the creation of a huge gap between the assessed valuation
and current market value of real property. Because a property is not reassessed until it
changes ownership, assessed valuation would never equal market value unless 100%
of the properties changed hands in one year. Consequently, Proposition 13 and the last
decade's real estate boom have created a natural cushion against the adverse impact
that market volatility might otherwise have on assessed property tax values. Effectively,
the lag behind market value, smoothes the volatility of assessed property value.
12
Median
% Price
Sales
Zip
Sales
Change from
Home
Change from
Code
Price
2005
Sales
2005
92625
$1,337,500
-16.4%
9
12.5%
92660
$1,200,000
-21.1%
19
-29.6%
92661
$4,500,000
113.1%
3
-50.0%
92662
$3,450,000
26.4%
1
-80.0%
92663
$1,300,000
35.1%
15
-59.5%
92657
$3,175,000
87.0%
17
-46.9%
* Source: DataQuick Information Systems
Unlike many cities, property taxes, not sales taxes, are the number one source of
revenue for the City representing nearly 43% of all General Fund revenues. The limited
data above presents a dramatic reduction in the number of sales but offers mixed
results in the market value of the sales.
In the last year, the housing market has been the topic of much speculation. Most
experts seem to agree that the current downtrend in sales will result in a gradual
"correction" and not a "crash." Irrespective of one's view of the depth and scope of the
correction, it might seem reasonable to assume that the City property tax revenues
would also follow a similar pattern. However, since Californians passed Proposition 13
in 1978, the increase in assessed property value has been limited to 2% per annum.
Since market values have realized enormous gains since 1978, the unintended result of
Proposition 13 has been the creation of a huge gap between the assessed valuation
and current market value of real property. Because a property is not reassessed until it
changes ownership, assessed valuation would never equal market value unless 100%
of the properties changed hands in one year. Consequently, Proposition 13 and the last
decade's real estate boom have created a natural cushion against the adverse impact
that market volatility might otherwise have on assessed property tax values. Effectively,
the lag behind market value, smoothes the volatility of assessed property value.
12
The market value of local property has skyrocketed over the last decade posting
repeated double digit gains in most years. Due to Proposition 13, total assessed
property values increased at a much more moderate and stable pace than market
value. Over a ten -year period, assessed valuation increased an average of 9.7% per
annum and 7.3% over a twenty year period. Since geographic and socioeconomic
conditions in Orange County and the City are very desirable, property values in Newport
Beach are projected to remain significantly higher than assessed property values even
after considering any market value correction that may be forthcoming. Therefore,
City's property tax revenues are anticipated to maintain a favorable trend for many
years to come. The total Newport Beach assessed valuation for 2005 -06 increased by
nearly 12.8 %. The City enjoys the benefit of stability in its number one revenue source
even in a year where there might be a sudden and substantial drop in property values
due to a cyclical downturn or over - heated market conditions.
Sales and Transient Occupancy Revenues: Because sales tax and TOT revenues
follow the whim of consumer sentiment, they are impacted with much greater volatility
than property taxes. Due to a cooling housing market, some analysts are worried that
the slowdown could become so severe that it could drag the entire country into a
recession, much as the bursting of the stock market bubble in 2000 led to the 2001
slump. The threat is that the fall in home prices could have a significant impact on
consumer spending patterns. The so- called wealth effect pushed consumer spending
higher during the housing boom as soaring home prices made homeowners feel
wealthier and thus more inclined to spend money. But falling home prices could have
the reverse effect and depress consumer spending.
Sales tax and TOT collections through the first quarter of 2006 -07 compare favorably to
collections for the same period in 2005 -06. Provided that consumer confidence does
not erode significantly, sales tax and TOT revenues are expected to present modest
gains especially considering the recent addition of the largest Lexus dealership in the
nation and significant major hotel renovations.
Other Factors Impacting Fiscal Planning —
Defined Benefit Pension Costs — The City contracts with the California Public
Employees' Retirement System (CaIPERS) for certain defined pension benefits. The
City's contributions to the plan include a fixed employer paid member contribution and
an actuarially determined employer contribution that fluctuates each year based on an
annual actuarial plan valuation. This variable rate employer contribution includes the
normal cost of providing the contracted benefits plus or minus an amortization of plan
changes and net actuarial gains and losses since the last valuation period. It is the
City's policy to make contributions to the plan equaling at least 100% of the actuarially
required contribution (annual pension cost) and in most years will prepay the employer
contribution in full at the beginning of the year. Because the City pays the entire
actuarially required contribution each year, by definition, its net pension obligation at the
end of each year is $0.
13
With the downturn in the equities markets between 2000 and 2003 most pension fund
managers suffered investment losses and the CalPERS pension plan was no exception.
Until recently, CaIPERS actuaries assumed an annual investment return of 8.25 %. The
actual investment returns for fiscal years ended 2001, 2002 and 2003 were -7.2 %, -
5.9% and 3.9 %, respectively. This produced a three -year actuarial loss of
- 15.45 %, - 14.15% and - 4.35 %, respectively, or a three -year cumulative actuarial loss of
- 33.95 %. It was the first time in the pension fund's history to have three consecutive
years of actuarial investment losses and these three years had a profound impact on
employer contribution rates starting in 2004 as demonstrated in the chart below.
Combined Emolover Paid Pension Rates
Rate estimated by CalPERS actuaries
After studying their rate smoothing methodologies after this investment loss period,
CaIPERS implemented a new rate stabilization methodology that spreads investment
gains and losses over a much longer period of time. Consequently, the rates are
expected to fall slower than they rose. Through conservative budgeting, the City was
able to absorb the pension increases within its operating budget without dipping into
reserves. Looking forward, it is clear the pension rates have peaked and are on the
way back down to normal cost and are expected to be more stable. For more
information on the City's pension plan and funding levels, see Footnote 10 in the notes
to the financial statements.
14
Miscellaneous
Plan
Safety Plan
Over / Under
Over/ Under
Normal
Actual
Normal
Normal
Actual
Normal
Cost
Cost
Cost
Cost
Cost
Cost
2001
11.281%
7.000%
-4.281%
20.215%
14.659%
- 5.556%
2002
12.985%
7.000%
- 5.985%
22.461%
14.153%
- 8.308%
2003
13.364%
7.000%
- 6.364%
22.853%
17.698%
- 5.155%
2004
13.436%
7.000%
- 6.436%
24.130%
26.580%
2.450%
2005
13.623%
11.328%
- 2.295%
24.287%
35.105%
10.818%
2006
14.217%
17.203%
2.986%
22.913%
37.095%
14.182%
2007
14.182%
16.132%
1.950%
23.200%
34.453%
11.253%
2008
14.005%
15.691%
1.686%
23.212%
35.098%
11.886%
2009
14.005%
15.500%
'
1.495%
23.212%
34.700%
11.488%
Rate estimated by CalPERS actuaries
After studying their rate smoothing methodologies after this investment loss period,
CaIPERS implemented a new rate stabilization methodology that spreads investment
gains and losses over a much longer period of time. Consequently, the rates are
expected to fall slower than they rose. Through conservative budgeting, the City was
able to absorb the pension increases within its operating budget without dipping into
reserves. Looking forward, it is clear the pension rates have peaked and are on the
way back down to normal cost and are expected to be more stable. For more
information on the City's pension plan and funding levels, see Footnote 10 in the notes
to the financial statements.
14
Post Employment Health Plans — Effective January 2006, the City and employee
associations agreed to major changes to the Post Employment Healthcare Plan. New
employees and employees with less than five years of service will participate in a
program that requires certain defined employee and employer contributions. However,
once the contributions have been made to the employee's account, the City has no
further funding obligation to the plan. Employees with greater than five years of service
or miscellaneous employees that have a combined factor of age and years of service
that is greater than, or equal to, 50 (47 for safety employees) had the option to retain a
hybrid of the former defined benefit formula or fully convert to the new plan. As of
June 30, 2006, 356 retirees were participating in the defined benefit plan and 368
employees are still eligible to receive future benefits of $400 ($425 for certain retired
Police employees) per month under this plan. This program is largely funded on a pay -
as- you -go basis; however, the City has set aside $3.2 million to offset the unfunded
portion of the post employment health benefit plan. The City is in the process of
obtaining an actuarial calculation of the liability associated with the former plan and will
amortize the unfunded liability over a period not -to- exceed thirty years.
Comprehensive Facilities Replacement Plan — During the year, City staff, along with
a citizen -based committee, developed a funding plan to replace all major critical
facilities within fifteen years through a combination of utilizing cash resources and
staggered debt issues. The intent of the plan was to develop a perpetual, systematic
basis for replacing critical facilities with a level contribution built into the operating
budget. As of June 30, 2006, the City has set aside $11 million and will be contributing
in excess of $3 million annually to pre -fund this effort.
6'3IATJ /_1N1b'i:11:
The City has taken a conservative approach to forecasting revenues, often assuming a
"worst case scenario." This fiscal conservatism has helped stabilize the City's finances
and as a result, we are able to maintain our course without cuts in service. The City has
demonstrated fiscal discipline with an ability to prepare balanced budgets, save during
difficult economic periods and maintain extremely low debt ratios. The City has
managed to fully fund Council designations totaling $45.2 million in the General Fund of
which $15.5 is specifically designated for contingencies. The City has taken aggressive
actions to recognize the costs and future implications of current programs, advance
fund capital projects when feasible and simply demonstrate its ability to live within its
means.
Budget — The annual budget serves as the foundation for the City of Newport Beach's
financial planning and control. The Administrative Services Department, with City
Manager direction, develops budget guidelines and appropriation limits for each
department every year in January. The departments then submit revenue and
expenditure appropriation requests which are summarized by the Administrative
Services Department and presented to the City Manager for review. The City Manager
then meets with each department and prepares a proposed budget document for the
15
City Council. The City Council holds a budget hearing and adopts a budget on or
before June 30, the close of the City's fiscal year.
Budgets are adopted for the General Fund and Special Revenue Funds. The legal level
of budgetary control is at the fund level. The City Manager is authorized to transfer
budgeted amounts between departments within any fund; however, any revisions which
increase the total appropriations of any fund over $10,000 must be approved by the City
Council.
Cash Management — It is the City's policy to invest all temporarily idle short-term funds
and longer -term reserves in a manner that will maximize return without sacrificing
security or jeopardizing liquidity requirements. Idle funds are invested in accordance
with the Government Code and a formal investment policy approved by the City
Council. The policy, which is reviewed and updated annually, allows investments in a
variety of specific instruments, as well as certain State, County, and private sector
investment pools and asset management services. Certificates of deposit, demand
deposits, bankers acceptances, U.S. Government and agency securities, commercial
paper, repurchase agreements, and the State Treasurer's Local Agency Investment
Fund (LAIF) are examples.
The City's current investment strategy is to normally place most of the funds with five
private sector investment management firms. Each of these intermediaries is guided by
and constrained to an investment program at least as restrictive as the policy governing
the City's direct investments. Regular reporting, both in writing and by personal
presentation, is required. Additionally, with regard to the private sector firms, well -
established and highly reputable third party custodians hold all cash or securities
managed by them on the City's behalf. Smaller, more liquid portions of the portfolio are
invested directly by City staff or placed with the State Treasurer's LAIF. For more
information on the City's investment policy, see Footnote 4 in the notes to the financial
statements.
Risk Management — The City maintains a risk management program, which is a
combination of self- insured retention, excess insurance coverage, and written policies
regarding department safety procedures. The City is also insured for environmental
liabilities associated with waste disposal. As part of the City's risk management
program, resources are aggressively set aside in an Internal Service Fund (Insurance
Reserve Fund) to meet current and probable losses. All claims are investigated,
valued, reserved, and defended and /or settled in accordance with generally accepted
industry practices. Additional information on the City of Newport Beach's risk
management activity can be found in Footnote 8 in the notes to the financial statements.
it
AWARDS & ACKNOWLEDGMENTS
Awards — The City has prepared a comprehensive annual financial report for thirteen
straight years. The City has been fortunate to receive state and national awards for
excellence in financial reporting each of those years.
The Government Finance Officers Association of the United States and Canada
(GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to
the City of Newport Beach for its comprehensive annual financial report for the fiscal
year ended June 30, 2005. In order to be awarded a Certificate of Achievement, a
government unit must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted
accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our
current comprehensive annual financial report continues to conform to the Certificate of
Achievement Program's requirements and we are submitting it to GFOA to determine its
eligibility for another certificate.
The California Society of Municipal Finance Officers ( CSMFO) is a state organization
which sponsors extensive training and emphasizes high standards in all aspects of
municipal finance operations, including financial reporting. As a result of last year's
report, the City of Newport Beach is fortunate to have remained among the ranks of
California cities that have met the rigorous standards of financial reporting required of
recipients of the CSMFO Outstanding Financial Reporting Award.
Acknowledgments - Preparation of this report was accomplished through the efficient
and dedicated services of virtually everyone in the City's Accounting Division and Print
Shop. In addition, members of the Administrative Services Department would like to
thank the City Manager, and the Mayor and City Council for their interest and support in
planning and conducting the financial operations of the City in a responsible and
progressive manner. We would also like to thank our auditors, Mayer Hoffman McCann
P.C., for their time and assistance in the preparation of the report. This report was
completely prepared and published by City employees.
Hom r L. Bludau
City Manager
17
,at'..
Dennis C. Danner
Administrative Services Director
II ��I V 11111 111
Presented to
Califomia
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2005
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
lu
California Society of
�/-Wunicipal finance Officers
Certificate of Award
Outstanding Financial Reporting 2004 -05
Presented to the
`l
This cerpficate is Issued in recognition ofineering professional standards and criteria in reporting
lohich reflect a high level of quality in rite annual financial statements
and in the underlying accounting system from which the reports were prepared.
February 24, 2006
vv 6111 TM., Chnir
Prokz,lonel @ Teohnlol Stvndvrde Caoawwe
Dedicated to Excellence in Municipal Financial Management
M
NEWPORT BEACH CITY OFFICIALS
CITY COUNCIL
L to R: Council Members Keith D. Curry and Edward D. Selich, Mayor Pro Tem Steven Rosansky,
Mayor Don Webb, Council Members Leslie J. Daigle, Tod W. Ridgeway, and Richard A. Nichols
Lto R: City Attorney Robin Clauson, City Manager Homer Bludau, City Clerk LaVonne Harkless
Sharon Wood ........... ...............................
Assistant City Manager /Director of Community & Economic Development
DaveKiff ............................................................................
............................... ......................Assistant City Manager
Dennis C. Danner .....................................................
............................... Administrative Services Director /Treasurer
BobMcDonell ..............................................................................
............................... ..........................Chief of Police
TimRiley .......................................................................................................................
............................... Fire Chief
Mark Harmon ......................................................................................
............................... General Services Director
Marie Knight ...............................................
............................... .....................Recreation & Senior Services Director
PatriciaL. Temple .............................................................................................
............................... Planning Director
JayElbettar .......................................................................................................
............................... Building Director
SteveBadum .............................................................................................
............................... Public Works Director
Barbara Ramsey ..............................................................................
............................... Human Resources Director
PeteAntista ...................................................................................
............................... ......................Utilities Director
Linda Katsouleas ..................................................................................
............................... Library Services Director
tze
ELECTORATE
r- BUILOINGCODE 1
BOARD OFAPPFALS
I
CIVIL SERVICE BOARD CITY CLERK
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ASSISTANT CITY MANAGER
MAYOR
8
COUNCIL
CITY ATTORNEY
CITY MANAGER
Immm onv ant e� se o wiopm r
taoor Ivelau—
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III
I I PLANNING
L_ — Current Plans & Projects
Advance Planning
II
II
II
I FIRE
Fire Suppreselon(Operations) Ocean UfeguaNs
Training and Education Haeardous Materials
Fire Prevention Junior Lifeguard Program
Adminiamation Emergency Metliral Services
II
II
I
BUILDING
HUMAN RESOURCES
Plan Checking
RECREATION & SENIOR SERVICES
Inspections
—
Permits
'
ADMINISTRATIVE SERVICES
HUMAN RESOURCES
Accounting Purchasing &Waretrousing
RECREATION & SENIOR SERVICES
Treasury Management Billing & Receivables
—
Geegrapolc Information System Telemmmunicationa
Personnel Admfnistrafion
Management Information Systems Revenue
PennI
Traffic
Detective
r-- - - - - -—
BOARD OF LIBRARY TRUSTEES
L- - - - - -J
r PARKS, BEACHES& 1—
RECREATION COMMISSION
I
` CITY ARTS COMMISSION
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Water
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POLICE I I
Suppan Services I I
Chief of Police
FIeel Mei tenant¢ I I
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PUBLIC WORKS I I
Engineering I I
DIP Management
Construction Management I I
Development Services
Tragic I I
II
II
GENERAL SERVICES I I
Parks and Trees Operations Suppod I I
Field Maintenance Traffic Signs & Markings
Building Maintenance Refuse Collection
Equipment Maintenance Fr iing
L—
HUMAN RESOURCES
RECREATION & SENIOR SERVICES
I I
—
Personnel Admfnistrafion
Recreation
Bene fit Mana'ri
Senior Services
— —
Risk Management
Laboreelatloos
I
LIBRARY SERVICES
I
Library ---- - - - -
-�
Cultural Arts
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- - - -J
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ELECTED OFFICIALS
COUNCILAPPOINTED BOARDS &COMMISSIONS COUNCILAPPOINTED POSITIONS CITY DEPARTMENTS
Fiscal Year 2005 -2006
March 22, 2005
21
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22
Financial Section
ti
H _
n
H .
H
Mayer Hoffman McCann P.C.
An Independent CPA Firm
Conrad Government Services Division
2301 Dupont Drive, Suite 200
Irvine, California 92612
949 - 474 -2020 ph
949 - 263 -5520 fx
www.mhm - pc.com
City Council
City of Newport Beach
Newport Beach, California
Independent Auditors' Report
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Newport Beach, California, as of and for the year ended June 30, 2006, which
collectively comprise the City's basic financial statements, as listed in the table of contents.
These financial statements are the responsibility of the City of Newport Beach's management.
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City of Newport Beach, as of
June 30, 2006, and the respective changes in financial position and cash flows, where applicable,
of the City of Newport Beach, California and the respective budgetary comparison information
for the general fund and major special revenue funds of the City for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
The information identified in the accompanying table of contents as management's discussion
and analysis are not a required part of the basic financial statements, but are supplementary
information required by the accounting standards generally accepted in the United States of
America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion
on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Newport Beach's basic financial statements. The introductory
section, combining and individual nonmajor fund financial statements, schedules, and statistical
tables 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 and
schedules have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole. The introductory section and statistical tables have
not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
23
City Council
City of Newport Beach
Newport Beach, California
In accordance with Government Auditing Standards, we have also issued a report dated October
27, 2006 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 to describe the scope of our testing,
and not to provide an opinion on the internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
Irvine, California
October 27, 2006
24
Management's
Discussion and Analysis
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the City of Newport Beach's Comprehensive Annual Financial Report (CAFR)
presents management's discussion and analysis of the City's financial performance during the
fiscal year that ended on June 30, 2006. This analysis should be read in conjunction with the
Transmittal Letter at the front of this report and the accompanying Basic Financial Statements.
FINANCIAL HIGHLIGHTS
Long -term Economic Resource (Government -wide) Focus — Economic resources are
differentiated from financial resources in that the economic measurement focus measures
changes in net assets as soon as the event occurs regardless of the timing of related cash
flows. Therefore, this measurement focus includes both current spendable resources and fixed
non - spendable assets, and long -term claims against these assets. The resulting net asset
utilizing this measurement focus provides one measure of the City's overall long -term financial
condition.
• The assets of the City exceeded liabilities at the close of the most recent fiscal year by
$2.236 billion. The vast majority of this figure is represented by illiquid capital assets
including land and infrastructure. Capital assets net of accumulated depreciation and
any related debt totaled $2.137 billion, while the remaining balance of net assets totaled
$99.0 million. Of this amount, $80.5 million represents unrestricted net assets that may
be used to meet the City's ongoing obligations to citizens and creditors for both
governmental and business -type activities.
• The City's total net assets increased $86.6 million (4.0 %) to $2.236 billion as a result of
current year activities. The increase is partially attributable to capital contributions of
$67.4 million consisting of land /projects known as John Wayne Gulch, Buck Gully,
Newport Coast Community Center, right -of -way and infrastructure as a result of the
State of California's relinquishment of Bristol Street, as well as several parks. See
further discussion in the Capital Assets and Debt Administration section.
• The City's total debt decreased by $1.8 million from $54.8 million to $53.0 million during
the current fiscal year, after taking into consideration a $1.7 million restatement, the
effect of which increased claims and judgments at June 30, 2005, from $3.4 million to
$5.1 million. The decrease is the net result of regular debt service payments, net
increases in the worker's comp payable, a net decrease in claims and judgments and
no change to net compensated absences.
Short -term Financial Resource (Fund) Focus — The Financial resources focus measures
inflows of current spendable assets. The resulting net difference between current financial
assets and current financial liabilities otherwise known as fund balance (or net working capital
in the private sector) is a measure of the City's ability to finance activities in the near term.
• At the close of the current fiscal year, the City's Governmental Funds reported a
combined ending fund balance of $100.7 million, an increase of $495,435.
25
Approximately $55.2 million is unreserved fund balance available to fund current
obligations at the City Council's discretion. Of the $55.2 million unreserved fund
balance, City Council has designated $15.4 for unspecified contingencies while the
remaining $39.8 million is designated for capital projects, appropriations, and other
special purposes.
• The General Fund reported an increase of $99,666 in fund balance after transferring
$28.6 million to other funds. Of this transfer, $15.2 million represented a routine transfer
to subsidize the operations of the Tide and Submerged Land Fund, while $1.2 million
was transferred to subsidize costs associated with the Newport Coast Annexation, $6.1
million was transferred to subsidize internal reserve funds, and $6.1 million represented
a nonrecurring transfer to certain Capital Project funds.
• At the end of the current fiscal year, unreserved fund balance for the General Fund was
$45.2 million, or 42.0% of total General Fund expenditures. Although unreserved and
available to fund current obligations, 100% of this balance is designated for
contingencies, capital projects, appropriations, and other special purposes.
[ OITA4:VIINVPNI am: INN yl� /_1ki [d/_1 W--3 IF_A94�d21 1111K
The financial section of the comprehensive annual financial report contains the following
information: Independent Auditor's Report, Management's Discussion and Analysis (this
section), the Basic Financial Statements, and the Supplementary Information section, an
optional section that presents combining and budgetary schedules for individual non -major
funds. The Basic Financial Statements are comprised of three components: 1) Government -
wide Financial Statements, 2) Fund Financial Statements and, 3) Notes to the Financial
Statements. The Management's Discussion and Analysis is intended to be an introduction to
the Basic Financial Statements.
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements — The Government -wide Financial Statements are
intended to provide a "Big Picture" view of the City as a whole using accounting methods
similar to those used by private sector companies. The statement of net assets includes all of
the City's assets (including non - spendable assets like streets, roads, and land rights) and
liabilities (including long -term liabilities that may be paid over twenty or so more years). All of
the current year revenues and expenses are accounted for in the statement of activities
regardless of when cash is received or paid.
The two Government -wide Financial Statements report the City's net assets and how they
have changed. Net assets — the difference between the City's assets and liabilities — is one
way to measure the City's financial health, or position. Over time, increases or decreases in
the City's net assets are an indicator of whether its financial health is improving or
deteriorating, respectively. To assess the overall health of the City, one should also consider
additional non - financial factors such as changes in the City's property tax base and the
condition of the City's roads.
tz-
The Government -wide Financial Statements of the City are divided into two categories:
Governmental Activities — This statement depicts the extent to which programs are
self - supporting and the net amount provided by property taxes and other general
revenues. Most of the City's basic services are included in this category, such as the
public safety, public works, community development and community services
departments, and general administration. Taxes and other general revenues finance
most of these activities.
Business -type Activities — The City accounts for its Water and Wastewater utilities as
business enterprises. The City charges fees to customers to recover the cost of
providing Water and Wastewater services.
Fund Financial Statements — Funds are accounting devices that the City uses to track and
control resources intended for specific purposes. The Fund Financial Statements provide more
detailed information about the City's most significant funds (major funds) but not the City as a
whole. Some funds are required by State and Federal law or by bond covenants. Other funds
are utilized simply to control and manage resources intended for particular purposes.
The City utilizes three broad categories of funds:
Governmental Funds — Governmental Funds are used to account for essentially the
same functions reported as Governmental Activities in the Government -wide Financial
Statements. However, unlike the Government -wide Financial Statements,
Governmental Fund Financial Statements utilize the financial resources measurement
focus and thus concentrate on near -term inflows and outflows of spendable resources,
as well as on balances of spendable resources available at the end of the fiscal year.
Consequently, the Governmental Fund Financial Statements provide a detailed short-
term view that helps a reader determine whether there are more or fewer financial
resources that can be spent in the near future to finance City programs. Also included in
the Governmental Funds are Permanent Funds. These funds are used to report
resources that are legally restricted to the extent that only earnings, not principal, may
be used for purposes that support City programs.
Proprietary Funds — Services for which the City charges customers a fee are generally
reported in Proprietary Funds (Enterprise Funds and Internal Service Funds). Like the
Government -wide Financial Statements, these funds provide both long and short-term
financial information utilizing the economic resources measurement focus. The City's
Enterprise Funds (Water and Wastewater Funds) are individual funds represented in
the combined presentation of Business -type Activities in the Government -wide Financial
Statements. The individual fund presentation provides more detailed information about
each business segment, its operating statements, and statements of cash flow. The City
also uses Internal Service Funds that are utilized to report and allocate the cost of
certain centrally managed and operated activities (e.g. fleet maintenance, risk
management, etc.). Because the Internal Service Funds primarily serve the
government, they are reported with Governmental Activities rather than the Business -
type Activities in the Government -wide Financial Statements.
27
Fiduciary Funds - The City utilizes Fiduciary Funds to account for assets held by the
City in a trustee capacity, or as an agent for other governmental entities, private
organizations, or individuals. All of the City's fiduciary activities are reported in a
separate statement of fiduciary net assets and a statement of changes in fiduciary net
assets. We exclude these activities from the City's Government -wide Financial
Statements because the City cannot use these assets to finance its operations.
Notes to the Financial Statements - The financial statements also include the Notes to the
Financial Statements that provide important narrative details about the information contained in
the financial statements. Information contained in the Notes to the Financial Statements is
critical to a reader's full understanding of the Government -wide and Fund Financial
Statements.
Supplementary Information - In addition to the required elements of the Basic Financial
Statements, we have also included a Supplementary Information section, which includes
budgetary and combining schedules that provide additional details about the City's non -major
Governmental Funds, Internal Service Funds, and Fiduciary Funds.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Net Assets - Net assets may serve over time as a useful indicator of a government's financial
position. The City's combined net assets for the year ended June 30, 2006, as shown in Table
1, were $2.236 billion.
Current and other assets
Capital assets
Total assets
Long -term liabilities outstanding
Other liabilities
Total liabilities
Net assets
Invested in capital assets, net of debt
Restricted
Unrestricted
Total net assets
Table 1
Net Assets
(in thousands)
Governmental Activities
2005 2006
$ 149,299 $ 150,708
1,946,230 2,027,701
2,095,529 2,178,409
47,572
47,095
18,167
17,107
63,999
64,202
1,915,349 2,005,644
52,546 51,901
61,894 56,663
$ 2,029,790 $ 2,114,207
Business -Type Activities Total
2005 2006 2005 2006
$ 22,357 $ 20,227
106,896 109,095
129,253 129,322
7,255
5,925
2,691
1,888
9,946
7,813
99,641 104,602
19,666 16,907
$119,307 $ 121,510
$ 171,656 $ 170,935
2,053,126 2,136,796
2,224,782 2,307,731
54,827
53,020
20,858
18,995
73,945
72,015
2,014,990 2,110,246
52,546 51,901
81,560 73,570
$ 2,149,096 $ 2,235,717
Invested in Capital
Assets - By far the largest component
of net assets,
$2.110 billion
(94.4 %), reflects the
City's investment in capital assets (e.g.,
land, buildings,
infrastructure,
and equipment) less
accumulated depreciation and any related outstanding
debt used to
28
acquire those assets. The City's capital assets do not represent a financial resource and
consequently are not readily available for funding current obligations.
Restricted Assets - An additional portion of the City's net assets, $51.9 million (2.3 %),
represents resources that are subject to external restrictions on how they may be used.
Unrestricted Assets - The remaining balance of unrestricted net assets, $73.6 million (3.3 %)
may be used to meet the City's ongoing obligations to citizens and creditors.
Overall the City's net assets increased $86.6 million during the current fiscal year. The
increase is partially attributable to capital contributions of $67.4 million consisting of land and
related projects. Other key financial activity for the year ended June 30, 2006 is as follows:
Table 2
Changes in Net Assets
(in thousands)
29
Governmental Activities
Business -Type Activities
Total
2005
2006
2005
2006
2005
2006
Revenues:
Program Revenues:
Charges for services
$ 33,791
$ 36,527
$ 20,474
$ 21,235
$ 54,265
$ 57,762
Operating grants and capital contributions
17,481
12,773
-
-
17,481
12,773
Capital grants and contributions
20,206
69,474
-
-
20,206
69,474
General Revenues:
Taxes:
Property taxes
46,303
57,889
-
-
46,303
57,889
Sales tax
24,318
27,186
-
-
24,318
27,186
Transient occupancy taxes
9,216
9,833
-
-
9,216
9,833
Other taxes
6,728
7,312
-
-
6,728
7,312
Intergovernmental (Unrestricted):
Motor Vehicle License Tax
6,396
508
-
-
6,396
508
Investment related income
951
1,224
336
380
1,287
1,604
Property income
-
-
27
-
27
-
Miscellaneous
761
777
-
761
777
Share of joint venture net income
100
(514)
-
-
100
(514)
Special Item:
-
-
Capital contributions
213,779
213,779
Total revenues
380,030
222,989
20,837
21,615
400,867
244,604
Expenses:
General government
13,119
14,510
-
-
13,119
14,510
Public safety
63,214
67,789
-
-
63,214
67,789
Public works
46,360
33,870
-
-
46,360
33,870
Community development
6,437
8,158
-
-
6,437
8,158
Community services
13,073
13,804
-
-
13,073
13,804
Interest
509
480
-
-
509
480
Water
-
-
14,467
16,204
14,467
16,204
Wastewater
2,741
3,168
2,741
3,168
Total expenses
142,712
138,611
17,208
19,372
159,920
157,983
Increases in net assets before transfers
237,318
84,378
3,629
2,243
240,947
86,621
Transfers
40
(40)
Increase in net assets
237,318
84,418
3,629
2,203
240,947
86,621
Net assets, beginning, as restated
1,792,471
2,029,789
115,678
119,307
1,908,149
2,149,096
Net assets, ending
$2,029,789
$ 2,114,207
$119,307
$ 121,510
$2,149,096
$2,235,717
29
Governmental Activities — The cost of all governmental activities in the current fiscal year
was $138.6 million. As shown in the statement of activities, $36.5 million of the costs was paid
by those who directly benefited from the programs, $82.2 million was financed by contributions
and grants received from other governmental organizations, developers, and property owners
for both capital and operating activities, and $19.8 million was subsidized through general City
revenues.
Net assets for governmental activities of the City at the beginning of the year were $2.030
billion, and increased by $84.4 million by the end of the year accounting for 97.3% of the total
growth of net asset for the City as a whole. The growth was primarily attributable to program
revenues from contributions of land as noted above.
The City is a full service city providing residents and visitors with the following functional
services:
General Government is comprised of six departments (City Council, City Clerk, City Manager,
City Attorney, Human Resources, and Administrative Services) providing general governance,
executive management, legal services, records management, risk management, finance,
accounting, and information technology services.
Public Safety is comprised of two departments (Police and Fire) providing general law
enforcement, fire suppression and prevention services, paramedic and medical transport
services, disaster preparedness, and ocean lifeguard services.
Public Works is comprised of two departments (Public Works and General Services) providing,
engineering, construction and maintenance of public streets, highways, buildings, beaches,
parks, and related infrastructure; as well as traffic engineering, street lighting, and trash
disposal services.
Community Development is comprised of two departments (Planning and Building) that
provide planning and zoning services; economic development services, and building plan
check and code enforcement services.
Community Services is comprised of two departments (Libraries & Arts and Recreation &
Senior Services) providing library services, cultural and arts programs, recreation services, and
senior social and transportation services.
Business Enterprise Operations are overseen by one department (Utilities) providing water and
wastewater services.
30
Each programs' net cost (total cost less revenues generated by the activities) is presented
below. The net cost shows the extent to which the City's general taxes support each of the
City's programs.
General government
Public safety
Public works
Community development
Community services
Interest
$70
$60
$50
$40
$30
$20
$10
$0
Table 3
Governmental Activities
(in thousands)
2005
Total Cost Net Cost
of Service of Service
$ 11,379
$ (8,966)
63,214
(44,758)
46,360
(8,882)
6,437
(1,307)
13,073
(5,072)
509
(509)
$ 140,972 $ (69,494)
2006
Total Cost Net Cost
of Service of Service
$ 14,510
$ (11,687)
67,789
(51,535)
33,870
35,815
8,158
(2,491)
13,804
10,541
480
(480)
$ 138,611 $ (19,837)
Table 4
Program Expenses and Revenue - Governmental Activities
Year Ended June 30, 2006
(in Millions)
General Public Safety Public Works Community Community Interest
Government Development Services
■Total Expenses 0Program Revenues
Of the $19.8 million in program revenues that financed the Governmental Activities, $51.5
million was utilized for Public Safety, $11.7 million was utilized for general government, $2.5
million was utilized for Community Development and $479,529 was utilized for interested on
long term debt. Public Works and Community Services had a $35.8 million and $10.5 million
excess of revenues over expenses respectively.
31
Table 5
Governmental Activities
Year Ended June 30, 2006
Sources of Revenue
(Excluding Special Items)
16%
1 so I
■ Charges for Services
■Contributions 24%
O Taxes
OOther
}?qy
Functional Expenses
1o% o% 10-,
■General Government
■ Public Safety
OPublic Works
O Community Development
)% ■ Community Services
■Interest
Major Governmental Activities in the current fiscal year included the following:
Revenues:
• Excluding transfers, total program and general revenues in the current year amounted to
$223.0 million. Of this amount, 53.3% represents program revenue, 28.5 % is from property
taxes, and 7% is from sales taxes and transient occupancy taxes. The remaining revenue
sources of 11.2% are represented by significantly smaller sources and are broadly diverse.
• The City reported contributions of $55.0 million in public works program revenues and $12.4
million in community services program revenues to reflect $67.4 million in contributions of
governmental land assets.
• Excluding the contributions of $67.4 million noted above from the current year, and the
$213.8 million related to the State of California's relinquishment of the Pacific Coast
Highway included in the prior year, total program and general revenues are down $10.7
million from the prior year. The net decrease over prior year is a combination of a few key
factors:
o At $57.9 million per year, property taxes represent the largest individual
recurring source of revenue for the City. Over the past ten years, assessed
values have increased an average of 11 % per year. Assessed property values
increased 15.36% in the current year. Property Tax revenues, in total,
including unsecured property and prior year collections increased $11.6 million
or 25% in the current year. This increase is primarily due to a state -wide
property tax revenue shift to local governments as part of a larger package
which reduced local revenues from motor vehicle license fees and sales taxes
by approximately the same amount. The remaining growth represents the
increase in assessed property values.
32
• At nearly $27.2 and $9.8 million respectively, sales taxes and transient
occupancy taxes represent the number two and three top individual revenue
sources for the City. Sales taxes, which are comprised of sales tax and sales
tax in -lieu, are up $2.9 million (11.8 %) from the prior year while transient
occupancy taxes are up $616,867 million (6.7 %).
• Offsetting the increases noted above, Motor Vehicle License Tax decreased
by $5.9 million as these funds were shifted to the State of California's General
Fund in exchange for additional property tax revenues.
• Charges for services were up $2.7 million from the previous year from the net
effect of increases and decreases within the various functions of the City. The
most significant swings within this account related to increases in community
services charges and decreases in general government and public safety
functions.
• Operating grants and contributions for public works are down $4.7 million over
the prior year due to unusually high activity in prior year contributions for Bay
dredging and street maintenance.
• Capital grants and contributions are down $18.1 million from the prior year,
excluding the effects of the $67.4 million land contributions noted above. This
decrease is primarily due to high activity in the prior year related to
underground utilities assessment districts and a contributions for the purchase
of fire station land.
• Rising interest rates in the fixed income securities market combined with a
changing interest rate environment had a combined positive impact on
investment income. Investment income combined with the net decrease in the
fair value of investments resulted in a $273,377 increase in revenues from the
prior year.
Expenses:
• In the current year, expenses for all governmental activities are $138.6 million. Overall, a
decrease of $2.4 million (1.6 %) from the prior year which can be attributed to the following
factors:
• General government expenses are up $3.1 million (27.5 %) when compared to
the prior year.
• Public safety expenses are up $4.6 million (7.2 %) in the current year. The
primary reason for the increase is a mid -year cost of living adjustment.
• Public works expenses were down $12.5 million (26.9 %) for costs associated
with repair and maintenance of City streets, infrastructure and facilities as
street related operating contributions were down sharply from the prior year.
• Community services' expenses increased $730,540 in the current year.
33
o Community development expenses are up $1.7 million (26.7 %) in the current
year primarily due consultant contracts associated with the City's General Plan
update process.
Business -type Activities — Business -type activities are financed primarily by fees charged to
external parties for goods and services. The City's two business -type activities, water and
wastewater utilities, produced a $2.2 million increase in net assets. The increase in net assets
was comprised of operating income of $2.4 million, non - operating expenses of $164,504,
transfers out of $40,000 and $137,097 consolidation adjustment related to internal service fund
activities.
$20
$15
$10
$5
$0
Table 6
Program Expense & Revenue - Business -type Activities
Year Ended June 30, 2005
(in Millions)
Water Wastewater
■Total Expenses ■Program Revenues
Major Business -type Activities in the current fiscal year included the following:
Water
Of the $16.2 million in water related expenses, $6.4 million (39.5 %) is for the purchase of
water, $3.0 million (18.5 %) is for maintenance, supplies and depreciation of the water system,
$3.5 million (21.6 %) covers employee related costs, and the remaining $3.3 million (20.4 %) is
collectively attributable to interest on outstanding debt and other miscellaneous expenses.
Wastewater
Of the $3.1 million in wastewater related expenses, $1.4 million (45.2 %) is maintenance,
supplies and depreciation of the wastewater system, $1.2 million (38.7 %) is employee related
costs, and the remaining $517,934 (16.1 %) is attributable to other individually insignificant
expenses.
34
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City uses fund accounting to highlight available financial resources and to
ensure and demonstrate compliance with finance - related legal requirements.
Governmental Funds — Utilizing the financial resources measurement focus, the City's
Governmental Funds provide information on near -term inflows and outflows, and balances of
spendable resources. This information is useful in assessing the City's financing requirements.
In particular, unreserved fund balance may serve as a useful measure of a government's net
resources available for spending at the end of the fiscal year.
Fund Balance — As of the end of the current fiscal year, the City's Governmental Funds
reported combined fund balances of $100.7 million, an increase of $495,435 from the
prior year. The General Fund represented $54.6 million or 54.2% of the combined fund
balances of the Governmental Funds.
Reserved Fund Balance — The City has $9.4 million in fund balance that is reserved to
indicate it is not available to finance new activities because it has already been
committed: 1) to fulfill contractual obligations and purchase orders ($6.9 million), 2) as a
reserve for affordable housing ($1.3 million), and 3) for a variety of other restrictions that
make these resources unavailable for spending ($1.2 million).
Unreserved Fund Balance — The remaining $45.2 million is classified as unreserved
fund balance, which is available for spending at the City's discretion.
Major activities in the Governmental Funds in the current fiscal year included the following:
• The General Fund ended the year with a $54.6 million fund balance, a net increase of
$99,666. Excluding net transfers out of $28.6 million, excess revenues over expenditures
totaled $27.9 million. See Note (13) in the Notes to the Financial Statements for more
information regarding interfund transfers.
• The activities of the Tide and Submerged Land Fund are routinely subsidized by the
General Fund. At year end, the General Fund transferred sufficient resources ($15.2
million) to cover the Tide and Submerged Land Fund's deficit and other outstanding
commitments and designations of fund balance. The Tide and Submerged Land Fund
ended the current year with $566,598 in fund balance.
• The Newport Coast Annexation Fund ended the year with a $17.4 million fund balance. The
net increase of $1.1 million in fund balance in the current year is due to an additional $3.0
million in revenues from the Irvine Ranch Water District related to the pre- annexation
agreement, offset by lower cash balances which decreased $1.6 million from the prior fiscal
year and increased liabilities for accounts payable which increased $364,467.
Proprietary Funds — The City's Proprietary Funds (Enterprise and Internal Service Funds)
presented in the Fund Financial Statements section basically provide the same type of
information in the Government -wide Financial Statements, but include individual segment
information.
35
Major activities in the Enterprise Funds in the current fiscal year included the following:
• Net assets in the Water Fund grew by $2.0 million and increased in the Wastewater Fund
by $190,739. Unrestricted net assets at year -end were $13.8 million for the Water Fund,
and $2.9 million in the Wastewater Fund.
• Other factors concerning the finances of these two funds have already been addressed
above in the discussion of the City's business -type activities.
Major activities in the Internal Service Funds in the current fiscal year included the following:
• Net assets at fiscal year end for the Internal Service Funds was $7.2 million. Included in
this amount is an accumulated deficit in the Insurance Reserve Fund and the Compensated
Absence Fund in the amounts of $7.1 million and $7.5 million, respectively.
• Net assets increased $4.1 million in the current year. The increase is a combination of
decreases and increases in the various Internal Service Funds; namely, an increase of $1.4
million in the Insurance Reserve Fund, a $1.3 million decrease in the Compensated
Absence Fund, and a $3.8 million increase in Retiree Insurance. Also a contributing factor,
the Equipment Maintenance Fund net assets increased $195,645 in the current year
through user fees charged to departments for maintenance and replacement of the City's
rolling stock fleet.
GENERAL FUND BUDGETARY HIGHLIGHTS
Changes to Original Budget
Final budgeted revenues for the General Fund increased $2.3 million from the original budget
during the year ended June 30, 2006. Significant factors contributing to this fluctuation are
highlighted as follows:
• Final budgeted intergovernmental revenues increased $1.4 million from the original budget
due to 1) $805,393 related to funding from the Irvine Ranch Water District for a joint water
main replacement project, 2) $246,661 for a new COPS Technology grant, and 3) $347,946
of other smaller amendments to intergovernmental revenues.
Final budgeted expenditures for the General Fund increased $9.8 million from the original
budget during the year ended June 30, 2006. Significant factors contributing to this fluctuation
are highlighted below:
• Budgeted expenditures for general government functions provided by the City Manager
division increased $876,277 for the General Plan Update Public Information program.
• Budgeted expenditures for public safety functions decreased by $14.0 million, primarily due
to a re- allocation of appropriations to the Tide and Submerged Land Fund for police and
fire services.
9t
• Budgeted expenditures for public works provided by the General Services division also
decreased $1.9 million due to the re- allocation of appropriations to the Tide and
Submerged Land Fund noted above. Budgeted expenditures for the Planning division
related to community development functions increased $836,246. This amount is made up
of 1) $552,131 related to General Plan Update of Public Information program, 2) $180,000
related to contracted professional and technical services, and 3) $104,115 of other smaller
budgetary adjustments both up and down.
• Budgeted expenditures for community services provided by the Library divisions increased
$649,771 made up of amendments including 1) $253,013 to provide library materials, 2)
$183,0444 in cost of living adjustment for personnel providing library and literacy services,
and 3) $213,314 for various smaller budgetary changes related to literacy program
services, appropriations for computer equipment and programming, maintenance and
repairs, and advertising and public relations.
Final budgeted capital outlays from the General Fund increased $3.4 million from the original
budget during the year ended June 30, 2006. Significant factors contributing to this fluctuation
are as follows: 1) $1.0 million for enhancement of the COPLINK data sharing project, 2)
$740,000 related to the Balboa Village project, phase III, 3) $2.1 million in budgetary
reductions due to project timing difference which are re- budgeted in the following fiscal year,
and 4) $440,000 in various smaller budgetary amendments, both increases and decreases.
Changes to budgeted transfers out of the General Fund were made in response to budgetary
changes within all other funds occurring throughout the year. During the current year final
transfers out budgeted for the General Fund varied from the original budget by approximately
$11.7 million.
These transactions, combined with numerous smaller amendments throughout the year,
resulted in a reduction of projected draws against existing General Fund Balance of $1.0
million.
Variance with Final Budget
Actual revenues exceeded final budget by $11.8 million for the year ended June 30, 2006.
Significant factors contributing to this favorable variance are summarized as follows:
• Higher than expected property tax, sales tax, and other tax revenues of approximately
$12.1 million.
• A $732,729 increase in transient occupancy tax revenues, primarily due to a higher
number of hotel units within the City.
• A $783,517 increase in license and permit revenues, made up of $370,000 from
building permit fees and $413,000 from an increase in the labor rate component of
licensing fees.
• An $805,000 increase in charges for services primarily due to higher plan checking
fees, fire plan checks, fire construction inspections, and paramedic service fees.
• A $2.6 million decrease in intergovernmental revenues caused by timing differences
between budgeted revenues which are based on acceptance of grant funding and
actual revenues which are based on reimbursable expenditure of the grant funds.
37
Actual General Fund expenditures of $107.6 million were significantly less than final budgetary
estimates of $116.0 million. Significant factors contributing to this $8.4 million favorable
variance are summarized as follows:
• A $5.8 million decrease in capital outlays due to timing differences in the progress of capital
project. Of this amount 1) $5.1 million is encumbered to be expended in the following fiscal
year.
• A $688,447 decrease in expenditures related to fire services for public safety, of which
$358,487 is due to salaries and benefits with the remainder due to various smaller
fluctuations both up and down.
• A $496,768 decrease in expenditures for general services for public works, of which
$490,291 is due to salaries and benefits with the remainder due to various smaller
fluctuations both up and down.
This $8.4 million variance in expenditures, along with the $11.8 million excess of actual
revenues over final budgetary estimates, eliminated the need to draw upon existing fund
balance.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City's investment in capital assets for governmental and business -type activities as of
June 30, 2006, amounts to $2.137 billion (net of accumulated depreciation). This investment is
in a broad range of capital assets includes land, buildings and systems, improvements,
machinery and equipment, park facilities, roads, storm drains, piers, oil wells, sound walls, and
bridges. The total net increase (including additions and deletions) of $83.7 million represents a
4.1% increase over last year. The $83.7 million net increase is the net result of additions of
$93.9 million, and deletions of $10.2 million.
Table 7
Capital Assets at Year End
(net of depreciation, in thousands)
Governmental Activities Business -Type Activities Total
2005 2006 2005 2006 2005 2006
Land
$ 1,713,154
$ 1,780,699
$ 2,016
$ 2,016
$ 1,715,170
$ 1,782,715
Structures
24,347
23,966
109
104
24,456
24,070
Equipment
7,722
7,844
13
10
7,735
7,854
Infrastructure
192,034
192,240
96,617
105,989
288,651
298,229
Work in progress
8,973
22,952
8,141
976
17,114
23,928
Totals $ 1,946,230 $ 2,027,701 $ 106,896 $ 109,095 $ 2,053,126 $ 2,136,796
9E
Major capital asset events during the current fiscal year included the following:
• The City capitalized $93.9 million in capital assets in the current year. Of the $93.9
million, $17.3 million was paid for through current year expenses, $67.4 million was
accepted as contributions, and the remaining $9.2 million represents additions from
work in progress started in previous years.
• Of the $91.9 million capitalized as governmental assets in the current year, $55.0 million
was accepted as contributions to public works program revenues for land /projects
known as John Wayne Gulch, Buck Gully, and Bristol Street relinquishment, and $12.4
million was accepted as contributions to community services program revenues for
Newport Village Park, Back Bay View Park, Canyon and Harbor Watch Parks, Los
Trancos Canyon View Parks, and Newport Coast Community Center.
• Of the $12.6 million capitalized in the current year as business -type assets, $11.7
million represented additions for infrastructure consisting of major repairs and upgrades
to the water mains, additions to wastewater and water pump stations, and completion of
Big Canyon Reservoir Cover Project.
Additional information on the City's capital assets can be found in Note (5) of the Notes
to the Financial Statements.
Long -term Debt
At the end of the current fiscal year, the City had total long -term debt outstanding of $51.8
million for all governmental and business -type activities.
Table 8
Outstanding Debt at Year -End
(in thousands)
EO
Governmental Activities
Business -Type
Total
Restated
Activities
Restated
2005
2005
2006
2005 2006
2005
2006
Certificates of participation
$ 5,570
$ - $
5,280
$ - $ -
$ 5,570 $
5,280
Note payable
1,789
-
1,633
- -
1,789
1,633
Pre - annexation agreement
14,400
-
13,200
- -
14,400
13,200
CDBG Loan
2,276
-
2,207
- -
2,276
2,207
Capital leases
421
-
166
- -
421
166
Revenue bonds
-
-
-
7,255 5,925
7,255
5,925
Claims and judgments
3,368
1,740
4,812
- -
5,108
4,812
Workers'compensation payable
10,631
-
11,160
- -
10,631
11,160
Compensated absences
7,376
8,637
7,376
8,637
Totals
$ 45,831
$ 1,740 $
47,095
$ 7,255 $ 5,925
$ 54,826 $
53,020
EO
The City's total debt decreased $1.8 million during the current fiscal year after taking into
consideration a $1.7 million restatement, the effect of which increased claims and judgments at
June 30, 2005, from $3.4 million to $5.1 million. The $1.8 million decrease is the net result of
regular debt service payments, an offsetting increase in long term obligations related to
workers' compensation of $528,723, and an increase in compensated absences payable of
$1.3 million. The City's Revenue Bonds and Certificates of Participation were insured and
therefore, maintain "AAA" rating from Standard & Poor's Corporation and an "Aaa" from
Moody's Investors Services.
Additional information on the City's long -term debt can be found in Note (6) of the Notes to the
Financial Statements.
FACTORS AFFECTING NEXT YEAR'S BUDGET
Overall the 2006 -2007 operating budget excluding capital improvement projects and
internal charges increased 5.2% over the 2005 -2006 amended budget. A brief summary of
the factors considered when preparing the 2006 -2007 budget are as follows:
• Sales tax and property tax estimates continue to grow indicating a healthy local
economy. In addition, a component of the Education Revenue Augmentation Fund
(ERAF III) shift of secured property tax to the State is ending. For the City of Newport
Beach this means an additional $2.2 million of secured property tax this fiscal year.
• The California Public Employees Retirement System (CaIPERS) earned 12.7 percent
return on its investments in 2005, marking the second year in a row that they've earned
double -digit returns. While this will result in lower contribution rates, it usually takes two
years before we see a change in our rates that impacts our budget. CaIPERS has also
adopted revised rate smoothing methods that are intended to "smooth" out large rate
fluctuations from year to year. Therefore this budget includes a small decrease in PERS
costs for both miscellaneous and safety members.
• Implementation of a new defined contribution retiree medical program instead of the
prior defined benefit program will ultimately reduce the City's long -term liability for this
program. The transition to the new program will take an estimated twenty years or more
to fully implement, but our operating expenses will eventually be capped as we will only
need to fund contributions for current employees and the City's unfunded liability will be
zero.
• The City is currently undertaking a comprehensive review of existing City structures
and developing a financing plan for the replacement of these facilities, including
Police Headquarters, Fire Stations, Library Branches, Lifeguard Headquarters, OASIS
Senior Center, and the Civic Center Complex. We believe the City is well positioned
to fund the replacement of all of these facilities beginning in the next fiscal year with
the replacement program lasting approximately an additional twenty years.
40
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors
and creditors with a general overview of the City's finances and to demonstrate the City's
accountability for the money it receives. If you have questions about this report or need
additional financial information, contact the City's Administrative Services Department, 3300
Newport Boulevard, Newport Beach, CA 92663 -3884, (949) 644 -3126.
41
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M
Government -wide
Financial Statements
CITY OF NEWPORT BEACH
Statement of Net Assets
June 30, 2006
Assets:
Cash and investments (note 4)
Receivables:
Accounts
Notes
Interest
Intergovernmental receivables
Cash with fiscal agent (note 4)
Internal balances
Investment in joint venture (note 15)
Prepaid items
Inventory
Capital assets, (note 5):
Non - depreciable
Depreciable
Accumulated depreciation
Total assets
Liabilities:
Accounts payable
Accrued salaries and benefits
Accrued interest payable
Deposits payable
Unearned revenue
Noncurrent liabilities (note 6):
Due within one year
Due in more than one year
Total liabilities
Net Assets:
Invested in capital assets, net of related debt
Restricted for:
Community development
Public safety
Public works
Community services
Debt Service
Permanent Funds:
Nonexpendable
Expendable
Unrestricted
Total net assets
Governmental
Business -type
Activities
Activities
Total
$ 125,645,269
$ 13,392,754
$ 139,038,023
4,573,273
4,446,763
9,020,036
50,000
-
50,000
1,497,197
-
1,497,197
12,207,594
818,532
13,026,126
3,170,068
1,432,355
4,602,423
(137,097)
137,097
-
2,243,353
-
2,243,353
1,047,190
1,047,190
411,555
-
411,555
1,803,650,730
2,992,575
1,806,643,305
348,940,051
151,072,884
500,012,935
(124,889,948)
(44,970,548)
(169,860,496)
2,178,409,235
129,322,412
2,307,731,647
9,421,925
1,594,838
11,016,763
2,193,471
93,053
2,286,524
138,996
129,381
268,377
3,431,190
70,507
3,501,697
1,921,732
-
1,921,732
8,038,233
1,385,000
9,423,233
39,056,705
4,540,000
43,596,705
64,202,252
7,812,779
72,015,031
2,005,643,651
104,602,266
2,110,245,917
10,242,581
-
10,242,581
4,226,485
-
4,226,485
19,115,693
-
19,115,693
12,715,438
-
12,715,438
566,354
-
566,354
4,629,781
-
4,629,781
404,771
-
404,771
56,662,229
16,907,367
73,569,596
$ 2,114,206,983
S 121,509,633
$ 2,235,716,616
See accompanying notes to basic financial statements
43
CITY OF NEWPORT BEACH
Statement of Activities
Year Ended June 30, 2006
General revenues:
Taxes:
Property tax
Sales tax
Sales tax in -lieu
Transient occupancy tax
Business license tax
Franchise tax
Other taxes
Intergovernmental (Unrestricted):
Motor vehicle license tax
Investment income
Net decrease in fair
value of investments
Other
Share of joint venture net loss (note 15)
Transfers
Total general revenues, and transfers
Change in net assets
Net assets at beginning of year,
as restated (notes 6 and 17 )
Net assets at end of year
See accompanying notes to basic financial statements
44
Operating
Capital
Total
Charges for
Grants and
Grants and
Program
Expenses
Services
Contributions
Contributions
Revenues
Functions /Programs
Primary government:
Governmental activities:
General government
$ 14,509,827
$ 2,623,272
$ 200,008
$ - $
2,823,280
Public safety
67,789,121
13,669,509
2,584,527
-
16,254,036
Public works
33,870,359
5,133,728
8,050,542
56,501,251
69,685,521
Community development
8,157,925
5,667,289
-
-
5,667,289
Community services
13,803,755
9,433,278
1,937,522
12,972,640
24,343,440
Interest on long -term debt
479,529
-
-
-
Total governmental activities
138,610,516
36,527,076
12,772,599
69,473,891
118,773,566
Business -type activities:
Water
16,203,725
17,923,523
-
-
17,923,523
Wastewater
3,168,117
3,311,089
-
-
3,311,089
Total business -type activities
19,371,842
21,234,612
-
-
21,234,612
Total primary government
$ 157,982,358
$ 57,761,688
$ 12,772,599
$ 69,473,891 $
140,008,178
General revenues:
Taxes:
Property tax
Sales tax
Sales tax in -lieu
Transient occupancy tax
Business license tax
Franchise tax
Other taxes
Intergovernmental (Unrestricted):
Motor vehicle license tax
Investment income
Net decrease in fair
value of investments
Other
Share of joint venture net loss (note 15)
Transfers
Total general revenues, and transfers
Change in net assets
Net assets at beginning of year,
as restated (notes 6 and 17 )
Net assets at end of year
See accompanying notes to basic financial statements
44
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental
Business -type
Activities
Activities
Total
$ (11,686,547)
$ -
$ (11,686,547)
(51,535,085)
-
(51,535,085)
35,815,162
-
35,815,162
(2,490,636)
-
(2,490,636)
10,539,685
-
10,539,685
(479,529)
-
(479,529)
(19,836,950)
-
(19,836,950)
-
1,719,798
1,719,798
-
142,972
142,972
-
1,862,770
1,862,770
$ (19,836,950)
$ 1,862,770
$ (17,974,180)
57,888,545
-
57,888,545
21,465,557
-
21,465,557
5,720,028
-
5,720,028
9,832,729
-
9,832,729
3,848,381
-
3,848,381
3,162,588
-
3,162,588
300,751
-
300,751
508,331
-
508,331
1,939,941
549,012
2,488,953
(715,615)
(169,095)
(884,710)
776,907
-
776,907
(513,791)
-
(513,791)
40,000
(40,000)
-
104,254,352
339,917
104,594,269
84,417,402
2,202,687
86,620,089
2,029,789,581
119,306,946
2,149,096,527
$ 2,114,206,983
$ 121,509,633
$ 2,235,716,616
See accompanying notes to basic financial statements
45
This page left blank intentionally.
M.
Fund
Financial Statements
Governmental Funds
47
GOVERNMENTALFUNDS
Major Funds
The General Fund is used to account for fiscal resources which are dedicated to
governmental operations of the City, and not required to be accounted for in another
fund.
The Tide and Submerged Land Fund is a Special Revenue Fund used to account for
all revenues and expenditures related to the operation of the City's tidelands, including
beaches and marinas.
The Newport Coast Annexation Fund is a Special Revenue Fund used to account for
revenues and expenditures related to the Newport Coast Annexation Agreement.
Non -major Funds
Non -major governmental funds are those governmental funds which do not meet the
criteria of a major fund. For reporting purposes in this section, they are combined
together as Other Governmental Funds.
LL•'
This page left blank intentionally.
..
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2006
See accompanying notes to basic financial statements
50
Tide and
Newport
Other
Submerged
Coast
Governmental
Assets
General
Land
Annexation
Funds
Totals
Cash and investments (note 4)
$
51,002,231
$ 621,584
$
17,971,714
$ 30,097,356
$ 99,692,885
Receivables:
Accounts
3,620,532
860,710
-
86,097
4,567,339
Notes
50,000
-
-
-
50,000
Interest
1,497,197
-
-
-
1,497,197
Intergovernmental receivables
6,366,265
-
2,000,000
3,841,329
12,207,594
Cash with fiscal agent (note 4)
-
-
-
3,170,068
3,170,068
Due from otherfunds(note12)
3,309,485
-
-
-
3,309,485
Prepaid items
865,350
-
-
89,141
954,491
Inventory
211,746
211,746
Total assets
$
66,922,806
$ 1,482,294
$
19,971,714
$ 37,283,991
$125,660,805
Liabilities and Fund Balances
Liabilities:
Accounts payable
$
5,164,274
$ 743,370
$
437,348
$ 1,747,603
$ 8,092,595
Accrued payroll
2,055,909
18,867
95,847
-
2,170,623
Deposits payable
3,277,731
153,459
-
-
3,431,190
Unearned revenue
1,590,815
-
-
330,917
1,921,732
Unavailable revenue
247,016
-
2,000,000
3,750,868
5,997,884
Due to other funds (note 12)
-
-
-
3,309,485
3,309,485
Total liabilities
12,335,745
915,696
2,533,195
9,138,873
24,923,509
Fund balances:
Reserved for encumbrances
6,918,206
538,965
17,438,519
12,871,926
37,767,616
Reserved for debt service
-
-
-
566,354
566,354
Reserved for permanent endowment
-
-
-
4,629,781
4,629,781
Reserved for affordable housing
1,329,420
-
-
-
1,329,420
Reserved for prepaid items
865,350
-
-
89,141
954,491
Reserved for inventories
211,746
-
-
-
211,746
Reserved for long -term receivable
50,000
-
-
-
50,000
Unreserved:
Designated for special purposes
27,152,687
27,633
-
-
27,180,320
Designated, reported in:
Special revenue funds
-
-
-
7,871,178
7,871,178
Capital projects funds
-
-
-
4,225,678
4,225,678
Permanent funds
-
-
-
404,771
404,771
Designated for contingencies
15,424,293
-
-
-
15,424,293
Designated for capital projects
2,077,278
-
-
-
2,077,278
Designated for appropriations
558,081
-
-
-
558,081
Undesignated, reported in:
Special Revenue Funds
-
-
-
(365,157)
(365,157)
Capital projects funds
(2,148,554)
(2,148,554)
Total fund balances
54,587,061
566,598
17,438,519
28,145,118
100,737,296
Total liabilities and
and fund balances
$
66,922,806
$ 1,482,294
$
19,971,714
$ 37,283,991
$125,660,805
See accompanying notes to basic financial statements
50
CITY OF NEWPORT BEACH
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
June 30, 2006
Fund balances of governmental funds
Amounts reported for governmental activities in the statement of net assets are
different because:
Capital assets net of accumulated depreciation have not been included
as financial resources in governmental fund activity. Amount excludes
capital assets from internal service funds which are added below.
Long term debt that have not been reported in the governmental fund activity.
Amounts exclude long -term debt activity from internal service funds
which have been added below:
Certificates of participation payable
Note payable
Pre - annexation agreement
CDBG loan
Accrued interest payable for the current portion of interest due on long -term debt
has not been reported in the governmental funds.
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.
Internal service funds are used by management to charge the costs of certain
activities, such as self- insurance, workers' compensation, compensated absences,
retiree insurance and fleet management, to individual funds. The assets (including
capital assets) and liabilities of the internal service funds must be added to the
statement of net assets.
Investment in joint ventures is not a current financial resource and therefore not reported
in the governmental funds.
Internal balance created by the consolidation of internal service fund activities
related to enterprise funds is not reported in the governmental funds.
Net assets of governmental activities
See accompanying notes to basic financial statements
51
100,737,296
2,020,583,177
(5,280,000)
(1,632, 789)
(13,200,000)
(2,207,000)
(138,996)
7,241,155
2,243,353
(137,097)
$ 2,114,206,983
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
Year Ended June 30, 2006
Other financing sources (uses)
Transfers in (note 13)
787,393
Tide and
Newport
Other
25,194,920
Transfers out (note 13)
(28,597,790)
Submerged
Coast
Governmental
(31,177,725)
Total other financing sources
General
Land
Annexation
Funds
Totals
Revenues
(27,810,397)
14,781,522
(262,894)
7,308,964
(5,982,805)
Taxes and assessments:
99,666
(180,289)
1,123,000
(546,942)
495,435
Property tax
$57,888,545
$ -
$ -
$ -
$ 57,888,545
Sales tax
21,465,557
-
-
-
21,465,557
Sales tax in -lieu
5,720,028
-
-
-
5,720,028
Transient occupancy tax
9,832,729
-
-
-
9,832,729
Othertaxes
7,377,811
-
-
453,140
7,830,951
Intergovernmental
3,935,193
-
3,000,000
7,907,801
14,842,994
Licenses and permits
3,295,057
1,327,560
-
1,086,348
5,708,965
Charges for services
13,098,106
37,260
-
-
13,135,366
Fines and forfeitures
3,839,925
1,918
-
-
3,841,843
Investment income
1,939,941
123,901
664,104
1,120,036
3,847,982
Net decrease in fair value of investments
(715,615)
(42,534)
(227,981)
(339,081)
(1,325,211)
Property income
6,224,093
7,401,049
-
-
13,625,142
Donations
605,271
-
-
278,134
883,405
Other
1,040,158
2,724
-
-
1,042,882
Total revenues
135,546,799
8,851,878
3,436,123
10,506,378
158,341,178
Expenditures
Current:
General government
12,457,334
73,866
-
-
12,531,200
Public safety
47,971,940
17,021,244
-
268,885
65,262,069
Public works
22,446,976
3,453,143
-
530,632
26,430,751
Community development
7,299,573
306,324
-
294,606
7,900,503
Community services
10,950,588
1,780,139
-
-
12,730,727
Capital outlay
6,510,325
941,911
850,229
16,508,772
24,811,237
Debt service (note 6):
Principal
-
156,542
1,200,000
359,000
1,715,542
Interest and fiscal charges
80,520
400,389
480,909
Total expenditures
107,636,736
23,813,689
2,050,229
18,362,284
151,862,938
Excess (deficiency) of revenues
over expenditures
27,910,063
(14,961,811)
1,385,894
(7,855,906)
6,478,240
Other financing sources (uses)
Transfers in (note 13)
787,393
15,212,022
1,200,000
7,995,505
25,194,920
Transfers out (note 13)
(28,597,790)
(430,500)
(1,462,894)
(686,541)
(31,177,725)
Total other financing sources
(uses)
(27,810,397)
14,781,522
(262,894)
7,308,964
(5,982,805)
Net change in fund balances
99,666
(180,289)
1,123,000
(546,942)
495,435
Fund balances, beginning
54,487,395
746,887
16,315,519
28,692,060
100,241,861
Fund balances, ending
$ 54,587,061
$ 566,598
$ 17,438,519
$ 28,145,118
$ 100,737,296
See accompanying notes to basic financial statements
52
CITY OF NEWPORT BEACH
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmenal Funds
to the Statement of Activities
Year ended June 30, 2006
Net change in fund balances - total governmental funds $ 495,435
Amounts reported for governmental activities in the statement of activities differ
from the amounts reported in the statement of activities because:
Donations of capital assets are not reported as revenue in the governmental funds 67,370,000
Governmental funds report capital outlays as expenditures. However, in the statement
of activities, the costs of those assets is allocated over their estimated useful lives
as depreciation expense. This is the amount by which capital outlays exceeded
depreciation in the current period. 13,976,633
Payment of debt service principal is an expenditure in the governmental funds, but the 1,715,542
repayment reduces long -term liabilities in the statement of net assets.
Accrued Interest for debt service. This is the net change in accrued interest for the current period. 8,375
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.This is the net change in unearned revenue for the current (2,734,468)
period.
Internal service funds are used by management to charge the costs of certain
activities, such as self- insurance, workers' compensation, compensated absences,
retiree insurance and fleet management, to individual funds. The net revenue of the internal
service funds is reported in the statement of activities. 4,070,830
Investment in joint ventures creates an explicit, measurable equity interest reported only
in the statement of activities. (513,791)
Internal balance created by the consolidation of internal service funds activities related to enterprise funds
is reflected as a reduction of revenues in the statement of activities. 28,846
Change in net assets of governmental activities $ 84,417,402
See accompanying notes to basic financial statements
53
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2006
See accompanying notes to basic financial statements
54
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Taxes and assessments:
Property
$ 49,709,583
$ 49,709,583
$ 57,888,545
$ 8,178,962
Sales
18,756,799
18,756,799
21,465,557
2,708,758
Sales tax in -lieu
5,660,217
5,660,217
5,720,028
59,811
Transient occupancy
9,100,000
9,100,000
9,832,729
732,729
Other
6,246,099
6,246,099
7,377,811
1,131,712
Intergovernmental
5,209,225
6,579,249
3,935,193
(2,644,056)
Licenses and permits
2,511,540
2,511,540
3,295,057
783,517
Charges for services
11,854,127
12,293,202
13,098,106
804,904
Fines and forfeitures
3,822,800
3,822,800
3,839,925
17,125
I nvestment income
1,750,000
1,750,000
1,939,941
189,941
Net decrease in fair value of investments
-
-
(715,615)
(715,615)
Property income
6,147,392
6,147,392
6,224,093
76,701
Donations
270,600
297,981
605,271
307,290
Other
468,706
907,942
1,040,158
132,216
Total revenues
121,507,088
123,782,804
135,546,799
11,763,995
Expenditures
General government:
City council
1,454,882
1,514,721
1,452,410
62,311
City clerk
355,888
434,271
424,079
10,192
City attorney
979,041
1,010.,105
1,020,120
(10,015)
City manager
1,040,999
1,917,276
1,491,403
425,873
Administrative services
6,578,270
6,648,931
6,513,591
135,340
Human resources
1,372,136
1,411,386
1,555,731
(144,345)
Total General government
11,781,216
12,936,690
12,457,334
479,356
Public safety:
Police
36,447,513
31,379,410
31,148,044
231,366
Fire
26,410,270
17,512,343
16,823,896
688,447
Total Public safety
62,857,783
48,891,753
47,971,940
919,813
Public works:
General services
19,565,404
17,653,975
17,157,207
496,768
Public works
4,473,967
4,189,431
4,101,626
87,805
Utilities
1,135,744
1,154,837
1,188,143
(33,306)
Total Public works
25,175,115
22,998,243
22,446,976
551,267
See accompanying notes to basic financial statements
54
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
(continued)
Budgeted Amounts
Original Final
Community development
Variance with
Final Budget
Positive
Actual (Negative)
Planning
2,941,459
3,777,705
3,294,196
483,509
Building
3,310,252
3,447,865
3,494,837
(46,972)
Code and Water Quality Enforcement
608,574
329,630
510,540
(180,910)
Total Community development
6,860,285
7,555,200
7,299,573
255,627
Community services:
Net change in fund balance
(21,185,751)
Library Services
5,465,249
6,115,020
5,819,796
295,224
Recreation and senior services
4,770,333
5,194,898
5,130,792
64,106
Total Community services
10,235,582
11,309,918
10,950,588
359,330
Capital outlay
8,960,410
12,350,186
6,510,325
5,839,861
Total expenditures 125,870,391 116,041,990 107,636,736 8,405,254
Excess (deficiency) of revenues
over expenditures (4,363,303) 7,740,814 27,910,063 20,169,249
Other financing sources (uses)
Transfers in
-
705,450
787,393
81,943
Transfers out
(16,822,448)
(28,597,790)
(28,597,790)
-
Total other financing
sources (uses)
(16,822,448)
(27,892,340)
(27,810,397)
81,943
Net change in fund balance
(21,185,751)
(20,151,526)
99,666
20,251,192
Fund balance, beginning
54,487,395
54,487,395
54,487,395
-
Fund balance, ending
$ 33,301,644
$ 34,335,869
$ 54,587,061
$ 20,251,192
See accompanying notes to basic financial statements
55
CITY OF NEWPORT BEACH
Tide and Submerged Land
Budgetary Comparison Statement
For the Year Ended June 30, 2006
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
(1,134,299) (5,359,676) (180,289)
746,887 746,887 746,887
5,179,387
-L --28-7-,4-1-2j $ (4,612,789) $ 566,598 $ 5,179,387
See accompanying notes to basic financial statements
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Intergovernmental
$ -
$ -
$ -
$ -
Licenses and permits
1,260,700
1,260,700
1,327,560
66,860
Charges for services
40,000
40,000
37,260
(2,740)
Fines and forfeitures
700
700
1,918
1,218
Investment income
83,438
83,438
81,367
(2,071)
Net decrease in fair value of investments
-
-
Property income
5,661,364
5,661,364
7,401,049
1,739,685
Other
-
-
2,724
2,724
Total revenues
7,046,202
7,046,202
8,851,878
1,805,676
Expenditures
General government
-
73,866
73,866
-
Public safety
-
17,021,244
17,021,244
Public works
478,102
3,333,862
3,453,143
(119,281)
Community services
1,901,737
1,942,206
1,780,139
162,067
Community development
-
306,324
306,324
-
Capital outlay
2,384,960
1,213,696
941,911
271,785
Debt service:
Principal
156,542
156,542
156,542
-
Interest and fiscal charges
80,520
80,520
80,520
-
Total expenditures
5,001,861
24,128,260
23,813,689
314,571
Excess (deficiency) of revenues
over expenditures
2,044,341
(17,082,058)
(14,961,811)
2,120,247
Other financing sources (uses)
Transfers in
-
15,212,022
15,212,022
-
Transfers out
(3,178,640)
(3,489,640)
(430,500)
3,059,140
Total other financing
sources (uses)
(3,178,640)
11,722,382
14,781,522
3,059,140
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
(1,134,299) (5,359,676) (180,289)
746,887 746,887 746,887
5,179,387
-L --28-7-,4-1-2j $ (4,612,789) $ 566,598 $ 5,179,387
See accompanying notes to basic financial statements
CITY OF NEWPORT BEACH
Newport Coast Annexation
Budgetary Comparison Statement
For the Year Ended June 30, 2006
Expenditures
Capital outlay
7,004,037
6,907,762
850,229
Variance
Debt service (note 6):
with Final
Principal
1,200,000
1,200,000
1,200,000
Budget
Budgeted Amounts
8,204,037
Positive
2,050,229
Original
Final
Actual
(Negative)
Revenues
over expenditures
(4,777,281)
Intergovernmental
$ 3,000,000
$ 3,000,000
$ 3,000,000
$
Investment income
426,756
426,756
664,104
237,348
Net decrease in fair value of investments
-
-
(227,981)
(227,981)
Total revenues
3,426,756
3,426,756
3,436,123
9,367
Expenditures
Capital outlay
7,004,037
6,907,762
850,229
6,057,533
Debt service (note 6):
Principal
1,200,000
1,200,000
1,200,000
-
Total expenditures
8,204,037
8,107,762
2,050,229
6,057,533
(Deficiency) of revenues
over expenditures
(4,777,281)
(4,681,006)
1,385,894
6,066,900
Other financing uses
Transfers in
-
-
1,200,000
1,200,000
Transfers out
(1,200,000)
(1,200,000)
(1,462,894)
(262,894)
Total other financing (uses)
(1,200,000)
(1,200,000)
(262,894)
937,106
Net change in fund balance
(5,977,281)
(5,881,006)
1,123,000
7,004,006
Fund balance, beginning
16,315,519
16,315,519
16,315,519
-
Fund balance, ending
$ 10,338,238
$ 10,434,513
$ 17,438,519 $
7,004,006
See accompanying notes to basic financial statements
57
This page left blank intentionally.
Proprietary Funds
Business -type Activities
The Water Fund is a Major Fund used to account for the operations of the City's water
utility, a self- supporting activity which is entirely financed though user charges.
The Wastewater Fund is a Major Fund used to account for the operations of the City's
wastewater system, a self - supporting activity which is entirely financed through user
charges.
Governmental Activities
The Internal Service Funds are used to allocate the cost of providing goods and
services by one department to other departments on a cost reimbursement basis.
.1
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Net Assets
June 30, 2006
Assets
Current assets:
Cash and investments (note 4)
Receivables:
Accounts
Intergovernmental receivables
Inventories
Prepaid items
Total current assets
Non - current assets:
Cash with fiscal agent (note 4)
Capital assets (note 5):
Land
Structures
Equipment
Infrastructure
Work in progress
Less accumulated depreciation
Total capital assets (net of accumulated depreciation)
Total noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Accrued payroll
Deposits payable
Accrued interest payable
Bonds payable (note 6)
Capital leases - current
Workers' compensation - current
General liability - current
Compensated absences - current
Total current liabilities
Non - current liabilities (note 6):
Bonds payable
Capital leases
Workers' compensation
General liability
Compensated absences
Total noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets, net of related debt
Unrestricted
Total Net Assets
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
Net assets of business -type activities
Enterprise Funds
Governmental
Total Activities
Enterprise Internal Service
$ 11,073,366
$ 2,319,388
$ 13,392,754 $
25,952,384
3,762,902
683,861
4,446,763
5,934
818,532
-
818,532
-
-
-
-
199,809
92,699
15,654,800
3,003,249
18,658,049
26,250,826
1,432,355
-
1,432,355
-
2,016,450
-
2,016,450
-
205,793
-
205,793
-
148,191
-
148,191
19,965,582
109,682,481
41,036,419
150,718,900
-
976,125
-
976,125
-
(33,562,644)
(11,407,904)
(44,970,548)
(12,847,926)
79,466,396
29,628,515
109,094,911
7,117,656
80,898,751
29,628,515
110,527,266
7,117,656
96,553,551
32,631,764
129,185,315
33,368,482
1,554,906
39,932
1,594,838
1,329,330
61,718
31,335
93,053
22,848
70,483
24
70,507
-
129,381
-
129,381
-
1,385,000
-
1,385,000
-
-
-
-
116,566
-
-
-
3,051,411
-
-
-
1,438,532
-
-
-
1,695,137
3,201,488
71,291
3,272,779
7,653,824
4,540,000
-
4,540,000
-
-
-
49,490
-
-
-
8,108,589
-
-
-
3,373,470
-
-
-
6,941,954
4,540,000
4,540,000
18,473,503
7,741,488
71,291
7,812,779
26,127,327
74,973,751
29,628,515
104,602,266
6,951,600
13,838,312
2,931,958
16,770,270
289,555
$88,812,063
$32,560,473
121,372,536 $
7,241,155
137,097
$ 121,509,633
See accompanying notes to basic financial statements
61
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Revenues,
Expenses and Changes in Fund Net Assets
For the Year Ended June 30, 2006
Operating revenues:
Charges for sales and services:
Water sales
Intergovernmental - rebates
Sewer service and connection fees
Other
Total operating revenues
Operating expenses:
Purchase of water
Salaries and benefits
Depreciation
Professional services
Maintenance and supplies
System maintenance
Fleet pads and supplies
Workers' compensation
Claims and judgments
Compensated absences
Retiree insurance
Other
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Investment income
Net decrease in fair value of investments
Loss on removal of capital assets
Interest expense
Other fiscal charges
Total nonoperating revenues (expenses)
Income (loss) before transfers
Transfers in (note 13)
Transfers out (note 13)
Change in net assets
Net assets, beginning of year
Net assets, end of year
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
Change in net assets of business -type activities
Enterprise Funds
1,181,643
4,691,758
Governmental
Total
Activities
Enterprise
Internal Service
Water Wastewater Funds
Funds
$ 16,098,674 $ -
1,779,557 152,790
- 3,129,915
45,292 28,384
17,923,523 3,311,089
6,379,320
$ 16,098,674 $ -
1,932,347 -
3,129,915 -
73,676 12,777,476
21,234,612 12,777,476
6,379,320
3,510,115
1,181,643
4,691,758
1,280,413
1,497,046
524,344
2,021,390
1,682,428
1,602,092
349,691
1,951,783
20,742
751,204
532,726
1,283,930
1,253,380
775,006
358,090
1,133,096
-
-
-
-
379,984
-
-
-
3,294,929
-
-
-
2,045,323
-
-
-
2,934,444
-
-
-
2,326,966
1,169,055
168,243
1,337,298
-
15,683,838
3,114,737
18,798,575
15,218,609
2,239,685
196,352
2,436,037
(2,441,133)
463,312
85,700
549,012
853,088
(139,675)
(29,420)
(169,095)
(292,860)
(220,409)
(61,893)
(282,302)
(64,075)
(258,763)
-
(258,763)
(6,995)
(3,356)
(3,356)
(158,891)
(5,613)
(164,504)
489,158
2,080,794
190,739
2,271,533
(1,951,975)
(40,000)
2,040,794 190,739
86,771,269 32,369,734
$ 88,812,063 $ 32,560,473
See accompanying notes to basic financial statements
M
- 6,147,805
(40,000) (125,000)
2,231,533 4,070,830
(28,846)
$ 2,202,687
3,170,325
$ 7,241,155
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Cash Flows
For the Year ended June 30, 2006
Cash Flows from operating activities:
Cash received from customers or user departments
Cash payments to employees for services
Cash payments to suppliers for goods and services
Cash received (payments made) for other operating activities
Net cash provided by operating activities
Cash Flows from noncepital financing activities:
Cash received from other funds
Cash paid to other funds
Net cash provided by noncapital financing activities
Cash Flows from capital related financing activities:
Acquisition of capital assets
Proceeds from sale of capital assets
Principal payments on long -term liabilities
Interest paid on long -term liabilities
Other fiscal charges
Net cash (used) for capital related financing activities
Cash Flows from investing activities:
Interest on investments
Net cash provided by investing activities
Net increase (decrease) in cash and
cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation of cash equivalents to the statement of net assets
Cash and investments reported on statement of net assets
Cash and investments with fiscal agent reported on statement of net assets
Cash and cash equivalents
Reconciliation of operating income to net cash
used for operating activities:
Operating income (loss)
Adjustments to reconcile operating income
to net cash used for operating activities:
Depreciation
Decrease in accounts receivable
(Increase) in intergovernmental receivable
Decrease in inventories
Decrease in prepaid items
Increase (decrease) in amounts payable and accrued payroll
(Decrease) in accrued interest payable
(Decrease) in deposits payable
Increase in workers' compensation
Increase in general liability
(Decrease) in compensated absences
Total adjustments
Net cash used for operating activities
Non -cash investing. capital and fnancina activities:
Net decrease in fair value of investments
Loss on disposal of capital assets
Total of non-cash activities
-
Enterprise Funds
-
6,147,805
(40,000)
(40,000)
Governmental
(40,000)
Total
Activities
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 17,452,459
$ 3,287,926
$ 20,740,385
$ 12,780,225
(3,565,218)
(1,198,838)
(4,764,056)
(5,794,440)
(9,780,427)
(1,6891895)
(11,470,322)
(5,211,833)
(1,123,763)
(139,859)
(1,263,622)
10,774
2,983,051
259,334
3,242,385
1,784,726
-
-
-
6,147,805
(40,000)
(40,000)
(125,000)
(40,000)
(40,000)
6,022,805
(3,638,828)
(863,364)
(4,502,192)
(2,055,028)
-
-
-
184,141
(1,330,000)
-
(1,330,000)
(254,716)
(258,763)
-
(258,763)
(6,995)
(3,356)
(3,356)
(5,230,947)
(863,364)
(6,094,311)
(2,132,598)
323,637
56,280
379,917
560,229
323,637
56,280
379,917
560,229
(1,964,259)
(547,750)
(2,512,009)
6,235,162
14,469,980
2,867,138
17,337,118
19,717,222
$ 12,505,721
$ 2,319,388
$ 14,825,109
$ 25,952,384
$ 11,073,366
$ 2,319,388
$ 13,392,754
25,952,384
1,432,355
1,432,355
$ 12,505,721
$ 2,319,388
$ 14,825,109
$ 25.952,384
$ 2,239,685
$ 196,352
$ 2,436,037
$ (2,441,133)
1,497,046
524,344
2,021,390
1,682,428
401,531
5,221
406,752
13,523
(818,532)
-
(818,532)
-
-
-
-
318,748
-
-
-
(42,353)
(299,979)
(466,583)
(766,562)
760,064
(27,930)
-
(27,930)
-
(8,770)
-
(8,770)
-
-
-
-
528,723
-
-
-
(295,961)
,260,687
743,366
62,982
806,348
4,225,859
$ 2,983,051
$ 259,334
$ 3,242,385
$ 1,784,726
$ (139,675)
$ (29,420)
$ (169,095)
$ (292,860)
(220,409)
(61,893)
(282,302)
(64,075)
$ (360,084)
$ (91,313)
$ (451,397)
$ (356,935)
See accompanying notes to basic financial statements
63
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.-
Fiduciary Funds
65
FIDUCIARY FUNDS
Agency Funds, a type of Fiduciary Funds, are used to account for assets held by the
City as an agent for other government entities, private organizations, or individuals.
..
CITY OF NEWPORT BEACH
Agency Funds
Statement of Fiduciary Assets and Liabilities
June 30, 2006
Assets Totals
Cash and investments (note 4) $ 1,920,275
Cash with fiscal agent (note 4) 4,432,708
Total assets $ 6,352,983
Liabilities
Due to bondholders $ 6,236,249
Due to others 116,734
Total liabilities $ 6,352,983
See accompanying notes to basic financial statements
67
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M
Notes to the
Financial Statements
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
(1) Summary of Significant Accounting Policies
The basic financial statements of the City of Newport Beach (the "City ") have been
prepared in conformity with generally accepted accounting principles ( "GAAP ") as
applicable to government units. The Governmental Accounting Standards Board
( "GASB ") is the accepted standard - setting body for establishing governmental
accounting and financial reporting principles.
a. Reporting Entity
The City of Newport Beach was incorporated on September 1, 1906. The current
City Charter was adopted in 1954. The City operates under a Council- Manager
form of government and provides the following services: public safety (police,
fire, and marine), highway and streets, cultural and recreation, public
improvements, planning and zoning, utilities, and general administrative services.
The financial statements present the financial activity of the City of Newport
Beach (the primary government) and its component unit. The component unit
discussed below is included in the City's reporting entity because of the
significance of its operational or financial relationship with the City. This entity is
legally separate from the City. However, the City of Newport Beach's elected
officials have continuing full or partial accountability for fiscal matters of the
component unit. The financial reporting entity consists of: (1) the City, (2)
organizations for which the City is financially accountable, and (3) organizations
for which the nature and significance of their relationship with the City are such
that exclusion would cause the City's financial statements to be misleading or
incomplete.
An organization is fiscally dependent on the primary government if it is unable to
adopt its budget, levy taxes or set rates or charges, or issue bonded debt without
approval by the primary government. In a blended presentation, a component
unit's balances and transactions are reported in a manner similar to the balances
and transactions of the City. Component units are presented on a blended basis
when the component unit's governing body is substantially the same as the City's
or the component unit provides services almost entirely to the City.
Blended Component Unit
The financial statements of the City of Newport Beach include the financial
activities of the Newport Beach Public Facilities Corporation (the "Corporation ").
The Corporation was formed on March 9, 1992, for the purpose of assisting the
City of Newport Beach in the financing of public improvements, including a public
library. The Corporation is governed by a Board of Directors comprised of seven
individuals appointed by the City Council of the City of Newport Beach. The
Corporation's financial data and transactions are included in the debt service
M.,
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
fund. Separate financial statements are not prepared for the Corporation. The
debt service fund is used solely to account for the activities of the Corporation
and contains no other City debt financing activities.
b. Basis of Accounting and Measurement Focus
The basic financial statements of the City are composed of the following:
• Government -wide financial statements
• Fund financial statements
• Notes to the financial statements
Financial reporting is based upon all GASB pronouncements, as well as the
FASB Statements and Interpretations, APB Opinions, and Accounting Research
Bulletins that were issued on or after November 30, 1989 that do not conflict with
or contradict GASB pronouncements.
Government -wide Financial Statements
Government -wide financial statements display information about the reporting
government as a whole, except for its fiduciary activities. These statements
include separate columns for the governmental and business -type activities of
the primary government (including its blended component units). The City of
Newport Beach has no discretely presented component units. Eliminations have
been made in the Statement of Activities so that certain allocated expenses are
recorded only once (by the function to which they were allocated). However,
general government expenses have not been allocated as indirect expenses to
the various functions of the City.
Government -wide financial statements are presented using the economic
resources measurement focus and the accrual basis of accounting. Under the
economic resources measurement focus, all (both current and long -term)
economic resources and obligations of the reporting government are reported in
the government -wide financial statements. Basis of accounting refers to when
revenues and expenses are recognized in the accounts and reported in the
financial statements. Under the accrual basis of accounting, revenues, expenses,
gains, losses, assets, and liabilities resulting from exchange and exchange -like
transactions are recognized when the exchange takes place.
Program revenues include charges for services, special assessments, and
payments made by parties outside of the reporting government's citizenry if that
money is restricted to a particular program. Program revenues are netted with
program expenses in the statement of activities to present the net cost of each
program.
70
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Amounts paid to acquire capital assets are capitalized as assets in the
government -wide financial statements, rather than reported as an expenditure.
Proceeds of long -term debt are recorded as a liability in the government -wide
financial statements, rather than as another financing source. Amounts paid to
reduce long -term indebtedness of the reporting government are reported as a
reduction of the related liability, rather than as an expenditure.
Fund Financial Statements
The underlying accounting system of the City is organized and operated on the
basis of separate funds, each of which is considered to be a separate accounting
entity. The operations of each fund are accounted for with a separate set of self -
balancing accounts that comprise its assets, liabilities, fund equity, revenues and
expenditures or expenses, as appropriate. Governmental resources are allocated
to and accounted for in individual funds based upon the purposes for which they
are to be spent and the means by which spending activities are controlled.
Fund financial statements for the primary government's governmental,
proprietary, and fiduciary funds are presented after the government -wide
financial statements. These statements display information about major funds
individually and non -major funds in the aggregate for governmental and
enterprise funds. Fiduciary statements include financial information for fiduciary
funds. Fiduciary funds of the City primarily represent assets held by the City in a
custodial capacity for other individuals or organizations.
Governmental Funds
In the fund financial statements, governmental funds are presented using the
modified - accrual basis of accounting. Their revenues are recognized when they
become measurable and available as net current assets. Measurable means that
the amounts can be estimated, or otherwise determined. Available means that
the amounts were collected during the reporting period or soon enough thereafter
to be available to finance the expenditures accrued for the reporting period. The
City uses an availability period of 60 days.
Sales taxes, property taxes, franchise taxes, gas taxes, motor vehicle license
fee, transient occupancy taxes, grants, and interest associated with the current
fiscal period are all considered to be susceptible to accrual and so have been
recognized as revenues of the current fiscal period to the extent normally
collected within the availability period. Other revenue items are considered to be
measurable and available when cash is received by the City.
Revenue recognition is subject to the measurability and availability criteria for the
governmental funds in the fund financial statements. Exchange transactions are
recognized as revenues in the period in which they are earned (i.e., the related
goods or services are provided). Locally imposed derived tax revenues are
recognized as revenues in the period in which the underlying exchange
71
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
transaction upon which they are based takes place. Imposed non - exchange
transactions are recognized as revenues in the period for which they were
imposed. If the period of use is not specified, they are recognized as revenues
when an enforceable legal claim to the revenues arises or when they are
received, whichever occurs first. Government - mandated and voluntary non -
exchange transactions are recognized as revenues when all applicable eligibility
requirements have been met.
In the fund financial statements, governmental funds are presented using the
current financial resources measurement focus. This means that only current
assets and current liabilities are generally included on their balance sheets. The
reported fund balance (net current assets) is considered to be a measure of
"available spendable resources." Governmental fund operating statements
present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets. Accordingly, they
are said to present a summary of sources and uses of "available spendable
resources' during a period.
Non - current portions of long -term receivables due to governmental funds are
reported on their balance sheets in spite of their spending measurement focus.
Special reporting treatments are used to indicate, however, that they should not
be considered "available spendable resources," since they do not represent net
current assets. Recognition of governmental fund type revenue represented by
non - current receivables is deferred until they become current receivables. Non-
current portions of other long -term receivables are offset by fund balance reserve
accounts. Revenues, expenses, gains, losses, assets, and liabilities resulting
from non - exchange transaction are recognized in accordance with the
requirements of GASB Statement No. 33.
Because of their spending measurement focus, expenditure recognition for
governmental fund types excludes amounts represented by non - current liabilities.
Since they do not affect net current assets, such long -term amounts are not
recognized as governmental fund type expenditures or fund liabilities.
Amounts expended to acquire capital assets are recorded as expenditures in the
year that resources were expended, rather than as fund assets. The proceeds of
long -term debt are recorded as other financing sources rather than as a fund
liability. Amounts paid to reduce long -term indebtedness are reported as fund
expenditures.
When both restricted and unrestricted resources are combined in a fund,
expenses are considered to be paid first from restricted resources, and then from
unrestricted resources.
72
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Proorietary & Fiduciary Funds
The City's enterprise and internal service funds are proprietary funds. In the fund
financial statements, proprietary and fiduciary funds are presented using the
accrual basis of accounting. Revenues are recognized when they are earned and
expenses are recognized when the related goods or services are delivered. In
the fund financial statements, proprietary funds are presented using the
economic resources measurement focus. This means that all assets and all
liabilities (whether current or non - current) associated with their activity are
included on their balance sheets. Proprietary fund type operating statements
present increases (revenues) and decreases (expenses) in total net assets.
Proprietary fund operating revenues, such as charges for services, result from
exchange transactions associated with principal activity of the fund. Exchange
transactions are those in which each party receives and gives up essentially
equal values. Non - operating revenues, such as subsidies, taxes, and investment
earnings result from non - exchange transactions or ancillary activities. Amounts
paid to acquire capital assets are capitalized as assets in the proprietary fund
financial statements, rather than reported as expenditure. Proceeds of long -term
debt are recorded as a liability in the proprietary fund financial statements, rather
than as other financing source. Amounts paid to reduce long -term indebtedness
of the proprietary funds are reported as a reduction of the related liability, rather
than as expenditure.
Agency funds are custodial in nature (assets equal liabilities) and do not involve
the recording of City revenues and expenses.
C. Fund Classifications
The City utilizes the following broad categories of funds:
Major Funds
Major funds are those funds which are either material or of particular importance.
Major Governmental Funds — Governmental funds are generally used to account
for tax supported activities. The following governmental funds met the criteria of a
major fund:
General Fund
The General Fund is the general operating fund of the City. It is used to
account for all activities, except those required to be accounted for in another
fund.
73
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Tide and Submerged Land
The Tide and Submerged Land Fund is used to account for all revenues and
expenditures related to the operation of the City's tidelands, including
beaches and marinas.
Newport Coast Annexation Fund
The Newport Coast Annexation Fund is used to account for revenues and
expenditures related to the Newport Coast Annexation Agreement.
Major Proprietary Funds — Proprietary funds are used to report an activity for
which a fee is charged to external users to recover the cost of operation.
Water Fund
The Water Fund is an enterprise fund used to account for the activities
associated with the transmission and distribution of potable water by the City
to its users.
Wastewater Fund
The Wastewater Fund is an enterprise fund used to account for the activities
associated with providing sewer services by the City to its users.
Internal Service Funds — The Internal Service Funds are used to account for
the City's self- insured general liability and workers' compensation, compensated
absences, retiree insurance, and the cost of maintaining and replacing the City's
rolling stock fleet. City departments are the primary users of these services and
are charged a fee on a cost reimbursement basis.
Fiduciary Funds — The Fiduciary Funds are used to account for assets held by
the City as an agent for property owners with special assessments, local
businesses in business improvements districts and other individuals who have
,
made miscellaneous special deposits with the City.
Cash and Investments
For purposes of the statement of cash flows, cash and cash equivalents are
defined to be cash on hand, demand deposits and highly liquid investments with
a maturity of three months or less from the date of purchase. For financial
statement presentation purposes, cash and cash equivalents are shown as cash
and investments and restricted cash and investments in the proprietary funds.
Investments
Investments are generally stated at fair value.
Cash and investments are pooled to maximize investment yields. The net change
in fair value and interest earned on the investments is allocated to the
74
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
respective funds based on each fund's average monthly cash and investments
balance.
The City's investment in LAIF is $2,910,547 at June 30, 2006. This investment
value is based on information provided by the State Treasurer's Office. The
carrying value of the City's position in the fund is materially consistent with the
fair value of the fund shares. This pool is under the regulatory oversight of the
State Treasurer's Office. The LAIF Board consists of five members as designated
by Statute. The Chairman is the State Treasurer, or his designated
representative. Two members qualified by training and experience in the field of
investment of finance, and two members who are treasurers, finance or fiscal
officers or business managers employed by any County, City or local district or
municipal corporation of this state, are appointed by the State Treasurer. The
term of each appointment is two years, or at the pleasure of the appointing
authority.
e. Intergovernmental Receivables
Intergovernmental receivables represent grant reimbursement requests, capital
project billings, and pending transfers of taxes and fees collected by other
government agencies. As of June 30, 2006, the balance of this account was
$12,207,594 of which $2,000,000 represents a receivable from the Irvine Ranch
Water District in conjunction with the Newport Coast Pre- annexation Agreement.
See Note (16) for more information.
f. Inventories
Inventories are valued at cost, which approximates market, using the first -in, first -
out method. The City follows the consumption method for inventory control. The
costs of governmental fund type inventories are recorded as expenditures when
consumed.
g. Notes Receivable
Included in notes receivable is a $50,000 loan to the City Manager to purchase a
home in the City. As required by the City Charter and the employment
agreement, the City Manager has to establish residency in, and become an
elector of, the City of Newport Beach. The City Manager shall pay a simple
interest on the unpaid balance of the loan, which shall be due on or before
September 15`h of each fiscal year.
The interest rate on the loan shall be the average rate of return on all City
investments during the fiscal year. The City Manager may, but is not required to
make payments to reduce the principal amount of the loan at any time and
75
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
payments to reduce the principal shall not be subject to any pre - payment penalty.
The entire unpaid balance of the loan is due March 26, 2012, or at the City
Manager's separation from City employment.
h. Capital Assets
Capital assets, which include land, structures, equipment, and infrastructure
assets, are reported in the applicable governmental or business -type activities
columns in the Government -wide Financial Statements. Capital assets are
recorded at cost where historical records are available and at an estimated
original cost where no historical records exist. Equipment purchased in excess of
$5,000 is capitalized if it has an expected useful life of three years or more.
Building, infrastructure, and improvements are capitalized if cost is in excess of
$30,000. The cost of normal maintenance and repairs that do not add to the
value of the asset's lives are not capitalized. The City chose to value and report
on infrastructure assets in their entirety (e.g. Prior to 1980).
Major capital outlay for capital assets and improvements are capitalized as
projects are constructed. For debt - financed capital assets, interest incurred
during the construction phase is reflected in the capitalization value of the asset
constructed, net of interest earned on the invested proceeds over the same
period. Capital assets acquired through lease obligations are valued at the
present value of future lease payments at the date acquired. Contributed capital
assets are valued at their estimated fair market value at the date of contribution.
Capital assets used in operations are depreciated over their estimated useful
lives using the straight -line method in the government -wide financial statements
and in the fund financial statements of the proprietary funds. Depreciation is
charged as an expense against operations and accumulated depreciation is
reported on the respective balance sheet. The range of lives used for
depreciation purposes for each capital asset class as follows:
Structures
30 -75 years
Equipment
3 -15 years
Infrastructure
20 -75 years
L Claims and Judgments
The City accounts for material claims and judgments and associated legal and
administrative costs when it is probable that the liability claim has been incurred
and the amount of the loss can be reasonably estimated. The City records the
estimated loss liabilities in the Internal Service Fund. Included therein are claims
incurred but not reported, which consists of (a) known loss events expected to be
presented as claims later, (b) unknown loss events that are expected to become
claims, and (c) expected future development on claims already reported. This is
rs
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
based upon historical actual results that have established a reliable pattern
supplemented by specific information about current matters. Small dollar claims
and judgments are recorded as expenditures when paid.
j. Property Taxes
The assessment, levy, and collection of property taxes are the responsibility of
the County of Orange. The City records property taxes as revenue when
received from the County, except at year -end, when property taxes received
within 60 days are accrued as revenue. Property taxes are assessed and
collected each fiscal year according to the following property tax calendar:
Lien date
March 1
Levy date
July 1
Due dates
November 1 — 15t installment
March 1 — 2nd installment
Collection dates
December 10 — 1st installment
April 10 — 2nd installment
k. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused
vacation and limited amounts of earned but unused sick leave benefits, which will
be paid to employees upon separation from City service. Beginning in fiscal year
1990, the City adopted a general leave plan to replace the traditional vacation
and sick leave plan. The City uses a general leave plan which permits a
maximum of three years' accrual for every employee, above which the excess is
paid out as current compensation. All employees hired prior to January 1, 1990,
were given the option of remaining in the traditional vacation and sick leave plan
or enrolling in the general leave plan. All employees hired on or after January 1,
1990, are automatically enrolled in the general leave plan. Compensated
absences are accrued in the Compensated Absence Internal Service Fund when
employee services have been rendered and when it becomes probable that the
City will compensate the employees for benefits through paid time off or cash
payments at termination or retirement. Benefits that have been earned but are
not yet available for use because employees have not met certain conditions are
accrued to the extent it is probable that the employees will meet the conditions
for compensation in the future.
Unearned Revenue
Unearned revenues are those where asset recognition has been met, but the
revenue recognition criteria have not been met.
77
(2)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Reconciliation of Government -wide and Fund Financial Statements
a. Explanation of Differences Between Governmental Funds Balance Sheet
and the Statement of Net Assets
The "total fund balances' of the City's governmental funds $100,737,296 differs
from "net assets" of governmental activities $2,114,206,983 reported in the
statement of net assets. This difference primarily results from the long -term
economic focus of the statement of net assets versus the current financial
resources focus of the governmental fund balance sheets.
Capital Related Items
When capital assets (property, plant, and equipment) that are to be used in
governmental activities are purchased or constructed, the cost of those assets
are reported as expenditures in governmental funds. However, the statement of
net assets includes those capital assets among the assets of the City as a whole.
Cost of capital assets $2,132,625,199
Accumulated depreciation (112.042,022)
Total capital assets, net* $2.020.583.177
*Amount excludes net capital assets of $7,117,656 from
Internal Service funds.
Long -term Debt Transactions
Long -term liabilities applicable to the City's governmental activities are not due
and payable in the current period and accordingly are not reported as fund
liabilities. All liabilities (both current and long -term) are reported in the statement
of net assets. Balances at June 30, 2006 were:
Certificates of participation $ 5,280,000
Note payable 1,632,789
Pre - annexation agreement 13,200,000
CDBG Loan 2.207,000
Total $22.319.789
W-1
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Accrued Interest
Accrued liabilities in the statement of net assets differ from the amount reported
in governmental funds due to accrued interest on outstanding debt payable (see
Note 6).
Accrued interest added J138 996
Investment in Joint Venture
Investment in joint ventures is not a current financial resource and hence
reported only in the statement of net assets.
Net equity in joint venture $2243353
Unavailable Revenue
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.
Unavailable revenue $5.997.884
Internal Service Funds
Internal service funds are used by management to charge the costs of certain
activities (such as equipment management and self- insurance authorities) to
individual funds. The assets (including capital assets) and liabilities of the internal
service funds are included in governmental activities in the statement of net
assets, because they primarily serve governmental activities of the City.
Internal Service Funds $7.241.155
Reclassifications and Eliminations
Interfund balances must generally be eliminated in the government -wide
statements, except for net residual amounts due between governmental
activities. Amounts involving fiduciary funds should be reported as external
transactions. Any allocations must reduce the expenses of the function from
which the expenses are being allocated, so that expenses are reported only once
— in the function in which they are allocated.
Investments in joint ventures are not a current financial resource and are not
reported in the governmental funds. Therefore, it is added for the statement of
net assets. Interfund balance created due to the consolidation of internal service
activities to governmental and enterprise funds is not reported in the fund
statements and must be added to the statement of net assets.
79
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
(2) Explanation of Differences between Governmental Funds
(a) Balance Sheet and the Statement of Net Assets, (Continued)
Total Capital
Governmental Related
Assets Funds Items
Long -term
Accumulated Debt
Depreciation Transactions
Cash and investments $ 99,692,885 $ - $ - S -
Receivables:
Accounts
4,567,339 - -
Notes
50,000 - -
Interest
1,497,197 - -
Intergovernmental receivables
12,207,594 - -
Cash with fiscal agent
3,170,068 - -
Interfund balances
3,309,485 - -
Investment in joint venture
- - -
Prepaid items
954,491 - -
Inventory
211,746 -
Capital assets
- 2,132,625,199 -
Accumulated depreciation
- - (112,042,022)
Total assets $ 125,660,805 $ 2,132,625,199 $ (112,042,022) $
Liabilities and Fund Balances / Net Assets
Liabilities:
Accounts payable
$ 8,092,595 $ - $ - $
Accrued payroll
2,170,623 - -
Accrued interest payable
- - -
Deposits payable
3,431,190 - -
Capital leases payable
- - -
Claims payable
- - -
Workers' compensation payable
- - -
Compensated absences payable
- - -
Unearned revenue
1,921,732 - -
Unavailable revenue
5,997,884 - -
Interfund payables
- - -
Due to other funds
3,309,485 - -
Long -term liabilities - - - 22,319,789
Total liabilities 24,923,509 - - 22,319,789
Fund balances / net assets 100,737,296 2,132,625,199 (112,042,022) (22,319,789)
Total liabilities and
and fund balances / net assets $ 125,660,805 $ 2,132,625,199 $ (112,042,022) $ -
Mf
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Investment
Internal
Reclassifications
Interest in Joint
Unavailable Service
and
Statement of
Payable Venture
Revenue Funds
Eliminations
Net Assets
- - -
$25,952,384
$ -
$ 125,645,269
- -
- 5,934
-
4,573,273
- -
- -
-
50,000
- -
- -
-
1,497,197
- -
- -
-
12,207,594
- -
- -
-
3,170,068
- -
- -
(3,309,485)
-
- 2,243,353
-
2,243,353
- -
- 92,699
-
1,047,190
- -
- 199,809
-
411,555
- -
- 19,965,582
-
2,152,590,781
- -
(12,847,926)
-
(124,889,948)
$ - $ 2,243,353
$ - $33,368,482
$ (3,309,485)
$ 2,178,546,332
$ - $ - $ - $ 1,329,330
22,848
138,996 - - -
- - - 116,566
- - - 1,438,532
- - 3,051,411
1,695,137
$ - $ 9,421,925
- 2,193,471
- 138,996
- 3,431,190
- 116,566
- 1,438,532
- 3,051,411
- 1,695,137
1,921,732
iJ,JJI,VVYI
- - -
-
137,097
137,097
- - -
-
(3,309,485)
-
- - -
18,473,503
-
40,793,292
138,996 (5,997,884)
26,127,327
(3,172,388)
64,339,349
138,996 2,243,353 5,997,884
7,241,155
(137,097)
2,114,206,983
$ - $ 2,243,353 $ -
$33,368,482 $
(3,309,485)
$ 2,178,546,332
L-11
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
b. Explanation of Differences between Enterprise Funds and Government -wide
Statement of Net Assets
Total net assets of the City's Enterprise Funds of $121,372,536 differs from net
assets of the business -type activities of $121,509,633 reported in the
government -wide statement of net assets. The difference, $137,097 results from
the consolidation of internal service fund activities related to the enterprise funds.
(2) Reconciliation of government -wide and fund financial statements
(b) Explanation of Differences between Enterprise Funds and
Government -wide Statement of Net Assets, (Continued)
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Cash with fiscal agent
Interfund balances
Capital assets, net
Total assets
Liabilities and Fund Balances I Net Assets
Liabilities:
Accounts payable
Accrued payroll
Accrued interest payable
Liabilities from restricted assets
Noncurrent liabilities:
Due within one year
Due in more than one year
Total liabilities
Total Internal Governmentwide
Enterprise Service Statement of
Funds Funds Net Assets
$ 13,392,754 $ - $ 13,392,754
4,446,763 - 4,446,763
818,532 818,532
1,432,355 - 1,432,355
- 137,097 137,097
109,094,911 - 109,094,911
$ 129,185,315 $ 137,097 $ 129,322,412
$ 1,594,838 $ - $ 1,594,838
93,053 - 93,053
129,381 - 129,381
70,507 - 70,507
1,385,000 - 1,385,000
4,540,000 - 4,540,000
7,812,779 7,812,779
Net Assets
Invested in capital assets, net of related debt $ 104,602,266 - $ 104,602,266
Unrestricted 16,770,270 137,097 16,907,367
$ 121,372,536 $ 137,097 $ 121,509,633
M
C.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Explanation of Differences between Governmental Fund Operating
Statements and the Statement of Activities
The "net change in fund balances" for governmental funds $495,435 differs from
the 'change in net assets' for governmental activities $84,417,602 reported in the
statement of activities. The differences arise primarily from the long -term
economic focus of the statement of activities versus the current financial
resources focus of the governmental funds. The effect of the difference is
illustrated below.
Capital Related Items
When capital assets that are to be used in governmental activities are purchased
or constructed, the resources expended for those assets are reported as
expenditures in governmental funds. However, in the statement of activities, the
cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense. In governmental funds, significant maintenance projects
are reclassified as functional expenses in the statement of net assets. Also,
contributed capital is not recorded in governmental funds; therefore it is added for
the statement of net assets.
Capital outlay
Net change to Internal Service Fund capital
assets
Capital contribution
Net change in capital related items
Depreciation expense
Deletions to accumulated depreciation
Net change in accumulated depreciation
83
$23,471,758
(2,992,785)
67.370.000
$87,848,973
($8,710,265)
2.769.446
($5.940.8191
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Long -term Debt Transactions
Repayment of debt service is reported as an expenditure in governmental funds
and, thus, has the effect of reducing fund balance because current financial
resources have been used. Issuance of debt is reported as an other financing
source in governmental funds, thus increasing fund balance. For the City as a
whole, however, the principal payments reduce the liabilities, and proceeds from
long term debt increase liabilities in the statement of net assets.
Certificates of Participation $ 290,000
Note payable 156,542
Pre - annexation agreement 1,200,000
CDBG loan 69.000
Total principal payments made $1.715.542
Accrued Interest
Interest accrued on outstanding debt payable is not recorded as an expenditure
in governmental funds, and, thus has been added to the statement of activities.
Net change in accrued interest $$
Investment in Joint Venture
Investment in joint ventures creates an explicit, measurable equity interest
reported only in the statement of activities.
Net change in investment in joint venture 513 791
01
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Unavailable Revenue
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.
Net change in unavailable revenue ($2.734.4681
Internal Service Funds
Internal service funds are used by management to charge the costs of certain
activities, such as equipment management and self- insurance activities, to
individual funds. The adjustments for internal service funds "closes" those funds
by reimbursing or charging additional amounts to participating departments in
individual funds for costs over or under charged for those activities.
Net change in Internal Service Funds $4.070.830
Reclassification and Eliminations
Interfund balances must generally be eliminated in the government -wide financial
statements, except for net residual amounts due between governmental and
business -type activities. Any allocations must reduce the expenses of the
function from which the expenses are being allocated, so that expenses are
reported only once — in the function in which they are allocated. Amounts
involving fiduciary funds should be reported as external transactions.
E2
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
(2) Reconciliation of Government-wide and Fund Financial Statements
(c) Explanation of Differences between Governmental Fund
Operating Statements and the Statement of Activities. (Continued)
Revenues:
Taxes and assessments
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property income
Share of joint venture net loss
Donations
Contributed capital
Loss on sale of capital assets
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenses
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources
(uses)
Net change in fund balances /
net assets
Total Capital Long -term
Governmental Related Accumulated Debt Accrued
Funds Items Depreciation Transactions Interest
$ 102,737,810 $ - $ - $ -
14,842,994 - - - -
5,708,965 - - - -
13,135,366 - - - -
3,841,843 - - - -
3,847,982 - - - -
(1,325,211) - - - -
13,625,142 - - -
883,405 - - - -
- 67,370,000 - - -
1,042,882 - - - -
158,341,178 67,370,000
12,531,200
-
241,533 -
65,262,069
2,055,030
(779,520) -
26,430,751
937,755
6,048,185 -
7,900,503
-
98,768 -
12,730,727
-
893,374 -
24,811,237
(23,471,758)
- -
1,715,542 - - (1,715,542)
480,909 (8,375)
151,862,938 (20,478,973) 6,502,340 (1,715,542) (8,375)
25,194,920
(31,177,725)
(5,982,805)
495,435 87,848,973
(6,502,340) 1,715,542 8,375
Fund balances / net assets beginning of year 100,241,861 2,044,776,226 (105,539,682) (24,035,331) (147,371)
Fund balances / net assets end of year $ 100,737,296 $ 2,132,625,199 $ (112,042,022) $ (22,319,789) $ (138,996)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Investment Internal Reclassifications
in Joint Unavailable Service and Statement of
Venture Revenue Fund Eliminations Activities
$ - $ - $ - $
- $ 102,737,810
- (2,734,468) -
- 12,108,526
- - -
- 5,708,965
- - -
28,846 13,164,212
- - -
- 3,841,843
- - 853,088
- 4,701,070
- - (292,860)
- (1,618,071)
- - -
- 13,625,142
(513,791) - -
- (513,791)
- - -
- 883,405
- - -
- 67,370,000
- - (64,075)
- (64,075)
1,042,882
(513,791) (2,734,468) 496,153
28,846 222,987,918
397,615
53,713
13,224,061
1,251,542
547,445
68,336,566
453,668
609,464
34,479,823
158,654
57,999
8,215,924
179,654
70,858
13,874,613
(1,339,479)
-
6,995 479,529
2,448,128 138,610,516
6,147,805 (31,342,725) -
(125,000) 31,342,725 40,000
6,022,805 40,000
(513,791) (2,734,468) 4,070,830 28,846 84,417,402
2,757,144 8,732,352 3,170,325 (165,943) 2,029,789,581
$ 2,243,353 $ 5,997,884 $ 7,241,155 $ (137,097) $ 2,114,206,983
87
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Explanation of Differences between Enterprise Funds Operating Statement
and the Statement of Activities
The change in net assets for the City's enterprise funds $2,231,533 differs from
the change in net assets of the business -type activities $2,202,687 reported in
the government -wide statement of activities. The difference ($28,846) results
from the consolidation of internal service fund activities related to the enterprise
funds.
(2) Reconciliation of Government -wide and Fund Financial Statement
(d) Explanation of Differences between Enterprise Funds
Operating Statement and the Statement of Activities, (Continued)
Total nonoperating revenues (expenses) (164,504)
Income before transfers 2,271,533
Transfers out (40,000)
Change in net assets
Net assets, beginning of year
Net assets, end of year
(28,846)
2,231,533 (28,846)
(164,504)
2,242,687
(40,000)
2,202,687
119,141,003 165,943 119, 306, 946
$ 121,372,536 $ 137,097 $ 121,509,633
Total
Internal
Business -type activities
Enterprise
Service
Statement of
Funds
Fund
Activities
Operating revenues:
Charges for sales and services:
Water sales
$ 16,098,674
$ -
$ 16,098,674
Intergovernmental
1,932,347
-
1,932,347
Sewer service and connection fees
3,129,915
-
3,129,915
Other
73,676
73,676
Total operating revenues
21,234,612
21,234,612
Operating expenses:
Purchase of Water
6,379,320
-
6,379,320
Salaries and wages
4,691,758
-
4,691,758
Depreciation
2,021,390
-
2,021,390
Professional Services
1,951,783
-
1,951,783
Maintenance and supplies
1,283,930
28,846
1,312,776
System maintenance
1,133,096
-
1,133,096
Other
1,337,298
1,337,298
Total operating expenses
18,798,575
28,846
18,827,421
Operating income
2,436,037
(28,846)
2,407,191
Nonoperating revenues (expenses):
Investment income
549,012
-
549,012
Net decrease in fair value of investments
(169,095)
-
(169,095)
Property income
(282,302)
-
(282,302)
Gain on removal of capital assets
(258,763)
-
(258,763)
Interest expense
(3,356)
-
(3,356)
Other
Total nonoperating revenues (expenses) (164,504)
Income before transfers 2,271,533
Transfers out (40,000)
Change in net assets
Net assets, beginning of year
Net assets, end of year
(28,846)
2,231,533 (28,846)
(164,504)
2,242,687
(40,000)
2,202,687
119,141,003 165,943 119, 306, 946
$ 121,372,536 $ 137,097 $ 121,509,633
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
(3) Budgetary Control and Compliance
The City adheres to the following general procedures in establishing the budgetary data
reflected in the financial statements:
• During April, the City Manager submits to the City Council a proposed operating
budget for the fiscal year commencing the following July 1. The operating budget
includes proposed expenditures and the means of financing them. Public
hearings are conducted at City Council meetings to obtain taxpayer comments.
Prior to July 1, the budget is legally adopted through passage of an appropriation
resolution.
• Budgets are adopted on an annual basis consistent with generally accepted
accounting principles for General and Special Revenue Funds.
• The City of Newport Beach does not present budget information on Capital
Projects Funds since the City approved project - length budgets. These project -
length budgets authorize total expenditures over the duration of a construction
project rather than year -by -year budgeting.
• The City of Newport Beach does not present budget information on Debt Service
and Permanent Funds since the City is not required to and does not adopt an
annual budget.
• The budget is formally integrated into the accounting system and employed as a
management control device during the year.
• The legal level of budgetary control is at the fund level. The City Manager is
authorized to transfer budgeted amounts between departments within any fund;
however, any revisions which alter the total appropriations of any fund must be
approved by City Council.
• At fiscal year -end, budget appropriations lapse. Budget appropriations for
incomplete capital projects are re- budgeted in the following fiscal year by Council
action and are included in the revisions noted above. Projects that are not started
during the budget year are reevaluated in the following year.
• Encumbrances represent commitments related to unperformed contracts for
goods and services. The City utilizes an encumbrance system as a management
control technique to assist in controlling expenditures. Under this system,
encumbrance accounting for the expenditure of funds is recorded in order to
indicate outstanding commitments and is employed in the governmental fund
types. Encumbrances outstanding at year -end are reported as reservations of
fund balances since they do not constitute expenditures or liabilities.
Encumbrances and their related budgets are honored in the subsequent year to
fulfill these commitments and are presented in the original adopted budget.
L-M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Expenditures exceeded appropriations in the following non -major governmental funds.
Appropriations Expenditures Variance
Environmental Liability
$
90,000 $
176,764
$ (86,764)
Contributions
$
- $
1,837,421
$(1,837,421)
Supplemental Law Enforcement
$
120,000 $
121,550
$ (1,550)
Air Quality Management District
$
26,415 $
28,350
$ (1,935)
The following funds reported deficit fund balances:
Special Revenue Funds
Arterial Highway Rehabilitation $ 65,703
Community Development Block Grant $ 299,454
Capital Projects
Mariners Library
$1,750,160
City Hall Improvement
$ 195,831
SAH Community Center
$ 100,859
Misc SAH Projects
$ 101,704
Internal Service Funds
Insurance Reserve $7,127,747
Compensated Absences $7,534,538
(4) Cash and Investments
Cash and investments as of June 30, 2006 are classified in the accompanying financial
statements as follows:
Statement of net assets:
Cash and investments
Cash with fiscal agent
Fiduciary funds:
Cash and investments
Cash with fiscal agent
Total cash and investments
.I
$ 139,038,023
4,602,423
1,920,275
4,432,708
$ 149,993,429
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Cash and investments as of June 30, 2006 consist of the following:
Cash on hand
$ 28,332
Deposits with financial institutions
376,150
Investments
149,588,947
Total cash and investments
$ 149,993,429
Investments Authorized by the California Government Code and the Entity'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 (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 trustee 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.
91
Maximum
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maturity
of *Portfolio
in One Issuer
Local Agency Bonds
5 years
None
None
U.S. Treasury Obligations
5 years
None
None
U.S. Agency Securities
5 years
None
None
Banker's Acceptances
180 days
30%
30%
Commercial Paper
270 days
25%
10%
Negotiable Certificates of Deposit
5 years
30%
None
Repurchase Agreements
1 year
None
None
Reverse Repurchase Agreements
92 days
10% of base value
None
Medium -Term Notes
5 years
30%
None
Mutual Funds
N/A
20%
10%
Money Market Mutual Funds
N/A
20%
10%
Mortgage Pass - Through Securities
5 years
20%
None
County Pooled Investment Funds
N/A
None
None
Local Agency Investment Fund (LAIF)
N/A
5%
None
JPA Pools (other investment pools)
N/A
None
None
* Excluding amounts held by bond trustee that are
not subject to California
Government Code restrictions.
91
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee (i.e. fiscal agent) 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 bond trustee. The table
also identifies certain provisions of these debt agreements that address interest rate risk,
credit risk, and concentration of credit risk.
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 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 trustee) to market interest rate fluctuations is provided by the
following table that shows the distribution of the City's investments by maturity:
I
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maximum Maturity
Allowed
in One Issuer
U.S. Treasury Obligations
None
None
None
U.S. Agency Securities
None
None
None
Banker's Acceptances
30 days - 360 days
None
None
Commercial Paper
180 days - 270 days
None
10%
Money Market Mutual Funds
N/A
None
None
Investment Agreements
None
None
None
Certificates of Deposit
None
None
None
Demand Deposits
30 days - 360 days
None
None
Time Deposits
30 days - 360 days
None
None
Local Agency Bonds
None
None
None
Forward Delivery Agreement
None
None
None
Forward Purchase and Sale Agreement
None
None
None
Corporate Notes
None
None
None
Repurchase Agreements
None
None
None
Local Agency Investment Fund
N/A
None
None
Municipal Obligations
None
None
None
County Pooled Investment Funds
N/A
None
None
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 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 trustee) to market interest rate fluctuations is provided by the
following table that shows the distribution of the City's investments by maturity:
I
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Investment agreements are recorded at cost (not fair value) because these
agreements represent nonparticipating contracts that are nonnegotiable and whose
redemption terms do not consider market rates.
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations
As of June 30, 2006 the City did not have any investments (including investments held
by fiscal agent) whose fair values were highly sensitive to interest rate fluctuations.
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 is the minimum
rating required by (where applicable) the California Government Code, the City's
investment policy, or debt agreements, and the actual rating as of year end for each
investment type.
Investment Maturities In Years
Exempt
" Fair Value
Less than 1
1 to 3
E 3 to 5
1 More than 5 Total
Investment Type
Not
Fair Value
Money Market Funds
$ 673,740
$ 673,740 $
-
$ -
$ - $ 673,740
U.S. Treasury Notes
20,084,943
8,351,423
9,409,092
2,324,427
- 20,084,943
U.S. Agencies
79,620,158
28,385,791
42,490,030
8,744,336
- 79,620,157
Corporate Notes
28,134,547
9,640,269
18,242,264
252,014
- 28,134,547
Municipal Bond
970,240
970,240
-
-
- 970,240
Commercial Paper
3,195,603
3,195,603
-
-
- 3,195,603
Local Agency Investment Fund
2,910,547
2,910,547
-
-
- 2,910,547
Repurchase Agreements
4,226,000
4,226,000
-
-
- 4,226,000
Mortgage- backed Securities
738,038
-
738,038
-
- 738,038
Cash with Fiscal Agent:
2,910,547
NIA
-
-
-
Money Market Funds
7,854,555
7,854,555
-
-
- 7,854,555
Investment Agreements
1,180,576
Mortgage - backed$emmies
738,036
A
1,180,576 1,180,576
Total
$ 149,588,947
$ 66,208,169 $
70,879,425
$11,320,777
$ 1,180,576 $ 149,588,947
Investment agreements are recorded at cost (not fair value) because these
agreements represent nonparticipating contracts that are nonnegotiable and whose
redemption terms do not consider market rates.
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations
As of June 30, 2006 the City did not have any investments (including investments held
by fiscal agent) whose fair values were highly sensitive to interest rate fluctuations.
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 is the minimum
rating required by (where applicable) the California Government Code, the City's
investment policy, or debt agreements, and the actual rating as of year end for each
investment type.
93
Minimum
Exempt
Legal
From
Not
Fair Value
Ratic
Disclosure
AAA
AA AA-
A+ A A_1 Rated
ves5nent Tyr,
Money Market Funds
$ 673,740
A $
- $
83,751 $
- $ - $
- $ - $ - $ 589,989
U.S. Treasury Notes
20,084,943
NIA
20,084,943
-
- -
- - - -
U.S.Agencies
79620,158
NIA
-
79620,158
- -
- - -
Corporate Notes
28,134,547
A
-
7,712,467
6,503,482 11,169,205
2,497,380 252,014 - -
Municipal Bond
970,240
NIA
970,240
- -
- - - -
CommemialPaper
3,195,603
A
-
450,000
- -
- - 2,745,603 -
LocalAgencylnvestmentFund
2,910,547
NIA
-
-
- -
- - - 2,910,547
Repurchase Agreaments
4,226,000
A
-
-
- -
- - - 4,228,000.
Mortgage - backed$emmies
738,036
A
-
738,038
- -
- - - -
Cash with Fiscal Agent:
-
-
- -
- - - -
MoneyMarketFunds
7,854,555
A
-
7,854,555
- -
- - -
Investment Agreements
1,180,576
NIA
-
-
- 1,180,576
- - - -
93
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be
invested in any one issuer beyond that stipulated by the California Government Code.
Investments in any one issuer that represent 5% or more of total City's investments are
as follows:
Issuer
Investment Type
Reported Amount
FHLB
Federal agency securities
$21,746,264
FHLMC
Federal agency securities
$27,093,018
FNMA
Federal agency securities
$29,553,831
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 provision for deposits: The
California Government Code requires that a financial institution secure deposits made by
state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental
unit). The market value of the pledged securities in the collateral pool must equal at least
110% 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% of the secured public deposits. As of June 30, 2006, none of the
City's deposits with financial institutions in excess of federal depository amounts were
held in uncol lateral ized accounts. As of June 30, 2006, City investments in the following
investment types were held by the same broker - dealer (counterparty) that was used by
the City to buy the securities:
Investment Type
Reported Amount
Money Market Funds
$ 98,491
U.S. Treasury Notes
7,354,107
U.S. Treasury Bills
1,088,307
U.S. Agencies
28,350,510
Corporate Notes
13,974,769
Repurchase Agreements
4,226,000
IS
(5)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
For investments identified herein as restricted cash with fiscal agent, the fiscal agent
selects the investment under the terms of the applicable trust agreement, acquires the
investment, and holds the investment on behalf of the reporting government.
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is
regulated by the California Government Code 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. LAIF is not
rated.
Capital Assets
Capital asset activity for the year ended June 30, 2006 was as follows:
Governmental Activities:
Non - depreciable:
Land
Work in progress
Depreciable:
Structures
Equipment
Infrastructure
Less accumulated
depreciation for:
Structures
Equipment
Infrastructure
Net Capital Assets
Beginning
Balance
July 1, 2005
$ 1,713,153,769
8,972,503
34,451,196
23,545,618
285,055,859
2,065,178,945
(10,103,790)
(733,050) -
Balance
Additions
Deletions
June 30, 2006
(93,021,771)
(6,029,325) 487,160
(98,563,936)
$ 67,545,000
$ -
$ 1,780,698,769
15,087,357
(1,107,899)
22,951,961
352,035
34,803,231
2,279,706
(2,492,167)
23,333,157
6,685,559
(937,755)
290,803,663
91,949,657
(4,537,821)
2,152,590,781
(10,103,790)
(733,050) -
(10,836,840)
(15,823,568)
(1,947,890) 2,282,286
(15,489,172)
(93,021,771)
(6,029,325) 487,160
(98,563,936)
(118,949,129)
(8,710,265) 2,769,446
(124,889,948)
$ 1,946,229,816 $ 83,239,392 $ (1,768,375) $ 2,027,700,833
M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Business -type Activities:
Non - depreciable:
Land
Work in progress
Depreciable:
Structures
Equipment
Infrastructure
Less accumulated depreciation for:
Structures
Equipment
Infrastructure
Net
Beginning
Governmental
Business -type
Balance
Balance
Additions
Deletions
June 30, 2006
$ -
Public safety
941,245
$ 2,016,450
$
$ -
$ 2,016,450
8,141,399
976,125
(8,141,399)
976,125
205,793
-
Water
205,793
148,191
-
-
148,191
139,429,262
11,667,466
(377,828)
150,718,900
149,941,095
12,643,591
(8,519,227)
154,065,459
(96,740) (5,145) (101,885)
(135,435) (3,189) - (138,624)
(42,812,509) (2,013,056) 95,526 (44,730,039)
(43,044,684) (2,021,390) 95,526 (44,970,548)
$ 106,896,411 10,622,201 $ (8,423,701) $ 109,094,911
Depreciation expense was charged in the following functions in the Statement of Activities:
t.
Governmental
Business -type
Activities
Activities
General government
$ 241,533
$ -
Public safety
941,245
-
Public works
6,535,345
-
Community development
98,768
-
Community service
893,374
-
Water
-
1,497,046
Wastewater
-
524,344
$ 8,710,265
$ 2,021,390
t.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
(6) Long -Term Debt
Changes in Long -Term Liabilities
Long -term liability for the year ended June 30, 2006, was as follows:
Capital leases payable
420,773
Restated
-
(254,717)
Amounts
116,566
Beginning
Beginning
Ending
Due Within
Balance
Restatement Balance Additions
Deletions
Balance
One Year
Governmental activities:
11,160,000
3,051,411
Claims and judgements
Certificates of
payable
3,367,961
participation payable
$ 5,570,000
$ - $ 5,570,000 $ -
$ (290,000) $
5,280,000
$ 300,000
Note payable
1,789,331
- 1,789,331 -
(156,542)
1,632,789
163,587
Pre - annexation
7,376,403
7,376,403
4,195,132
(2,934,444)
8,637,091
agreement
14,400,000
- 14,400,000 -
(1,200,000)
13,200,000
1,200,000
CDBG Loan
2,276,000
- 2,276,000 -
(69,000)
2,207,000
73,000
Capital leases payable
420,773
- 420,773
-
(254,717)
166,056
116,566
Workers'
compensations payable
10,631,277
- 10,631,277
3,294,929
(2,766,206)
11,160,000
3,051,411
Claims and judgements
payable
3,367,961
1,740,002 5,107,963
2,045,323
(2,341,284)
4,812,002
1,438,532
Compensated
absences
7,376,403
7,376,403
4,195,132
(2,934,444)
8,637,091
1,695,137
Total governmental
activities
45,831,745
1,740,002 47,571,747
9,535,384
(10,012,193)
47,094,938
8,038,233
Business -type activities:
Water Revenue Bonds
payable
7,255,000
- 7,255,000
-
(1,330,000)
5,925,000
1,385,000
Total $
53,086,745
$ 1,740,002 $ 54,826,747
$ 9,535,384
$ (11,342,193) $
53,019,938 $
9,423,233
Internal service funds predominantly serve the governmental funds. Accordingly, long -term
liabilities for them are included as part of the above totals for governmental activities. Also,
liabilities for workers' compensation, claims and judgments, and compensated absences
are typically liquidated from the Internal Service funds through resources collected from
individual funds.
Beginning balance has been restated to include correction of an error in the valuation of
claims and judgments payable. See Note (17) for further discussion.
97
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Governmental Activities
• Certificates of Participation
In Fiscal Year 1998 -99, the Newport Beach Public Facilities Corporation issued
$7,330,000 of Refunding Certificates of Participation to advance refund the 1992
Certificates of Participation used to finance the construction of the Central Library. The
refunding was undertaken to reduce total debt service payments over the next twenty
years by $690,228 and resulted in an economic gain of $495,745. The Refunded
Certificates were executed and delivered pursuant to the Prior Trust Agreement. The
City has previously entered into a project lease with the Newport Beach Public
Facilities Corporation to lease certain property, facilities, improvements, and
equipment.
The lease payments made by the City are held by a trustee who makes semi - annual
payments on the Certificates of Participation. The lease payments began May 15,
1994, and are in amounts sufficient to cover the payment of principal and interest of
the Certificates. The 1998 Certificates consist of $2,995,000 of Serial Certificates with
interest rates from 3.6% to 4.55% and $4,335,000 of Term Certificates with interest
rates from 5.05% to 5.15 %. Interest on the Certificates is payable semiannually on
June 1 and December 1 of each year. Future principal payments range from $300,000
to $535,000 through June 1, 2019. Principal payments are payable annually on June 1
of each year. At June 30, 2006, the City has a required cash reserve balance for debt
service of $566,354, which is recorded as a restricted asset and reservation of fund
balance in the Debt Service Fund. The outstanding balance at June 30, 2006,
amounted to $5,280,000.
The annual amortization requirements of the Certificates of Participation are as
follows:
Year Ending
June 30
Principal
Interest
Total
2007
$ 300,000
$ 262,530
$ 562,530
2008
315,000
249,480
564,480
2009
330,000
235,463
565,463
2010
345,000
220,448
565,448
2011
360,000
203,025
563,025
2012 -2016
2,100,000
722,225
2,822,225
2017 -2019
1,530, 000
160,165
1,690,165
$ 5,280,000
$ 2,053,336
$ 7,333,336
-61-1
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
• Note Payable
Note payable consists of a note to the California Department of Boating and
Waterways in 1987 for a loan in the amount of $3,300,000. The note is payable in
thirty annual principal and interest installments of $237,062 at 4.5% rate of interest
beginning August 1, 1987. The outstanding balance at June 30, 2006, amounted to
$1,632,789.
The annual amortization requirements for the Note Payable are as follows:
Year Ending
June 30
Principal
Interest
Total
2007
$ 163,587
$ 73,475
$ 237,062
2008
170,948
66,114
237,062
2009
178,641
58,421
237,062
2010
186,679
50,383
237,062
2011
195,080
41,982
237,062
2012 -2016
737,854
78,364
816,218
$ 1,632,789
$ 368,739
$ 2,001,528
• Newport Coast Pre - Annexation Agreement Payable
In conjunction with the January 1, 2002, annexation of Newport Coast, the City entered
into an agreement payable with the Newport Coast Committee for a total of
$18,000,000 to reduce property owner assessments used to finance certain road and
street improvements. The principal -only agreement which began in the 2003 fiscal
year, is payable over a period of fifteen years in equal installments of $1,200,000. The
outstanding balance at June 30, 2006, amounted to $13,200,000.
• CDBG Loan
In fiscal year 2003, the City received $2,400,000 in Section 108 loan proceeds to
assist with the funding for the Balboa Village Improvement Program. The loan is
collateralized by future Community Development Block Grant allocations with an
average interest rate of 6.5 %. Future principal payments range from $69,000 to
$208,000 through June 30, 2023. The outstanding balance at June 30, 2006,
amounted to $2,207,000.
..
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
The annual amortization requirements for the CDBG Loan are as follows:
Year Ending
Payments
2007
$ 119,567
June 30
Principal
Interest
Total
2007
$ 73,000
$ 118,224
$ 191,224
2008
78,000
115,482
193,482
2009
84,000
112,253
196,253
2010
89,000
108,535
197,535
2011
95,000
104,345
199,345
2012 -2016
581,000
440,482
1,021,482
2017 -2021
804,000
247,841
1,051,841
2022 -2023
403,000
25,013
428,013
$ 2,207,000
$ 1,272,175
$ 3,479,175
• Capital Leases
Rolling Stock Leases - Equipment Maintenance Internal Service Fund: In fiscal year
2003, the City entered into a lease- purchase agreement, payable monthly, as lessee
for financing the acquisition of heavy duty street maintenance vehicles and fire trucks.
The term of the lease is five years and the interest rate for the lease is 2.72 %. The
lease agreement qualifies as a capital lease for accounting purposes as the title
transfers at the end of the lease term or the lease contains a bargain purchase option,
and therefore has been recorded at the present value of its future minimum lease
payment as of the inception date. The assets acquired through capital leases, totaling
$6,754,827, were classified as equipment in the Equipment Maintenance Internal
Service Fund.
Future minimum lease payments under the leases are as follows:
Year Ending June 30
Payments
2007
$ 119,567
2008
49,820
Total minimum lease payments
169,387
Less: amount representing interest
(3,331)
Present value of future
minimum lease payments
$ 166,056
100
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
• Claims and Judgments
The City retains the risk of loss for general liability and workers' compensation claims
as described in note (8). These amounts represent estimates of amounts to be paid for
reported general liability and workers' compensation claims including incurred- but -not-
reported claims based upon past experience, modified for current trends and
information. While the ultimate amount of losses incurred through June 30, 2006, is
dependent on future developments, based upon information from the City's attorneys,
the City's claims administrators and others involved with the administration of the
programs, City management believes the accrual is adequate to cover such losses.
The estimated liability at June 30, 2006, for general liability amounted to $4,812,002
and for workers' compensation was $11,160,000.
• Compensated Absences
The City's policies relating to compensated absences are described in Note (1). This
liability, to be paid in future years from available and future resources, at June 30,
2006, is $8,637,091.
Business -type activities
• Water Revenue Bonds
In Fiscal Year 1998 -99, the City issued $14,225,000 of Refunding Water Revenue
Bonds to refund the 1994 Water Revenue Bonds used to finance the construction and
acquisition of water storage and transmission facilities. The refunding was undertaken
to reduce total debt service payments over a ten -year period by $481,153 and resulted
in an economic gain of $418,469. The bonds are secured by a pledge of net revenues
of the water fund. The 1998 Serial Bonds bear interest ranging from 3.6% to 4.5 %. At
June 30, 2006, the City has a required cash reserve balance of $1,432,294 which is
recorded as cash with fiscal agent. Ten annual principal payments are payable on
August 1, and semiannual interest payments are payable on February 1 and August 1.
At June 30, 2006, the outstanding principal balance was $5,925,000, and accrued
interest payable was $129,381.
101
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
The annual amortization requirements for the Water Revenue Bonds are as follows:
Year Ending
June 30
Principal
Interest
Total
2007
$ 1,385,000
$ 229,331
$ 1,614,331
2008
1,445,000
168,833
1,613,833
2009
1,510,000
104,545
1,614,545
2010
1,585,000
35,663
1,620,663
66
$ 5,925,000
$ 538,372
$ 6,463,372
Limited Obligation Bonds
Special Assessment Districts Bonds
The City has issued certain Assessment District and Community Facilities District
Bonds. Although the City collects and disburses funds for these districts, the City has no
obligation or duty to pay any delinquency out of any available funds of the City. Neither
the faith and credit nor the taxing power of the City is pledged to the payment of the
bonds, and therefore the bonded indebtedness is not shown in the financial statements
of the City. The City holds reserve funds on behalf of bondholders; the assets are
recorded in the Special Assessment Agency Fund. Bonds outstanding at June 30, 2006
for each district under the Bond Acts of 1911 and 1915, and other special assessments,
are as follows:
102
Bonds Outstanding
Assessment District
Original Issue
June 30, 2006
No.
59
McFadden Square
$ 530,609
$ 55,000
No.
63
Newport Island
536,531
60,000
No.
64
Channel Road
180,794
55,000
No.
66
East Newport
171,911
30,000
No.
67
CDM Blk -133
64,431
18,000
No.
68
Newport Shores
3,813,562
3,560,000
No.
69
West Newport
4,978,498
4,640,000
No.
70
Bay Shores
1,380,996
1,235,000
No.
71
Balboa Boulevard
796,942
420,000
No.
72
Balboa Coves
192,908
30,000
No.
74
Island Avenue
222,629
180,000
No.
75
Balboa Business
821,204
785,000
No.
78
Little Balboa Island
1,348,196
995,000
No.
79
Beacon Bay
1,215,134
990,000
No.
82
Corona del Mar
274,967
215,000
No.
86
Balboa Peninsula
300,174
255,000
No.
95 -1
CIOSA Refunding Series A
15,495,000
12,445,000
102
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Other Limited Obligation Bonds
The City has issued revenue bonds for the purpose of advancing the net proceeds of the
bonds to Hoag Memorial Hospital Presbyterian for the purposes of financing the
acquisition, construction and equipping of health facilities located within the City.
The bonds are limited obligations of the City payable from payments required to be
made by Hoag Memorial Hospital. The City is not obligated to pay the principal or
interest of the bonds except from payments made by Hoag, and neither the faith and
credit nor the taxing power of the City is pledged to the payment of the principal and
interest on the bonds.
Bonds outstanding at June 30, 2006 are as follows:
Series 1992 $ 91,000,000
Series 1996 100,000,000
Series 1999 125,000,000
Series 2005 200,000,000
The revenue bonds are subject to, at the option of Hoag Memorial Hospital Presbyterian,
optional and mandatory tender for purchase. If no tender or purchase is made, varying
redemption payments on the 1992 bonds commence on October 1, 2013 and are
required to be made through October 1, 2022. For the Series 1996 bonds, if no tender
for purchase is made, redemption is required to be made on October 1, 2026. If no
tender or purchase is made for the Series 1999 bonds, redemption is required to be
made on December 1, 2029. If no tender or purchase is made for the Series 2005
bonds, redemption is required to be made on December 1, 2040.
(8) Risk Management — General Liability and Workers' Compensation
The City is exposed to various risks of loss related to torts, theft of, damage to, and
destruction of assets, errors and omissions, injuries to employees, and natural disasters.
The City carries commercial insurance with independent third parties for loss risks
associated with real and personal property, and automotive liability. The City purchases
fidelity bonds for employees in key positions. Settled claims from these risks have not
exceeded commercial insurance coverage for the past three years. For general liability,
the City has excess insurance coverage of $25 million per occurrence with a self- insured
retention (SIR) of $500,000 per occurrence.
For workers' compensation and employer's liability insurance, the City has excess
insurance coverage of $1,000,000 per occurrence with a $1,000,000 SIR. This coverage
provides for work - related accidents and diseases.
The Insurance Reserve fund was established to account for costs associated with
general liability and workers' compensation. The Insurance Reserve fund is accounted
103
(9)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
for as an internal service fund where assets are set aside for risk management,
administration, claim settlements and benefit distribution. A premium is charged to each
fund that accounts for part-time or full -time employees. The total charge allocated to
each of the funds is calculated using trends in actual experience after considering
unexpected and unusual claims.
Fund Liabilities are reported when it is probable that a loss has occurred and the amount
of the loss can be reasonably estimated. Liabilities include an amount for claims that
have been incurred but not reported (IBNR). Claims liabilities are calculated considering
the effects of inflation, recent claim settlement trends including frequency and amount of
payouts and other economic and social factors. The total liability claims payable include
$15,972,002 which represents the discounted present value at June 30, 2006; the
claims were discounted using an interest rate of five percent.
General Liability
Workers' compensation
Restated
June 30, 2005 Restatement June 30, 2005 June 30, 2006 June 30, 2005 June 30, 2006
Unpaid claims,
beginning of fiscal
year $ 2,839,000 $ 2,839,000 $ 5,107,963 $ 8,393,227 $ 10,631,277
Incurred claims
(including IBNR) 3,864,692 1,740,002 5,604,694 2,045,323 7,476,861 3,823,652
Claim Payments (3,335,731) - (3,335,731) (2,341,284) (5,238,811) (3,294,929)
Unpaid claims, end
of fiscal year $ 3.367.961 $ 1.740.002 5.107.963 $ 4.812.002 $ 10.631.277 $ 11.160.000
Incurred claims (including IBNR) were restated at June 30, 2005. See note (18) for
additional information on this restatement.
For the past three years, no payment on any claim or judgment has exceeded the
amount of applicable insurance.
Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with
Internal Revenue Code Section 457. The plan, available to all City employees, permits
them to defer a portion of their salary until future years.
Section 457 plan assets were placed in trust for the exclusive benefit of all employees
and their beneficiaries. Therefore, all employee assets held in Section 457 plans are not
104
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
the property of the City and are not subject to the claims of the City's general creditors.
The assets under the plan, which are not included in the accompanying financial
statements, totaled $57,954,195 at June 30, 2006.
(10) Pension Plan
Plan Description - Defined Benefit Plan
The City contributes to the California Public Employees Retirement System (PERS), an
agent multiple - employer public employee defined benefit pension plan. PERS provides
retirement and disability benefits, annual cost -of- living adjustments, and death benefits
to plan members and beneficiaries. PERS acts as a common investment and
administrative agent for participating public entities within the State of California. Benefit
provisions and all other requirements are established by state statute and city ordinance.
Copies of PERS' annual financial report may be obtained from their executive office: 400
P Street, Sacramento, CA 95814.
Funding Policy
Participants are required to contribute 7% (9% for safety employees) of their annual
covered salary. The City makes the contributions required of City employees on their
behalf and for their account. The City is required to contribute at an actuarially
determined rate; the current rate is 9.476% for non - safety employees and 26.916% for
safety employees of annual covered payroll. The contribution requirements of plan
members and the City are established and may be amended by PERS.
Annual Pension Cost
For 2006, the City's annual pension cost of $15,064,212 for PERS was equal to the
City's required and actual contributions. A summary of principle assumptions and
methods used to determine the annual required contribution is shown below:
Valuation Date
Actuarial Cost Method
Amortization Method
Average Remaining
Period
Asset Valuation Method
Actuarial Assumptions
Investment Rate of
Return
Miscellaneous Plan
June 30, 2003
Entry Age Actuarial Cost
Method
Level Percent of Payroll
15 Years as of the Valuation
Date
3 Year Smoothed Market
7.75% (net of administrative
expenses)
105
Safety Plan
June 30, 2003
Entry Age Actuarial Cost
Method
Level Percent of Payroll
18 Years as of the Valuation
Date
3 Year Smoothed Market
7.75% (net of administrative
expenses)
Projected Salary
Increases
Inflation Rate
Payroll Growth
Individual Salary
Growth
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
Miscellaneous Plan
3.25% to 14.45% depending
on age, service, and type of
employment
3.00%
3.25%
A merit scale varying by
duration of employment
coupled with an assumed
annual inflation growth of 3.0%
and an annual production
growth of 0.25%
Safety Plan
3.25% to 13.15% depending
on age, service, and type of
employment
3.00%
3.25%
A merit scale varying by
duration of employment
coupled with an assumed
annual inflation growth of
3.0% and an annual
production growth of 0.25%
Initial unfunded liabilities are amortized over a closed period that depends on the plan's
date of entry into PERS. Subsequent plan amendments are amortized as a level percent
of pay over a closed 20 -year period. Gains and losses that occur in the operation of the
plan are amortized over a rolling period, which results in an amortization of 10% of
unamortized gains and loses each year. If the plan's accrued liability exceeds the
actuarial value of plan assets, then the amortization payment on the total unfunded
liability may not be lower than the payment calculated over a 30 -year amortization
period.
THREE -YEAR TREND INFORMATION FOR PERS ($ Amount in Thousands)
Fiscal
Year
6/30/04
6/30/05
6/30/06
Annual Pension
Cost (APC)
$12,442
$15,064
M
Percentage of Net Pension
APC Contributed Obligation
100% $0
100% $0
100% $0
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
SCHEDULE OF FUNDING PROGRESS FOR PERS ($ Amount in Thousands
Entry Age
$139,983
Unfunded
$
5,870
Normal
Actuarial
Liability
Annual
Valuation Accrued
Value of
(Excess
Funded Covered
UAAL as a %
Date Liability
Assets
Assets )
Status Payroll
of Payroll
(A)
(B)
(A - B)
(B /A) (C)
[(A-B) / C]
6/30/2003
Misc.
$139,983
$134,113
$
5,870
95.8%
$ 31,586
18.584%
Safety
229,155
188,309
40,846
82.2%
23,941
170.611%
Total
$369,138
$322,422
$
46,716
87.3%
$ 55,527
84.132%
6/30/2004
Misc.
$151,246
$140,911
$
10,335
93.2%
$ 34,085
30.321%
Safety
250,554
200,715
49,839
80.1%
24,734
201.500%
Total
$401,800
$341,626
$
60,174
85.0%
$ 58,819
102.304%
6/30/2005
Misc.
$161,371
$150,730
$
10,641
93.4%
$ 34,218
31.098%
Safety
267,192
215,965
51,227
80.8%
24,303
210.785%
Total
$428,563
$366,695
$
61,868
85.6%
$ 58,521
105.719%
More current information regarding actuarial data is not yet available from PERS
Plan Description - Defined Contribution Plan
As of January 1, 1992, the City entered into a defined contribution plan with Public
Agency Retirement System ( "PARS ") for all of its part-time employees. In a defined
contribution plan, benefits depend solely on amounts contributed to the plan plus
investment earnings. All part -time employees are eligible to participate from the date of
employment. Federal legislation requires contributions of at least 7.5% to a retirement
plan, and City Council resolved to match the employees' contributions of 3.75 %. The
City's contributions for each employee (and interest earned by the accounts) are fully
vested immediately.
For the year ended June 30, 2006, the City's covered payroll for employees participating
in the plan was $3,581,629. The City made employer contributions of $134,311 (3.75%
of current covered payroll). Assets of the plan totaled $1,741,719 at June 30, 2006.
(11) Post - Employment Health Care Benefits
Effective January 2006, the City and employee associations agreed to major changes to
Post Employment Healthcare Plan. All employees and eligible retirees will participate in
a Health Reimbursement Arrangement ( "HRA ") under IRS Revenue Ruling 2002 -41
107
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2006
(June 26, 2002) and IRS Notice 2002 -45 (June 26, 2002). New employees and
employees with less than five years of service will participate in a program that requires
certain defined employee and employer contributions. However, once the contributions
have been made to the employee's account, the City has no further funding obligation to
fund the plan. As of June 30, 2006, 406 employees were participating in the HRA.
Employees with greater than five years of service or miscellaneous employees that have
a combined factor, of age and years of service, that is greater than or to equal 50 (47 for
safety employees) had the option to retain a hybrid of the former defined benefit formula
or fully convert to the new plan. The hybrid of the former defined benefit formula
provides post - employment health care benefits to employees who retire from the City
with seven years of service and participate in PERS retirement. Those employees are
eligible to receive health care benefits covering themselves and a qualified family
member from the City's insurance carriers, Blue Cross and PERS. Retirees receive a
defined employer contribution of $400 per month ($425 for certain retired Police
employees). This program is largely funded on a pay -as- you -go basis. As of June 30,
2006, 368 employees and 356 retirees were participating in the hybrid of the defined
benefit. The City is in the process of calculating the actuarial liability associated with the
former plan and amortize the unfunded liability over a period not -to- exceed thirty years.
As of June 30, 2006, the City has set aside $3.2 million to offset the unfunded portion of
the post employment health benefits. These assets are accounted for in an internal
service fund and classed as unrestricted net assets on the statement of net assets.
The City's expenditure for post - employment health care benefits for the past three fiscal
years are as follows:
Year Ending
June 30
2004
2005
2006
(12) Interfund Receivables and Payables
Post - employment Health
Care Expenditure
$1,017,692
$ 936,042
$1,231,231
At June 30, 2006, interfund receivables and payables were as follows:
General Fund
Nonmajor funds
Total
Due From
$ 3,309,485
$ 3,309,485
108
Due to
3,309,485
$ 3,309,485
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2006
Interfund receivables and payables were created in order to eliminate deficit cash
balances in non -major special revenue and capital projects funds.
(13) Interfund Transfers
5
O
N
?
N
io
Interfund transfers at June 30, 2006, consisted of the following:
Transfers In
Newport
Tide and Coast
Submerged Annexation Internal Non -Major
General Fund Land Fund Service Fund Funds Total
General Fund $ - $ 15,212,022 $ - $ 6,147,805 $ 7,237,963 $ 28,597,790
Tide and
119,500
- - - 311,000 430,500
Submerged Land
Newport Coast
262,894
- 1,200,000 - - 1,462,894
Annexation Fund
Internal Service
125,000
- - - - 125,000
Fund
Non -Major Funds
239,999
- - - 446,542 686,541
40,000
- - - - 40,000
Water Fund
Total $ 787,393 $ 15,212,022 $ 1,200,000 $ 6,147,805 $ 7,995,505 $ 31,342,725
The City typically uses transfers to fund ongoing subsidies. The general fund transferred
$15,212,022 to subsidize for the maintenance and operation of the Tide and Submerged
Land Fund. As required by the pre- annexation agreement, interest accrued in the
amount of $262,894 in the Newport Coast Annexation fund, is due to and was
subsequently transferred to the General Fund.
(14) Reserved and Designated Fund Balances
The City has set up `reserves" of fund equity to segregate fund balances which are not
appropriable for expenditure in future periods, or which are legally set aside for a
specific future use. Fund "designations' also may be established to indicate tentative
plans for financial resource utilization in a future period.
st
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2006
The following provides explanations as to the nature and purpose of each reserve and
designation.
Reserved for encumbrances
Amounts reserved for encumbrances are commitments for materials and services on
purchase orders and contracts that are legally committed but not expended by fiscal
yearend.
Reserved for debt service
This account sets aside a portion of fund balance to meet the annual debt service
requirements.
Reserved for permanent endowment
This account reflects a permanent endowment established for the maintenance and
dredging of Upper Newport Bay.
Reserved for affordable housina
This account reflects amounts collected from developers to build affordable housing to
all income levels in compliance with State planning laws.
Reserved for prepaid items
This account reflects prepaid items which are not available, spendable resources.
Reserved for inventories
This account reflects the value of inventories purchased by the City but not yet issued to
the operating departments.
Reserved for long -term receivable
This account reflects the value of the note receivable which is not an available and
spendable resource.
Designated for special purposes
This account reflects funds that have been designated for special projects which vary in
nature.
Designated for contingencies
Contingency designations represent funds for unexpected emergencies.
Designated for capital projects
This account reflects unspent appropriations committed to capital projects in the prior
year.
Designation for appropriations
This account reflects unspent appropriations that may be utilized to augment the
operating budget.
110
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2006
(15) Joint Venture Agreements
Bonita Canyon Public Facilities Financing Authority
The Bonita Canyon Public Facilities Financing Authority (Authority) is a joint venture
formed by the City of Newport Beach, Irvine Unified School District, and Newport-Mesa
Unified School District. The Authority's Board is comprised of two members appointed by
each of the member agencies. The Authority created Community Facilities District 98 -1
to finance public facilities that will benefit the properties within their boundaries. The
Authority issued $45,000,000 of special tax bonds that will be repaid by special
assessments; the City is not obligated in any manner to repay the bonds. The Authority
paid the City $30,577,712 (81.7 %) to pay for the costs of acquiring and constructing
public facilities including parks and road improvements. At June 30, 2006, the remaining
bond proceeds are held in trust as cash with fiscal agent totaling $90,926. The City does
not make any annual contributions to this joint venture. The City does not include the
Authority as a component unit, as the City is not financially accountable for the
Authority's activities and the Authority is not fiscally dependent on the City. The City's
equity interest in this joint venture is not readily determinable. Complete separate
financial statements can be obtained at the Newport Mesa Unified School District, 2985
Bear Street, Suite 8M, Costa Mesa, California.
Air Borne Law Enforcement
The City is a participant in a joint venture agreement with the City of Costa Mesa for the
operation of the Air Borne Law Enforcement program (ABLE). The oversight Board
consists of the Chiefs of Police of Costa Mesa and Newport Beach and one appointee
for each Member Agency for a total of four (4) Board Members. The Cities have a 50
percent interest in the venture, with each City having provided an initial investment of
two helicopters and related equipment. The City of Newport Beach's cost of participating
in the ABLE program is recorded in the General Fund, which provides for the
maintenance and operation of the program as well as replacement of capital equipment
used in the operation of the program. Annually, the amounts paid by the City to this joint
venture are approximately $500,000. Operation costs are offset by fees collected from
surrounding cities that may subscribe to regular patrol or request assistance on an as-
needed basis. Shared equally between the Cities of Newport Beach and Costa Mesa,
the City's share of net loss from subscribers and other cities amounts to $583,423 for
fiscal year 2005 -06. The City's 50% interest in the net equity of this joint venture at
June 30, 2006, amounts to $2,173,721. Complete separate financial statements can be
obtained at the City of Costa Mesa at 77 Fair Drive, Costa Mesa, California.
Metro Cities Fire Authority
The City of Newport Beach is a Member of a joint venture agreement with the Cities of
Anaheim, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, and Orange for
the operation of a communication network to provide fire suppression, emergency
medical assistance, and rescue services. The oversight board consists of one voting
member and one alternate appointed by the governing body of each member agency.
111
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2006
The City of Newport Beach's costs are based each fiscal year upon the number of
recorded incidents attributable to the City divided by the recorded incidents attributable
to all members during the year and, are recorded in the General Fund as an expenditure
for service. Upon termination of the agreement, the proceeds from the sale of the
property and assets of the joint venture will be paid to each member agency pursuant to
their fair share percentage. Annually, the amounts paid by the City to this joint venture
are approximately $412,052. The City's 10.25% interest in the net equity of this joint
venture at June 30, 2006, amounts to $69,632. Complete separate financial statements
can be obtained at the Metro Cities Fire Authority offices at 201 S. Anaheim Boulevard,
Suite 302, Anaheim, California.
(16) Commitments and Contingencies
Claims and Judgments
Numerous claims and suits have been filed against the City in the normal course of
business. The estimated liability under such claims, based upon information received
from the City Attorney, contracted attorneys and the Risk Manager, has been estimated
and recorded as accrued claims and judgments payable (See Note 6).
Circulation Improvement and Open Space Agreement
The City entered into a Circulation Improvement and Open Space Agreement (CIOSA)
with a developer whereby the City could receive a loan amount up to $14,395,572 to be
used only for certain transportation and circulation improvements, of which $12,191,760
had been received as of June 30, 2006. The City agreed to match the contribution
(without interest) by pledging 50% of future Fair Share Fees (developer impact fees)
which are recorded in the Circulation and Transportation Special Revenue Fund. During
the year ended June 30, 2006, the City received $893,082 of Fair Share Fees, and
$446,541 was paid to the CIOSA Construction capital projects fund. Through June 30,
2006, $2,983,589 of Fair Share Fees has been paid. No additional liability has been
recorded, because any future repayment is uncertain; any amounts not contributed by
February 20, 2016, will be forgiven.
Newport Coast Pre - Annexation Agreement
In Fiscal Year 2001 -02, the City entered into a Pre - Annexation Agreement with the
Newport Coast Committee that stipulated certain terms and conditions for the
annexation of property collectively known as Newport Coast.
In conjunction with the annexation, the City also agreed to sell the water service rights
for the annexed area to Irvine Ranch Water District for $25.0 million. Of the $25.0 million
payable from the Irvine Ranch Water District, $23.0 million has been received and the
remaining $2.0 million is due January 1, 2008. At June 30, 2006, the remaining
receivable of $2.0 million has been recorded as an Intergovernmental Receivable in the
Newport Coast Annexation Special Revenue Fund.
112
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2006
Among other basic provisions, the Pre - Annexation Agreement stipulates specific
requirements for the use of proceeds from the sale of the water rights to Irvine Ranch
Water District. The City has entered into an agreement to reimburse Newport Coast
residents $18.0 million of the $25.0 million for certain public road and street
improvements previously financed by property owner assessments. The assessment
debt relief will be provided to Newport Coast residents in equal installments of $1.2
million over 15 years. The remaining $7.0 million may be used in locating, planning, and
constructing a Community Center within the annexed area. In the event that the
Community Center is constructed for less than $7.0 million, or not at all, the Newport
Coast Committee has the option to allocate the funds to further reduce the property
owner assessments. In the Government -wide Statements, the $13.2 million outstanding
assessment debt relief has been recorded as a Noncurrent Liability, and the $7.0 million,
including applicable interest earnings, has been restricted in the Net Assets.
(17) Net Asset Restatements
Beginning Net Assets have been restated by the net effect of changes resulting from the
correction of an error in the valuation of claims and judgments liabilities. The adjustment
decreased the government -type activities beginning net assets by $1,740,002.
Net Assets
Government -type Activities:
Net assets at July 1, 2005, as previously reported
Adjustment to claims and judgments
Net assets at July 1, 2005, as restated
113
$ 2,031,529,582
(1,740,002)
$ 2,029,789,580
Total
Project
Project
To Date
Unexpended
Budge
Expenses
Commitments
Water Transmission Master Plan
$ 4,598,346
$ 2,473,388
$ 2,116,745
Pipeline Master Plan Replacement
1,493,707
310,348
1,291,026
Corona del Mar Beach Improvements
4,484,288
3,613,146
917,149
Mariners Library
7,006,663
6,455,191
551,472
Newport Coast Community Center
9,669,757
1,224,766
8,444,991
Sewer Main Master Pllan Improvement
4,440,706
539,519
3,901,187
Jamboree Road Rehab -SJH to Ford Road
1,181,656
595
1,181,061
(17) Net Asset Restatements
Beginning Net Assets have been restated by the net effect of changes resulting from the
correction of an error in the valuation of claims and judgments liabilities. The adjustment
decreased the government -type activities beginning net assets by $1,740,002.
Net Assets
Government -type Activities:
Net assets at July 1, 2005, as previously reported
Adjustment to claims and judgments
Net assets at July 1, 2005, as restated
113
$ 2,031,529,582
(1,740,002)
$ 2,029,789,580
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2006
(18) Subsequent Events
The City has entered into an agreement with the California Department of Transportation
(Caltrans) for the purchase of a 15.05 acre parcel of land at the corner of Superior
Avenue and Coast Highway. The purchase price is $5 million, paid in three installments
with 4.75% interest:
• $2.0 million by December 31, 2006;
• $1.5 million by December 31, 2007 (plus $142,000 in interest); and
• $1.5 million by December 31, 2008 (plus $71,250 in interest).
A deed restriction requires that the City use the property as a park. Should the City
decide to remove the park use and sell the property, it must be sold at fair market value
and the City would then remit to Caltrans the amount above $5 million for the sale.
Integrated Law and Justice Agency for Orange County
On July 1, 2006, the City entered into a joint powers agreement with twenty Orange
County cities and the Superior Court of California to facilitate the integration and sharing
of criminal justice information for the benefit of the lands and inhabitants within their
respective boundaries. The oversight board consists of six municipal Police Chiefs, the
Presiding Judge of the Orange County Superior Court, the Chief Executive Officer of the
Court, and three City Manager representatives. Upon termination of the agreement, the
proceeds from the sale of the property and assets of the joint venture will be paid to
each member agency pursuant to their fair share percentage. There are presently no
contributions collected from members or any material net assets belonging to the joint
powers.
114
Supplementary
Information
Non Major Governmental Funds
115
IZMZal.Ti /_3161 MC160 4NZI IT, I4ZIr_11111 III ZUb'i
Non -major Special Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific revenue sources
which are legally restricted to expenditures for specified purposes. The City of Newport
Beach Special Revenue Funds are as follows:
The State Gas Tax Fund accounts for all State Gas Tax related revenues and expenditures, including street
repair, construction, and maintenance. State law requires that these funds be used exclusively for maintenance
of the street and highway system.
The Asset Forfeiture Fund was established to account for all revenues resulting from the seizure of assets in
conjunction with criminal cases (primarily drug trafficking). It is the City's policy that all such funds shall be used
for enhancement of law enforcement programs.
The Contributions Fund is used to account for revenues received from other government agencies or private
developers and expended for specific street or highway construction projects.
The Circulation and Transportation Fund is used to account for fair share revenues collected from
developers and restricted for capital improvement projects meeting the circulation element of the City's General
Plan.
The Building Excise Tax Fund is used to account for revenues received from builders or developers on
building or remodeling projects within the City. Expenditures from this fund are used exclusively for public
safety, libraries, parks, beaches, or recreational activities.
The Combined Transportation Fund is used to account for the revenues and expenditures of funds received
from the Orange County Combined Transportation Funding Program. Expenditures from this fund are used
exclusively for transportation related purposes.
The Arterial Highway Rehabilitation Fund is used to account for federal funds available through the Federal
Highway Administration Arterial Highway Rehabilitation Program to share the cost of rehabilitating certain
arterial roadways in the City.
The Community Development Block Grant Fund is used to account for revenues and expenditures relating
to the City's Community Development Block Grant program. These funds are received from the Federal
Department of Housing and Urban Development and must be expended exclusively on programs for low or
moderate income individuals /families.
The Air Quality Management District Fund is used to account for revenues received from the South Coast
Air Quality Management District restricted for the use of reducing air pollution.
The Environmental Liability Fund is used to account for solid waste fees restricted for mitigation of future
environmental liability relating to the handling of solid waste.
The Supplemental Law Enforcement Services Fund (SLESF) is used to account for revenues received from
the county to be used exclusively for front line law enforcement services.
The Traffic Congestion Relief Fund is used to account for all revenues received from the State
Treasury related to Assembly Bill 2928. State law requires that these funds be used exclusively for
maintenance or reconstruction costs on public streets and roads.
116
Non -major Debt Service Funds
Debt Service Funds are used to account for debt service transactions including revenue
collections and payments of principal and interest on long -term obligations of the City. The
City of Newport Beach Debt Service Fund is as follows:
The Library COP Fund is used to account for the debt service transactions related to the Certificates of
Participation used to finance the construction of the Central Library.
Non -major Capital Projects Funds
Capital Projects Funds are used to account for resources used for the acquisition and
construction of capital facilities by the City, except those financed by Enterprise Funds. The
City of Newport Beach Capital Projects Funds are as follows:
The Assessment District Fund is used to account for the receipt and expenditure of funds received from 1911
Act and 1915 Act Assessment Districts for capital improvement projects.
The CIOSA Construction Fund is used to account for the receipt and expenditure of funds for the Circulation
Improvement and Open Space Agreement (CIOSA). The improvements include street and frontage
improvements.
The Bonita Canyon Development Fund is used to account for the receipt and expenditure of funds for the
Bonita Canyon Public Facilities Agreement. The improvements include certain public parks and recreation
facilities, and street improvements and facilities.
The Oil Spill Remediation Fund is used to account for the receipt of the settlement proceeds from the
American Trader Company. These funds must be used on projects affecting the areas damaged by the spill.
The Mariners Library Fund is used to account for the receipt and expenditure of funds for the Mariners Library
Capital Project.
The Fire Station 7 Fund is used to account for the property acquisition, design and construction of a new
fire station which will replace a temporary fire station that provides service in the northern part of the city.
The Marine Science Center Fund is used to account for the design and construction of a new Marine
Science Center.
The City Hall Improvement Fund is used to account for the design and construction of a new Civic
Center Complex.
The Santa Ana Heights Community Center Fund is used to account for the property acquisition, design
and construction of a new community center in the part of the City known as Santa Ana Heights.
The Misc. Santa Ana Heights Projects Fund is used to account for various grants and projects
associated with providing public works, parks and recreation opportunities within the part of the City
known as Santa Ana Heights.
117
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Cash with fiscal agent
Prepaid items
Total Assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Unearned revenue
Unavailable revenue
Due to other funds
Total Liabilities
Fund balances:
Reserved for encumbrances
Reserved for debt service
Reserved for permanent endowment
Reserved for prepaid items
Unreserved:
Designated for special purposes
Undesignated
Total fund balances
Total liabilities and
fund balances
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2006
Special Revenue
$ 2,961,989 $ 92,986 $ 4,851,212 $ 2,931,665
$ 229,501 $ 9,093 $ 298,812 $ 72,620
- - 132,570 -
- 1,196,783 -
229,501 9,093 1,628,165 72,620
771,105 - 3,223,047 887,463
1,961,383 83,893
1,971,582
2,732,488 83,893 3,223,047 2,859,045
Z!, z,aol,y0a y &Z,aon zl� 4,bol,zlz y 446'I,000
118
Circulation
State Asset
and
Gas Tax Forfeiture Contributions
Transportation
$ 2,961,989 $ 92,986 $ 3,651,179
$ 2,931,665
- - 3,250
-
- - 1,196,783
-
$ 2,961,989 $ 92,986 $ 4,851,212 $ 2,931,665
$ 229,501 $ 9,093 $ 298,812 $ 72,620
- - 132,570 -
- 1,196,783 -
229,501 9,093 1,628,165 72,620
771,105 - 3,223,047 887,463
1,961,383 83,893
1,971,582
2,732,488 83,893 3,223,047 2,859,045
Z!, z,aol,y0a y &Z,aon zl� 4,bol,zlz y 446'I,000
118
Special Revenue
Building
$ 131,950
Arterial
Community
Air Quality
-
Excise
Combined
Highway
Development
Management
Environmental
Tax
Transportation
Rehabilitation
Block Grant
District
Liability
880,914 -
-
6,240
372,330
144,657
1,179,878 -
$ 304,637
$ 2,907,574
$ 6,510
$ 486,527
$ 170,199
$ 2,305,245
-
73,038
-
-
-
9,809
-
-
72,444
393,897
-
-
-
-
-
-
-
89,141
$ 304,637
$ 2,980,612
$ 78,954
$ 880,424
$ 170,199
$ 2,404,195
$ 6,240
$ 131,950
$ 72,213
$ 37,561 $ - $
14,912
-
188,346
-
10,001 -
-
-
52,034
72,444
251,402 -
-
-
-
-
880,914 -
-
6,240
372,330
144,657
1,179,878 -
14,912
8,481
1,527,763
-
- -
-
-
-
-
- -
89,141
289,916
1,080,519
-
- 170,199
2,300,142
-
-
(65,703)
(299,454) -
-
298,397
2,608,282
(65,703)
(299,454) 170,199
2,389,283
$ 304,637
$ 2,980,612
$ 78,954
$ 880,424 $ 170,199 $
2,404,195
(continued)
119
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Cash with fiscal agent
Prepaid items
Total Assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Unearned revenue
Unavailable revenue
Due to other funds
Total Liabilities
Fund balances:
Reserved for encumbrances
Reserved for debt service
Reserved for permanent endowment
Reserved for prepaid items
Unreserved:
Designated for special purposes
Undesignated
Total fund balances
Total liabilities and
fund balances
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2006
(continued)
Special Revenue
Supplemental
Law
Enforcement
Traffic
Congestion
Relief
13,544 $
Debt Service
Library
COP
Capital Projects
Assessment
District
- - 566,354 2,512,788
$ S 13,544 S 566,354 $ 2,512,788
S
13544
566,354
13,544 566,354
$ 30,196
556,501
586,697
589,532
1,336,559
1,926,091
$ - $ 13,544 $ 566,354 $ 2,512,788
120
CIOSA Bonita Canyon Oil Spill Mariners
Construction Development Remediation Library Fire Station 7
$ 2,715,422 $ - $ 118,844 $ - $ 4,398,435
- - 2,076,846 -
90,926 -
$ 2,715,422 $ 90,926 $ 118,844 $ 2,076,846 $ 4,398,435
30,310
30,310
5,763
2,715,422 60,616 113,081
$ 306,794 $ 405,042
2,076,846 -
1,443,366 -
3,827,006 405,042
3,993,393
- - - (1,750,160) -
2,715,422 60,616 118,844 (1,750,160) 3,993,393
$ 2,715,422 $ 90,926 $ 118,844 $ 2,076,846 $ 4,398,435
(continued)
121
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2006
(continued)
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ 131,669
Capital Projects
$ -
$ -
Unearned revenue
-
SAH
-
Marine
City Hall
Community Misc
-
Science Center
Improvements
Center SAH Projects
Assets
195,831
100,859
101,704
Cash and investments
$ 1,997,048
$ -
$ - $ -
Receivables:
Fund balances:
Accounts
-
-
- -
Intergovernmental receivables
-
-
101,359 -
Cash with fiscal agent
-
-
- -
Prepaid items
-
-
- -
Total Assets
$ 1,997,048
$
$ 101,359 $
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ 131,669
$ -
$ -
$ -
Unearned revenue
-
-
-
-
Unavailable revenue
-
-
101,359
-
Duetootherfunds
-
195,831
100,859
101,704
Total Liabilities
131,669
195,831
202,218
101,704
Fund balances:
Reserved for encumbrances
1,865,379
-
-
-
Reserved for debt service
-
-
-
-
Reserved for permanent endowment
-
-
-
-
Reserved for prepaid items
-
-
-
-
Unreserved:
Designated for special purposes
-
-
-
-
Undesignated
-
(195,831)
(100,859)
(101,704)
Total fund balances
1,865,379
(195,831)
(100,859)
(101,704)
Total liabilities and
fund balances
$ 1,997,048
$ -
$ 101,359
$ -
122
Permanent Fund
Total
Other
Ackerman Governmental
Bay Dredging Donation Funds
$ 4,025,602 $ 1,009,950 $ 30,097,356
- - 86,097
- - 3,841,329
- - 3,170,068
- - 89,141
$ 4,025,602 $ 1,009,950 $ 37,283,991
$ - $
1,000
$ 1,747,603
-
330,917
-
-
3,750,868
-
-
3,309,485
-
1,000
9,138,873
-
-
12,871,926
-
566,354
3,857,000
772,781
4,629,781
-
-
89,141
168,602
236,169
12,501,627
-
-
(2,513,711)
4,025,602
1,008,950
28,145,118
$ 4,025,602 $
1,009,950
$ 37,283,991
123
CITY OF NEWPORT BEACH
Non -Major Governmental Fund Types
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year ended June 30, 2006
Expenditures:
Current:
General government - - - -
Public safety - 147,335 - -
Public works - - - -
Community development - - -
Community services - - -
Capital outlay 2,230,572 - 1,837,421 1,615,521
Debt service:
Principal - - - -
Interest and fiscal charges - - -
Total expenditures 2,230,572 147,335 1,837,421 1,615,521
Excess (deficiency) of revenues
over expenditures (640,142) (49,999) 1,025,262 (630,417)
Other financing sources (uses):
Transfers in - - - -
Transfers out (160,000) - - (526,541)
Total other financing sources (uses) (160,000) - - (526,541)
Net change in fund balances
Fund balances, beginning
Fund balances (deficit), ending
(800,142) (49,999) 1,025,262 (1,156,958)
3,532,630 133,892 2,197,785 4,016,003
$ 2,732,488 $ 83,893 $ 3,223.047 $ 2.859,045
124
Special Revenue
Circulation
State
Asset
and
Gas Tax
Forfeiture
Contributions
Transportation
Revenues:
Other taxes
$ -
$ -
$ -
$ -
Intergovernmental
1,501,410
95,697
2,536,633
-
Licenses, permits and fees
-
-
-
893,082
I nvestment income
133,515
2,422
162,790
140,126
Net decrease in fair value of investments
(45,835)
(783)
(55,884)
(48,104)
Donations
1,340
-
219,144
-
Total revenues
1,590,430
97,336
2,862,683
985,104
Expenditures:
Current:
General government - - - -
Public safety - 147,335 - -
Public works - - - -
Community development - - -
Community services - - -
Capital outlay 2,230,572 - 1,837,421 1,615,521
Debt service:
Principal - - - -
Interest and fiscal charges - - -
Total expenditures 2,230,572 147,335 1,837,421 1,615,521
Excess (deficiency) of revenues
over expenditures (640,142) (49,999) 1,025,262 (630,417)
Other financing sources (uses):
Transfers in - - - -
Transfers out (160,000) - - (526,541)
Total other financing sources (uses) (160,000) - - (526,541)
Net change in fund balances
Fund balances, beginning
Fund balances (deficit), ending
(800,142) (49,999) 1,025,262 (1,156,958)
3,532,630 133,892 2,197,785 4,016,003
$ 2,732,488 $ 83,893 $ 3,223.047 $ 2.859,045
124
Special Revenue
Building
Arterial
Community
Air Quality
Excise
Combined
Highway
Development
Management
Environmental
Tax
Transportation
Rehabilitation
Block Grant
District
Liability
$ -
$ -
$ -
$ -
$ -
$ 453,140
-
1,528,971
-
532,350
99,719
-
193,266
-
-
-
-
-
14,705
119,112
253
15,789
4,909
81,503
(5,048)
(40,894)
(87)
-
(1,685)
(27,979)
202,923
1,607,189
166
548,139
102,943
506,664
- - - - 28,350 176,764
187,327 - -
296,680 1,606,680 72,444 704,243 - -
- - - 69,000 - -
120,514
296,680 1,606,680 72,444 1,081,084 28,350 176,764
(93,757) 509 (72,278) (532,945) 74,593 329,900
(93,757) 509 (72,278) (532,945) 74,593 329,900
392,154 2,607,773 6,575 233,491 95,606 2,059,383
$ 298,397 $ 2,608,282 $ (65,703) $ (299.454) $ 170.199 $ 2,389,283
(continued)
125
CITY OF NEWPORT BEACH
Non -Major Governmental Fund Types
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year ended June 30, 2006
(continued)
Special Revenue Debt Service Capital Projects
Supplemental Traffic
Law Congestion Library Assessment
Enforcement Relief COP District
Revenues
Other taxes $ - $ - $ - S -
Intergovernmental 120,222 266,503 - -
Licenses, permits and fees - - - Investment income 1,328 2,557 12,888 118,554
Net decrease in fair value of investments - (878) - (7,057)
Donations - - - -
121,550 268,182 12,888 111,497
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning
Fund balances (deficit), ending
121,550 - - -
- 254,638 - 503,566
290,000
- - 279,875 -
121,550 254,638 569,875 503,566
13,544 (556,987) (392,069)
555,101 31,800
555,101 31,800
13,544 (1,886) (360,269)
- - 568,240 2,286,360
$ - S 13.544 S 566.354 $ 1,926,091
126
Capital Projects
CIOSA
Bonita Canyon
Oil Spill
Mariners
Construction
Development
Remediation
Library Fire Station 7
-
-
-
959,208 -
99,057
4,166
16,263
- -
(34,005)
-
(5,583)
- -
-
-
-
32,650 -
65,052
4,166
10,680
991,858 -
224,659 - - - -
903,159 21,776 802,166 4,218,567 574,628
1,12 1,818 Zl, /76 SUZ, I bb 4,Z18,b6! b /4,628
(1,062,766) (17,610) (791,486) (3,226,709) (574,628)
446,541 - - 447,502 4,542,397
446,541 - - 447,502 4,542,397
(616,225) (17,610) (791,486) (2,779,207) 3,967,769
3,331,647 78,226 910,330 1,029,047 25,624
$ 2,715,422 $ 60,616 $ 118,844 $ (1,750.160) $ 3,993,393
(continued)
127
CITY OF NEWPORT BEACH
Non -Major Governmental Fund Types
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year ended June 30, 2006
(continued)
Revenues:
Other taxes
Intergovernmental
Licenses, permits and fees
Investment income
Net decrease in fair value of investments
Donations
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal
Interest and fiscal charges
SAH
Marine City Hall Community Misc
Science Center Improvement Center SAH Projects
$ - S S $
267,088 - - -
25,000
292,088 - - -
- - 100,859 -
- 101,704
449,778 416,933 - -
449,778 416,933 100,859 101,704
Excess (deficiency) of revenues
over expenditures (157,690) (416,933) (100,859) (101,704)
Other financing sources (uses):
Transfers in 1,972,164
Transfers out -
Total other financing sources (uses) 1,972,164
Net change in fund balances 1,814,474 (416,933) (100,859) (101,704)
Fund balances, beginning 50,905 221,102 - -
Fund balances (deficit), ending $ 1,865,379 $ (195,831) $ (100.859) $ (101,704)
128
Permanent Funds
Total
Other
Ackerman
Governmental
Bay Dredging
Donation
Funds
$ -
$ -
$ 453,140
-
-
7,907,801
-
-
1,086,348
151,846
38,253
1,120,036
(52,127)
(13,132)
(339,081)
-
-
278,134
99,719
25,121
10,506,378
268,885
- 530,632
5,575 294,606
- - 16,508,772
359,000
400,389
5,575 18,362,284
99,719 19,546 (7,855,906)
- 7,995,505
- (686,541)
7,308,964
99,719 19,546 (546,942)
3,925,883 989,404 28,692,060
$ 4,025,602 $ 1.008,950 $ 28.145.118
129
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2006
Revenues:
Intergovernmental
Investment income
Net decrease in fair value of investments
Donations
Total revenues
Expenditures:
Capital outlay
Excess (deficiency) of revenues
over expenditures
Other financing uses:
Transfers out
Net change in fund balance
Fund balance, beginning
Fund balance, ending
(160,000) (160,000) (160,000)
(2,666,912) (1,560,079) (800,142) 759,937
3,532,630 3,532,630 3,532,630
$ 865,718 $ 1,972,551 $ 2,732,488 $ 759,937
130
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 1,666,132
$ 1,666,132
$ 1,501,410
$ (164,722)
92,614
92,614
133,515
40,901
-
-
(45,835)
(45,835)
-
-
1,340
1,340
1,758,746
1,758,746
1,590,430
(169,656)
4,265,658
3,158,825
2,230,572
928,253
(2,506,912)
(1,400,079)
(640,142)
759,937
(160,000) (160,000) (160,000)
(2,666,912) (1,560,079) (800,142) 759,937
3,532,630 3,532,630 3,532,630
$ 865,718 $ 1,972,551 $ 2,732,488 $ 759,937
130
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2006
Expenditures
Public safety
248,886
248,886
Variance
Net change in fund balance
(143,886)
(143,886)
with Final
Fund balance, beginning
133,892
133,892
Budget
Fund balance (deficit), ending
Budget Amounts
$ (9,994)
Positive
Original Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 100,000 $ 100,000
$ 95,697
$ (4,303)
Investment income
5,000 5,000
2,422
(2,578)
Net decrease in fair value of investments
- -
(783)
(783)
Total revenues
105,000 105,000
97,336
(7,664)
Expenditures
Public safety
248,886
248,886
147,335 101,551
Net change in fund balance
(143,886)
(143,886)
(49,999) 93,887
Fund balance, beginning
133,892
133,892
133,892 -
Fund balance (deficit), ending
$ (9,994)
$ (9,994)
$ 83,893 $ 93,887
131
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Contributions Special Revenue Fund
For the Year Ended June 30, 2006
132
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 1,481,475
$ 5,342,056
$2,536,633
$(2,805,423)
Investment income
17,299
17,299
162,790
145,491
Net decrease in fair value of investments
-
-
(55,884)
(55,884)
Donations
-
271,265
219,144
(52,121)
Total revenues
1,498,774
5,630,620
2,862,683
(2,767,937)
Expenditures:
Capital outlay
7,192,583
-
1,837,421
(1,837,421)
Net change in fund balance
(5,693,809)
5,630,620
1,025,262
(4,605,358)
Fund balance, beginning
2,197,785
2,197,785
2,197,785
-
Fund balance (deficit), ending
_L _a,496,024)
$ 7,828,405
$ 3,223,047
_L(4,605,358
132
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Circulation and Transportation Special Revenue Fund
For the Year Ended June 30, 2006
Excess (deficiency) of revenues
over expenditures (3,340,144) (2,221,312) (630,417) 1,590,895
Other financing uses:
Transfers out (80,000) (80,000) (526,541) (446,541)
Net change in fund balance
(3,420,144)
(2,301,312)
(1,156,958) 1,144,354
Variance
4,016,003
4,016,003
4,016,003 -
Fund balance, ending
with Final
$ 1,714,691
$ 2,859,045 $ 1,144,354
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ 200,000
$ 200,000
$ 893,082
$ 693,082
Investment income
111,717
111,717
140,126
28,409
Net decrease in fair value of investments
-
-
(48,104)
(48,104)
Total revenues
311,717
311,717
985,104
673,387
Expenditures:
Capital outlay
3,651,861
2,533,029
1,615,521
917,508
Excess (deficiency) of revenues
over expenditures (3,340,144) (2,221,312) (630,417) 1,590,895
Other financing uses:
Transfers out (80,000) (80,000) (526,541) (446,541)
Net change in fund balance
(3,420,144)
(2,301,312)
(1,156,958) 1,144,354
Fund balance, beginning
4,016,003
4,016,003
4,016,003 -
Fund balance, ending
$ 595,859
$ 1,714,691
$ 2,859,045 $ 1,144,354
133
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Building Excise Tax Special Revenue Fund
For the Year Ended June 30, 2006
Revenues:
Licenses, permits and fees
Investment income
Net decrease in fair value of investments
Total revenues
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance, ending
134
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 150,000
$ 150,000
$ 193,266
$ 43,266
9,356
9,356
14,705
5,349
-
-
(5,048)
(5,048)
159,356
159,356
202,923
43,567
424,231
304,891
296,680
8,211
(264,875)
(145,535)
(93,757)
51,778
392,154
392,154
392,154
-
$ 127,279
$ 246,619
$ 298,397
$ 51,778
134
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Combined Transportation Special Revenue Fund
For the Year Ended June 30, 2006
135
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 1,721,189
$ 1,721,189
$ 1,528,971
$ (192,218)
Investment income
56,928
56,928
119,112
62,184
Net decrease in fair value of investments
-
-
(40,894)
(40,894)
Total revenues
1,778,117
1,778,117
1,607,189
(170,928)
Expenditures:
Capital outlay
3,789,690
3,183,296
1,606,680
1,576,616
Net change in fund balance
(2,011,573)
(1,405,179)
509
1,405,688
Fund balance, beginning
2,607,773
2,607,773
2,607,773
-
Fund balance, ending
$ 596,200
$ 1,202,594
$ 2,608,282
$ 1,405,688
135
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Arterial Highway Rehabilitation Special Revenue Fund
For the Year Ended June 30, 2006
Revenues:
Intergovernmental
Investment Income
Net decrease in fair value of investments
Total revenues
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
Budgeted Amounts
Original Final
$ 1,102,070
1,102,070
$ 1,502,070
1,502,070
Variance
with Final
Budget
Positive
Actual (Negative)
$ - $(1,502,070)
253 253
(87) (87)
166 (1,501,904)
1,090,000 800,000 72,444 727,556
12,070 702,070 (72,278) (774,348)
6,575 6,575 6,575
$ 18,645 $ 708,645 $ (65,703) $ (774,348)
136
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2006
137
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 426,000 $
426,000
$ 532,350
$ 106,350
Investment income
-
-
15,789
15,789
Total revenues
426,000
426,000
548,139
122,139
Expenditures:
Community development
231,008
231,008
187,327
43,681
Capital outlay
741,288
741,288
704,243
37,045
Debt service:
Principal
69,000
69,000
69,000
-
Interest and fiscal charges
120,514
120,514
120,514
-
Total expenditures
1,161,810
1,161,810
1,081,084
80,726
Excess (deficiency) of revenues
over expenditures
(735,810)
(735,810)
(532,945)
202,865
Other financing sources:
Transfers out
(15,450)
(15,450)
-
15,450
Net change in fund balance
(751,260)
(751,260)
(532,945)
218,315
Fund balance, beginning
233,491
233,491
233,491
-
Fund balance (deficit), ending
_L(5 $
(517,769)
$ (299,454)
$ 218,315
137
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2006
WE
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 136,000
$ 136,000
$ 99,719
$ (36,281)
Investment income
1,167
1,167
4,909
3,742
Net decrease in fair value of investments
-
-
(1,685)
(1,685)
Total revenues
137,167
137,167
102,943
(34,224)
Expenditures:
Public works
26,415
26,415
28,350
(1,935)
Net change in fund balance
110,752
110,752
74,593
(36,159)
Fund balance, beginning
95,606
95,606
95,606
Fund balance (deficit), ending
$ 206,358
$ 206,358
$ 170,199
$ (36,159)
WE
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Environmental Liability Special Revenue Fund
For the Year Ended June 30, 2006
Revenues:
Taxes
Investment income
Net decrease in fair value of investments
Total revenues
Expenditures:
Public works
Capital outlay
Total expenditures
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
Budgeted Amounts
Original Final
$ 370,000 $ 370,000
49,590 49,590
419,590 419,590
$ 90,000 $ 90,000
635,000 -
725,000 90,000
(215,410) 419,590
2,059,383 2,059,383
$ 1,843,973 $ 2,478,973
139
$ 176,764 $ (86,764)
176,764 (86,764)
329,900 310
2,059,383 -
$ 2,389,283 $ (89,690)
Variance
with Final
Budget
Positive
Actual
(Negative)
$ 453,140
$ 83,140
81,503
31,913
(27,979)
(27,979)
506,664
87,074
$ 176,764 $ (86,764)
176,764 (86,764)
329,900 310
2,059,383 -
$ 2,389,283 $ (89,690)
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Supplemental Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2006
Revenues:
Intergovernmental
Investment income
Total revenues
Expenditures:
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
1,382 1,382
(1,382)
$ 1,382 $ 1,382 $ $ (1,382)
140
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
$ 120,000
$ 120,000
$ 120,222
$ 222
1,382
1,382
1,328
(54)
121,382
121,382
121,550
168
120,000
120,000
121,550
(1,550)
1,382 1,382
(1,382)
$ 1,382 $ 1,382 $ $ (1,382)
140
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Traffic Congestion Special Revenue Fund
For the Year Ended June 30, 2006
Budgeted Amounts
Original Final
Variance
with Final
Budget
Positive
Actual (Negative)
Revenues:
Intergovernmental $ - $ 254,638 $ 266,503 $ 11,865
Investment income 1,056 1,056 2,557 1,501
Net decrease in fair value of investments - - (878) (878)
Total revenues 1,056 255,694 268,182 12,488
Expenditures:
Capital outlay - 254,638 254,638 -
Net change in fund balance 1,056 1,056 13,544 12,488
Fund balance, beginning - - -
Fund balance, ending $ 1,056 $ 1,056 $ 13,544 $ 12,488
141
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142
Internal Service Funds
143
INTERNAL SERVICE FUNDS
The Internal Service Funds are used to allocate the cost of providing goods and
services by one department to other departments on a cost reimbursement basis.
The City of Newport Beach Internal Service Funds are listed below:
The Insurance Reserve Fund is used to account for the City's self- insured general
liability and workers' compensation program.
The Compensated Absence Fund is used to account for the City's accumulated
liability for compensated absences.
The Retiree Insurance Fund is used to account for the cost of providing post -
employment Health Care Benefit.
The Equipment Fund is used to account for the cost of maintaining and replacing the
City's rolling stock fleet and the rental of the fleet to operating departments.
144
Assets
Current assets:
Cash and investments
Receivables:
Accounts
Inventories
Prepaid items
Total current assets
Non - current assets:
Capital assets:
Equipment
Less accumulated depreciation
Total capital assets (net of
accumulated depreciation)
Total assets
Liabilities
Current liabilities:
Accounts payable and accrued liabilities
Accrued payroll
Capital leases - current
Workers' compensation - current
General liability - current
Compensated absences - current
Total current liabilities
Non - current liabilities:
Capital leases
Workers' compensation
General liability
Compensated absences
Total Noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets, net of related
Unrestricted
Total net assets
CITY OF NEWPORT BEACH
All Internal Service Funds
Combining Statement of Net Assets
June 30, 2006
Total
Insurance Compensated Retiree Equipment Internal
$ 8,993,234 $ 1,103,283 $ 5,916,247 $ 9,939,620 $ 25,952,384
5,480 454 5,934
- 199,809 199,809
- - 82,735 9,964 92,699
8,993,234 1,103,283 6,004,462 10,149,847 26,250,826
- 19,965,582 19,965,582
(12,847,926) (12,847,926)
7,117,656 7,117,656
8,993,234 1,103,283 6,004,462 17,267,503 33,368,482
148,979
730
3,496
1,176,125
1,329,330
-
-
-
22,848
22,848
-
-
-
116,566
116,566
3,051,411
-
-
-
3,051,411
1,438,532
-
-
-
1,438,532
-
1,695,137
-
-
1,695,137
4,638,922
1,695,867
3,496
1,315,539
7,653,824
-
-
-
49,490
49,490
8,108,589
-
-
-
8,108,589
3,373,470
-
-
-
3,373,470
-
6,941,954
-
-
6,941,954
11,482,059
6,941,954
-
49,490
18,473,503
16,120,981
8,637,821
3,496
1,365,029
26,127,327
-
-
-
6,951,600
6,951,600
(7,127,747)
(7,534,538)
6,000,966
8,950,874
289,555
$ (7,127,747)
$ (7,534,538)
$ 6,000,966
$ 15,902,474
$ 7,241,155
145
Operating revenues:
Charges for services
Other
Total operating revenues
Operating expenses:
Salaries and wages
Depreciation
Professional services
Maintenance and supplies
Fleet parts and supplies
Workers' compensation
Claims and judgments
Compensated absences
Retiree Insurance
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Investment income
Net decrease in fair value of investments
Loss on sale of capital assets
Interest expense
Total nonoperating revenues
Income (loss) before transfers
Transfers in
Transfer out
Change in net assets
Net assets (accumulated
deficit), beginning, as restated
Net assets, (accumulated
deficit), ending
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Revenues, Expenses
and Changes in Fund Net Assets
For the Year Ended June 30, 2006
Total
Insurance Compensated Retiree Equipment Internal
$ 5,028,121
$ 1,583,803
$ 1,383,586
$ 4,771,192
$ 12,766,702
389
204
10,189
10,774
5,028,502
1,583,803
1,383,790
4,781,381
12,777,476
-
-
1,280,413
1,280,413
-
-
-
1,682,428
1,682,428
-
-
20,742
20,742
-
-
-
1,253,380
1,253,380
-
-
-
379,984
379,984
3,294,929
-
-
-
3,294,929
2,045,323
-
-
-
2,045,323
-
2,934,444
-
-
2,934,444
2,326,966
2,326,966
5,340,252
2,934,444
2,326,966
4,616,947
15,218,609
(311,750)
(1,350,641)
(943,176)
164,434
(2,441,133)
326,716
40,670
158,855
326,847
853,088
(112,159)
(13,963)
(54,534)
(112,204)
(292,860)
-
-
-
(64,075)
(64,075)
(6,995)
(6,995)
214,557
26,707
104,321
143,573
489,158
(97,193)
(1,323,934)
(838,855)
308,007
(1,951,975)
1,500,000
-
4,635,167
12,638
6,147,805
(125,000)
(125,000)
1,402,807
(1,323,934)
3,796,312
195,645
4,070,830
(8,530,554) (6,210,604) 2,204,654 15,706,829
$ (7,127,747) $ (7,534,538) $ 6,000,966 $ 15,902,474
MR
3,170,325
$ 7,241,155
Cash flows from capital and related
financing activities:
Acquisition of capital assets
Proceeds from sale of capital assets
Principal payment
Interest paid
Net cash used for capital
and related financing activities
Cash flows from investing activities:
Interest on investments
Net cash provided for investing activities
Net increase in cash
and cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation of operating income to net cash
provided (used) by operating activities:
Cash flows from operating activities
(2,055,028)
CITY OF NEWPORT BEACH
184,141
184,141
Combining
Statement
of Cash Flows -
Internal Service Funds
214,643
560,229
For the Year Ended June
30, 2006
Depreciation
-
-
1,652,866
(122,976)
3,738,889
966,383
Total
7,340,368
Insurance
Compensated
Retiree
Equipment
Internal
$ 1,103,283
Reserve
Absences
Insurance
Maintenance
Service Funds
Cash flows from operating activities
-
318,748
318,748
(Increase) decrease in prepaid items
-
Receipts from user departments
$ 5,028,121
$ 1,583,803
$ 1,393,371
$ 4,774,930
$ 12,780,225
Payments to employees
(2,766,206)
(1,734,217)
-
(1,294,017)
(5,794,440)
Payments to suppliers
(2,323,987)
730
(2,394,174)
(494,402)
(5,211,833)
Other operating cash receipts
381
-
204
10,189
10,774
Net cash provided (used) for operating activities
(61,691)
(149,684)
(1,000,599)
2,996,700
1,784,726
1,260,687
-
-
1,260,687
Total adjustments
Cash flows from noncapital financing activities:
1,200,957
(57,423)
2,832,266
4,225,859
Net cash provided (used) by operating activities
Cash received from other funds
1,500,000
-
4,635,167
12,638
6,147,805
Cash paid to other funds
-
-
-
(125,000)
(125,000)
Net cash provided (used)by noncapital financing
1.500,000
(54,534)
4,635,167
(112,362)
6,022,805
Cash flows from capital and related
financing activities:
Acquisition of capital assets
Proceeds from sale of capital assets
Principal payment
Interest paid
Net cash used for capital
and related financing activities
Cash flows from investing activities:
Interest on investments
Net cash provided for investing activities
Net increase in cash
and cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation of operating income to net cash
provided (used) by operating activities:
Cash flows from operating activities
(2,055,028)
(2,055,028)
184,141
184,141
(254,716)
(254,716)
(6,995)
(6,995)
(2,132,598) (2,132,598)
214,557
26,708
104,321
214,643
560,229
214,557
26,708
104,321
214,643
560,229
Depreciation
-
-
1,652,866
(122,976)
3,738,889
966,383
6,235,162
7,340,368
1,226,259
2,177,358
8,973,237
19,717,222
$ 8,993,234
$ 1,103,283
$ 5,916,247
$ 9,939,620
$ 25,952,384
Operating income (loss) $ (311,750) $ (1,350,641) $ (943,176) $ 164,434 $ (2,441,133)
Adjustments to reconcile operating income (loss;
to net cash provided by operating activities
Depreciation
-
-
-
1,682,428
1,682,428
Changes in operating assets and liabilities.
Decrease in accounts receivable
-
-
9,785
3,738
13,523
Decrease in inventories
-
-
-
318,748
318,748
(Increase) decrease in prepaid items
-
-
(70,704)
28,351
(42,353)
Increase (decrease) in accounts payable and accrued
payroll
17,297
(59,730)
3,496
799,001
760,064
Increase in workers' compensation
528,723
-
-
-
528,723
Decrease in general liability (as Restated)
(295,961)
-
-
-
(295,961)
Increase in compensated absences
-
1,260,687
-
-
1,260,687
Total adjustments
250,059
1,200,957
(57,423)
2,832,266
4,225,859
Net cash provided (used) by operating activities
$ (61.6911
$ (149.6841
$ (1.000.5991
$ 2.996.700
$ 1.784.726
Non -cash investing, capital, and financing activities:
Net decrease in fair value of investments
(112,159)
(13,963)
(54,534)
(112,204)
(292,860)
Loss on disposal of capital assets
-
-
-
(64,075)
(64,075)
Total of non -cash activities
$ (112,159)
$ (13,963)
$ (54,534)
$ (176,279)
_L_1356,9351
147
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M
Fiduciary Funds
ML
FIDUCIARY FUNDS
Fiduciary Funds are used to account for assets held by the City in a trustee
capacity, or as an agent for other government entities, private organizations, or
individuals. The City of Newport Beach Fiduciary Funds are listed below:
The Special Assessment Fund is used to account for funds received from affected
property owners and payable to holders of 1911 Act, 1915 Act and other special
assessment bonds.
The Business Improvement District Fund is used to account for monies collected
from local business districts for district property improvements and business
enhancement.
150
CITY OF NEWPORT BEACH
Agency Funds
Combining Statement of Fiduciary Assets and Liabilities
June 30, 2006
151
Special
Business
Assessment District
Improvement
Assets
Fund
Fund
Totals
Cash and investments
$
1,803,541
$
116,734
$
1,920,275
Cash with Fiscal Agent
4,432,708
-
4,432,708
Total assets
$
6,236,249
$
116,734
$
6,352,983
Liabilities
Due to bondholders
$
6,236,249
$
116,734
$
6,352,983
Due to others
-
-
-
Total liabilities
$
6,236,249
$
116,734
$
6,352,983
151
Special Assessment:
Assets
Cash and investments
Cash with Fiscal Agent
Total Assets
Liabilities
Due to bondholders
Business Improvement District:
Assets
Cash and investments
Liabilities
Due to others
Totals - All Agency Funds:
Assets
Cash and investments
Cash with Fiscal Agent
Total Assets
CITY OF NEWPORT BEACH
Statement of Changes in Fiduciary Net Assets
All Agency Funds
For the Year Ended June 30, 2006
Balance Balance
June 30, 2005 Additions Deductions June 30, 2006
$ 2,075,624
$ 2,911,942
$ (3,184,025)
$ 1,803,541
3,326,425
3,351,821
(2,245,538)
4,432,708
$ 5,402,049
$ 6,263,763
$ (5,429,563)
$ 6,236,249
$ 5,402,049
$ 6,263,763
$ (5,429,563)
$ 6,236,249
$
77,025
$
311,858
$ (272,149)
$
116,734
$
77,025
$
311,858
$ (272,149)
$
116,734
$
2,152,649
$
3,223,800
$ (3,456,174)
$
1,920,275
3,326,425
$
3,351,821
$ (2,245,538)
4,432,708
$
5,479,074
$
6,575,621
$ (5,701,712)
$
6,352,983
Liabilities
Due to bondholders $ 5,402,049 $ 6,263,763
Due to others 77,025 311,858
Total Liabilities $ 5,479,074 $ 6,575,621
152
$ (5,429,563)
(272,149)
$ (5,701,712)
$ 6,236,249
116,734
$ 6,352,983
O
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Statistical Section
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CITY OF NEWPORT BEACH
Statistical Contents
June 30, 2006
This section of the City of Newport Beach's Comprehensive Annual Financial Report (CAFR)
presents detailed information as a context for understanding what the information in the
financial statements, note disclosures, and required supplementary information says about the
City's overall financial heath. The statistical information presented herein is un- audited.
Contents Page
FinancialTrends .............................. ............................... ............................155
The following schedules contain trend information illustrating how
the City's financial performance and well -being has changed over time:
• Net Assets by Component
• Changes in Net Assets
• Fund Balances of Governmental Funds
• Changes in Fund Balance of Governmental Funds
RevenueCapacity ............................. ............................... ............................160
The following schedules present factors affecting the City's ability to
generate its own revenue and its most significant local revenue source,
the property tax:
• Assessed Value and Estimated Actual Value of Taxable Property
• Direct and Overlapping Property Tax Rates
• Principal Property Tax Payers
• Property Tax Levies and Collections
DebtCapacity .................................. ............................... ............................164
The following schedules exhibit the City's levels of outstanding debt
over time, to help readers assess the affordability of the current
level of outstanding debt, and the City's ability to issue additional debt:
• Ratios of Outstanding Debt by Type
• Ratios of General Bonded Debt Outstanding
• Direct and Overlapping Debt
• Legal Debt Margin Information
• Pledged Revenue Coverage
Demographic and Economic Information .............................. ............................171
The following schedules depict demographic and economic
indicators to assist the reader in understanding the socio- economic,
environment in which the City's financial activities take place:
• Demographic and Economic Statistics
• Principal Employers
153
Operating Information ........................ ............................... ............................173
The following schedules present information on the City's operations
and resources including service and infrastructure data to
facilitate the readers understanding of how financial statement
information relates to the services the City provides and the activities
it performs:
• Full Time City Employees by Functions
• Operating Indicators by Function
• Capital Asset Statistics by Function
• Water Sold by Customer Type
• Water Rates
• Major Water Customers
Sources: Unless otherwise noted, the information in these schedules is derived from the Comprehensive annual financial reports and
underlying accounting records for the relevant year.
154
Governmental activities:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total governmental
activities
Business -type activities:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total business -type
activities
Primary government:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total primary government
CITY OF NEWPORT BEACH
Net Assets by Component
Last Five Fiscal Years
(accrual basis of accounting)
Fiscal Year
2002 2003 2004 2005 2006
$ 1,391,677,813 $ 1,412,372,465 $ 1,512,651,096 $ 1,915,348,883 $ 2,005,643,651
38,689,956 37,650,692 45,494,082 54,285,743 51,901,103
41,095,786 49,322,283 46,772,913 61,894,956 56,662,229
$ 1,471,463,555 $ 1,499,345,440 $ 1,604,918,091 $ 2,031,529,582 $ 2,114,206,983
$ 87,470,314 $ 91,912,205 $ 94,206,704 $ 99,641,411 $ 104,602,266
26,123,500 24,227,579 21,493,528 19,665,535 16,907,367
$ 113,593,814 $ 116,139,784 $ 115,700,232 $ 119,306,946 $ 121,509,633
$ 1,479,148,127 $ 1,504,284,670 $ 1,606,857,800 $ 2,014,990,294 $ 2,110,245,917
38,689,956 37,650,692 45,494,082 54,285,743 51,901,103
67,219,286 73,549,862 68,266,441 81,560,491 73,569,596
$ 1,585,057,389 $ 1,615,485,224 $ 1,720,618,323 $ 2,150,836,528 $ 2,235,716,616
The City of Newport Beach implemented GASB 34 for the fiscal year ended June 30, 2002.
Information prior to the implementation of GASB 34 is not available.
155
CITY OF NEWPORT BEACH
Changes in Net Assets
Last Five Fiscal Years
(accrual basis of accounting)
Fiscal Year
2002 2003 2004 2005 2006
Expenses:
Governmental activities:
General government
$
12,792,860
$
10,799,630
$
11,428,379
$
11,378,609
$
14,509,827
Public safety
47,168,918
56,521,871
58,178,633
63,214,291
67,789,121
Public works
30,320,516
32,089,038
38,127,832
46,359,871
33,870,359
Community development
4,471,397
5,782,215
6,229,785
6,437,006
8,157,925
Community services
11,044,086
10,404,285
14,741,504
13,073,215
13,803,755
Interest on long -term debt
517,102
673,944
542,126
508,869
479,529
Total governmental activities
expenses
$
106,314,879
$
116,270,983
$
129,248,259
$
140,971,861
$
138,610,516
Business -type activities:
Water
$
14,806,514
$
14,540,036
$
17,185,034
$
14,467,233
$
16,228,213
Wastewater
2,588,833
3,115,136
3,363,954
2,740,908
3,143,629
Total business -type activities
$
17,395,347
$
17,655,172
$
20,548,988
$
17,208,141
$
19,371,842
expenses
Total primary government
$
123,710,226
$
133,926,155
$
149,797,247
$
158,180,002
$
157,982,358
expenses
Program revenues:
Governmental activities:
Charges for services:
General government
$
2,270,082
$
3,008,162
$
2,109,141
$
2,412,769
$
2,623,272
Public safety
10,549,410
11,603,584
15,739,912
16,264,493
13,669,509
Public works
5,436,948
5,009,048
5,481,464
6,031,248
5,133,728
Community development
3,236,483
4,022,904
5,196,276
5,129,858
5,667,289
Community services
2,533,899
6,039,226
3,846,566
3,952,862
9,433,278
Operating Grants and
Contributions:
7,891,059
8,750,565
10,681,329
17,480,834
12,772,599
Capital Grants and
1,562,458
4,146,728
674,815
20,205,948
69,473,891
Contributions:
Total governmental activities
program revenues
$
33,480,339
$
42,560,217
$
43,729,503
$
71,478,012
$
118,773,566
Business -type activities:
Charges for services:
Water
16,665,724
16,489,284
18,430,000
17,573,196
17,923,523
Wastewater
2,945,804
2,768,941
2,882,793
2,900,672
3,311,089
Total business -type activities
program revenues
$
19,611,528
$
19,258,225
$
21,312,793
$
20,473,868
$
21,234,612
Total primary government
program revenues
$
53,091,867
$
61,838,442
$
65,042,296
$
91,951,880
$
140,008,178
Net revenues (expenses):
Governmental activities
$ (72,834,540.00)
$ (73,690,766.00)
$ (85,518,756.00)
$ (69,493,849.00)
$ (19,836,950.00)
Business -type activities
2,216,181
1,603,053
763,805
3,265,727
1,862,770
Total net revenues (expenses)
$
(70,618,359)
$
(72,087,713)
$
(84,754,951)
$
(66,228,122)
$
(17,974,180)
156
CITY OF NEWPORT BEACH
Changes in Net Assets
Last Five Fiscal Years
(accrual basis of accounting)
The City of Newport Beach implemented GASB 34 for the fiscal year ended June 30, 2002.
Information prior to the implementation of GASB 34 is not available.
157
Fiscal Year
2002
2003
2004
2005
2006
General revenues and other changes
in net assets:
Governmental activities:
Taxes:
Property taxes
$
33,583,659
$
39,474,864
$
43,631,829
$
46,303,366
$
57,888,545
Sales tax
18,796,571
20,133,598
21,843,884
18,977,828
21,465,557
Sales tax in -lieu
-
-
-
5,339,827
5,720,028
Transient occupancy taxes
7,690,655
8,055,266
8,045,132
9,215,862
9,832,729
Business license
2,470,857
2,030,845
2,830,127
3,458,165
3,848,381
Franchise taxes
2,735,641
2,465,584
2,765,519
3,029,476
3,162,588
Motor vehicle license fees
4,380,070
3,970,103
3,624,917
6,395,860
300,751
Motor vehicle fines
711,693
742,957
-
-
-
Othertaxes
341,820
314,725
266,642
240,534
508,331
Investment income
2,171,474
2,111,451
584,415
1,209,074
1,939,941
Net increase in fair value of
investments
1,093,913
318,686
(360,586)
(258,125)
(715,615)
Gain on sale of assets
160,236
130,954
-
-
-
Other
12,570
1,294,628
214,536
761,111
776,907
Property income
3,771,556
-
-
-
-
Shareofjointventurenet
2,120,582
389,418
146,819
100,325
(513,791)
income
Capital contributions
836,206,102
17,836,792
102,713,421
213,779,060
-
Sale of service rights
25,000,000
-
-
-
-
Transfers
-
33,277
57,783
-
40,000
Total governmental activities
$
941,247,399
$
99,303,148
$
186,364,438
$
308,552,363
$
104,254,352
Business -type activities:
Investment income
$
888,779
$
505,619
$
203,041
$
424,157
$
549,012
Net increase in fair value of
investments
428,199
440,697
(87,078)
(87,921)
(169,095)
Property income
27,100
29,880
29,280
26,970
-
Capital contributions
-
-
215,331
-
-
Transfers
-
(33,277)
(57,783)
-
(40,000)
Total business -type activities
$
1,344,078
$
942,919
$
302,791
$
363,206
$
339,917
Total primary government
$
942,591,477
$
100,246,067
$
186,667,229
$
308,915,569
$
104,594,269
Changes in net assets
Governmental activities
$
868,412,859
$
25,612,382
$
100,845,682
$
239,058,514
$
84,417,402
Business -type activities
3,560,259
2,545,972
1,066,596
3,628,933
2,202,687
Total primary government
$
871,973,118
$
28,158,354
$
101,912,278
$
242,687,447
$
86,620,089
The City of Newport Beach implemented GASB 34 for the fiscal year ended June 30, 2002.
Information prior to the implementation of GASB 34 is not available.
157
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds
Last Five Fiscal Years
(modified accrual basis of accounting)
All other governmental funds
Reserved $
4,669,957
$ 4,693,197 $ 3,973,823 $ 12,230,132
Fiscal Year
Unreserved, reported in:
2002
2003
2004
2005
2006
General fund:
7,120,032
- - 6,076,969
2,077,124
Permanent funds
15
Reserved
$ 3,165,787
$ 4,393,418
$ 6,678,579
$ 4,673,198
$ 9,374,722
Unreserved
25,171,551
31,929,366
37,765,801
49,814,197
45,212,339
Total general fund
$ 28,337,338
$ 36,322,784
$44,444,380
$ 54,487,395
$ 54,587,061
Tide and submerged land fund:
Reserved
$ 294,876
$ 457,777
$ 340,208
$ 552,713
$ 538,965
Unreserved
238,822
356,075
120,328
194,174
27,633
Total tide and submerged land fund
$ 533,698
$ 813,852
$ 460,536
$ 746,887
$ 566,598
Newport coast annexation fund:
Reserved
$ 7,000,000
$ 23,322
$ 575,000
$ 218,037
$ 17,438,519
Unreserved
8,035,822
13,897,539
17,178,391
16,097,482
-
Totalgeneralfund
$ 15,035,822
$13,920,861
$ 17,753,391
$ 16,315,519
$17,438,519
All other governmental funds
Reserved $
4,669,957
$ 4,693,197 $ 3,973,823 $ 12,230,132
$ 18,157,202
Unreserved, reported in:
Special revenue funds
11,057,395
18,789,098 16,895,613 10,099,453
7,506,021
Capital projects funds
7,120,032
- - 6,076,969
2,077,124
Permanent funds
15
- - 285,506
404,771
Total all other governmental funds $ 22,847,399 $ 23,482,295 $ 20,869,436 $ 28,692,060 $ 28,145,118
The City of Newport Beach has elected to show only five years of data for this schedule.
158
CITY OF NEWPORT BEACH
Changes in Fund Balances of Governmental Funds
Last Five Fiscal Years
(modified accrual basis of accounting)
Expenditures
Fiscal Year
2002
2003
2004
2005
2006
Revenues:
General government
$
Taxes
$ 65,878,471
$ 72,864,836
$ 79,874,751
$ 86,995,139
$ 102,737,810
Intergovernmental
26,227,740
10,379,792
16,108,023
24,125,313
14,842,994
Licenses and permits
3,350,958
4,397,520
5,429,632
4,968,234
5,708,965
Charges for services
10,338,569
11,156,294
11,516,782
13,104,478
13,135,366
Fines and forfeitures
3,384,164
3,448,826
3,605,963
3,422,735
3,841,843
Investment income
2,758,557
1,941,046
887,513
2,356,747
3,847,982
Net increase (decrease) in fair
12,730,727
Capital outlay
38,613,906
value of investments
1,268,972
1,468,682
(360,586)
(493,879)
(1,325,211)
Properly income
10,130,165
10,947,021
11,857,671
12,337,339
13,625,142
Donations
746,774
1,819,159
2,704,367
1,087,826
883,405
Contributions from property owners
-
-
-
14,779,013
-
Other
1,782,696
2,590,504
478,200
980,446
1,042,882
Total revenues
$ 125,867,066
$ 121,013,680
$ 132,102,316
$ 163,663,391
$ 158,341,178
Expenditures
Current:
General government
$
12,292,008
$
9,689,275
$ 11,024,256
$ 10,920,667
$ 12,531,200
Public safety
47,841,176
53,035,377
56,849,718
59,462,134
65,262,069
Public works
19,418,067
21,259,782
22,780,896
24,365,996
26,430,751
Community development
4,586,192
5,457,498
5,723,031
6,144,917
7,900,503
Community services
9,418,041
9,382,608
10,827,346
10,351,414
12,730,727
Capital outlay
38,613,906
14,684,897
15,188,550
33,486,048
24,811,237
Debt service:
Principal retirement
1,291,099
1,822,913
1,668,350
1,688,801
1,715,542
Interest and fiscal charges
466,974
529,808
520,228
499,077
480,909
Total expenditures
$ 133,927,463
$ 115,862,158
$ 124,582,375
$ 146,939,054
$ 151,862,938
Excess (deficiency) of revenues
over (under) expenditures
$
(8,060,397)
$
5,151,522
$ 7,519,941
$ 16,724,337
$ 6,478,240
Other financing sources (uses):
Transfers in
$
10,927,460
$
14,376,167
$ 16,553,395
$ 20,601,957
$ 25,194,920
Transfers out
(11,669,089)
(14,342,890)
(18,495,612)
(20,612,176)
(31,177,725)
Proceeds from issuance of debt
18,000,000
2,630,736
-
-
-
Total other financing sources
(uses)
$
17,258,371
$
2,664,013
$ (1,942,217)
$ (10,219)
$ (5,982,805)
Net change in fund balances
$
9,197,974
$
7,815,535
$ 5,577,724
$ 16,714,118
$ 495,435
Debt service as a percentage of
noncapital expenditures 1.9% 24% 2.0% 2.0% 1.8%
The City of Newport Beach has elected to show only five years of data for this schedule.
159
CITY OF NEWPORT BEACH
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
City
Fiscal Year Taxable Assessed Total Direct
Ended June Value Tax Rate
30
Public Utility
Secured
Unsecured
1997
$ 354,820
$ 11,154,286,162
$ 754,892,821
1998
354,820
11,551,641,504
778,209,144
1999
354,820
12,343,526,263
1,009,975,297
2000
324,960
13,091,299,313
1,295,776,000
2001
2,000
15,087,602,671
915,394,966
2002
2,000
16,515,797,641
913,075,074
2003
16,531,505
21,339,270,499
1,085,951,066
2004
16,531,505
23,219,166,299
1,372,432,950
2005
53,310
25,193,662,254
1,484,019,033
2006
53,310
28,136,554,256
1,914,106,993
NOTE:
$ 11,909,533,803
0.149%
12,330,205,468
0.149%
13,353,856,380
0.149%
14,387,400,273
0.149%
16,002,999,637
0.147%
17,428,874,715
0.146%
22,074,712,813
0.146%
24,028,922,454
0.146%
26,048,627,730
0.146%
30,050,714,559
0.146%
In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total
maximum rate of 1 % based upon the assessed value of the property being taxed. Each year, the assessed
value of property may be increased by an "inflation factor" (limited to a maximum increase of 2 %). With few
exceptions, property is only re- assessed at the time that it is sold to a new owner. At that point, the new
assessed value is reassessed at the purchase price of the property sold. The assessed valuation data
shown above represents the only data currently available with respect to the actual market value of taxable
property and is subject to the limitations described above.
Source: County of Orange Auditor - Controller's Office
160
Source: Orange County Auditor Controllers Office
161
CITY OF NEWPORT BEACH
Direct and Overlapping Property Tax Rates
(Rate per $100 of assessed value)
Last Ten Fiscal Years
1997 1998 1999 2000 2001 2002
2003
2004
2005
2006
City Direct Rates:
City basic rate
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
Total City Direct Rate
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
Overlapping Rates:
Metro Water District
$ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.009 $ 0.008
$ 0.007
$ 0.006
$ 0.006
$ 0.005
Newport -Mesa Unified
School District
0.0000 0.0000 0.0000 0.0000 0.0000 0.0069
0.0067
0.0122
0.0122
0.0131
Total Direct Rate
$ 1.009 $ 1.009 $ 1.009 $ 1.009 $ 1.009 $ 1.015
$ 1.013
$ 1.018
$ 1.018
$ 1.018
NOTE:
In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00%
fixed amount.
This
1.00% is shared
by
all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount,
property
owners are
charged
taxes as a percentage of assessed property values for the payment of other debt obligations.
Source: Orange County Auditor Controllers Office
161
CITY OF NEWPORT BEACH
Principal Property Taxpayers
Current Year and Nine Years Ago
2006 1997
Taxpayer
Taxable Assessed
Value
Percent of Total
City Taxable
Assessed Value
Taxable Assessed
Value
Percent of Total
City Taxable
Assessed Value
Irvine Company
$ 1,172,400,123
3.90%
$ 640,564,159
5.38%
Jazz Semiconductor Inc.
393,204,165
1.31%
467,372,034 '
3.92%
Conexant Systems Inc.
373,715,557
1.24%
- '
0.00%
Irvine Apartment Communities
341,157,065
1.14%
166,737,098
1.40%
UDR Newport Beach North
123,637,906
0.41%
-
0.00%
Balboa Bay Club Inc.
123,661,632
0.41%
-
0.00%
4000 Macarthur
70,631,340
0.24%
-
0.00%
HMH Properties Inc.
73,104,132
0.24%
91,411,825
0.77%
Rockwell Semiconductor Systems Inc.
67,669,199
0.23%
- '
0.00%
Cornerstone Partners IV LLC
66,498,776
0.22%
-
0.00%
Coronado South Apartments
68,106,835
0.23%
-
0.00%
Park Newport Land Limited
66,524,707
0.22%
63,308,620
0.53%
Downey S & L Association
66,474,587
0.22%
42,056,337
0.35%
Metropolitan Life Insurance Company
56,610,000
0.19%
-
0.00%
100 Bayview LLC
58,667,507
0.20%
32,627,700
0.27%
$ 3,122,063,531 10.39% $ 1,504,077,773 12.63%
' In the fiscal year ended June 30, 1997, Rockwell International Corp. was a principal property taxpayer. By the fiscal year
ended June 30, 2006, there were three principal property taxpayers originating from this company: Jazz Semiconductor Inc.,
Conexant Systems Inc., Rockall Semiconductor Systems Inc.
Source: HdL, Caren and Cone Co.
162
Fiscal Year Taxes Levied for
Ended June the Fiscal Year
30
1997
$ 20,563,561
1998
21,144,504
1999
22,738,432
2000
24,667,494
2001
27,405,295
2002
31,298,541
2003
37,092,528
2004
42,469,238
2005
45,111,328
2006
47,286,816
CITY OF NEWPORT BEACH
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the Fiscal
Year of Levy Total Collections to Date
Amount
$ 20,096,688
20,472,716
22,084,910
24,207,104
26,856,091
30,651,143
36,351,026
41,420,410
54,063,951
45,558,039
Percent of
" " " "'` " "'
Years
Percent of
Levy
Amount
Levy
97.73%
$ 897,670
$ 20,994,358
102.09%
96.82%
1,040,120
21,512,836
101.74%
97.13%
1,113,950
23,198,860
102.02%
98.13%
1,398,573
25,605,677
103.80%
98.00%
886,625
27,742,716
101.23%
97.93%
102,001
30,753,144
98.26%
98.00%
529,986
36,881,012
99.43%
97.53%
670,685
42,091,095
99.11%
119.85% 2
483,804
54,547,755
2 120.92%
96.34%
728,365
46,286,404
97.88%
Includes estimated levy for Newport Coast properties that were annexed on January 1, 2002.
2 Collections include nearly $10 million of Property Tax in lieu of Sales Tax and Vehicle License Fees not included in
the levy.
Source: Orange County Auditor Controller's Office
163
CITY OF NEWPORT BEACH
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Note: This excludes claims and judgements and employee compensated absence liabilities .Details
regarding the City's outstanding debt can be found in the notes to the financial statements.
These ratios are calculated using personal income and population for the prior calendar year.
164
Governmental Activities
Fiscal
Year
Total
Ended
Certificates of
Pre- Annexation
Governmental
June 30
Participation
Note Payable
Agreement
CDBG Loan
Capital Leases
Activities
1997
$ 6,940,000
$ 2,813,704
N/A
N/A
$ 1,853,027
$ 11,606,731
1998
6,780,000
2,703,949
N/A
N/A
1,532,071
11,016,020
1999
7,070,000
2,589,255
N/A
N/A
2,657,180
12,316,435
2000
6,845,000
2,469,399
N/A
N/A
1,798,655
11,113,054
2001
6,610,000
2,350,930
N/A
N/A
914,830
9,875,760
2002
6,365,000
2,219,660
18,000,000
N/A
1,150,927
27,735,587
2003
6,110,000
2,082,483
16,800,000
2,400,000
1,293,586
28,686,069
2004
5,845,000
1,939,133
15,600,000
2,340,000
862,975
26,587,108
2005
5,570,000
1,789,332
14,400,000
2,276,000
420,773
24,456,105
2006
5,280,000
1,632,789
13,200,000
2,207,000
166,056
22,485,845
Note: This excludes claims and judgements and employee compensated absence liabilities .Details
regarding the City's outstanding debt can be found in the notes to the financial statements.
These ratios are calculated using personal income and population for the prior calendar year.
164
Business -type Activities
Percentage of
Water Revenue Total Business- Total Primary Personal Debt Per
Bonds type Activities Government Income' Capita'
$ 15,435,000
$ 15,435,000
$ 27,041,731
0.73%
$ 392
14,560,000
14,560,000
25,576,020
0.65%
365
14,225,000
14,225,000
26,541,435
0.62%
365
13,200,000
13,200,000
24,313,054
0.53%
329
12,095,000
12,095,000
21,970,760
0.50%
314
10,950,000
10,950,000
38,685,587
0.80%
511
9,765,000
9,765,000
38,451,069
0.72%
484
8,535,000
8,535,000
35,122,108
0.65%
435
7,255,000
7,255,000
31,711,105
0.56%
382
5,925,000
5,925,000
28,410,845
0.45%
341
165
CITY OF NEWPORT BEACH
Ratio of General Bonded Debt Outstanding
Last Ten Fiscal Years
(In Thousands, except Per Capita)
Fiscal Year Certificates of
Ended June 30 Participation
1997
$ 6,940
1998
6,780
1999
7,070
2000
6,845
2001
6,610
2002
6,365
2003
6,110
2004
5,845
2005
5,570
2006
5,280
Total
6,940
6,780
7,070
6,845
6,610
6,365
6,110
5,845
5,570
5,280
Percent of
Assessed
Value'
Per Capita
0.06%
$ 100
0.05 %
97
0.05 %
97
0.05%
93
0.04%
94
0.04%
84
0.03%
77
0.02%
72
0.02%
67
0.02%
63
1 Assessed value was used because the actual value of taxable property is not
readily available in the State of California.
f[
City Assessed Valuation:
Redevelopment Agency Incremental Valuation:
Adjusted Assessed Valuation:
OVERLAPPING TAX AND ASSESSMENT DEBT:
Orange County Teeter Plan Obligations
Metropolitan Water District
Coast Community College District
Rancho Santiago Community College District
Laguna Beach Unified School District
Laguna Beach U.S.D. Community Facilities District No. 98 -1
Newport Mesa Unified School District
Newport Mesa U.S.D. Community Facilities District No. 90 -1
Santa Ana Unified School District
Irvine Ranch Water District Improvement DisMCts
CITY OF NEWPORT BEACH
Direct and Overlapping Debt
June 30, 2006
Percentage
Applicable'
9,577%
2,018%
33.460%
4.907%
10.990%
100.000%
71.115%
100.000%
11.741%
17.643 % -
100.000%
Bonita Canyon Public Facilities Financing Authority Community Facilities District No.
98 -1
100.000%
City of Newport Beach Special Improvement District No. 95 -1
100.000%
City of Newport Beach 1915 Act Bonds
100.000%
Orange County Assessment District No. 88 -1
100.000%
Orange County Assessment District No. 99 -1 R
100.000%
Orange County Assessment District No. 01 -1
100.000%
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations
Orange County Pension Obligations
Orange County Board of Education Certificates of Participation
Orange County Transit District Authority
Orange County Sanitation District Certificates of Participation
Municipal Water District of O.C. Water Facilities Corporation
Coast Community College District Certificates of Participation
South O.C. Comm. College District Certificates of Participation
Newport Mesa U.S.D. Certificates of Participation
Santa Ana Unified School District Certificates of Participation
Irvine Ranch Water District Certificates of Participation
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
DIRECT GENERAL FUND DEBT:
City of Newport Beach Certificates of Participation
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT
TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT
Less: Orange County Transit District Authority (80% self- supporting)
M WDCO Water Facilities Corporation (100% self - supporting)
TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT
9.577%
9.577%
9.577%
9.577%
13.328%
11.401%
33.460%
2.666%
71.115%
11.741%
11.534%
$ 30,050,714,559
548,723,855
$ 29,501,990,704
Outstanding Debt
6/30/06
123,725,000
389,565,000
102,718,867
210,699,166
35,950,000
9.970,000
104,770,000
16,450,000
135,923,187
56,493,830
43,615,000
13,575,000
13,523,000
83,883,088
18,290,000
88,305,000
1,447,456,138
$ 630,022,000
99,716,298
19,820,000
2,470,000
130,370,000
28,205,000
6,695,000
38,790,000
1,915,000
44,699,711
44,200,000
1,046,903,009
100.000% 5,280,000
1,052,183,009
Estimated Share of
Overlapping Debt
11,849,143
7,861,422
34,369,733
10,339,008
3,950,905
9,970,000
74,507,186
16,450,000
15,958,741
50,190,455
43,615,000
13,575,000
13,523,000
39,353,296
18,230,000
58,305,000
422,047,889'
$ 60,337,207
9,549,830
1,898,161
236,552
17,375,714
3,215,652
2,240,147
1,034,141
1,361,852
5,248,193
5,098,028
107,595,477
5,280,000
220,470,955
$ 642,516,644
(189,242)
(3,215,652)
$ 639,113,950
' The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by
determining the portion of another governmental unit's taxable assessed value that is within the city's boundaries and dividing it by each unit's total
taxable assessed value.
2 Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non - bonded capital lease obligations.
Ratios to Assessed Valuation:
Combined Direct Debt ($5,570,000)
0.020%
Total Gross Combined Debt
2.110%
Total Net Combined Debt
2.090%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/06:
0.000%
Source: California Municipal Statistics, Inc.
167
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
1997 1998 1999 2000 2001
Assessed valuation
$ 11,909,533,803 $
12,330,205,468
$ 13,353,856,380
$ 14,387,400,273 $
16,002,999,637
Conversion percentage
25%
25%
25%
25%
25%
Adjusted assessed valuation
2,977,383,451
3,082,551,367
3,338,464,095
3,596,850,068
4,000,749,909
Debt limit percentage
15%
15%
15%
15%
15%
Debt limit
446,607,518
462,382,705
500,769,614
539,527,510
600,112,486
Total net debt applicable to limit:
General obligation bonds 6,940,000 6,780,000 6,615,000 6,845,000 6,610,000
Legal debt margin $ 439,667,518 $ 455,602,705 $ 494,154,614 $ 532,682,510 $ 593,502,486
Total debt applicable to the limit
as a percentage of debt limit 1.6% 1.5% 1.3% 1.3% 1.1%
NOTE:
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was
enacted when assessed valuation was based upon 25% of market value. Effective with the 1981 -82 fiscal year, each parcel is now assessed at
100% of market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of
assessed valuation data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the
legal debt margin was enacted by the State of California for local governments located within the state.
Source: City Administrative Services Department
168
Fiscal Year
2002 2003 2004 2005 2006
$ 22,074,692,813
$ 22,074,712,813
$ 24,028,922,454 $
26,048,627,730
$ 29,501,990,704
25%
25%
25%
25%
25%
5,518,673,203
5,518,678,203
6,007,230,614
6,512,156,933
7,375,497,676
15%
15%
15%
15%
15%
827,800,980
827,801,730
901,084,592
976,823,540
1,106,324,651
6,365,000 6,110,000 5,845,000 5,570,000 5,285,000
$ 821,435,980 $ 821,691,730 $ 895,239,592 $ 971,253,540 $ 1,101,039,651
0.8% 0.7% 0.6% 0.6% 0.5%
•'
CITY OF NEWPORT BEACH
Pledged- Revenue Coverage
Last Ten Fiscal Years
Gross revenues includes operating revenues, interest, property, and intergovernmental revenues
in the Water Fund.
' Total Water Fund operating expenses do not include interest or depreciation expenses.
170
Water Revenue Bonds
Debt Service
Fiscal
Year
Less Operating
Net Available
Ended
Water Revenue
Expenses'
Revenue
June 30
'
Principal
Interest
Coverage
1997
$ 18,221,967
$ 14,651,987
$ 3,569,980
$ 845,000
$ 854,130
2.10
1998
16,497,212
12,350,445
4,146,767
875,000
784,390
2.50
1999
17,658,076
11,145,936
6,512,140
335,000
593,469
7.01
2000
17,770,491
11,713,223
6,057,268
1,025,000
551,668
3.84
2001
18,215,185
11,784,120
6,431,065
1,105,000
510,225
3.98
2002
17,809,919
13,289,297
4,520,622
1,145,000
456,573
2.82
2003
17,326,604
12,430,144
4,896,460
1,185,000
465,573
2.97
2004
18,558,258
15,256,454
3,301,804
1,230,000
392,958
2.03
2005
17,878,016
12,964,712
4,913,304
1,280,000
367,743
2.98
2006
18,247,160
14,186,792
4,060,368
1,330,000
314,623
2.47
Gross revenues includes operating revenues, interest, property, and intergovernmental revenues
in the Water Fund.
' Total Water Fund operating expenses do not include interest or depreciation expenses.
170
CITY OF NEWPORT BEACH
Demographic and Economic Statistics
Last Ten Fiscal Years
Fiscal Year Population
Personal Income Per Capita Unemployment
(in thousands) Income Rate
1997
69,069
$ 3,699,957
$ 53,569
2.6%
1998
70,030
3,921,680
56,000
2.0%
1999
72,623
4,288,461
59,051
1.8%
2000
73,965
4,630,061
62,598
1.6%
2001
70,032
4,413,066
63,015
1.6%
2002
75,662
4,865,294
64,303
2.5%
2003
79,392
5,325,060
67,073
2.4%
2004
80,800
5,434,285
67,256
1.9%
2005
83,120
5,635,370
67,798
2.4%
2006
83,361
6,335,186
75,997
2.1%
Source: City of Newport Beach Library Services Department
171
CITY OF NEWPORT BEACH
Principal Employers
Current Year
' Information for prior years was unavailable.
Source: Orange County Auditor Controllers Office
172
2006
1997'
Number of
Percent of Total
Number of
Percent of Total
Employer
Employees
Employment
Employees
Employment
Hoag Memorial Hospital
3,579
4.41%
N/A
N/A
Pacific Life Insurance
2,854
3.52%
N/A
N/A
Conexant Systems Inc.
1,400
1.73%
N/A
N/A
Downey Savings & Loan
800
0.99%
N/A
N/A
City of Newport Beach
725
0.89%
N/A
N/A
Four Seasons Hotel
600
0.74%
N/A
N/A
Fletcher Jones Motor Cars
500
0.62%
N/A
N/A
The Fairmont Newport Beach
400+
0.49%
N/A
N/A
Newport Beach Marriott Hotel &
400
0.49%
N/A
N/A
Tennis Club
Pacific Investment Management Co.
390
0.48%
N/A
N/A
The Hyatt Regency Newport Beach
200
0.25%
N/A
N/A
' Information for prior years was unavailable.
Source: Orange County Auditor Controllers Office
172
CITY OF NEWPORT BEACH
Full -time City Employees by Function
Last Ten Fiscal Years
Source: City Administrative Services Department
173
Full -Time Employees as of June 30, 2006
Function
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
General government
34
29
26
69
75
77
77
84
86
90
Public safety
12
12
106
344
358
384
384
385
385
388
Community development
20
19
18
39
42
44
46
46
47
48
Public works
23
24
16
157
155
163
164
162
162
163
Community services
20
19
18
51
53
57
58
57
60
65
Balboa yacht basin
15
12
16
1
1
1
1
1
1
-
Water
20
20
16
31
34
33
33
33
34
34
Wastewater
17
17
16
11
10
12
12
13
13
13
Total
161
152
232
703
728
771
775
781
788
801
Source: City Administrative Services Department
173
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
Source: City of Newport Beach
174
Fiscal Year
1997
1998
1999
2000
2001
Police:
Adult Arrests
2,930
2,954
3,029
3,396
3,494
Parking Citations Issued
72,464
68,133
72,711
76,993
74,068
Fire:
Fire Responses
216
238
260
353
365
Fire Inspections
7,878
7,500
6,216
6,173
6,173
General Services:
Street Patching (tons of mix)
4,130
2,403
3,200
4,400
5,000
Sidewalk Repair (square feet)
52,728
36,055
59,645
65,000
50,000
Recreation & Senior Services:
Co- Sponsored Youth Organizations
126,000
128,900
132,500
141,594
165,464
Senior Transportation Services
12,000
12,800
10,260
10,260
11,000
Water:
New connections
74
103
253
163
154
Average daily consumption (hundred cubic ft.)
17
17
17
17
17
Sewer:
New connections
N/A
N/A
N/A
N/A
N/A
Average daily sewage treatment (hundred cubic ft.)
20
20
20
20
20
Library Services:
Library Circulation of Materials
1,415,000
1,430,000
1,240,000
1,130,000
1,250,713
Source: City of Newport Beach
174
Fiscal Year
2002
2003
2004
2005
2006
3,684
3,485
3,201
3,079
3,138
73,191
68,907
71,076
72,665
74,860
359
442
423
228
208
4,402
4,460
4,500
4,550
5,939
5,500
5,500
5,000
4,500
5,235
50,000
55,000
50,000
50,000
53,428
188,689
200,077
185,627
194,749
194,722
10,917
12,094
12,041
11,936
13,000
118
99
53
55
52
17
17
17
17
17
N/A
50
25
24
24
20
20
20
20
20
1,263,200 1,347,583 1,392,346 1,475,025 1,443,078
175
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Source: City of Newport Beach
176
Fiscal Year
1997
1998
1999
2000
2001
Police:
Stations
1
1
1
1
1
Fire:
Fire stations
6
6
6
6
6
Lifeguard Headquarters
1
1
1
1
1
Public works:
Streets (miles)
N/A
N/A
N/A
N/A
7,714.49
Streetlights
N/A
N/A
N/A
N/A
N/A
Traffic signals
N/A
N/A
N/A
N/A
121
Recreation & Senior Services:
Parks
43
43
45
45
45
Community centers
10
10
10
10
10
Aquatic Center
1
1
1
1
1
Water:
Water mains (miles)
NIA
N/A
N/A
N/A
282.35
Maximum daily capacity (thousands of gallons)
NIA
N/A
NIA
N/A
20,959
Wastewater:
Sanitary sewers (miles)
N/A
N/A
N/A
N/A
200.02
Storm sewers (miles)
NIA
N/A
N/A
N/A
103.08
Library Services:
Libraries
4
4
4
4
4
Source: City of Newport Beach
176
Fiscal Year
2002
2003
2004
2005
2006
1
1
1
1
1
7
7
7
8
8
1
1
1
1
1
8,811.03
8,811.03
8,811.03
9,532.81
9,532.81
7,277
7,277
7,277
7,277
7,277
130
131
131
144
147
47
47
47
47
47
11
11
11
11
11
1
1
1
1
1
294.81
294.81
294.81
298.42
299.88
20,796
21,291
20,092
20,633
19,369
176.90
178.40
179.15
179.15
179.15
51.40
53.50
57.60
57.60
57.60
4 4 4 4 4
177
CITY OF NEWPORT BEACH
Water Sold by Type of Customer
Last Ten Fiscal Years
(in hundred cubic feet)
Source: City Utilities Department
178
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Type of Customer:
Residential
N/A
N/A
N/A
N/A
4,227,699
4,459,302
4,430,485
4,362,402
4,289,629
4,190,791
Commercial
N/A
N/A
N/A
N/A
1,487,538
1,552,366
1,604,931
1,659,565
1,568,462
1,440,377
Government
N/A
N/A
N/A
N/A
678,594
480,809
597,395
486,051
487,189
607,650
Total
N/A
N/A
N/A
N/A
6,393,831
6,492,477
6,632,811
6,508,018
6,345,280
6,238,818
Total direct rate
per 100 cubic ft.
$ 2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.08
Source: City Utilities Department
178
CITY OF NEWPORT BEACH
Water Rates
Last Ten Fiscal Years
Fiscal Year
Ended June Monthly Rate per
30 Base Rate 100 cubic ft
1997
$ 8.75 $
2.50
1998
8.75
2.50
1999
8.75
2.50
2000
8.75
2.50
2001
8.75
2.50
2002
8.75
2.50
2003
8.75
2.50
2004
8.75
2.50
2005
8.75
2.50
2006
10.75
2.73
Note: Rates are based on 3/4" meter, which is
the standard household meter size. The
City charges an excess -use rate above
normal demand.
179
CITY OF NEWPORT BEACH
Major Water Customers
Current Year and Nine Years Ago
i Information for fiscal yeard ended prior to 2001, was unavailable.
Source: City Revenue Division
W-M
2006
2001 '
Percent of Total
Percent of Total
Water Customer
Water Charges
Water Revenues
Water Charges
Water Revenues
Big Canyon Country Club
$ 270,957
1.48%
$ 169,900
0.93%
Irvine Apartment Management
251,919
1.38%
N/A
0.00%
Hoag Memorial Hospital
211,759
1.16%
101,436
0.56%
Newport Beach Country Club
204,244
1.12%
152,362
0.83%
The Irvine Company
201,130
1.10%
267,688
1.47%
Park Newport
177,100
0.97%
150,062
0.82%
Bluffs Homeowners Association
149,527
0.82%
N/A
0.00%
Pacific View - Pierce Bros.
75,539
0.41%
47,466
0.26%
IOIC /PMS Engineering Dept.
74,732
0.41%
63,948
0.35%
UDR Newport Beach South LLP
74,454
0.41%
N/A
0.00%
De Anza Corporation
71,500
0.39%
50,460
0.28%
Balboa Bay Club
64,287
0.35%
33,742
0.18%
Lido Peninsula Resort
55,640
0.30%
46,734
0.26%
Radisson Hotel Newport Beach
54,827
0.30%
N/A
0.00%
Conexant Systems
54,827
0.30%
N/A
0.00%
$ 1,992,440
10.92%
$ 1,083,798
5.94%
i Information for fiscal yeard ended prior to 2001, was unavailable.
Source: City Revenue Division
W-M