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Fiscal Year 2001-02 Financial Statement
■ ■ ■ a ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ w P Z � � L IF o Comprehensive Annual Financial Report For the Year Ended June 30, 2002 Prepared by the Administrative Services Department Dennis Danner, Director r THE CITY OF NEWPORT BEACH WAS INCORPORATED SEPTEMBER 1, 1 906 ■ THE PRESENT CITY SEAL WAS ADOPTED JUNE 22, 1 957 r OUR HISTORICAL PAST ■ Founding Citizens of Long Ago The dramatic coastline of Newport Beach and its proximity to the water have always played a great part in the development of the City. The City's first inhabitants thousands of years ago were the Shoshone Indians who lived along the Pacific coast, supported by the abundance.of the seas and fertile land. In the mid 1700 °s the Spanish aristocrat and military leader Gaspar de Portola ■ led an expedition to clairn .California frontier land for Spain. Portolaenlisted the aid of Father: Junipero Serra; and numerous European soldiers,. to explore previously unmapped territory . Decades later: in the. 1800's, land. holdings of the Capistrano Mission were parceled out as Spanish and Mexican land grants to great war heroes and aristocratic families. Later, many of the Spanish and Mexican landowners were forced to sell large tracts of their land. The most prominent landowners of the area, Don Jose ;Sepulveda Don and Bernardo Yorba, men whose com bined holdings comprised Newport Beach's upper bay and lower.,bay, sold their tracts . to American entrepreneurs by the names of Flint, Bixby, Irvine, and McFadden. The Enterprisirlg,McFadtlens Santa Ana, Tustin, and Grange became new farming communities forthe settlers who arrived by ateamer and covered wagon. Not long after, hide.; and tallow businesses emerged: The first stirrings of commerce began when in 1870, a smallstern wheeler from San Diego named "The Vaquero" made. its first trip to a marshy.agoon io exchange Lumber for hides, tallow, livestock, and grain. James McFadden of Santa Ana and other ranch owners in the Lower Bay decided from. . . then on that the area should be called "Newport." Recognizing a lucrative opportunity, James McFadden and his brother Robert . established a shipping business inside the bay. In 1888, the isolated settlement changed" James built a wharf. that extended from the shallow bay of the peninsula to deeper water where large steamers could dock. Shipping activity . increased dramatically; and in two years, Newport was known as a vibrant Southern Cal ifornia_shipping town. Attracted by the activity, Pacific Eiectnc.Railroad "established itself in Newport in 1905, connecting the city to Los Angeles by rail. Rapid transit brought camping families to the waterfront, and small hotels and beach cottages sprang up to cater to the emerging tourist industry. At about the same time, the McFadden brothers sold their holdings of Peninsula land. West Newport, East Newport, Bay . Island, and Balboa became vacation communities in the beach boom decade. In 1906 with a population of 206 citizens, the scattered settlements were a 11 incorporated as the City of Newport Beach.' These early settlements soon filled in on the Peninsula, West Newport, Balboa Island, and Lido Isle, developing from West to East. . Entrance Into a New Age Parts of Newport Heights and Corona del Mar were annexed soon after the turn of the century. Between 1934 and 1936, the federal government and the county undertook work around the harbor. They dredged the Lower Bay, extended the jetties, and created the present day contours of Newport Beach. . In 1936;;community. members dedicated the City's main harbor, named Newport Harbor. Just six years later, during World War ll; the harbor became a vital hub as naval ships were built and repaired in its coastal waters. The opening of Santa Ana Army Air Base, Army Air:Force West Coast Training Center, and EI Toro Marine Base followed soon after, attracting thousands of service personnel to Orange County. Newport Beach businesses flourished due in large part to this . influx of new military personnel. At the end of the war, many service men and women decided to stay, triggering a real estate boom in Newport, Beach. :. ;Seasonal rentals became year -round housing; and the City's identity as primarily :a summer resort location began to change. i The Santa Ana Freeway, built in the 1950's, brought even more citizens to the aty During ahis time, housing development began to spread northward from the ■ waterfront to the hills and mesa areas. The subdivision patterns changed, becoming less traditional, with non- linear streets and sprawling, ranch -style homes on larger lots. Industries changed too, as the fishing industry, once the . backbone of Newport Beach's economy, gradually declined to be replaced with vibrant new businesses and commercial centers. The city's largest retail area, Fashion Island, was built by The Irvine Companyto accommodate the shopping And office needs of the . city's growing poplulation. By the 1970's, rapid urbanization led to the building of shopping centers, hotels, high -scale restaurants, and, new homes in gated communities and attached townhouses. Drawn by these amenities, big businesses such as Collins Radio (now Conexant ■ Systems) and Pacific Life Insurance Company established their headquartering offices in Newport Beach. . The progressive; entrepreneurial spirit that characterized, so much of the city's history is still very much a part of Newport Beach today, The pressures of growth . and development, however, are affecting traffic levels and exerting a greater demand on infrastructure and services. Now Imore than ever, an active citizenry will be called on to meet the challenges and visions for the future of Newport Beach. i Lee, Ellen K. Newport Bay: A Pioneer History, Fullerton: Sultana Press, 1973 11 �Y b.l ry t t . t z Rl° °ter •,t,.ow ar.�" A�, -: 00 r y, 0 CITY OF NEWPORT BEACH Comprehensive Annual Financial Report Year Ended June 30, 2002 TABLE OF CONTENTS INTRODUCTORY SECTION (Unaudited) Table of Contents..... ..... ......... .....:: .. .: ....... ...................i Letter of Transmittal. ..... ........i ......... ....::: .. ...... ` - ................. m GFOA Certificate of Achieverient for Excellence in Financial Reporting CSMFO Certificate of Award for Outstanding Financial Reporting .... xii xiii List of City Officials .. ........ .......:'. ......................... ......... ......... ...... xiv Organization Chart... ...::; ..... ......... ... . ...: ..................................... xv FINANCIAL SECTION " . Independent Audito[s 'Report ..................... ......... ........ ...... ......::.:1 ;Management's Discussion and "Analysis....... .................................. 3 (Required 5uppfementary Information)- . Basic Financial Statements Government -W. Financial Statements: Statement of Net Assets .... ...:.. .......... ..... :: - 19 Statement of Activities..,':, ......... ....... ................. :....:........... :.........20 Fund Financial' Statements: . Governmental Funds: Balance Sheet .......... ... ............................. :: ::.. .......: ............................:: 24 Reconciliation of the Balance Sheet of Governmental Funds. to the ■ Statement of Net Assets...'.. .. ......... ............... ............................... .. `... 25 Statement of Revenues, Expenditures and Changes in Fund Balances ....... 26 Reconciliation of Statement of Revenues, Expenditures and Changes In Fund Balances of Governmental Funds to the Statement of Activities .............. 27 . Budgetary Comparison Statements General Fund .......... ....... ........ . ....... .....: ::... ....... .... ............... 28 Tide and Submerged Land Fund ......................... .......................................... 30 ■ Newport Coast Annexation::. ......... ............. ............................... 31 Proprietary Funds: Assets Statement of Net . .................. ............................... ...................... 33 e. s Statement of Revenues Ex penses and Changes in Fund Net Assetsets ...................... e'n 34 Statement of Cash Flows ............................................................. ............................... 35 . Fiduciary Funds: Statement of Fiduciary Assets and Liabilities — Agency Funds ..... ............................... 36 . Notes to the Financial Statements ..................................................... ............................... 39 1 ■ Supplementary Schedules . Non -Major Governmental Funds: CombiningBalance Sheet ................................................................. ............................... 86 Combining Statement of Revenues, Expenditures and Changes in FundBalances ................................................................................... ............................... 92 Budgetary Comparison Schedules: StateGas Tax Fund .... . ...... ...::........... :.:..................... ,::.................................................... 97 Traffic Congestion Relief Fund...... .....1111 ......: ............ ............................... 98 . Asset Forfeiture: Fund ........................................................................ ............................... 99 Contributions Fund......... .................... ............................... ..... 100 Circulation and Transportation Fund ........... ............................... ....:....... ....... 101 Building Excise Tax Fund.*. ......... :! ................ ....................... ........ ..,.......... 102 Combined Transportation Fund ... :.................................................................................. 103 Arterial Highway Rehabilitation Fund .......... ............................... ......... ............. 104 Community Development Block Grant, Fund............... . :.. 105 Ackerman Donation Fund ......... .. .............................................. 1.111.. ........................ 106 Air Quality Management District Fund ......................................................... 107 Environmental Liability Fund ......... .........................1111.. 108 r Supplemental Law Enforcement Fund ................................... ....... ....... 109 Miscellaneous Grants Fund ...................................:.... ............................... 110 Internal Service Funds: Combining Statement of Net Assets ........................... ............................... 111 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ....... 112: :.:. 'Combining Statement of Cash Flows ................. :.................... :................ :....................... 1 3 Fiduciary Funds: Combining Statement of Fiduciary Assets and Liabilities ......................... ............ 115 Statement of Changes in Fiduciary Net Assets ............. .................. ................................ 116 STATISTICAL SECTION (Unaudited)' Miscellaneous Statistics ................................................ ............................... .............1111...........117 Governmental Revenues by Source, Last Ten Fiscal Years ................... .......................::...... 118 Governmental Expenditures by Function, Last Ten Fiscal Years............................................ 118 Assessed and Estimated Actual Values of Taxable Property, Last Ten Fiscal Years ...........120 Secured Property Tax Levies and Collections, Last Ten Fiscal Years .........................120 . Construction Activity, Last Ten Fiscal Years ........ ............................... .......................... 122 Bank Deposits, Last Ten Fiscal Years ......................................:............... ............................... 122 Property Tax Rates, Direct and Overlapping Governments, Last Ten Fiscal Years .............. 124 Computation of Legal Debt Margin...::: .......:.:............ ::............................. ..............1111............. 124 Principal Property Taxpayers as of June 30, 2002 .................................. ............................... 125 Schedule of Direct and Overlapping Bonded Debt .................................. ............................... 126 Revenue Bond Coverage, Last Ten Fiscal Years .................................... ............................... 127 Demographic Statistics, Last Ten Fiscal Years ........................................ ............................... 128 r a ii N ■ ■ CITY OF NEWPORT BEACH P.O. BOX 1768, NEWPORT BEACH, CA 92659 -1768 December 18, 2002 Honorable Mayor and Members of the City Council City of Newport Beach Newport Beach, California The City Charter and Califomia 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, 2002, 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 k n3sts 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 compUed to allow for the preparation of financial statements in conformity with generally ad d.' principles. The internal control structure is designed to provide reasonable; but notabsolute, . 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 inall 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 Conrad & Associates, LLP, 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, 2002, 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, 2002, 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. In order to conform to GAAP, the City was required to implement GASB 34 that significantly changed the format and the required information presented in the annual report. As a new requirement of GASB 34, GAAP now requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of the Management's Discussion and ■ iii 3300 Newport Boulevard, Newport Beach www.city.newport-beach.ca.us Analysis (MD &A). This 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. PROFILE OF THE CITY The City of Newport Beach is located inthe coastal, center of Orange County, in the heart of Southern California, with.Los Angeles County,to the north and SO Diego County to the south. There are currently 34 cities withinthe 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 greater number of- residents`than twenty of the country's states including Montana,. Mississippi; and New Hampshire. The City of Newport Beach is one of Southern Califomia's most scenic and- dynamic oommunkies.'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".- tvoes ed within its 15 square mile, harbor area. This bay area and he six-miles of ocea outstanding fishing swimming, surfing,. and aquatic sports activities. The City rarient population of 75;662. During the summer months, the population: grows .Dad 0.60,90 z, _o 100,000 tourists daily: There , are fine residential areas; ping facilities, anda quality school system. A major.campus of the University of C is- was things, and hii a ;r -d.immediately;' adjacent to the City, and eight other colleges are within. a 3Q,-,mile of Newport Beach was incorporated September t, 1906 The current City Cfarter Oted in": 1954. The City operates: under a Council - Manager form of, government. members are elected by district and serve four -year st8ggered' terms. The governing xmsists of the mayor and six other members and is responsible for among other tollcy- making, passing local ordinances, adopting the budget, appointing committees g the City Manager, City Attomey, 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 seance city providing its residents and visitors with the following functional services: general govemance, legal, financial, inforrnatiori 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'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 iv matters of the Corporation. Additional information about the Newport Beach Facilities . Corporation and the reporting entity in general can be found in footnote 1a of the notes to the financial statements. LOCAL ECONOMIC FACTORS From 1950 -2002, the population of the City incre6g. from 12,120 to 75,662. As vacant land becomes increasingly scarce, sources for future Orojections:show that population growth will continue at a slower rate. By.theyear 2020, Newport Beach: will be home to an estimated 88,676 residents, an increase of 13.4% over a twenty year period Newport Beach's physical setting encompasses about 25 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 $96.7 million. The top three revenue categories include Property Taxes; Sales Taxes, and Transient Occupancy Taxes (TOT) and account for 67% of General Fund revenues. The remaining revenue sources of 33% are represented by significantly smaller individual sources and are broadly diverse. General Fund Revenues ■ ; . ■ Property Taxes 33% 38% ■ .1111111 Sales Taxes o13 Transient Occupancy Taxes` ■ 9% 0All Other Sources 20% Property Taxes: Largely a residential community, residential property accounts for nearly . 80% of all City Property Tax. Of the various commercial property categories, office developments represent a distant second to residential property, accounting for less than 10% of all City property tax revenues. Of the City's 37,288 dwelling units, 60% of the housing is . single - family units and 40% are multi - family units. The average assessed valuation for existing housing is $625,000 for single - family units and $431,000 for multi - family units: In 2001, the . median price of housing "for sale" in Newport Beach was $718,400. Bolstering the stability of property taxes is the relatively constant demand for scenic coastal property. Unlike many ■ v 0 inland areas of the country, the City's assessed property values are less affected by real . estate cycles due to this unique demand and limited supply. 0 Vi, . ECONOMIC OUTLOOK The U.S. economy today continues its struggle to recover from significant declines in stock . prices, particularly in the technology sector, while addressing increased scrutiny on corporate accounting and recovery from the tragic events of September 11, 2001. However, since geographic and socioeconomic conditions in Orange County remain very desirable, property values in Newport Beach arei projected to maintain modest increases over ■ the next several years. With interest rates' at historic lows, the demand for real estate in the City and across Orange County remains high. Median home prices have increased 15% across the County over last year, even though inflation indexes have been reasonably low. As ■ the City grows due to recent and proposed annexations within the City's sphere of influence, the City's property' #ax revenues are also anticipated to- maintain a favorable: trend for many ■ years to come; . Property tax revenues aside, :the outlook for Sales Tax and _TOT revenues are not as optimistic The City's genera[ outlook for the futum:is reflective of the nation's :general sentiment towards today's economic condition. Simply stated, we are hopeful, =but we are also . professionally skeptical of what this next year will bring to our State and local economy. One of the few certainties is that. the State is facing very tough fiscal times due to the utility crisis, as well as a large swing in personal income tax and sales tax revenues: brought on by the . receding economy. We are also reasonably confident that ,in attempting to close its own budgetary, gap; the State will "share" its shortfall with cities, one way or another. Depending on . the rianner and the magnitude of the State's legislative action in this regard, the City will either absorb the reduction within the current operating plan, elect to utilize reserves; .or propose budgetary cuts for 2003-04. In any case, it is not anticipated that a reduction of service level in 2002703 will 6e required at this point. Even as economic conditions deteriorate, the City's overall financial condition remains quite strong. The City considers it'essential to fund its financial reserves at level that can endure a limited economic recession without adversely impacting service levels and capital ■ maintenance programs. It is the City's goal to maintain the highest level of municipal services to its residents and business constituents. To that end, the City has worked hard to replenish its reserves to preserve the financial strength of Newport Beach. Due to the many uncertainties in the air, the City has just cause to approach the next fiscal year with prudent caution, while keeping a watchful eye on economic conditions and legislative actions as events unfold in the coming months. ■ STEWARDSHIP AND OTHER FACTORS EFFECTING FINANCIAL CONDITION . 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 approval, . 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 presents a final budget document to the City Council. The City Council holds a budget hearing and adopts a budget on or before June 30, 0 vii i the close of the City's fiscal year. The appropriated budget is prepared by fund, function (e.g., . public safety), and department, (e.g., fire). Department directors may make transfers of appropriations within specific classifications (e.g., salaries and benefits), within a department. Transfers of appropriations between classifications and departments, however, require the ■ approval of the City Manager. Further, the City Council is required to authorize new appropriations in excess of $5,000 or transfers of appropriations between funds. Cash Management. It is the City's poNcy to invest all .temporarily idle short -term funds and longer -term reserves in a manner that wdill maximize return without sacrificing security or . jeopardizing liquidity requireents: Idle funds,:are invested "in accordance with the Government m 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. Govemment and Agency ■ Securities, commercial paper; repurchase: agreements, and the Local Agency Investment Fund are examples. . The City's current investment strategy is to .normally place most of the funds with.five private sector. management' firms. Each of these intermediaries is guided by and . constrained town 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 ■ Pool .(LAIF).:For more: information on the City's investment policy, see footnote 4:.in the notes to the: financial,stafements. OLN ■ Defined Benefit Pension Plan. The City contracts with the CaIifomia Public Employees' Retirement System (PERS) for .certain retirement, disability, death,:and survivor benefits for full- time'.. employees :.and certain part-time positions. PERS prepares an annual actuarial M valuation =in order to determine the City's required contributions to the plan. The new employer rate 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. Therefore, the City's required contribution rate (annual pension cost) fluctuates t annually. It is the City's policy to make contributions to the plan equaling at least 100% of the actuarially required contribution. Further it has been the City's policy to pay -this obligation in lump sum at the beginning of. each 'fiscal year in order to take advantage of certain financial and incentives provide by "PERS to mitigate future required employer; contributions. For more information on the City's Pension Plan and funding levels, see footnote 10 in the notes to the financial statements. See Factors Affecting Next Year's I Budget section of the MD &A for more information on future PERS rates. Post Employment Health Plan The City of Newport Beach also provides post - employment • health benefits for certain retirees. At the end of the current fiscal year, there were 292 retired . employees receiving this benefit, which is funded on a pay -as- you -go basis. Current GAAP precludes agencies from recognizing a liability for the promise to provide current employees this future benefit. None - the -less the City has begun a forced savings plan to accumulate sufficient resources to fund the current and future expected costs of the plan plus an Viii ■ amortization of expected future benefits previously accrued. Additional information on the City . of Newport Beach post - employment benefits can be found in footnote 11 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-p- rogram, 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. STAFF PRIORITIES, AFFECTING LONGTERM FINANCIAL CONDITION • The City believes .,there are many factors that add to the quality of life in 'Newport Beach. For any life aspect we can favorably impact, there is a direct relationship in creating value for our . citizens and customers. Protecting their quality of life also protects and enhances the:, City's economic stability and ability to serve. John: Wayne: Airport Settlement Agreement. In the direct flight path of Orange County's ■ John.Wayne Airport; further expansion of this airport: could impact both the property values and quality. of..life in Newport Beach. The City is committed to ensuring that Newport Beach's quality of life and economic resources are not compromised by an expansion at John Wayne . Airport. Therefore, it is our number one priority to obtain all:necessary approvals to extend the John :Wayne Airport settlement_ agreement and maintain. the integrity of the settlement agreement;, once approved. This agreement not only, places a cap on the number of I annual ■ flights and passengers, it also imposes a nightly curfew on flight arrivals and departures. . General Plan Public Outreach;_ General Plan Update & Local Coastal Plan. A General Plan is a long -range plan that includes goals, policies, and programs to guide the.future growth of the community. Land use and zoning decisions are important to: maintain the appropriate . balance of residential and commercial development. These decisions can often affect the traffic, economic viability, as well as charm of a city. The City is soliciting public input to update ■ this plan through a variety of different public outreach tools including: community newsletters, a vision festival, neighborhood workshops, surveys, and a community based advisory committee. City officials willuse this plan to link community values, visions, and priorities with . decisions about physical development including topics such as zoning, street projects, and housing. The current General Plan.was adopted in 1970. A new State law signed by Governor Davis in October 2001 requires the City to submit a Local Coastal Plan (LCP) to the California Coastal Commission (CCC) for approval and certification ■ by June 30, 2003. An LCP includes a land use plan, zoning ordinances, zoning district maps, and other legal instruments necessary to implement a land use plan. Once the CCC certifies the LCP, the Coastal Development Permit authority is delegated to the City. Currently the City . does not have a certified LCP. The cost of implementing the LCP is expected to exceed $250,000. . ix N Traffic Signalization Management System. Safe, smooth traffic flow throughout the City is a goal most every citizen can appreciate. Through a series of surveys and studies of traffic . signals and traffic flow patterns including public input and education, a Traffic Signalization Management System will be placed in service to maximize smooth and safe traffic flow . throughout the City. Water Quality. Newport Bay is the City's most treasured environmental asset. From the ecological reserve and parkland in the Upper. Bay to the boating, residential, and visitor - serving uses in the Lower Bay, Newpor., Bay is home to 'six endangered species, the nation's ■ largest small craft harbor, .tour and charter boat operations; more than sixty different commercial ventures, rowing clubs, yacht races, millions-of visitors annually, and more. ■ The National PA, tant , Discharge. Elimination System.,,,(NPDES) requires the State Water Resources Control Board and,, its nine Regional Boards to direct local agencies' compliance with the federal Clean Water Act. Corripliance is achieved via a 5 -year permit (NPDES Permit) that directs the County of Orange and all 34 cities (as co- permittees) to adopt a uniform water quality ordinance, to enforce the ordinance itself, to adopt and use;; best management . practices that; reduce urban runoff (street sweeping with citations, for instance), to educate the population as to water quality, and to further minimize any water quality :impacts. The last 5- year ..permit expired: in` March 2001. The new 5 -year permit. is much more detailed than the . Previous permit. Over this next year the City will be developing an organization response to the NPDES and Upper Newport Bay water quality requirements.: Mariners Library Joint Use Plan. The City and the Newport -Mesa Unified School District have a unique opportunity to receive State construction funding to replace. the Mariners . Library This funding.is available for "Joint Use" library proiectsahat:.combine a publicaibrary and a`school library in one service unit. This library project is,expected to cost $5.t million $3 2:coming from a State grant, $1.06 coming from.local, donations, and the remaining.coming from. appropriations. This is a unique opportunity ser to enhance the library, the school and'the community. The project provides the opportunity to maximize the use of State . funding , and donor contributions to replace the Mariners .library and develop a. joint use synergy. . Santa Ana.' na Heights/Bay Knolls Annexation Process: On September 26, 2000, the City Council adopted Resolution 2000 =81 directing City staff to process an annexation application ■ for the Newport Coast, Santa Ana Heights, and the Bay Knolls community. The City filed its application to annex these territories on March 19, 2001. The Newport Coast portion of the . City's annexation effort became effective January 1, 2002. The City Council added another neighborhood (about nine homes in the Emerson /Churchill tract) t6 its pending application on May 28, 2002, when it adopted Resolution 2002 -3. The east -Santa Ana Heights and Bay . Knolls/Emerson annexations are to become effective July >1; 2003. Santa Ana Heights Fire Station. In March 2001, the City established a temporary fire station M on Zenith Street serving Santa Ana Heights and the airport area when a nearby Orange County Fire Authority (OCFA) station closed in December 2000. Since that time, staff has . worked to find a site for a permanent station should the City be successful in annexing eastern Santa Ana Heights. ■ x . 0 . OTHER INFORMATION Awards. The City has prepared a comprehensive annual financial report for eleven straight . years now. 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, 2001. 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 aperiod of one year only. We believe our current comprehensive annual financial report continues to conform to thIe 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. We will be submitting the report to CSMFO for consideration again ". this ear as well. - - ACKNOWLEDGMENTS Preparation of this report could not have been accomplished without the efficient and dedicated services of a number of personnel. It would be difficult to name them all. Virtually . everyone in the Accounting Division and the Print Shop contributed to the project. In addition, members of the Administrative Services Department would like to thank 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, CONRAD AND ASSOCIATES; LLP for their time and assistance in the preparation of the report. This report was completely prepared and published by City employees. C Horrk& L. Bludau Dennis C. Danner City Manager Administrative Services Director . xi City of Newport Beach, California: n �.eruncare.. oc nu nevelr�na�� cnceuence ui ruim n.ia Reporting is presented by the Government Finance Officers Association of the United States and Canada fo government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. gvwg sident Executive Director xii ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ NEWPORT BEACH CITY OFFICIALS City Council iberg Tern Norma GI Couricit)W Council Member Council Member Council Member Principal Administrative Officers Homer L. Bludau City Manager LaVonne M. Harkless Robert H. Burnham City Clerk City Attorney Sharon Wood ................. ...... Assistant City Manager /Director of Community 8 Economic Development Dave Kiff ......................... ,, :::...........Assistant City Manager Dennis C. Danner ............... ........... . Administrative Services Director /Treasurer Bob MCDonell ....................................................................... ............................... Chief of Police TimRiley .................................................................................. ............................... Fire Chief David E. Niederhaus .................................................. ............................... General Services Director vacant ............................................ ............................... Community Services Director /City Librarian PatriciaL. Temple .............................................................. ............................... Planning Director JayEtbettar ...................................................................... ............................... Building Director Steve Badum ....................................... ............................... .........................Public Works Director Linn Livingston ....................................................... ............................... Human Resources Director Eldon Davidson ................................................................... ............................... Utilities Director xiv ■ ■ ■ ■ ■ ■ ELECTORATE CLERK MAYOR COUNCIL r -i L. J ELECTWOFFIMS COUNCILAPPOINTED SOANDS & COMMISSIONS CQWILAPPOINT POWKM C"DEPARTMENTS Fiscal Year 2002-2003 Mamh 15, 2002 xv Newport m 0 0 m li Xv, ■ -V 7w- 0 1 rF —41L vat It �11 Poe Ai 11 t V ;&V oo ^1 . COl VRAD AND CERTIFIED PUBLIC ACCOUNTANTS 1100 MAIN STREET, SUITE C ASSOCIATES, L.L.P. IRVINE, CALIFORNIA 92614 (949) 474 -2020 Fax (949) 263 -5520 Honorable Mayor and City Council . City of Newport Beach, California lndepeendem Au6ors'. Report • We have audited the accompanying "basic financial statements of the City of Newport Beach, California as of and far the year ended June '30, 2002, as listed in the table;of contents. These . basic financial stateirients are the responsibility of the : management of the .City of Newport Beach, California.. 04 responsibility is to express an opinion on these basic 'financial statements based on ouraudit. 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 basic financial statements are free of material misstatement An audit includes examining,:on a . test basis, evidence supporting the amounts and disclosures in the-basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement; presentation::. We believe that . our audit provides a reasonable basis for our opinion. In our opinion, the Basic, financial statements referred to :above. present fairly, in all material' . respects;' the financial ;Positron of the City. of New Beach, California, as of June 30, 2002, :. and':the results of Its operations-and the,:cash flows :of its proprietaryfund types: for the year then ended In' conformity with accounting ,principles :generally; accepted in the United States of ;. As discussed further in the notes to the basic financial statements, .the accompanying financial ■ statements" reflect certain changes in She presentation of financial data as a result of the implementation of GASB Statement No. 34 for the year ended June 30; 2002. . The information identified in the accompanying.table of contents as management's discussion and analysis is not . a required part of the basic. financial . statements but is supplementary information required by the Govermnental Accounting ,Standards Board. We have. applied . certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The combinng;,and individual fund financial statements and schedules listed in . the table of contents are presented far purposes of additional: analysis and are not a required part of the basic financial statements ofthe.City.ofNewport Beach, California. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements . and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The scope of our audit did not include the statistical schedules listed in the table of contents and we do not express an opinion on *them. t MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION Honorable Mayor and City Council City of Newport Beach, California Page Two In accordance with Government Auditing Standards, we have also issued a report dated November 1, 2002 on our consideration of the City's intemal.control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. ■ 2 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Management's Discussion and Analysis e � � e a r t r XYi;p r", RRr'.ST PO }3 19 yt YX Y I XV eF t Y 9' a a i i t ! p:Rhypifi „z° k t °P °fa "t t a Q ci %>.F# tea�°'."sx s Xii a:i WryXk M' d %IX n3 0 nV �} ra'gM� b yj ,4}VFi.M1 t f P t v. t Ft Y 4Xk. W4 %ly6 'V' yg3v� iAG a V M1 a, t h 4 E % W C'vpp f y� PWA1 R t Y Y NN X fr. A y4, Xy�� qq!J 55 ��: ZM Wp 6 ppWtS i Aflf t � 4M k� `.A e� 4 u Pvw va+r qG Sn nn � d b�Y° 2 3 repwtP 5 �4Y �P' � � a a I' s w'v- i �FV� h vree � e � wu yy °F �v�.FFP eXF d t{ s�pr. i' WWF PP�f .tj- a $yv �,,,g** ✓” �'q F "bj�ipd Pai W "ab�� "Pt � .JY 1 rX �xp�'!q st��Gni.R � ��91� i M 0 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, 2002. 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_Aesource (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 proyjies one measure of the City's overall, 'long -term . financial condition • The assets of the City exceeded its liabilities at the close of the most recent fiscal year by . $1.585 billion. Of this am uQW $67.2 million represents unrestricted net assets that may be used: to meet the City's ongoing obligations to citizens. and creditors. . • The City's total net assets increased $872 million (122%)!::J6 $:1.585 billion as a result of current year operations..Approximately $861 million of this.,increase is :attributable to the one bme infusion o #: capital infrastructure from the annexation of Newport Coast ($836.2 . mrAion) and:the sale of water service rights to the annexed area ($25 million) 1. • The City's total debt increased by $15.7 million during-the-cur rent fiscal year. The increase ■ is the net result.of regular debt service payments (reducing pirincipal:by $2.3 million) and the: newly incurred liability associated with the Pre- Annexation. Agreement for the: current year annexation of the Newport Coast area ($18 million). Short-t- rn 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 asAund balance (or net working capital . in the private sector) is a measure the City's ability to finance activities in the near term. • At the close of the current #iscal year, the City's Governmental Funds reported a combined . ending fund balance of $66 .7 million, an increase of $9.2 million. Approximately $51.8 million is unreserved? #und.balance available for spending at the City's discretion. . • The General Fund reported an 1increase of $81,583 in fundbalance after transferring $10.2 million to other funds. . • At the end of the current fiscal year, unreserved fund balance for the General Fund was $25.4 million, or 29% of total General Fund expenditures. . 3 0 OVERVIEW OF THE FINANCIAL STATEMENTS 0 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 Inforrimation 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 i fhe . 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.. • 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.10 customers to recover the cost of supplying the Water and Wastewater services it provides. 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. . 4 ■ 0 ■ 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 a detailed short- term view that helps a' reader".determine whether there are more or fewer financial . resources that can be spent in thenear future to finance City programs. Also included in the Governmental Funds are sPermanent Funds. These funds are used to report ■ resources that are' legally restricted for the extent that only, that not principal, may be used for purposes.that support ;City programs. Proprietary Funds — Services for which the City charges customers a fee are.generally . report ed in Proprietary Fon8s (Enterprise Funds and Internal Service Funds). Like the Government -wide Financial Statements, these funds provide both long ti nd short-term financial information. utilizing the economic resources measurement focus. The. City's Enterpnse'"Funds (Water and Wastewater Funds) are individual. funds reptesented in the combined presentation of Business -type Activities in the Government wide Financial . .'Statements.: The individual fund presentation provides rnore detailed information about each business segment, its operating statements; I 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 inthe Government -wide Financial Statements. . 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'govemmental entities, private organizations, or :individuals. All of the City's fiduciary activities are repotted in a sep#.ate statement of net assets and a'statementof changes in fiduciary, net assets ;:.We exclude these activities from the City's. Government-wide, ■ Statements because the City cannot use these ass ets to finance its operations. Notes to the Financial. Statements The financial statements also include the Notes to the Financial Statemenfs"thai 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 Govemment -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. . 5 E 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, 2002, as shown in Table 1, were $1.585 billion. Table 1 ;Net Assets (in thousands):. June 30, 2002 Governmental Business -Type Total . Activities Activities Activities Current and other assets . $ 113,993 $ 28,346 $ '142,339 Capital assets 1,419,413 98,420 1,517,833 . Total assets 1,533,406 .126,766 1,660,172 ><: Longterm liabilities outstanding 45,593 9,765 55,358 Other liabilities 16,350 3,407 19;757 '. Total liabilities 61,942 13,172 75,174 . Net assets Invested in capital assets, net of debt 1,391,678: . 87,470 1:1476,148 . Restricted .: 38,690 38,690. Unrestricted 41,096 26,124 67219 net ' ■ Total assets $ 1,471,464 $ 113,594 $ 1,585;057 %), • Invested to .Capital Assets — By far the largest component of net assets, $1.479 billion (93 reflects the City's investment in capital assets (e.g., land; buildings, infrastructure, and equipment) less any related outstanding debt used to acquire those assets. The City's capital assets 'do' not represent a financial resource and consequently are not available for future spending,; _ . Restricted Assets — An additional portion of the City's net assets, $39 million (2.4 %), represents resources that are subject to external restrictions on how they may be used. . Unrestricted Assets — The remaining balance of unrestricted net assets, $67 million (4.2 %) may be used to meet the City's ongoing obligations to citizens and creditors. At the end of the fiscal year, the City reported positive balances in all three categories of net , assets for both Governmental and Business -type Activities. Overall the City's net assets increased $872 million during the current fiscal year. . Approximately $861 million (98 %) of this increase is attributable to the one -time infusion of capital infrastructure from the annexation of Newport Coast ($836.2 million) and the sale of . rights to service the annexed area ($25 million). Excluding Special Items, Net assets increased $10.8 million in the current year reflecting generally favorable economic conditions, high levels of service charge activity, and a significant amount of grants and contributions that fund City . programs. The key financial activity for the year ended June 30, 2002 is as follows: 6 0 ■ Table 2 Changes in Net Assets (in thousands) ■ Year Ended June 30, 2002 Governmental Business -Type Total ■ Activities Activities Activities Revenues: Program Revenues: . Charges for services $ 24,027' $ 43,638 Operating grants agd caprtel 'contributions.- 7,891 7,891 . Capital grants and contributions 1,562 1,562 General Revenues.:: _ Taxes::` -- - - Property taxes 33,584 _ 33,584 Salts tax:. 18,797 - 18,797 Transient occupancy taxes 7,691 7,691 ■ Other taxes 10,640. 889 11,529 Investrient income. 3,265 ' 428 3,694 Property income w . 3,772 27 3,799 .Capital .contributrons .. 836,206 836,206 .' Sale of service rights . 25,000: . _ 4000 ■ Miscellaneous 2,293 Total. 2,293 revenues .' 974,728 20,956 it 995,683,,,, Expens;: es General government ( 12,793 12 793. Public safefp 47,769 47,169" Public works 30,321 30,321 . bommunity development .. 4,47111i. :' 4,471 ..Community services - -. 11,044 - 11,044 ■ Interest 517 Water 14,807 517 14,807 Wastewater 2,589 2,589 ■ Total expenses 106,315 17;395 123,710 Change in, net assets 868,413: 871,973 ". . Net assets at beginning of year, as restated 603,051 110,034 713,084 Net assets at erd of year $ 1,471,464 $ 113,594 $ 1,585,057 Governmental Activifies - The cost of all Governmental Activities in the current fiscal year ■ was $106.3 million. As shown on the.statement of activities $24.million of the cost was paid by those who directly benefited from'theprograms; $9.5 million was financed by contributions and grants received from other governmental organizations, developers, and property owners for . both capital and operating activities, and $72.8 million was subsidized through general City taxes. Net assets of the City at the beginning of the year were $603.1 million. The City reported program revenues of $33.5 million and general revenues of $941.3 million (including Special Items amounting to $861.2 million). Expenses for all Governmental Activities for the year 7 0 totaled $106.3 million. Therefore, as a result of operations, the City's net assets increased by 0 $868 million to $1.472 billion. Excluding Special Items, net assets related to Governmental Activities increased $7.2 million. . 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. is ■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. ■ Communitv.. Services is comprised of two departments (Libraries & Arts and Recreation & Senior Services) providing library services, cultural and arts programs, recreation services, and . senior; li;ocia and: transportation services. • Business Enterprise Operations are overseen by one department (Utilities) providing water and wastewater services. . 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: 1� i ■ ■ ■ 8 0 ■ ■ ■ ■ ■ Table 3 Governmental Activities (in thousands) Total Cost Net Cost $50 $40 $30 $20 $10 $0 General Public Safety Public Works Community Community Interest Government Development Services ■Total Expenses ■Program Revenues Of the $72.8 million in general revenues that financed the Governmental Activities, 48% was utilized for Public ,Safety, 26% was utilized for Public Works, and the remaining 26% supplemented Community. Development; Community Services, General Government, and Interest. 7 of Service of Service General government $ 12,793 $ (10,274) Public safety q 47,169 (34,767) Public works 30,329 (181833) Community,development` 4,471 :: (1,235) Community. services ,. 11,044 (7,208) Interest: 517 517:. $106,315. $ 72,835 Table 4 Program Elk, 9.1anses; and Revenue - Governmental Activities (in Millions) $50 $40 $30 $20 $10 $0 General Public Safety Public Works Community Community Interest Government Development Services ■Total Expenses ■Program Revenues Of the $72.8 million in general revenues that financed the Governmental Activities, 48% was utilized for Public ,Safety, 26% was utilized for Public Works, and the remaining 26% supplemented Community. Development; Community Services, General Government, and Interest. 7 Table 5 • Governmental Activities Fiscal Year 2002 . Sources of Revenue Functional Expenses (Excluding Special Items) 8 "/° 21%, Charges for Services 10% 12% ■CoMributions:c. 4% - ■GeneralGovernment . - OTaxes_. _ - - ■Public Safety ®:Other _ ®Public Works 299/6 , ®Community Development. - : _ ■Community Services ,,Interest . Major Governmental Activities in the current fiscal year included' {he following:. Revenues: • The; City's combined program revenue and general revenue Is $974 7 million. This amount . Includes two Special Items totaling $861.2 million and operating capital °grants. and contributions of $9.5 million. ■ • As mentioned above, the City reported two Special Items related to the Newport Coast annexation including a. one -time infusion of contributed infrastructure of $836.2 million, and the sale of water service rights for the :annexed area to the Irvine Ranch Water;District for $25 million:: • Excluding the Special Items,t the combined program and general revenue for all . Governmental Activities is $113.5 million. Of the $113.5 million, 30% represents Program Revenue, 30% is from property taxes, and 24% is from sales taxes and transient occupancy taxes. The remaining;, revenue sources of 16% are represented by significantly smaller . sources and are broadly diverse. • Expenses: • In the current year, expenses for all Governmental Activities are $106.3 million. . • Of the $106.3 million, 9% includes costs associated with repair and maintenance of City infrastructure, facilities, and major technology systems, and 5% is depreciation expense. . These capital related items were all functionally distributed with the vast majority of activity allocated to Public Works ($12 million). • Excluding the $836.2 million in capital contributions related to the annexation of Newport Coast (consisting of infrastructure and a fire station), the City capitalized $11 million of 10 ■ 0 • current year expenses. The significant projects capitalized included $2.8 million for pier improvements, $3 million for phase one of three for the Balboa Village Improvements, $3.2 ■ million in other infrastructure related improvements, $1.4 million for the Bonita Canyon Sports Park, and the remainder for miscellaneous facility and park improvements. . In conjunction with the Newport Coast annexation, the City increased activities to provide services to the new 7,779 acre - region -The related $5 million most significantly impacted the . Public Safety, Public Works and Community Services, nctions. • The City spent $4.1 million in "continuous efforts towards the John °Wayne Airport Settlement . Agreement and regional aviation solutions. A schedule of changes, In net costs/revenues of the City's programs Is not presented since ■ prior year information is not readily available. A schedule of changes in net assets by program will be presented in future years' reports.: 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, increased the City's net assets by $3.6 million, accounting for less than 1 % of the total growth in the City's net assets. Of the $3.6 million increase in net assets, $1.6 million represents the net revenue from water activity, $356,971 represents net revenue from . wastewater activity, and the remaining $1.3 million represents investment income, net increase in fair:valueof investments, and property income. ■ ;$20 $15 $10 $5 $0 Table 6 Program Expense & Revenue - Business -type Activities (in Millions) Water Wastewater ETotal Expenses ■ Program Revenues Major Business -type Activities in the current fiscal year included the following: Water: Of the $14.8 million in water related expenses, 33% is for the purchase of water, 22% is for maintenance and depreciation of the water system, 18% covers employee related costs, and the remaining 27% is collectively attributable to the amount paid to internal services funds, interest related to debt service payments, and other miscellaneous expenses. 11 El • The General Fund ended the year with $28.4 million, a net increase in fund balance of $81,583. Excluding net Transfers Out of $10.2 million, excess revenues over expenditures totaled $10.3 million. See footnote 13 in the Notes to the Financial Statements for more information regarding Interfund Transfers. • The General Fund routinely subsidizes the activities of the Tide and Submerged Land ■ Fund. At year end, the General Fund transferred sufficient resources ($9.5 million) to cover 12 ■ • In the current year, the City capitalized $3.1 million as current year capital additions and work in progress. Of the amount capitalized, $2 million is for the Corona Highland's water main improvements and other miscellaneous piping projects. The remaining $1.1 million ■ included major system repairs and upgrades to the water system and pumping operations. • Wastewater: • Of the $2.6 million in wastewater related expenses, 49% rs maintenance and depreciation of the wastewater 366/o is employee related costs,- and the remaining 15% is yinsignificant attributable to other.individually expenses. • In the current year, the City capitalized $650,947 as current year capital Additions and work in progress for major repairs and:upgrades to the wastewater mains. FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted earlier, the City fund accounting to highlight available financial resources and to ensure-.0 and demonstrat, 6::*compliance: With finance-related legal requirements. Governmental Funds Utilizing the, financial resources measurement focus, the:L�:Gity's Governmental Funds.� .... ,provide information on near -term inflows And outflows, And balances of spendable; resburcm i This information is useful in assessing the: City's financingrequirements. 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. .0.01 Fund Balance !-A6,ofthe end of the current fiscaV.ye4r;., the. City's Governmental Funds reported cortibirHie'd fund balances of $66.7 million, an., increase .of $9.2 million from the .-prior year. e on or 42.6% combined fund Th General Fund represented $28.4 milli of the balances of the Governmental Funds. Reserved Fund Balance The.:City has $14.9 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 ($14.1 million), 2) as a debt service reserve consistent with bond covenants ovenants ($567,005), and 3) for a variety of other restrictions that make these resources unavailable for spending ($241,562). Unreserved Fund •Balance — The remaining $51.8 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 $28.4 million, a net increase in fund balance of $81,583. Excluding net Transfers Out of $10.2 million, excess revenues over expenditures totaled $10.3 million. See footnote 13 in the Notes to the Financial Statements for more information regarding Interfund Transfers. • The General Fund routinely subsidizes the activities of the Tide and Submerged Land ■ Fund. At year end, the General Fund transferred sufficient resources ($9.5 million) to cover 12 0 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 $533,698 in fund balance. • As mentioned above in the Financial Highlights Section, the City sold water service rights . for the Newport Coast area to the Irvine Ranch Water District for $25 million. Of the $25 million, $15 million was received and recorded as I ntergovem mental Revenue in the . Newport Coast Annexation Fund =and the remaining, $10 million is recorded as intergovernmental receivable: and defened revenue: See footnotes 6, 16, and 17 of the Notes to the Financial Statements for additional information related to the Newport Coast ■ annexation transactions. 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. ' • Major activities in the'Enterprise Funds in the current fiscal year included the following:: • Net assets'in the Water and Wastewater Funds grew by $2.8 million and $465,100, respectively. Unrestricted net assets at year -end was $11 million for the Water Fund, and $3.9 million in the Wastewater Fund. • Other factors concerning the finances of these two funds have already been:addressed 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: fit • Net Assets at fiscal year end'for the Internal Service Funds was:$6.9 million. Included in ■ this amount is an accumulated tleficit;in;the Insurance Reserve Fund and the Compensated Absence Fund in the'amounts of $806,497 and $6.6 million, respectively. . Net Assets increased $5.4 million in the current year. Over 55% of the $5.4 million increase occurred in the Insurance Reserve Fund and is the result of aggressive interdepartmental charges in the City's general liability and workers' .compensation program. The large ■ majority of the charges were collected from the General Fund. • The Equipment Maintenance Fund contributed 38% of the increase in current year Net . assets through user fees charged to departments related to the maintenance and replacement of the City's roiling stock fleet. ■ 13 GENERAL FUND BUDGETARY HIGHLIGHTS The final appropriations for the General Fund at year -end were $5.2 million less than the original budget. Total actual expenditures were $5.4 million less than the final budget. Several factors moving in both directions contribute to this variance and include the following: • As discussed in the John Wayne Airport that end, the City C during the fiscal year • Also discussed in_th Local Coastal Plan. I w,-,it: is the City's number one priority to extend the �ment and limit jurthe,r expansion of that airport. To a total of $2.7 million in appropriation amendments i pursuit of this goal.' Transmittal Letters the City's goal to updat+ iring,theryear the Planning Department subm iate'funds for consulting fees related to these Plan and Q budget • A change in accounting allocation procedure between the General and the;_Tide and Submerged Lands (Tidelands).Fund` resulted in significant variances between the original budget and: final budget in the Police, Fire, and General Services Departments.: !Prior to GASB 34, the City incurred Tidelands expenditures in the General Fund. At year. -end, the Tidelands Fund reimbursed the General Fund (by an operating transfer in/out) to the extent firjancial resources were available in the Tidelands Fund: During the.. current- year, the City changed this allocation procedure and now records the $stimated full cost of providing services to tidelands area in the Tidelands Fund. This allocation .change = resulted in a trarsfer of appropriations between funds increasing the appropriations in the Tidelands Fund by $13.3. million and decreasing the appropriations in the General ' F...und by $13.3 million. Since Tidelands revenues are not sufficient to cover its expenditures, the General Fund subsequently subsidized Tidelands operations by transferring $9.5:: million at year- end. end. The impact of this change in accounting procedure is; :visible in the aforementioned departments and transfers line of the General Fund, Budgetary Comparison Statement within the Fund Financial Statements section of this report. Total final expenditures' were $5.4 million under the final approved budget primarily!due to the following. • The timing of capital projects. and the Planning. Department expenditures in this fund account for nearly $3 million of this variance. Of this amount, $2.5 million was encumbered and will be expended in the following fiscal year. • The Police and Fire Departments contributed the remaining $2 million of this variance. Twenty -five new police and fire positions were funded due to the newly annexed Newport Coast area; however, many of these, positions were vacant during the year. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City's investment in capital assets for Governmental and Business -type Activities as of June 30, 2002, amounts to $1.517 billion (net of accumulated depreciation). This investment in a broad range of capital assets includes land, buildings and systems, improvements, 14 ■ n machinery and equipment, park facilities, roads, storm drains, piers, oil wells, sound walls, and bridges. The total net increase (including additions and deletions) of $862.5 million represents . a 232% increase over last year. Excluding Special Items, the City's investment in capital assets is $681.7 million, which represents a 24 % increase over the prior year. • Table 7 Capitet Assets a Year End ■ feet of ilgpreciation,'In thou94nds) . Governmental Activities Business -Type Activities Total 2001. 2002' 2001 2002 2001 :€ 2002 . Land $ "386;574 $ 1,201;894 $ 2,016 $ 2,016 ` $ 388,590 $ 1;203,910 Structures 20,523 21;397" 130 124 26,653 21,521 Equipment 7,361 8,311 8 5 7,369 8;316 . Infrastructure 138,725' 178,384 94,216 94,676 232,941 273,060 Work in progress 5,809 9;428 1,598 5,809 11,026 . Totals $ 558,993 $ 1,419,413 $ 96,370 $.98,420 $ 655,363 $ 1,517,833:.. . Majorcapital asset events during the current fiscal year.included;the following . • . Through the annexation of Newport Coast and Newport Ridge; the City acquired $854.5 million in capital: assets, related to right of way, road systems,:, storm drains:.,and a fire .station. Of this amount; $836.2 million was a capital contribution and is considered a Special ltem • Various building and system improvements were completed at a cost of $680;972. ■ A. variety of road system.and storm drain improvements were completed at a cost of $3.4 million. . • The City revitalized both Balboa and;Newport Piers at a cost'of $2.8 million. , • Water and wastewater system improvements were completed at a cost of $22 million. • Work in progress for Governmental Activities as of the close of the fiscal year reached $9.4 million. Major projects near completion included Bonita Canyon Sports Park . improvements ($6.6 million) „ Balboa Village improvements ($1.5 million), beach restrooms ($718,-.170), Balboa Island Bridge ($452,585), and $181,231 in miscellaneous structure improvements. • Work in progress for Business -type Activities as of the close of the fiscal year totaled $1.6 million primarily relating to the water and wastewater main projects, and pump . station improvements. . Additional information on the City's capital assets can be found in footnote 5 of the Notes to the Financial Statements. . 15 El Long -term Debt ■ At the end of the current fiscal year, the City had total long -term debt outstanding of $20.7 . million for all Governmental and Business -type Activities. �$ 28,591,710 $ 45,592,675 $12,095,000... $ 10;950,000 $ 40,686 710 $ 56,542,675 . W. increased by $15.9 million during the current fiscal year as the net result service payments and the liability 'associated with the Pre - Annexation City's:' Revenue Bonds and Certificates - of,:Participation „were insured and maintain "AAA” rating from 'Standard & Poor s 'Corporation and an "Aaa" from Investors Services. Add itional.information on the. City's long -term debt can be found in footnote 6 of the Notes to the Financial Statements:.,.,' FACTORS AFFECTING NEXT YEAR'S BUDGET State Budget — The State ;of California's original 2002 -03, $98.9 billion budget reflected a $23.6 billion gap between revenues and expenditures. In their overview of the budget, the State listed the "precipitous decline in income tax revenues derived from stock market activity" as a major reason for;;the;. gap. On December 6, 2002, Governor Davis released a list of proposed spending reductions and budget adjustments totaling;$1;0.2 billion over the next two years. A quick review of the proposals undertaken by League of California Cities staff calculates a direct $1.43 billion impact on programs affecting cities (and other local governments). If the budget deficit estimates hold true, the Governor's proposals represent only 40 -50 percent of the total expected State budget deficit. That being said, the list of items in the Governors mid -year budget proposal that are known to impact the City of Newport Beach are: 16 ■ Table 8 . Outstanding:, Debt at Year -End i n thousands) . Governmental Activities. :.Businpss -Type Activities Total 2001 2002 2001:, 2002 2091 2002 . Certificates of participation $'6,610,000 $ 6,365000 :'$ <$ - $'6,610,000 $_ 6,365,000 . Note payable 2,350,930 :.:' ::Z 19;660 - ° -. - - 2,350,930 - -- 2,219,660 Pre - annexation agreement -._ - 18,000,000 - - . 18;000,000 Capital leases �- 1,819,173 1,150,927 + - - -• 1,819,173 1,150,927 . Revenue;bands - -- - 12,095,000 10,950,000 -- 12,095,000- 19,950,000 Claims and judgments 6,198,814 ':6,431',000' - -- `.,. - 6,198,814 8,437,000 Workers' compensation payable .4,016,336 3,270,000 - - - - 4,016,336 3,270,000 . Compensated absences 7;596,457 8,156,088 - - - 71596,457. 8,156,088 �$ 28,591,710 $ 45,592,675 $12,095,000... $ 10;950,000 $ 40,686 710 $ 56,542,675 . W. increased by $15.9 million during the current fiscal year as the net result service payments and the liability 'associated with the Pre - Annexation City's:' Revenue Bonds and Certificates - of,:Participation „were insured and maintain "AAA” rating from 'Standard & Poor s 'Corporation and an "Aaa" from Investors Services. Add itional.information on the. City's long -term debt can be found in footnote 6 of the Notes to the Financial Statements:.,.,' FACTORS AFFECTING NEXT YEAR'S BUDGET State Budget — The State ;of California's original 2002 -03, $98.9 billion budget reflected a $23.6 billion gap between revenues and expenditures. In their overview of the budget, the State listed the "precipitous decline in income tax revenues derived from stock market activity" as a major reason for;;the;. gap. On December 6, 2002, Governor Davis released a list of proposed spending reductions and budget adjustments totaling;$1;0.2 billion over the next two years. A quick review of the proposals undertaken by League of California Cities staff calculates a direct $1.43 billion impact on programs affecting cities (and other local governments). If the budget deficit estimates hold true, the Governor's proposals represent only 40 -50 percent of the total expected State budget deficit. That being said, the list of items in the Governors mid -year budget proposal that are known to impact the City of Newport Beach are: 16 ■ a . • Local Street and Road Maintenance Funding of the Traffic Congestion Relief Act: The elimination of second, third, and fourth quarter 02 -03 apportionments for street and road . maintenance. The estimated impact on the City is $150,000. • Public Library Foundation: Reduction in the Public Library Foundation per capita formula . grants to local libraries. The estimated impact on the City is $100,000. • State- Funded Mandates: Continue the.suspension of payment for various budget year and prior year reimbursable non - Proposition 98 mandates :7`he estimated impact on the City is $250,000. . Orange County Property Tax Lawsuit -The City is closely monitoring ,_County of Orange lawsuit regarding calculation of property:tax assessments. In 1978, California; Proposition 13 limited annual property tax assessments to increase no more than 2% per year. All 58 counties . in California have interpreted that tfie 2% per year allowance is cumulative and can be recaptured from any year where market conditions declined or remained flat. The County of ■ Orange is being sued by a .Seal Beach homeowner alleging that the County `is violating Proposition 13 by_ increasing .tax assessments more than 2% in any one year to, recapture taxes they could not collect when property values declined or remained flat. The lawsuit has . been granted class actio rrl.statu s and will now be heard by the 4'" District Court of Appeals. A January 2002 report issued by the Orange County auditor - controller showed' hat a successful . class = action lawsuit that included all affected taxpayers between 1998 and 2002 would cause a shortfall for:the City of Newport Beach of $3.4 million the first year due to refunds and,$ 1.7 million in subsequentyears. Em A ee:::Bargaining Agreements - Current employee bargaining unit agreements provide for. salary and benefit ;;increases ranging from 1,.25% to, 4 5% of salary and benefits. , The . cumulative.impact of the agreements on fiscal year 2002 -03 is estimated to be $1.25 million: ■ Defined Benefit Pension Plan, — As discussed In the Transmittal Letter, the City contracts with the California i Public Employees' Retirement System (PERS) for certain defined. pension benefits. Required employer contribution rates include both the normal cost of contracted ■ benefits plus or minus an amortization of plan changes and net actuarial gains or losses since the past valuation period. . Benefit revisions in recent years Will-impact future PERS rates. California Senate Bill 90 increased the maximum benefit -level for safety employees from 85% to 90% of total . compensation. Other.contract benefit changes include the miscellaneous employees' benefit formula increase from.2 %o at age 60 to 2% at age 55 and the police employees benefit formula increase from 3% at age 55 to 30/6 at age 50. A portion of the accrued unfunded benefits . related to all prior covered service credit will be paid from available pension assets while the remaining obligation will be amortized and paid in conjunction with the normal cost employer . rate. Although PERS has a ten -year average annualized return on investments of 9.4 percent, ■ recent asset losses will have a significant impact on actuarially required employer contributions beginning in 2003 -2004. The PERS actuaries assume an annual investment return of 8.25 %. The actual investment returns for fiscal year ended June 30, 2001 and June 30, 2002 were - 7.23% and - 5.97% respectively. This produces a two -year actuarial loss of 15.5% and 14.2% 17 N Cl E 18 a respectively but is slightly mitigated by the actuarial convention of valuing pension assets at 90 -95% of their market value. The remaining investment losses are then amortized over a three -year period. A portion of the fiscal year 2001 investment losses will be included in 2003- ■ 04 employer contribution rates. The 2004 -05 employer contribution rates will include a portion of both the 2000 -01 and 2001 -02 investment losses. ■ The cumulative effect of the normal cost of contracted.:. benefits, plan changes, and the net gain /loss on actuarial assumptions has made a significant impact on the employer contribution . rates for the City's safety pension plan. The actuarially determined employer contribution rates are in listed in Table 8 belowtor the three fiscal years ended June 30, 2004. . Table 9 PERS Rates *' . Miscellaneous Plan Safety Plan Rate Rate ■ Year Increase Increase Ended Employer Over Prior Employer Over Prior June 30 Rate Year Rate. Year . 2002 0% 5.2%, . 2003 ::.. 0% 00/0 15.40/6 .198% 2004 0% 00/0 17.6 %. 14% . "Based on Actuarial Valuations,.,. . 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. ■ Cl E 18 a ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Government-wide Financial Statements YN pS;yAf'. CITY OF NEWPORT BEACH Statement of Net Assets June 30, 2002 Total assets 1,533,405,839 Accounts payable 5,451,362 Accrued salaries and benefits - 3,569,403 Accrued mterest;payable 108,915' Liabilities from restricted assets Deposits payable 5,796,528 Deferred revenue 1;423;401 Governmental Business -type Activities Activities Assets: Due in more than one:year 39,350,330 Cash and investments (note 4) $ 87,407,392 $ 22,593,142 Receivables: Net Assets: Accounts 4,594,586 4,048,152 Notes 50,000 - Lease 376,167;.._ 7,723,887 Interest 1,300,437 549,533 Intergovernmental receivables...., 16,052,150 .l 19,319,210 Restricted cash with fiscal- agent(note 4) 1;431,221 1,437;659 Internal balances (272,743) 272,743 Investment in joint venture (note 15) 21120,582 3,000 Prepaid items - '' 296,885 15 Inventory 437,821 41,095,786 Other 197,941. ' Capital assets, (note 5): Land 1,201,893,933 2,016,450 Structures, net 21,396,615 124,488 Equipment, net 8,311,014 5,298 ; Infrastructure, net 178,384,228. 94,676,396 Work in progress 9,427,610 1,597,682,. Total assets 1,533,405,839 Accounts payable 5,451,362 Accrued salaries and benefits - 3,569,403 Accrued mterest;payable 108,915' Liabilities from restricted assets Deposits payable 5,796,528 Deferred revenue 1;423;401 . Total net assets ■ 126,766,010 1,738,671 168,806 314,719 1,185,000 9,765;000 13,172,196 87,470,314 26,123,500 Total $ 110,000,534 8,642,738 50,000 376,167 1,300,437 16,052,150 2,862,880 2,120,582 296,885 437,821 197,941 1,203`;910,383 21,521,103 8,316;312 273,060,624 11,025,292 11660,171,649 7;190,033 3,738,209 108,915 314,719 5,796,528 1,423,401 7,427;345 49,115,330 75;114,;480 1,479,148,127 7,723,837 549,533 19,319,210 10,636,221 458.090 3,000 15 67,219,286 $ 1,471,463,555 $ 113,593,814 $ 1,585,057,369 See accompanying notes to basic financial statements. 19 Noncurrent liabilities (note 6): Due within one year 6,242,345 ■ Due in more than one:year 39,350,330 ■ Total liabilities 61,942,284 Net Assets: Invested in capital assets, net related debt 1,391,677,813 . Restricted for: Community development 7,723,887 Public safety 549,533 . Public works 19,319,210 Community services -. - 10,636,221 Debt service 458,090 . Endownment - nonexpendable 3,000 Endownment - expendable 15 Unrestricted 41,095,786 . Total net assets ■ 126,766,010 1,738,671 168,806 314,719 1,185,000 9,765;000 13,172,196 87,470,314 26,123,500 Total $ 110,000,534 8,642,738 50,000 376,167 1,300,437 16,052,150 2,862,880 2,120,582 296,885 437,821 197,941 1,203`;910,383 21,521,103 8,316;312 273,060,624 11,025,292 11660,171,649 7;190,033 3,738,209 108,915 314,719 5,796,528 1,423,401 7,427;345 49,115,330 75;114,;480 1,479,148,127 7,723,837 549,533 19,319,210 10,636,221 458.090 3,000 15 67,219,286 $ 1,471,463,555 $ 113,593,814 $ 1,585,057,369 See accompanying notes to basic financial statements. 19 CITY OF NEWPORT BEACH Statement of Activities Year Ended June 30, 2002 Program Revenues Operating Capital Total Charges for Grants and Grants and Program Expenses =;:r.:..: Services .: r Contributions Contributions Revenues Functions/Programs Primary government: Governmental activities: - - General government $- 12,792,860 $ 2,270;082 $ 248,348, $ - $ 2,518,430 Public safety Public works Community development -" Community services Interest on long-term debt Total governmental activities Business -type activities: 47,168,918 - : 10,549,410 1,852,733 - 12,402,143 36;320,516 ' 5,436,948 4,523,620. 11526,636 11,487,204 4,471,397 3,236;483 $ 7,891,059 $ 1,562,458 $ ';53,091,867 3,236,483 1.1,644,086 _. 2,533,899 1,266;358 -- 35;822'.- - - -._ 3,836,079 517,102 - Taxes: 106,314,879 24,026,822 7,891,059 1,562,458 -- 33,480,339 Water _ - - 14,806,514 Wastewater - 2,586,833 Total: business -type activities, ° 17,395,347 Total: primary government $ 123,710,226 16,665,724 - - 16,665,724 2,945,804 2,945,804 19,611,528. - - 19,611,528 $ 43,638,350 $ 7,891,059 $ 1,562,458 $ ';53,091,867 General revenues: Taxes: Property taxes .. Sales taxes Transient occupancy taxes Business license Franchise taxes '. Motor vehicle license fees .. Motor vehicle fines ... .. Other taxes Investment income Net increase in fair .. value of investments Gain.on sale of assets Property income Share of joint venture -net _income (note 15) Capital contributions (notej16) - Sale of service rights. Other See accompanying notes to basic financial statements 20 Total general revenues Change: in net assets ■ ■ ■ Net assets at beginning of year, .: as restated (notes 2, 5, 6 and 18) . Net assets at end of year 0 0 0 0 ■ ■ See accompanying notes to basic financial statements . 21 Net (Expense) Revenue and Changes in Net Assets Primary Government . Governmental Business -type Activities Activities Total $ (10,274,430) $ ; $' (10,274,430): - . (34,766,775) (34,766,775) . (18,833,312) (18,833,312):. -- (1,234,914) _ - (1,234,914) - (7,208,007) ;- - ,., _ (7,208,007): . (517,102) (517;102): _ (72,834,540) • 1,859,210 1859,210 -- - ::356,971 356,971 ' - . - ,2,216,181 2,246;181 (70,618,359) :33,583659 33,583,659.' 18,796,571 - 18,796,571 . . 7,690,655 - `7,690,655 2,470,857 0- " . _2,470,857. 2735641 2.735.641; . x,380 070 - 4,380,070 .. 71,693 - ... 711,693 541,820 - 341,820 - . 2,171474 888,779 3,060,253. . 7 -, ;093;913 428,199 1,522,112 160,236 - 160,236 - 3,771,556 27,100 3,798,656 . 2.120,582 -. 2,120,582 836,206102 -:.. - -- 836,206,102 25,000,000 ..25,000,000 ■ 12,570 - .< 12,570.. - 941,247,399 �� -- `:1;344,078 �� 942,591,477 . 868,412,859 3560 -,259 871.,973,118 . 603,050,696 110,033,555 713,084,251 - $ 1,471,463,555 _$ 113,593,814 $ 1,585,057,369 ■ ■ See accompanying notes to basic financial statements . 21 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ } }et. Sa* wx�F`ra sA;.' k r z: R 4y W k 8k yn �m Fund Financial Statements w try �4 r t i �f. ja hl�P. Y: # iry h y T � r wry ' r r T °`^rT =:1 •- '"'',.�; Vii._ ^�S GOVERNMENTAL FUNDS • 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. 23 See accompanying notes to basic financial statements 24 . CITY OF NEWPORT BEACH . Governmental Fund Types Balance Sheet June 30,2002 . Tide and Newport Other Submerged Coast Governmental Assets General Land Annexation Funds Totals . Cash and investments (note 4) $ 30,600,669 $ 336.534 $ 15,035,822 $ 22,665,833 $ 68,638,858 Receivables: Accounts 3,798,802 703,954 - 73,885 4,576,641 Notes 50,000 - - - 50,000 ■ Lease - 376,167 376,167 Interest .:1,300,437: - - 1,300,437 Intergovernmental receivables 5 ,258,849. - 101000,000 793,301 16,052,150 . Restricted cash with fiscal agent (note 4) - - 1,431,221 1,431,221 Due from other funds (note 12) 696,248 - - 696,248 Prepaid items . >. Inventory 246,659. 188,562:. - -- - - - - -- -:; - - 246,659 188,562 . Other 1.974941 197,941 Total assets - - $ ;42,140,226 - . $ - 1,040,488. $ 25,035,822 $ 25,538,348: $ 93,754,884 ,. Liabilities and Fund Balances - . Accounts payable- Accrued payroll $ 3,712,162 - 3,440,851 '$ :324,228 41,137 $ '� - - $ 1,024,772 - $ - 5,061,162 3,481,988 . Depositspayable - 5,655,103' - 141,425 - - - - -- 5,796,528 Deferred revenue 994,772 - 10,000,000 999,929 '.- 11,994,701 Due to other funds (note 12) - - - 696,248 696,248 . Total liabilities 13,802,888 506,790 .10,000,000 .2,720,949 27,030,627 Fund balances: Reserved for encumbrances r 294,876 7,000,000 4,099,952 14,075,394 Reserved for debt service 2,680,566 - - 567,005 567;005 . Reserved for permanent endownment 3,000 Reserved for prepaid Rems " 246,659 - - - 246,659 Reserved for inventories 188,562 - - - 188,562 . Reserved for long -term receivable 50,000 - - - 50,000 Unreserved: Designated for: specific projects 5,962,851. - 5,962,851 Designated for stabilization .: 1,983,195 - - - 11983;195 Designated for contingencies 10,266,733 - - -.; 10,266,733 Unde §ignated, reported in: General fund:.. 6,958,772 - - - 6,958,772 Special revenue funds - 238,822 8,035,822 `11,027,395 ` 1,9,302,039 . Capital;; project funds 7,120,032 7,120,032 Pertnanerit:fund - 15 15 Total fund balances 28,337,338 533,698 15,035,822 22,817,399 :; 66,724257 . Total liabilities and - - and fund balances .:;'- '- $ 42,140,226 $ 1,040,488 $ : 25,635,822 -.i$ .. 25,538,348...1 $ 93,754,884 See accompanying notes to basic financial statements 24 . ■ CITY OF NEWPORT BEACH Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2002 Fund balances of governmental funds . Amounts reported for governmental activdtes�n the different because: ■ Capital assets net of depteeiahon have not been included as financial resources i govemm.entaL fund activity. Amount excludes capital assets from mtenal service funds which are added below. Long term debt from the General Long Term Debt Account Group that have not been included; in the governmental fund activity.'! Certificates of participation payable Note payable Pre- annexation agreement Accrued. interest payable for the.current portion of interest due on long -term debt has not. been reoorted in the oovernmental'- funds. Som ,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 deferred 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 capitai 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 reportec 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 governmentatactivities $ 66,724,257 1,412,147,130 See accompanying notes to basic financial statements 25 6,866,604 2;1'20,582 (272,743) $ 1,471,463,555 CITY OF NEWPORT BEACH Governmental Fund Types Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2002 Excess:: (deficiency) of revenues .. ;ever expenditures 10,276,494 (9,376,886) (2,552,226) Other financing.sources (uses) Transfers Bn (note 13 ) Transfers out (note 13 ) Proceeds frorn1ssuance of debt Total other financing sources - (uses) Net change in fund balances 799,589 9,515,346 (10,994,500) - (411,952) 18,000,000 (6;407,779) (8;060,397) 612,525 10,927,460 (262,637),',(11,669,089) 18,000,000 (10,194,911) 9,515,346 17,588,048 349,688 17,258,371 81,583 138,460 15,035,822 (6,057,841) 9,197,974 Fund balances, July 1, as previously reported 28,380,093 395;238 - 28,875,290 57,650,621 Restatement (note 18) - (124,338) (124,338) Fund balances, end of year 1 ''$28,337,338 $ 533,698 $,15,035,822 -$22,817,399 $ 66,724,257 See accompanying notes to basic financial statements. 26 i ■ a i ■ Tide and Newport Other Submerged Coast Governmental General Land Annexation Funds Totals Revenues Taxes and assessments: Property $.33,583,659 $ - $ - $ - $ 33,583,659 Sales ',, 18,796,579' - - 18,796,571 Transient Occupancy 7,690;655 7,690,655 Other - 5,389,155 418,431 5,807,586 Intergovernmental 7,253,139. 98.614 :.15,000,000 3,875,987 26,227,740 Licenses and permits - 1,956,765 - 1,184,962'- - 209,231 3,350,958 Charges for services .10,318,367 -, 20,202 - 10,338,569 Fines and forfeitures ?' ' . ' ' -.. 3;252,386 131,778 .: ,, ';; ;;: 3,384,164 Investment income;,: _:. 1,258,622 - - -- -: 298,548 1,204.387;. 2,758,557 Net increase in (air.yalue of investments 7641,405 - 149,226 478,341 1,268,972 Properly Income .. - .5,.332j403-.:- X4,797,762 - 10,130,165 Donations, -- 462 -,077 -- - - - 284,697 ' �, 746,774 Other - - 750,630 - 286,496 - 745570 -.- 1,782,696 :Totalrevenues - 96,685,834 - 6,519,814. 15,447,774 7,213,644 -. - :125,867,066 Expendit ures Current General government ,; ... 12,239,127 52,881 - - 12,292,008 Public safety 36,257,755 11,138,034 - 445,387 47,841,176 Public vrorks 17,007,472 : 2,180,333 -. 230,262 19,418,067 Community development 4,380,890 205,302 4,586;192 Communityservlces 7,913,028 1,330,425 .. .:. - 174,586 9,418;041 Capital outlay 7,655,747 957,965 16,06000 12,000,194 38,613,906 Debt service (note,6 ): Principal 914,829 131,270 - 245,000 1,291,099 Interest and fiscal charges 40,492 105,792 320,690 '466,974 Total expenditures 86,409,340. ;15,896,700 18,000,000 13;621,423 133,927;463 Excess:: (deficiency) of revenues .. ;ever expenditures 10,276,494 (9,376,886) (2,552,226) Other financing.sources (uses) Transfers Bn (note 13 ) Transfers out (note 13 ) Proceeds frorn1ssuance of debt Total other financing sources - (uses) Net change in fund balances 799,589 9,515,346 (10,994,500) - (411,952) 18,000,000 (6;407,779) (8;060,397) 612,525 10,927,460 (262,637),',(11,669,089) 18,000,000 (10,194,911) 9,515,346 17,588,048 349,688 17,258,371 81,583 138,460 15,035,822 (6,057,841) 9,197,974 Fund balances, July 1, as previously reported 28,380,093 395;238 - 28,875,290 57,650,621 Restatement (note 18) - (124,338) (124,338) Fund balances, end of year 1 ''$28,337,338 $ 533,698 $,15,035,822 -$22,817,399 $ 66,724,257 See accompanying notes to basic financial statements. 26 i ■ a i ■ ■ ■ ■ CITY OF NEWPORT BEACH Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Govemmenal Funds to the Statement of Activities Year ended June 30, 2002 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities differ from the amounts reported in the statement of activitiesbecause:' Donations of capital assets do not reportrsv.$n -a 3d the governmental funds Governmental funds report,cai lair oflays 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,- - -` Repayment of debt service principal is.an expenditure -in the governmental funds, but the repayment reduces long -term liabilities inthestatemeht':of net assets. Accrued Interest for debt service. This is the net change in accrued interest for the current period Deferretf revenue. This is-the net changeiin deferred., revenue for the current period. Internal service funds are used by,rnanagement 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. Investment in joint ventures creates an:explicit, measurable equity interest reported only in the statement of activities. Internal balance created by the consolidation of internal service funds. activities related to enterprise funds s: is reflected aa radtictlon.of revenues in:the'statement of activities. `.. Change in riet assets of governmental activities ■ See accompanying notes to basic financial statements 27 $ 9,197,974 836,206,102 5,258,757 1,291,099 CITY OF NEWPORT BEACH General Fund Budgetary Comparison Statement For the Year Ended June 30, 2002 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenues: $33,583,659 Taxes and assessments: 20,639300(x Property $ 29;317,000 Sales 20.497;000 Transient occupancy ''8,433,800 Other - 4,276,000 Intergovernmental _ .. 5,932,164 Licences and permits - 1,980400 Charges for services"" - 9,182,629 Fines and forfeitures - - 3,258,000. Investment income ',,. 1.,200dW0. Net increase In fair value of investments - Property I6colne.5,606,879 Donations' _ " .300,000 Other - -- ".234,200 Total revenues 89,618,072 $ 31,408,400 $33,583,659 $ 2,175,259 20,639300(x 18,796,571 (1,842,729) 8,474,200 z 17,690,655 (783,545) 4,359,300 5,369;355 1,029,855 6,661,741 7253;13,9!i' 591,398 .. 1;980,400 4,752,433 (23,635) 9,265,729 101318,367 -' ;:1,052,638 3,258,000 35252386(5,614) - .91,563 1,583,420 ;1,258,622'; -. _ (324,798) - ` 641,405 641,405 5,006,879 5,332,403 325,524 724,959 462,077 -. (262,882) 236,200 . - - 750,630.: " 514,430.- 38,609,851'- 36,257,755 2,352;696' 93,598,528, 96,685,834 3,087,306 12,829,808 12,618,746 211,062 1,574,700 4,320,204 4,605,143 (284,939) 247;780: 257,201 262,748 (5,547) .756;160 686;274 688,672 '(2,398) 862,065 902,904 842,723 60,181 4,752,433 4,766,255. 4,665,428 ;. 120,827 1,213,713 _1;265,976 1,174,413 - .91,563 ..9,406,851 12,218,814 12,239,127 z (20,313) :..27,342,446 24,164,613 22,886,749 1,277,864 - .18,942,105 14,445,238 13,371,006 1,074,232., 46,284,551 38,609,851'- 36,257,755 2,352;696' 13,715,140 12,829,808 12,618,746 211,062 3,536,350 3,438,848 3,181,701 - 257,147 -- 1,063,397 1,045,613 1,207,025 (161,412) 18,254,887 17,314,269 17(007,472 306,797 See accompanying notes to basic financial statements 28 ■ ■ ■ ■ CITY OF NEWPORT BEACH L See accompanying notes to basic financial statements . 29 General Fund ■ Budgetary Comparison Statement (continued) Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Community development: _ Planning 2,189,049 2,435,166 1,865,009 570,157 Building 2501,511(7 2,544,120.. 2,515,881 28,239 Total Community development 4690,629: 4,979,288 4380,890 598,396 Community servces .. Community services 7;311,039 7,888,129 7,913,028 v -.- ,. (24,899) Total Community services : 7,311,039 7,888,729 7,943028 .= ::(24,899) Capital ouaay- _ .10,405,498 10,158,910 7,655,747 2,503,183.. Debt service Principal .Interest and fiscal charges 914,829 59,580 914,829 59,580. ' 914,829 40,492 - .19,088 Total Debt service ,'.�:',- 974,409 974,409 955,321 ;19,088 • Total,eXpendiWres 97,327,864 92,143,668 86,409,340 5,734,328 ■ Excess (deficiency) of revenues over expenditures (7,709,792) 1.454,860 10276,494 8,821,634 rOther financing sources (uses): Transfersin 3,294,306 3,294,306 799,589 _(2,494,717) ® Transfersou ;, (9,515,346) . (10,994,500) (1;479,154) Total other financing .-sources (uses) 3,294,306 (6,221,040) . (10.194,911) (3,973,871): „ Net !change in fund balance - -, (4,415,486) (4,766,180) 81,583 4,847,763 Fund balance, beginning of year 28,380,093 28,380,093 28,380,093 - Restatement 4 1 1 - (124,338) (124,338) (124,338) - ■ Fund bafance, end of year -' -:; $ 23,840,269 $ 23,489,575 $28,337,338 ` $ 4,847,763 L See accompanying notes to basic financial statements . 29 CITY OF NEWPORT BEACH Tide and Submerged Land Budgetary Comparison Statement For the Year Ended June 30, 2002 Budgeted Amounts Original Final Actual Revenues: C ■ Variance with Final Budget . Positive (Negative) Intergovernmental $ - $ - $ 98,614 $ 98,614 Licences and permits 8Q;29811 1,186,298 1,184,962 (1,336) Charges for services 26,000 261000::. 20,202 (5,798) Fines and forefeitures` (322;332) 131,778 131,778 Property Income 5,063,315 5,063,315 4,797,762 (265,553) Other 18;333 286,496 268,163 Principal Total revenues 1 6,275,613 61293,946 6 519,814 225,868 Interest and fiscal charges: 103,294. 105,792 Expenditures Total expenditures- 3,533,979 General government 15,896,700 52,881 % 52,881 Public safety- - 11,138,034 . 11,138,034 Public`works 377,502 2,128,508 2,180,333 (51;825) Community services 985,617 7,008,093 1,330,425 (322;332) Capital Outlay 1,933,798 1,451,811 957;965: 493;846 Debt service: ■ Principal 133;768 131,270 .. 131,270 Interest and fiscal charges: 103,294. 105,792 105,792 Total expenditures- 3,533,979 16,016,389 15,896,700 119,689 ■ Excess (deficiency) of revenues over expenditures 2;741,634 (9,722;443) (9,376,886),f 345,557 ■ Other financing sources (uses): Transfers in::, 9,515;346 9,515,346' Transfers out, (2,9a9;306) (2,989,306) 2,989;306. Total other financing . sources(uses) (2;989',306) 6,526;040 9,515;346 2,989;306 Net change In fund balance.. (247,672) (3,196,403) 138,460 3,334,863 Fund balance, beginning of year 395,238 395,238 395,238 ■ Fund balance, end of: year $ 147,566 $ (2,801,165) $ 533,698 .$ 3,334,863 See accompanying notes to basic financial statem:;nts 30 . ■ ■ ■ CITY OF NEWPORT BEACH Newport Coast Annexation Budgetary Comparison Statement For the Year Ended June 30, 2002 See accompanying notes to basic financial statements 31 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Intergovernmental $. $. 15,000,000 $ 15,000,000 $ Investment income 298,548 262,548 Net increase in fair value of invest"nts :! 149,226 149,226 Total revenues - :.15,036000 '15;447,774 411,774 Excess offrevenues over expenditures : 15;036,000 15,447,774 411,774 Other financing uses:: Transfers out -- - (411,952) :, (411,952) -! Met change imfund balance, - - 15,036,000 15,035822 - -; ,(178) Fund balance, beginning of year Fund balance, end of year ',. $ - $ 15,036,000 $ 15,035,822. See accompanying notes to basic financial statements 31 32 _ .�.�_, �-._ _ -, - >_.. 4 : ;.; -:: �= ° _ _� a� _ „r�ry � �__- .. . 1 _ :r�r �.._.. .. _. '+ . CITY OF NEWPORT BEACH Proprietary Fund Statement of Net Assets June 30, 2002 Enterprise Funds . Governmental Total, Activities Enterprise Internal Service Assets Water Wastewater Funds Funds Current assets: Cash and investments (note 4) $ ]9,017,151 .::..:$ 3,575,991 $ 22,593,142 $ 18,768,534 Receivables: Accounts 3,510,739 `537413 4,048,152 17,945 Inventories .. '' 249,259 Prepaid items 50,226 Total current assets 22,527,890. 4 113,404 26,641294 19,085,964 Noncurrent assets: '. Restricted cash with fiscal agent (note 4) '! I, - 1,431,659 1,431;659 -. . Capital assets (note -5) .''- Land : -_. - 2,016,450 :::.2 -, Structures _, ; - ' -_ ..- -. 205,793 - ._' 205,793 Equipment. 132,246 132,246 x:::,17,637,537 Infrastructure 94,841,956 37,911,595- 132,753,553 - Warkinprogress 1,226,275 371,407 - 1,597,682 - Less'acetimulated depredation (28,801,176) .(9,484,234) (38,285;410) (19;371,267) Total capital assets (net of accumulated depreciation) 69,621,546 28,798,768 98,420;314 7,266,270 Total noncurrent assets 71,053,205 28,798,768. 99,851,973 7,266,270 Total assets 93,581,095 32,912,172 126,493,267 - 26,352,234 Liabilities .. Current:)labilities: Accounts payable 1,551,609 187,062 1,736,671 390,200 Accrued payroll 122,012 46,794 168,606 87,415 Capitalleases- current ;: - -'- - 393,985 Workers' compensation - current - - 1.950,000 General liaDlliry- current 1400,000 Compensated absences current 1,400,000 Total current liabilities 1,673,621 233,856 1,907,477 5,121,610 Current liabfltties payable from restricted assets: Depositspayable .;: 81,909 24 81,933 - Accrued interest payable 232,786 232,786 Bonds payable (note 6) 1,185,000' - 1,185,000 - Total current liabilities payable from restricted assets Noncurrent Irablr6ss: 1,499,695 - 24 1,499,719 - Bonds payable (note 6) 9,765,000 - 9,765,000 Capital leases - - - 756,932 Workers compensation - _ - - - 4,581,000 General kabrbry _ 2,270,000 Compensated absences - 6,756,088 Total noncurrent liabilities 9,765,000 - 9,765,000 14,364,020 Total liabilities 12,938,316 233,880 13,172,196 19,485,630 Net Assets ■ Invested in capital assets, net of related debt 69,621,546 .:. . 28,798;768 98,420,314 6,115,342 Unrestricted 11,021,233 3,879,524 14,900,757 751,262 Total Net Assets $60,642,779 $32,678,292 113,321,071 $ 6,866,604 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 272,743 Net assets of business -type activities $113,593,814 See accompanying notes to basic financial statements 33 CITY OF NEWPORT BEACH . Proprietary Fund Statement of Revenues. Expenses and Changes In Fund Net Assets For the Year Ended June 30, 2002 Enterprise Funds Governmental Total Activities . Enterprise Internal Service Water Wastewater Funds Funds Operating revenues: Charges for sales and services: Water sales $,; 16,620,930.. $ - $ 16,620,930 $ - Sewer service and connection fees - 2,923;583... 2,923,583 - Other 44,794 22,221 67,015 11,447,259 Total operating revenues 16,665,724 2,945,804 19,611,528 11,447,259 Operating expenses: Purchase of Water. � "�, 4,936,448' - 4938 448 - Salariesandwages. 2,708,325 - 943,843 „' 3650,168 905,252 Npreotation '', -- :;, -' _.. _ 1,232,6331 504,804 ' 1,737;437 1,615,763 Professional swices - 1;496,623- - '329,972 1,826,595 90,382 Maintenanceand `supplies ' -, 653,914 '290,653 944,567 "._. 16,388 ■ System maintenance .. (;354,154 468,157 1,622,311 - Fleet parts-and supplies;, - - `30,8,984 Workers' canpensa0ori - - 1,819,250 ■ Claims and judgements - - - - - - - 655;183 Compensated absences 1,377;812 Retiree Insurance Other - -- - 2,141,833 - '143,158 - 2,284,991 1,036,473 - . : = Total operating expenses 14,521,930 2;680,587 17,202,517 -- 7,825;487 Operating income :.. 2,143,794 265,217 2,409,011 3,621,772 Nonopera6ng revenues (expenses): Investmentincome 755,509 133;270 888,779 638,168' Net increase in fair value of investments .361,586 66,613 428,199 315,220 Property Income 27,100 - 27,100 - %Gelnonsaleoffoxedassetsl - - ,- 136,482 interest expense .(465,573),. (465,573) (55,868). Total n6hoperating revenues 678,622 199,683 878,505 1,034,022 ■ Income before transfers 2,822,416 465,100 . 3,287,516 4,655,794 Transfers in (note 13) Transfersout(ri6i 13) - - -' - 873,049 (131,420) . Change in net assets:. " 2,822,416 465,100 3,287,516 5,397,423 Net assets; begin" of year 51,149,490 14,170,794 1.369 1751 Restatement. - 26,670,873 18,042,398 - '- 99,430 Net assets, beglnning of year, as restated (note 18) 77,820,363 32;213,192 ' : '1,469,181 Net assets and of :year $ 80,842,779 $ 32,678,292 $ °8,866,804 . Adjustment to - reflect the consolidation of internal service fund activites related to enterprise funds. 272,743 Change In net assets of business -type activities $ 3,580,259 0 ■ See accompanying notes to basic financial statements 34 ■ ■ CITY OF NEWPORT BEACH Proprietary Fund Statement of Cash Flows For the Year ended June 30, 2002 Enterprise Funds Govermnerdal ■ Total Activitles Enterprise Internal Servica Water Wastewater Funds Funds Cash flows from operating activities: Cash received from customers $ 16,574,546 $ 2,817,668 $ 19,392,214 $ 11,425,548 Cash payments to employees for services (2,677,048) (926,771) (3,603,819) (555,498) Cash payments to suppliers for goods and services - (10,679;493) (1,064,514) (11,743,917) (5,619,705) ■ Cash received For other operatirg activities Net cash provided by operating activities ,44,794 ' 3,262,889 22,221 MB,604 67,015 4,111,493 14,751 5,265,096 Cash flows from noncapital financing activities Cash received from other funds - - 873,049 Cash paid to other funds . ' F. - - (131,420) Net cash provided by noncaprtalfisrancing activities::.. ;':` -_ 741,629 Cash Flows from capital related financing activities.- -- Acquisition of capital asset (3136,604) (650,947) (3,787,55.1)1:,. (1,753,613) Proceeds from sale cf ca{idal assets 228,6711 Principal payments on long -term liabilities (1,145,000) (1,145,000) (664,264) Interest paid on ong4erin liabilities (465,573) (465,573) (55,888) Net cash used fot capital related financing activities - (4,747,177) -.. (650,947) (5,398,124) : ; (2,2A5,069) Cash Flows from imesting actwtties::' Interest on imesMems,': 1,144,195 199,883 1,344,078 "I: 953,408 Net increase in cash and cash equivalents (340,093) 397,540 57,447 4,715,064 Cash and cash equivalents, beginning of Year. 20,788,903 3,178,451 23,967,354 14,053,470 . Cash and cash equivalents, end of year $20.448,810 $ '3,575,997 $$ 24�y24,8011 $ 18.788;534 Reconciliation of cash equivalents to the statement of net assets . Cash and investments reported on statement of net assets Cash and imestrnents with fiscal agent reported:on'statement $ 19,017 151 of not assels 1,431 659 $ 3,575,991 $ 22,593,142 1,431,659 $ 18,786,534 11 Cash and Cash equivalents $ 26448 810 ': $ 3,575,991 $ 24,024,801 $ "' 18,768;s34 Reconciliation of operating': income to net cash . used for opelnng activities Opereting:income, :: $ 2,143.794. $ 265,217 $: 2.409.011 $r 3,621;772 Adjustments to reconcile operating income to net cash used for operating activities: DeDregfa0on 1,232.633 504,804 1,737,437 1, 615,763 (Increasa)ini)ccounts receivable '(43,708) (105,915) (149,623) (6,960) (Increase)7ninventones (57,698) (Increese)in prepaid Items ' : - - - (50,226) . Increase (decrease) in accounts payable (74,103) 187,426 93,323.: 308,841 Increase ( decrease) in accrued payroll 29,277 17;072 46,349 (132) ( Decrease) in accrued Interest payable (22,328) - - (2Z328) (Decrease) in deposits payable (2,075) (2,676)"', - Increase in workers' compensation' : 232,186 (Decrease) in gener4l:I1a011dy - (746,336) Increase in compensated absences - 349,886 Total adjustments -: - 1,119,095 583,387 1!,702,482 1,643,324 Net cash used for operating activities $ 3,262.869 $ 848,604 S 4,111,493 $ 5,265,096 Noncash Investing, capital and financing activities' Disposal of fixed assets $ (168,932) $ - $ (168,932) $ (861,124) . Acquisition of equipment by capital leases 910,848 Total of noncash activities $ (788,932) $ - $ (168,932) $ 29,724 FI ■ See accompanying notes to basic financial statements 35 m ■ ■ a 0 36 • T do r. imp l ■ ■ ■ r ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 3vkF��`1' "rs VF . b Yi�pS WS�wAe l Notes to the Financial Statements ro 4 � •wi A �i y� w4 dktl6 pp %.1 Ti 1 ': i A 4'✓Q a AJn YA A0.�ifi�. F x 1 �% 4A� xefG 0 ypl 1 y`i Y p A YCb *W iWHy}� WY•4Pd= Fy'. Y YpBpA 4j ��1 Oy;i4 fYf� W� n4d1�1YtlP Yai P �k Pa �'�641Y d � �. L�� i.S��3 6. tn�e V'A !� did OA t1^ P- ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 ■ (1) Summary of Significant Accounting Policies The basic financial statements of:: the'City. of Newport Beach (the "City") have been prepared in conformity wtth geralty accepted , accounting principles ( "GAAP ") as applicable to government units. The Governmenfal.. Accounting Standards Board ( "GASB ") is the accepted standard - setting body for establishing governmental accounting and financial reporting principles. a Reporting Enttyt The City of Newport Beach:.was incorporated on September 1, 1906, The,current City' y.Cbarter was: adopted th 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 signnccance of its operationat 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.(s 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 componenYunit's governing body is substantially the same as the City's or the 6 ponent;unit provides services almost entirely to the City. Blended Component Urnt " 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 0 39 of the City.� Governiml resources economic econo m4ic L W. the gov er revenues financial ve not been allocated as indirect exp( to the various functions nt-wide financial statements are presented using the economic measurement focus and the accrual basis of:accoqrifing. Under the resources measurement focus, all (both current. ,'and long-term) resources and obligations of the reporting goverqtrent are reported in i.ment-wide financial statements. Basis of.acc6bhtfhg refers to when and expenses are recognized in the .accounts 'and reported in the statements. Under.. the accrual: basis,'..of accounting, revenues, expenses, gains, losses, I 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. 40 CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 Corporation's financial data and transactions are included in the debt service 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 1debt financing activities. b. Basis of Accounting and Measurement Focus ■ The basic financial statements of the City are composed of thd4i5flowing: Govern ment-wide financial statements Fund financial statements Notes to the financial'.statements well_:ds�: a I reporting is based.upon all GASB pronouncements, as :th FASB Statements and Interpretations, APB Opinions, anct:Accouriting Research Bulletins that were issued on or after November 30, 1989 that 00 not conflict with or contradict GASB prdnQuncements: . . ........ ;: Government -wide Financial Statements Government-wide financial statements display information about the-,reporting: government as a whole; - except for its fiduciary activities. These include separate columns, for :the governmeh! tdl and business-type activities of the primary government (including its:blencled . compdhont units), .as well as its: discretely- presented I financial' statements. The City of Newport Beach z has I �...no discretely presented component units. I Eliminations ,ba I ve b6en:7mad,e in. the Statement of Activities so4t h at.certain all&atdid expenses are recorded only once (by the function to Which they were allocated). However, general government of the City.� Governiml resources economic econo m4ic L W. the gov er revenues financial ve not been allocated as indirect exp( to the various functions nt-wide financial statements are presented using the economic measurement focus and the accrual basis of:accoqrifing. Under the resources measurement focus, all (both current. ,'and long-term) resources and obligations of the reporting goverqtrent are reported in i.ment-wide financial statements. Basis of.acc6bhtfhg refers to when and expenses are recognized in the .accounts 'and reported in the statements. Under.. the accrual: basis,'..of accounting, revenues, expenses, gains, losses, I 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. 40 0 0 41 CITY OF NEWPORT BEACH ■ Notes to Basic Financial Statements June 30, 2002 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 Iong-!e1rm::1inddbf56dness of the eepb irid:':government are reported as a reduction of the related 6 6d Ii b ility, rather than Fund Financial Statements The underlying _accounting .system of the City is organized and roperated on the basis of separateJunds; each of which is considered to be .a. separate accounting entity. The operations of fund are accounted for with a separate set:of self- balancing accounts ithat ,comprise its assets, liabifities,jund equity, revenues and expenditures or expenses, as appropriate. Governmental resources.:. are allocated 10 �6mcl accounted for in inclividual-funds based upon: the. purposes:,for u ed, o ■ which... they "are to be spent and the means by Which spending activities are .,.controlled-" Fund financial -.statements for the governmen s governmental.: =cl ■ proprietary,,: and ;fiduciary funds are after the government wide:: 21 f nan cmai sta tements. These statements cisp lay information about major funds'::'* individually a nd non -major .. funds n ifib:. aggreg: ate for governmental and No.ont�_ enterprise funds.:Ficuciay statements clUde financial information for fiduciay fun' cls.Fiduciary funds of the City primarily represent assets held by the City in 1:6: ■ cu I sto :clialbab�acitv for other individuals or organizations Governmental Funds In the'fund financial statements, �governmentall funds are presented using � the modified-.arccrual basis of accounting. Their revenues are recognized whei n,they become measurable and available as net current assets. Measurable means that the amounts can..,be estimated, or otlherwise� determined. Available means s 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. Revenue "recognition is subject to the measurability and avdi 146 ifity criteria for the govemm.40tal funds in the fund financial statements. Exchange transactions are recognized as P&ohues in, the period in which they :are earned (i.e., the related goods or services are'v6vided). Locall yjmposed derived tax revenues are recognized as revenues: in the period in which the underlying exchange ■ 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- 0 41 CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 exchange transactions are recognized as revenues when all applicable eligibility requirements have been met. . In the fund financial statements, governr current financial tesourcess`:. measurement assets and current liabilities are generally "available 'spendable resources." Govemme present increases (revenues and other fin aexpenditures. and other financing uses) in net ,are said to present a summary of sources a resources" during' a period.' Non- current portions .of long -term receivables reported•on..their balance sheets in spite of`thr J funds are presented using the rs This means that only current ded orrtheir balance sheets. The considered to be a measure of ................ r al .fund operating statements ancing ssources)'?;and decreases current assets. Accordingly, they nd uses of "available spendable due to governmental funds are Special reporting treatments are used to indicate however, that tf be considered "available. spendable resources," since they do not assets. Recognition. rent receivables is de portions of other k accounts. Revenue; j from non- exchange nents of GASB Statei until. 33. Because of their spending measu.rei governmental fund types excludes liabilities. Since they do not affect net ntal fund. type revenue r [hey become current rec, :eivables' are :,offset by gains, losses, assets, are:: recognized in accorc with the ■ ■ r a:.i ?are not recognized as governmental fund type expenditures or fund liabilities Amounts expended to acquire capital assets are record ed`as expenditures inthe 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 indebtednes orted as fund ed in a fund, rces, and then 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 42 ■ 0 ■ 43 CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 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: bperatiqgl,?revenues, such as charges for services, result from exchange transactions associated with principal ; Acti vity,of the fund. Exchange transactions are those in Which each party,. receives and gives up essentially equity9106s. Nontoperating. revenues, such as subsidie§,:taxe% and investment earntrig - s result fror . dnon-6ichange transactions or ancillary activities. Amounts paidto acquire. capital assets are capitalized as assets ih -the*lirpprietary fund ■ :Jinancial statements, ratherthah reported as,expenditUre. Proceeds of long-term debt are recorded as;;oliability in the proprietary fund financial statements; : rather than as other, financing source. Amounts paid to reduce long -term indebtedness proprietary reported as a reduction of the related liability; rather ryl.0 than as expenditure. Agency f unds are custodial in nature (assets : :equal liabilities), and do. not inVbIV6. the recording of City revenues and expenses - - c Fund Classifications ...... .. . ... The City ti tyllwl I izes the f ollowing broad cateaories. Of funds: ■ Maior. Finds Major funds are those funds which are either material or of particular impoirtance. 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 Tide and Submerged Land The Tide: aftd.,,S,u,b.m e rged Land Fund is used. to account for. all revenues and expenditures 461ated, to the. operation ofAhe 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. ■ 43 CITY OF NEWPORT BEACH Notes to Basic Financial Statements ■ June 30, 2002 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 :.ane'nte'rprise--.fUnd'Ilused to : account for the activities associai -with: the transmission and disffibUWrT._0'f!potable water by the City to its:users. Wastewater Fund The Wastewater Fund is an enterprise fund used � te !kcouhf.4_44ilhe activities providing sewer City it associated with providing services by the 'y Q St. users ■ Internal Service fiui - rid S -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 t4citpy 's rolling stock fleet. City departments are the primary users of these services and ■ are cha rged a fee on a cost reimbursement basi S*. Agency"Funds - A fiduciary fund used '.to account"for assets held by the City an agent for property owners with special..;assessments, local bUs nessesIni. t individuals business,, improvements districts, and .:other Who have' made..; miscellaneous special deposit$`: with the City d.:: Cash and Investments For purposes of the Statement of Cash Flows, cash and cash equivalents, are defined to b e cash on h. and, demand deposits :,and rhighly liquid investments With of three months or less fro, the date. of purchase. For financial a maturity rn are shown 'cash statement presentation purposes, cash and cash ..equivalents as and investments and restricted cash and investments in the proprietary. funds. Investments .Investments are generally stated at fair value . . . ■ nve a t m e nt* yields. The net Cash And,. investments are pooled to maximize investment" change in fair value and interest earned on the investments is allocated to the respective funds based i.ton each fund's .average -monthly cash and investments ■ balance The City's investment in LAIF is $5,969,227 at June 30, 2002. 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 E 44 ■ CITY OF NEWPORT BEACH . Notes to Basic Financial Statements June 30, 2002 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:dhis state, arei,ra ppointed by the State Treasurer. The . term of each appointment is:.two years, or at the pleasure of the appointing authority. . The City's investment in Los Angeles County Pooled Fund is. $.97,193 at June 30, .2002. This investment. value is based on information ;provided by Los Angeles County 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 Los Angeles County Treasurer's .,Office. ■ r The oversight coinmittee is comprised of the following Los Angeles County Officers: treasurer and tax .collector, chief administrative officer, auditor- controller, chief engineer.and` general manager (County Sanitation District) and ■ the director of.9chool .financial services (Office of Education). . e.. Lease Receivable Lease receivable represents lease payments due onlproperty donated to the City during fiscal year .1993 The lease term on this property runs through fiscal year 2007. ■ f. Intergovernmental Receivables . Intergovernmenta[ receivables; represent grant reimbursement requests, capital project billings, and pending transfers of: taxes and 'fees collected by other government agencies. As of June 30, 2002,; the balance of this account was ■ $16,052,150.; .. - g Inventories ■ Inventories are valued at cost, which approximates market, using the first -in, first- ouf:method. The City follows the consumption method, for'inventory control. The costs of governmental fund type inventories are. recorded as expenditures ■ when consumed ■ h. 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 . 45 46 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements ■ June 30, 2002 ■ interest on the unpaid balance of the loan, which shall be due on or before September 15th of each fiscal year. . ............... The interest rate_ on the ;loan shall be the:: average rate of return on all City investments during the fiscaf year: The City.Manater may, but is not required to . make payments to reduce the, principal amoun t +�f the, loan at any time and : payment s to reduce the" principal shall ,not be subject to::. any pre - payment penalty. The entire unpaid balance of the loan is due Mareh 26, 2012, or at the . City Manager's; separation from City employment. ■ L 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 irecords are available and at an estimated original =cast where no:historical, records exisVEquipment purchased in excess of; $5;000 is capitalized if it.has an expected useful,life of three years or more : . Building, infrastructure, and improvementsare capitalized if cost is in excess of; Nwin $301000. The cost of normal maintenance and repairs that do not add to the` Lon ' value of the asset's lives are not capitalized: Major capital outlay for capital assets and:: improvements are capitalized as; projects are constructed: z,% For debt financed capital .. assets .interest incurred . during the construction phase is reflected in ahe 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 fives used for depreciation purposes for each fixed asset class as follows. . Structures 30 -75 years .,.. = . Equipment 3 -15 years Infrastructure "` '''20 -75 years ■ j. 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 . 46 0 'u ■ . 47 CITY OF NEWPORT BEACH ■ Notes to Basic Financial Statements June 30, 2002 ■ 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:develop ment ; on claims already reported. This is based upon historical actual results that have.estabiished a reliable pattern supplemented by specific information about current matters. Small dollar claims . and judgments are recorded as expenditures when paid . k 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:•:pre accrued as revenue:, :Property taxes are assessed and . collected each.fiscal year according to the following property tax calendar: . Eien date March t.. Levy date ;, July 1 Due dates November 1 — 1st installment ■ March 1, -2nd installment Collection dates December 10 — 1 s installment April 10 -`2nd installment ■ I. Compensated Absences . it is the City's policy to permit employees. to accumulate earned bill unused vacation, andAimited 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. ■ . 47 M CITY OF NEWPORT BEACH Notes to Basic Financial Statements . June 30, 2002 M. Deferred Revenue ■ Deferred revenues are those where asset recognition has been met, but the ...._ .............. revenue recognition criteriahave nofbeen..met.. (2) Reconciliation of. Government wide and Fund Financial Statements • a. Explanation of Differences Between Governmentdl Funds 'Balance Sheet_ and the Statement of Net Assets • The "total fund balartces" of the :City's governmental funds $66,724,257: differs from, "net assets" of governmental activities $1,471;463,555 reported in the statement of. net.' assets. ?his difference primarily results from the long -term ■ economic focus' of. the : statement of net assets versus the :.current financial resources focus of the governmental fund balance. sheets. . Capital. Related -Items ■ When capital assets roe lant and equipment) that are to be used in. p (P. P rty, p governmental activities are purchased or constructed, the cost of those assets:. are reported as expenditures in governmenfal funds: However; the statement of . net assets includes those capital' .assets among the assets of the City a$:,; whole. • Cost of capital assets 1,$1 ,499,383,056 Accumulated depreciation (87,235,9261 Total capital assets, net' $1;412:147.130 *Amount excludes net capital assets of.,$7,266,270 from . Internal Service funds. Long -term Debt Transactions .. Iterrh ■ Lon; liabilities applicable to the City's governmental activities are not due and payable in Ahe current period and accordingly, ate `not reported as fund liabilities. All liabilities (both current and long -term) are' reported in the statement . of net assets. Balances at J0te,.30, 2002 were. Certificates of participation $ 6,365,000 . Note payable 2,219,660 Pre - annexation agreement 18,000,000 . Total $26,584,660 F l 48 0 ■ CITY OF NEWPORT.BEACH Notes to Basic Financial Statements June 30, 2002 ■ Accrued Interest ■ Accrued liabilities in the statement of net assets differ from the amount reported in governmental funds due'to accrued intetest on outstanding debt payable (see . note 4). Accrued interest added f • 8 915 Certain Deferred 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 . deferred revenue'in the .governmental funds.. Deferred revenue earned $10.571.300 . Internal Service Funds Internal service fu - nds 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 $6.866.604 . Reclassifications and Eliminations Interfund balances must generally be eliminated in 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 arelw reported only once — inAhe.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. ■ . 49 n Lj CITY OF NEWPORT BEACH Notes to Basic Financial Statements . June 30, 2002 (2) Explanation of Differences between Governmental Funds (a) Balance Sheet and the Statement of Net Assets, (Continued) . " Total ; Capital Long -term Governmental-',,, Related Debt Interest Assets.:. Funds Ikems Transactions Payable ■ Cash arld in+estments $- 68,638,858 $ -` ' Fiscal as: -- $ - $ - r - Accounts " - 4,576,641 Notes - - - -- 50,000 -- - -Lease 376,167 - -- Interest -. - 1,300,437 - ;' IntergoVemmental recenebles 16,052,150 - Restricted cash th fiscal agent :1,431,221 - :Intertund balances. - - - .. -. Irnestment in joint enture - - - `: Due from other funds 696,248 ...; Prepaid items,. 246,659 -- :- Inventory 188,562 - - -- Other t : 197 941. . ,;:Capital asseis,nel - ! 1,412,147,130 .......... Total assets S. 33.754,884 Liabilities and Fund Balances/ Net Assets Liabilities: Accounts payable $ 5,061,162 , $ Acc rued payroll. 3,481,988 Accrued interest payable - - 108;915 -- Deposits payable 5,796,528. _ - - Capital leases payable Claims payable - - - Workers' compersation payable - . Compensated absences payable GOP payable - current - '!i Note. payable - current,: - Deferred - revenue 11,994,701' Due to-other funds - 696,248 - - Long -term liabilities - - - 26,584,665 - Total liabilities 27,030,627 - 26,584,660 108,915 . Fund balances / net assets 66,724,257 1,412;147,130- (26,584,660) (108,915) ■ Total liabilities and fund balances / net assets $ 93,754,884 $ 1,412,147,130 $ 50 . r ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 Certain Internal Reclassifications Deferred Service and Statement of ■ Revenue Funds `Eliminattons Net Assets ■ ■ $ $ 18,768,534' $ - $ 87;407;392 -- 17,945 - - 4,594,5861- - 3,569,403 -- - .50,000 ' 5,796,528 .... '376,167 393,995, 1,000,000... 1,300,437 - -- .....1.850.000... 16,052,150 1400000 1,431,221 .... (272,743) (272,743) _ .2,120,582 -i: 2,120,582 - 40,550,330 (696,248) _ (10,571,300) .296,885 - ':.:`. - 249,259 61,942294 - 197;941 '7,266,270' '.,:.. -. 1,419,413,400. ... 6,866,604: 7,647,839 ...... .. g. .. Q 9A AS9 9'id It Y 15Y FQ1 ... '.4 I 5,'i'1 Any A3Q ... 390,200 $ $ 5,451,362 -- �- .87,415 - 3,569,403 -- - 108,915.:.... ' 5,796,528 .... - 393,995° 393,995, 1,000,000... 1,000;000 1,850,000... .....1.850.000... - 1400 ;000 1400000 . 51 - - 255,000 - 255,000 - - . ' - 143,350 143,350 (10,571,300} .:;:_ -• `.. ;- -• 1,423,401 (696,248) U14,164,020 :'. (398,350) - 40,550,330 (10,571,300) 19,485630 (696,248) 61,942294 . 10,571,300 6,866,604: 7,647,839 1;471;463,555 -- • $ - $ 26,352,234 $ 1,151,591 $ 1,533,405,839 . 51 7-7 Lj CITY OF NEWPORT BEACH Notes to Basic Financial Statements . June 30, 2002 ■ b. Explanation of Differences between Enterprise Funds and Government - wide Statement of Net Assets . Total net assets of the City's EnterpriseFunds of $113,321,071 differs 11 from net assets of the business -type activities of $113,593,814 reported in . the government =wide statement of net assets The difference, $272,743 results from the. consolidation of internal service fund activities related to ■ the enterprise funds. . (2) Reconciliation of government -wide and find financial statements (b) Explanation of Differen6gbet:W h Enterprise Funds and meet of sets ■ 2;593,142 ,048,152 ■ ,43T,659 222,743 ■ 52 1;738,671 168,806 . 1,499,719 9,765,000 • 13,172,196 . 98,420,314 14,900,757 272,743 15,173,500 $ 113,321,071 $ 272,743 $ 113,593,814 . ■ Total `" - - Ihtemals ' Govern me t Enterprise .- - service.::. State .,;., Assets..:" - 'Funds Funds NetAs cashand investments .` -'" $ .22,593,142: ` $ $ „ 2 ..: Receivables:.. Accounts :'4,048152 4 Restricted cash with fiscal. agent bue:from other funds 272,743 capital assets, net ':98,420,314 98 meet of sets ■ 2;593,142 ,048,152 ■ ,43T,659 222,743 ■ 52 1;738,671 168,806 . 1,499,719 9,765,000 • 13,172,196 . 98,420,314 14,900,757 272,743 15,173,500 $ 113,321,071 $ 272,743 $ 113,593,814 . ■ wide 222,743 ■ 52 1;738,671 168,806 . 1,499,719 9,765,000 • 13,172,196 . 98,420,314 14,900,757 272,743 15,173,500 $ 113,321,071 $ 272,743 $ 113,593,814 . ■ 13,172,196 . 98,420,314 14,900,757 272,743 15,173,500 $ 113,321,071 $ 272,743 $ 113,593,814 . ■ ■ ■ ■ ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 C. Explanation of Differences between Governmental Fund Operating Statements and the Statement of Activities Capital Related hems $9,197,974 differs ties $868,412,859 ;primarily from the ermus the current ct;ofthe difference When capital assets "that are to be used in governmental activities are purchased or constructed, ..the -resources expended for those assets are reported _ -as expenditares:in:governmental funds. However, in the statement of activities,:the cost oftthose assets is.allocated over their estimated. useful lives and reported as; depreciation expense.,In governmental funds, significant maintenance projects are reclassified as functional expenses m ahe statement of net assets, Also contributed capital is not recorded, in governmental, funds; therefore it is added. for the statement of net assets 53 54 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements . June 30, 2002 ■ 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.. For the City as 6-:;Whole, however, the principal . payments reduce.4he liabilities in the statement of net assets and do not result in an expense in the statement of activities. Certificates of Participation $245,000 . Note payable 131 270 Capital Lease 914,829 =21 099 ;, -Total prmcpal payments made • Accrued Interest: Beginning fund balance in :the statement.of activities has been restated to reflect; . the retroactive recording of accrued interest.on 0 U, tstanding debt payablez< Net change in accrued interest.. 5 40 Certain Deferred 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 deferred revenue in the governmental funds. . Net change in deferred revenue $9,716,841 ■ ■ 54 0 a 55 ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements ■ June 30, 2002 ■ (2) Reconciliation of Government-wide and Fund Financial Statements (c) Explanation of Differences between Governmental Fund Operating Statements and the Statement of Activities, (Continued) tit T Capital Long -term Governmental . ..... -Related Debt Accrued Funds .... ..... .. . Transactions Interest Revenues: q q Taxes and assessments $ 65,878,471 $ $ tit Intergovernmental' 26,227,740 :it:. Licenses and permits - Charges for services 10,238,569 "Fines and forfeitures' 3,204,164, Investment income 2,759,557 Net increase in fair*value -of investments - 1,268,972 r.::Property income 10,130,165 Share of joint veiitur* a net income: Donations 746;774 Contributed capital 836,206,102 Other 1,782696 Total revenues 125,867;066 -836,206.102 Expenditures: Current: General government 12,292,008 567,722 Public safety 47,841,176 1,054,215 Public works 19,418 j&7 11,944,255 Community development 4,586,192 22,906 Community services 9,416,041 1,766,051 Capital outlay 38,613,906 (20,613,906) Debt service: Principal retirement'; 1,291,099, Interest and fiscal charges., 466,974 (5,740) Total expenses 133,1127,463, (5,256;767) (Q91,099),:] (5,740) Other financing sources (uses): Transiersin 10,927,460 Transfers out (11,669,089) Proceeds from long -term debt 18,000,000 Total other financing sources (uses) 17,268,371 Nkchange in.fund balances/ 9,197,974 841;464,859 1,291,099 5,740 Fund batarces net assets beginning of year, as restated 57,526,283 (27,875,759) (114,655) Fund balances I net assels - end of year $ 724;257 66 ::tA,412,147.130 E_29,584,660 $ (108,915) 0 0 M 56 M ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 Certain Internal , -Reclassifications Deterred service arid. ". Statementof Revenue Fund . Eliminations Activities 9,716,841 f "..1,089,890 1,847,839 974,727,738 12;792,859 ;� „(1,726,473)< 741,629 .. (18,000,000) 477 §8,918: (1,041;806) 9,716;841 4;888,507 1,847,839 - 868,412,859 30,320,516 (137,700),; 4,471,398 .,,:.. 40;008) (1: ■ 11,044,686 .: :.:..... (18.000,000)'- ' :.....: 55,868 '.. 517,102.... .. :.. ` (3,056,988) (18;000,000) 106;314;879 - <- - -- `873;049 (11,800,509) - %(131,420) 11,800,509_. - - - - - (:18,000,000) r 1 C 0 57 741,629 .. (18,000,000) 9,716;841 4;888,507 1,847,839 - 868,412,859 • 854,459 -- 1, 978,097 603,050;696 ■ $ 10,571300 $ 6,866,664 ; $ '.1,847,839. ,,.: $ 1,471,463,555 r 1 C 0 57 J CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 d. Explanation of Differences between Enterprise Funds Operating Statement and the Statement of Activities . The change in net asaets for the City's enterprise funds $3,287,516 differs from the change in net assets.af the business -type activities $3,560,259 reported in the government -wide statement of activities. The difference $272,743 results from the.consolidation of internal service fund activities related to the enterprise funds. ■ j2? Reconciliation of: -. .Government -wide and Fund Financial Statement (d} `Explanation of Differences between Enterprise Funds, Operating Statement and the.Stetement of Activities (Continued) _ Total -- .:.Internal Busrn"s - type activities - - Enterprise :Service stafament of . Funds -;. - Fund - ;Activities Operating revenues: Charges for sates and services: - - - Water sales $ i 6 620 930$ $ 16,620,930 Sewerservice and connection fees 2,923,583 - .2;923,583 'Other :67,015 •. -- •.. 67,015 Total operating revenues 19,811528 .: 19;611,528 ■ .:..,:. Operating expenses: " ' .: i.. Purchase of Water ;:4,936,448:. = , '.14,936,448 —: salaries and wa ges 3,650,168 9 - 3,850,168 Depreciation '- 1,737,437 1,737,437 . Professional Services 1,826,595 :: °.- �'�: - 1,826,595 ' Maintenance and supplies.' '- 944,567' ' -:�. (272,743} : l,6711,824 t :... :: System maintenance ! 1,822311 - 1,822,311 Other + -' 2,284991 - :2.284,991 . . ' Total operating expenses 17,202,51 T ;,.� (272,743) . -16,929,774 Operating income 2,409,011 272,743 2.681,754 ■ Nonoperating revenues (expenses): Investment income 888779 Net increase in fair value of. investments 428,199 - - 888,779 - 428,199 ■ Property income - .. 27.100:1" 27,100 Gain onsale of fixed: assets - Interest expense - '(465,573) : -.._ - - (465,573) . -. Total other financing sources 878,505 - (438,473) Income before transfers:' - ,3,287,516 272 743 - 2,243,281 . Transtersm :- - - - Transfers out - - - Change in net assets .3,287 516 272,743 3,560,259 . Net assets, beginning of year - 65,320,284 - 65,320,284 Restatement 44,713,271 44,713,271 Net assets, beginning of year, as restated 110,033,555 - 110,033,555 . Net assets, end of year $ 113,321,071 $ 272,743 $ 113,593,814 . 71 58 . 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 (3) Budgetary Control and Compliance . The City adheres to the following general procedures in establishing the budgetary data reflected in the financial statements: • During A.pnl, the City Manager submits to the 'City Councii,a proposed operating budget for the' fiscal year commencing the following July i. The. operating budget includes:: proposed expenditures and the means ..of financing _them. Public hearings are conducted at City Council meetings to dbtain 6.ztp 3r 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 ibudgets 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 . Fund 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 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,Gouncii. At fiscal year =end, budget appropnabons ;lapse: Budget appropriations for incomplete capital projects are re- budgeted in 4he 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 i 11.1 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 as revisions to the original adopted budget. 0 59 0 11 0 60 . 0 . 61 0 62 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements . June 30, 2002 • County Investment Pools (Los Angeles) • Money Market Funds /Mutual Funds . • Medium Term Corporate Bonds/Notes • Asset- backed securities • Municipal Bonds' . The City investment policy contains several additional regwrements including the following.- investment limitations {as a percentage of the total portfolio): 10% for . certificates df deposit;. 30 %. for negotiable certificates of deposit, 30..% for bankers acceptances, 250% for`commercial paper, T0% for reverse repurchase agreements, 5% for the Los Angeles County investment; pool, 30 %for. _medium term notes; 10% for . asset - backed securities, 15 %, for municipal bonds, and 20% for money market; funds. Fora short period of tiros during - e.year, money market fund investments of the. City . exceeded 20% until the ;City could determine suitable.invesfinents fora large deposit received in December: ■ Deposits Deposits .consist of cash and demand deposits accounts. _Deposits in are° ,.banks maintained in. financial institutions that provide Federal Depository Insurance : Corporation protection on the bank balances. The Califorrna,Government Code ;requires . California banks and, savings and loan associations to secure a city' deposits bk pledging government securities as collateral. The market value of pledged securities must equal at least 110% of a city's deposits. Califorrii !aw also' allows. financial; . institutions torsecure city deposits by pledging first:trust deed:mortgage notes having a value of, 150% of a city's total deposits. The City may waive collateral requirements for . deposits that are fully:insured up to $100,000 by federal depository insurance. The City's deposits at year- end, are categorized below to give an indication of the level . of credit risk assumed by the City in three :categories as,follows: Cateaory 1 Insured or collateralized with securities held by the City or its agent . in the City's name= Cateaory 2 Collateralized with: securities held by the pledging financial institution's trust department or agent in the City's name. Category 3 0ricollateralized. . 0 62 0 . 63 . CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 As of June 30, 2002, the City's deposit balances were as follows: • Category Bank Carrying 3 Balance Amount . Petty Cash $ $ $ $ $ 8,232 Deposits: ■ Demand deposits 3,0,01000:::.z, 3,675,055 3,975,055 (483,345) Total deposits: $:.300,000 $ 3,675,055 $ '' . '' -. $ '3;975, 055 $ (475,113) . Investments The investments that are represented by specific identifiable investment securities are . classified as to credR iisk by three categories as follows: . Category 1 : Insured, registered, or securities held'by the City or its agent m the City's name. . . Category 2 ,! Uninsured and unregistered; : with securities.- held by counterparty's trust department:or agent in the City's,name ;;, . Category 3 Uninsured and unregistered with securities held by the counterparty. or by its ztrust department or agent but not in the City's name. . 63 CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 The City's investments at June 30, 2002, are summarized below for the credit risk and carrying amounts: Federal National Mortga9e' . Association 16,808,344: Other Government Securities 4,409,240. Money market funds' Medium term notes 18,879,016 Carrying Amount $ 5,495,449 26,185,833 1,747,821 22,190,026 16,808,344 16 . 16 64 ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 (5) Capital Assets Land' $ .3861573,555 $ 815,320,378 $ $ 1,201,893,933 Structures 28 149,594 `` 1,364,096 29,513,690 Equipment 18',153,510 2,934,206. (979,749)': 20,107,967 Infrastructure 213,724,585 44,615,246 (2,351,607) 255,988,224 Work in progress' 5,808,997 3,707,782 9,516,779 652,41.0,241 867,941,708 (3,331 356) 1,517,020,593 :.'.Less accumulated depreciation:for: . Structures (7,626,405) (579;839) (8;206,244) Equipment (10,792,093) (1,968,464) _ 963604, (11;796,953) Infrastructure (74,999,706) (4 955;897) 2,351 607 (77,803,996) (93,418,204) (7,504,2Q0) 3,315211:.`: (97,607,193) Net ° $ 558,992,037 $ 860,437 508` $ ;(16,145) $ 1,419,413,400 N4d.epreciable assets 0 65 7 66 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements . June 30, 2002 Business -type Activities: Beginning Ending . Balance, as 6/30/2002 Restated Additions Deletions Balance Land' $ .,. 2,016,450 $ _ $,_ - $ 2,016,450 Structures 205,793 205,793 Equipment,,,,, 132,246 132,2 46 . Infrastructure 130,732,616 t2j8q,869 (168,932) 132,753,553 Work in progress' - - -, 1 597,682' 1,597,682 . - - - :133,087105 3,787,551 (168,932) s:. 136,705,724 Less accumulated depreciation for:*. Structures (76,160) (5,145) (81,305) Equipment (123,826) (3,122) (126,948) Infrastructure (36,516,919) (7 729,170) 168,932 (38,077 ,157) (36,716,905) (1 737,437) `168,932 438;285,410) Net.:.. $ 96,376;200 $ 2,050,114 $ $.. 98;420,314 Not depreciable assets . Depreciation expense was charged in;the following functions In the Statement. of Activities: ■ Governmental Business -type ' Activities Activties General Government $ 151,994 $ Public Safety 928,680 . Public Works 5,721,519 Community Development 55,051 . Community Service "•• 646,956 Water 1,232,633 Wastewater 5(14;804 . $ 7,504,200 $1,737,437 Beginning balance has been restated to include capital assets and related accumulated depreciation not recorded in previous years, as a result of GASB Statement No. 34. 66 0 0 . CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 (6) Long -Term Debt • Chances in Lono -Term Liabilities ■ Long -term liability for the year'ended June A 2002, was as follows: .. ... Amounts . Beginning - - - - Ending Due Within Balance Additions Deletions - 'Balance One Year Governmental activities: :. . Certificates of participation payable $...6,610,000 $ - $ (245,000) $ 6,365,000. $ 255,000 Nate payable- "::. 2,350,930 - -. _ (131 -,270) 2,219,660. -- 143,350 . Pre - annexation agreement ;: - 18,000,000 " -. - 18000,000' - 1,200,000 'Capital leasas`payable ,: '1,619,173 910,848 (1- ,579,094) -- 1150,927._ 393,995 Workers'compensationspayable. 6,198;814 2,048,490— (1,816,304) , 6,431,000 :: 1,850,000 -- Claims and ludgementspayable, 4,016,336 1,225,402 -:- :(1,971,738) - 3,270,000 - 1;000,000 -� Compensated absences � 7;596,457 .1,937443 (1- ,377,812) - 8,156,o88 1,400,000 TotargovemT9n[af activities 28,591,710, 24,122,183' (7;121,218) - -- 45,592,675 6,242,345 -.4%; Business -type activities ■ Water Revenue Bonds payable 12,095,000 - (1,145,000) 10 950,000 118$000 Total - $. 40,686,710 $ 24 1221183 $ (8,266!218) $ 56,542,675 $ 7,427,345 :. Intemal"servlce funds predominantly serve the governmental funds. Accordingly;. long -. . term liabilitiddiltorithern 'am included as part of the above totals for governmental activities. `. Also, liabilities; fo "r' workers' compensation, claims :and judgments, and compensated absences are typically liquidated from the Internal Service funds th. rough resources ■ collectedfrom individual funds. 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 enfered 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 . 67 CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 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 $255,000 to $535,000 from June 1, 2003 through June 1, 2019. Principal payments are payable annually on June 1 of each year At. June 3Q,,:2002, the City has a required cash reserve balance for debt service of $567,005, Which is recorded as a restricted asset and reservation 'of fund balance in the Debt Seruice=_:_Fund. The Certificates outstanding at June 30, 2002,:amounted to $6,365,000 Year Ending June 30 Pnncipalt Interest Total 2003 $ 255,000 :$ 308,140 $` 563,140 2004 265,600 297,685 562,685 2005 275;000 286,688 561;688 2006 290,000 275,000 565,000 2007 300,000 262,530 562;530 2008 -2012` 1,730,000 1,093;260 2,823,260 2013 201'7 2,205,000 616;175 2 821 17& zL 2018 -2019 1,045,000 81370 11263703 $ 6,365,000 $,:, 3,220,848 $., 9,585,848„ • Note Payable Note payable consists of a note to''the California Department of, Boating '+ Waterways in 1987" for a loan'in the amount of $3,300;01}0 The note is payab4 thirty annual principal and interest installments of. $237,062 at 4.5% rate of intel beginning August 1, 1987. The outstanding balance at June 30, 2002, amountec $2,219,660. Annual Amortization Requirements for Note Payable Year Ending June 30.- Principal Interest Total 2003 '" $ ' 137,177 $ 99;885 $ 237,592 2004 143,350 93,712 237,062 2005 149,801„ 87,261 -: 237,062 2006 156,542 $0,520: 237,062 2007 163,587 73,475 237,062 2008 -2012 935,207 250,103 1,185,310 2013 -2016 533,995 45,161 579,156 $ 2,219,659 $ 730,117 $ 2,949,776 M to ■ ■ ■ . CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 ■ ■ ■ ■ • Newport Coast Pre - Annexation Agreement Payable In conjunction with the January f;; 2( entered into an agreement payable witl $18,000,000 to reduce' = property owner street improvements. The principal -only years beginning in. the. 2003 fiscah:ye of Newport Coast, the City )ast Committee for a total of J to= finance certain road and gable over a period of fifteen ailments of $1;200,000. The payable .annually, .as essee for financing the acquisition of a heavy duty s. maintenance vehicles and fire trucks. The term of :each lease is five years•and ea payable annually: The interest rate for each lease: is between 3.79 %. and 6.98 %. lease agreements :qualify as capital :leases for; accounting purposes as the a pargam.pur [heir future m ig the current Dhows 7] )3: 35: , 35 44 Less: amount representing interest (103,017) Present value of future minimum lease payments $ 1,150,927 M 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements ■ June 30, 2002 • Claims and Judgments The City retains the risk of loss for general liability and workers' compensation claims as described in note (6) Theseamounts 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; modifisf -for current trends and is information; the ultimate amount of losses incurred through June 30, 2002, is dependent "on :future developments, based "upon, information from the_City's attorneys, , the CiN,,s claims administrators and others involved with'the administration of the programs, City management believes the accrual is adequate to cover such losses. Theestimated liability at June 30, ""2002, for general liability amounted to "$3,270,000 . and for workers compensation was $6,431,000. • 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 $Q", 2002, is $8,45.6,088. i_ its i zst st .. Business -type activities ■ • 'Water Revenue Bonds In Fiscal Year 1,998 -99, the City issued $14,225; ©00 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 undertakish 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, 2002, the City has a required cash reserve balance of $1,431,659. which is recorded as a restricted asset. Ten annual principal::'payments are payable on August 1, and semiannual interest payments are payable on February 1 and August 1. At June 30, 2002, the outstanding, principal„ balance was $10,950,000, "and accrued interest payable was $232,786. 0 ■ 70 ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 Annual Amortization Requirements for Water Revenue Bonds Year Ending June 30 Principal Interest •: Total 2003 $ . 1,185,000 $'' 441,873 $ , 1,626,873 2004 1;230,000 392,958 1;622,958 2005 1,280000 341,183 1,621,183 . 200fi . 1,330,000 287;074 ,. 1,617,074.: 2007 = = 4,385,000 229,331 1,614,33111' . 2008 -2010 4,540,000 309,040 4,849,040 $ 10,950,000'. $ 2,001,459 $ 12,951,459 (7) 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 ah available funds of the City. Neither, tare faith and credit nor.the taxing, power of the'City is pledged to the.paymentof the ■ bonds, and therefore the bonded indebtedness is riot shown in the financial statements df 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, 2002 . for -each distnct under the Bond Acts of 1911 and 1915 and other special assessments, are as follows: '.- . Bonds Outstanding Assessment District Original Issue June 30, 2002.:.. . No. 57 Corona Highlands $9381598 $125,147 "_ No. 58 Cannery. Village 107,746. 5,000:, No. 59 McFadden Square 530,609 235,000 . No. 60 Bay Avenue 236,533 110,000 No 61 East Bay Front 127,299 55,000 No. 62 Hazel Drive 335,210 140,000 . No. 63 'Newport Island 536,531 260,000 No. 64 Channel Road .180,794 108,000 No. 65 Rocky P, int 53,125 24,000 . No. 66 East Newport 171,9.1`1 90,000 No. 67 CDM Blk -133 64';431 45,000 No. 71 Balboa Boulevard 796,942 620,000 No. 72 Balboa Coves 192,908 135,000 No. 74 Island Avenue 222,629 222,629 No. 78 Little Balboa Island 1,280,000 1,211,804 ■ No. 79 Beacon Bay 1,215,134 1,215,134 No. 82 Corona del Mar 274,967 274,967 ■ No. 95 -1 CIOSA Refunding Series A 15,495,000 15,495,000 71 7- CITY OF NEWPORT BEACH Notes to Basic Financial Statements . June 30, 2002 ■ 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 ari_ required to contribute 7% (9% for safety a mployees} of their annual 1. covered salar1. The City:" makes the contributions required of Cit t employees on their ■ behalf._antl,:for their._account.; The City is required to= :contribute at 'an actuarially rm deteined rate the current rate Is 0 (i0% for non = safety employees,anCf 5.153% for safety; Employees of annual covered payroll The contribution requirements;: of plan m- ers_and the City are establishbd,and may be amended by :PERS. Annual Pension Cost For 2002, the City s annual pension cost of $5,019,876 for PERS was equal to the City's require actual contributions. A summary of principle assumptions and methods . used to determine: the annual required contribution. is`shown below Miscellaneous Plan Safety Plan Valuation Data; June 30, 2001 June 30 20Q1 . Aetuanal CciSP VMethod Entry-Age Actuarial Cost Entry Age Actuarial Cost Method (Method: Amortization Method Level Percentof Payroll Level Pe..rcent of Payroll . Average Remaining 32 Years as of the Valuation 14 Years as of the Valuation Penrad Date'; Date Asset Valuation Method 3 Year Smoothed Market 3 Year Smoothed Market Actuarial Assumptions ■ Investment Rate of 8.25% (net of :Administrative 8.25% (net of administrative Return expenses) expenses) Prai d, Salary .; 3.75% to 14.20 % depending 4.27% to 11.59% depending Increases on age, - service, and type of `- on age, service, and type of employment employment Inflation Rate 350% 3.50% Payroll Growth 3:75 °I° 3.75% Post Retirement Benefit 2.00% per year cost -of- living 2.00% per year cost -of- living Increases adjustments adjustments 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 74 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ r r ■ i ■ ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 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 :calbulated, over a 30 -year amortization period. Fiscal Annual Pension Year Cost' (APO) 6/30700 $4,816 ' 6/30/01 $5597 6/30/02 $5;020 Percentage of Net Pension APC Contributed Obligation': $Q $0 SCHEDULE OF FUNDING PROGRESS FOR RERS ($Amount in Thousands) Ent A e Unfunded . Normal Actuarial Liability, Annual' Valuation Accrued'- Value of (Excess Funded Covered UAAL as a Date : r Liability Assets Assets) . Status Payroll % of Payroll (A). (B) (A - B) (B / A) (C) [(A -B) / C] 6/30/1999 Misc. $941287 $125,443 ($31,156) 133:0% $23,718 (131.360 %) Safety 157,265 170,345 13;080 168.3% 18,756 (69.738 %) Total $251,552. $295,788 ($44;236 117.6% $42,474 (104.148 %) 6/30[2000 Misc. $101,385 $137,045 ($35,660) 135.2% $26,052 (136.880 %) Safety _: 178,527 187,793 9,266: 105.2% 21 ;428 (43.242 %) Total $279,912 $324,838 $44,926 116.1% $47,480 (94.621 %) 6/30/2001 Misc. $110,252" ..$141,132. ($30,88Dj:! 128.0% $26,865 (114.945 %) Safety 197,338 195,209 2,129 98.9% 21,816 9.759% Total $307,590 $336,341 $28,751 1 109.3% $48,681 59.060% More current information regarding actuarial data is not yet available from PERS. rm 76 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements ■ June 30, 2002 ■ Plan Description - Defined Contribution Plan ■ As of January 1, 1992, the City entered into a defined contribution plan with Public .......................... . Agency Retirement System (PAtiS) forll of its;;;;part -time employees. In a defined contribution plan, benefits depend solely'.on amounts contributed to the plan plus . investment earnings. All -Ipart -time employees are eligible to jaarticipate 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 cQ01til utions for each employee (and interest earned by the accounts) are fully vested; immediately F rithe year ended Junej30 2002; the City's covered payroll for employeeg, aarticipating In the plan Was $2,422i The City matle employer contributions of $90,848'(W75% of -current-covered Assets the totaled'$1 814 387,at June,30, 2002. ! ' payroll) of an (11) Post- Employment Health Care Benefits As established by a City Council approved Memorandum" of Understanding between the ■ City.::and iitk employees, the City provides post- employment health care: _benefits: Employees who' retire from the City with seven years of service and participate 'in PERS: retirement are eligible to receive health, care ,benefits covering themselves and a' r qualified family:member from the City's insurance carriers;,Health Net :and PERS. The City pays 50% of the total plan premiums while the. active and retired': erployees split' the remaining premium at a rate of 25% each. This program Is funded bn a pay -as you go basis. As of °June 30; 2002, 292 retireesare:enrolled m..Ctyshealih plans out of -the 539 retirees eligible to receive benefits. In July 2000, the City established a program to begin setting' resources aside to fund the "promise to pay° current active: employees: this future benefit. The City contributes $20 per month to this -fund and the active employees each contribute $10 per'month. . Canty butions will continue until the projected liability is satisfactorily funded, approximately 30 years. The City's expenditure for post, employment health care benefits for the past three fiscal years arei s follows: ■ Year Ending Post- employment Health June 30 .Care Expenditure`` 2000 $414,040 2001 $609,034 2002 $706,538 ■ 76 0 . CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 (12) Interfund Receivables and Pavables ■ At June 30, 2001, interfund receivables and payables were as follows: Due From Due to General Fund $ 696,248 $ Nonmajor funds 696,248 ■ Total $ 696,248 $ 696,248 Interfund receivables and payables were created in order to eliminate deficit cash balances in special revenue funds.:? . (13)? Interfund Transfers Interfund transfers at June 30,:2002, consisted of the following: . Transfers In: Tide and Internal Submerged Non -major Service General Fund Land Funds Funds Total . 0 General Fund; $ $9,515,346,:,: $: 606,.105 $ 873,049 $10,994,500 .. Non-major Fu nds 262,637 262,637 n 2 Newport Coast Annexation , _ 411,952 411,952 Internal Service, Funds 125,000 6,420 131,420 Total $ 799,589 $9,515,346.,, $_ 612,525 $ 873,049- '$11,800,509 The City typically uses, transfers' to -fund _ongoing subsidies. The general fund transferred $9,515,346:10 subsidize for the .maintenance and operation of the Tide and Submerged . Land Fund. As required by the pre = annexation, interest accrued in the ,agreement, amount of $411,952,. in the Newport Coast Annexation fund but is due to and was subsequently transferred to the General Fund. A transfer of :$873,049 from General Fund to Internal Service Fund Is for the cost of purchasing three new fire engines. The eventual replacement of these fire'engines will be funded through future Internal Service Fund replacement rates. . (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 ■ 77 78 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements ■ June 30, 2002 specific future use. Fund "designations" also may be established to indicate tentative plans for financial resource utilization in a future period. . 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 matertalsand services on . purchase orders and: contracts that are legally :committed: but not expended by fiscal year end. ■ Reserved for debt service Thin account sets aside a pbrtior� of fund balance to meet the annual debt service requirements. Reserved for perrnanententiawment Thiseccount reflects a permanent endowment established for the. maintenance and d r dredging of;UpperNewport Bay. jt prepaid %toe Reserved for items This account reflects prepaid items which are not available::spendable resources. • Reservedforinvent ories This account reflects the value of inventories purchased by the. City but not yet issued to :. the. operating departments. Designated for special projects There;iare several special projects'for.which funds have been designated for equipment replacement, refurbishment; development, and/ormprovement :These special projects include Recreational Instruction, ,Paramedic Program, Facility Replacement, Neighborhood Enhancement, Park Fees, Off - Street Parking, and the Senior _Citizen Site. Designation for stabilization ■ This account stabilizes fluctuating revenues and expenditures, providing stability by smoothing but ,year -to -year volatility in the City's finances. = ■ Designated for contingencies Contingency designations represent funds for unexpected eniargencies. (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 78 0 7- L-i CITY OF NEWPORT BEACH . Notes to Basic Financial Statements June 30, 2002 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 $45,99.9 000. of special tax bonds that will be repaid by special assessments; the City is not obligated in any manner I to repay the bonds. The Authority paid the City $30 577,712 {89.7 %) to pay for the costs of .acquiring and constructing public facilities including parks and road improvements. At June 30, 2002, the remaining ibond proceeds are held in trust as.re.stricted cash totaling $864,217. 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.s 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, COsfiV Mesa, California. Air Borne Law Enforcement The City is a participant::irra joint venture agreement with the City of Costa Mesa for the . operation of Vvt Air. Borne Law Enforcement program; (ABLE). The oversight Board. consists of theGhiefs of.Police of Costa Mesa and Newport Beach and one appointee. for each Member Agency for a total of four (4) Board Members. The :Cdies have a 50 percent interest; in the venture, with each City having provided an initial investment of two ha icopters and related equipment. The:City of: Newport Beach's cost ot participating in the ABLE program is recorded in the Genefal 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 income from subscribers and other cities amounts to $406,$11'for . fiscal year 2001 -02 and $270,460 for the previous fiscal year. The City's 50% inter' est in the net equity of this joint venture at June 30, 2002, amounts to $2,067,051. Complete separate financial statements can be obtained at the City of Costa Mesa at 77 Fair . Drive, Costa Mesa, California. Central Net .. The City of Newport'Beach is a Member in a joint venture agreement with the Cities of . Huntington Beach and Fountain Valley for the operation of the Central Net Training facility. The oversight board consists of the existing City = Manager of each City and as an alternate, the Fire Chief of each "City "The'City of Newport Beach's costs are based on the number of personnel using the training facilities and is recorded in the General Fund as an expenditure for service. Upon termination of the agreement, the property and assets of the joint venture become the property of the City of Huntington Beach, provided that the funds remaining in the training facility budget are paid to each Member in proportion to their most recent contribution to the budget. Annually, the amounts paid ■ by the City to this joint venture are approximately $153,077. Cash balances held by this ■ 79 80 0 CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 joint venture at June 30, 2002 were immaterial. The City does not have a material measurable equity interest in the joint venture. Complete financial statements can be obtained at the Central Net offices at 18301 Gothard Street, Huntington Beach, California. ol 4 .. . ...... :1::;.]:, - --------- -- -- Metro Cities Fire Authority The City of 4Wport Beach is a� Member of a joint venture I ,agreement , �,w,ith the Cities of Anaheim" ain Valley, Fulle Bea& land Orange for Fountain Garde , n Grove, Huntington , the operation of..:ai:. communication . network-to provide-,fire suppres6i'9p, emergency medi0kassistance,'arid rescue services: The , oversight board donsis tsi, of one voting member and one alternate.appoint- the governing-body of each merribbiriaciency. Od -by The City of, :Newport -6��icb -are based each fiscal year upon the number of : : "recorded incidents attributable tqthe City divided by the recorded incidents attributable to all members-during-the yegii and are corded in the. General Fund-,-as,a experid't re n;. -1 Au,re for service. _�a of Upon "termination e greemi�n�i:74.,,O�,prb�eeds:�.frorh"thiD sale he property, andias8els, of the" joint venture Will be paid "to `each: member agency pursuan their fair share .percentage. A 11 , 4he amQunts:0aid,b' h Citylot this joint vehi6 .- nnu _yle i* 4y $296;175. The; City's 9% i nte rest in the net equity of this -joint vefif- are approxima e � at lune 30, 2002, amounts to $53,531. Complete ,,separate financial m6tementis can ig obtained av; the.Metib i : Cities F ire Authority off 26f!�. Anaheim � 9 ul evar d S hp 302, Anaheim California. .. .. . .. ...... zo. z c c c z r. . ........ .. . . ..... ..... (116)... Special Items- . Capital . . .... . .. .. . !.Coirolbution.s As part of the";January 1, 2002, annexation. dd �6i Newport the City received contributed capita I licif $836,206,102 consisting of land infrastructure, and a firei station. . I I I In the Governmental-wide Fina ncia(Statements, the contributed capital is recorded' as a separate line item in.4he General Revenue section of the :Statement of Actiyi fib s. is Th amount is also reported as a current Asset as land year to Capital A, ■ ($815, , M0,377), structures ($52.2,293), and infrastructure ($20,363,4312) on the Governfrientrwide Statement of Net*Assets. See Note (5), Note (6) and IR'Note (17) for more information. Sale of Water SeMde iRiohts J, A: In the current year the City sold'the Water service rights for the Newport Coast area to the Irvine Ranch Water District for $25,000,000. Of this amount, $15,000,000 was received in the current year. In the Government-wide Financial Statements, the $25,000,000 sale is recorded as a separate line item in the General Revenue section of the Statement of Activities as sale of service rights, and the remaining receivable of $10,000,000 is recorded as an Intergovernmental Receivable in the Statement of Net Assets. In the Governmental Fund Statements, the $15,000,000 that was received in the 80 0 9 CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 current year was recorded as Intergovernmental Revenue and the remaining $10,000,000 was recorded as Intergovernmental Receivable and Deferred Revenue in the Newport Coast Annexation Special Revenue Fund. See Note (17) for more information. (17) Commitments ia KContingencies Claims :and :Judgments Numerous claims and suits -:have. rbeen filed against the City in the normal course of business.,The estimated, liability. such claims, based upon information received T9m the City Attorney, contracted attorneys and the Risk Manager, has been estimated _' and recorded as aGctuedxIaims:and judgments payable (See Note 6), Circulation Improvement and Space Agreement f: Verne The City entered ,,Jh10 a Circulation Improvement and Open Space Agreement 1(.abSk ■ With a developeY !.whereby the City could receive up to $ 14;395,572 to be used only .for; certain, trans 6tion rand circulation improvements, 6f.which $9,886..,055.:had... been received 6�1 of June Mi, 2062.- The City agreed Jo match the contributiow (without interest) byliiij'b interest) �_.Abd f I..p ... ... ging: 51Q%t.10 future,Fair Share Fees (deve' o er impact fees) which are .. .. ... .. . recorded m 'th e.Q k6ulafion and Transportation SpeciA Revenue Fund. During the year i ended June 30',!i200, the City received $856,454 of Fair Share.. Fees, and.'.$28,227 was . ........ ... paid to the QfOSA Construction capital projects 'fund .-Through June. .30, 200 $1,561,279r.of;Fair Share Fees has been paid. No additional liability:.has been recorded, bebausd any future repayment is uncertain; any amounts not contributed by. .February 20, 2016, will be forgiven.:. tNewport Coast Pre - Annexation Agreement Irr,the current fiscal ar, the City entered into a Pre - Annexation Agreement w , lith the ye, 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 annex6d`larea,to Irvine Ranch Water District for $25,000,000. Of the $25,000,000 payable from the Irvine-Ranch Water District, $15,000,000 was received in the current year and the remaining $1.0,000,000 is due in:.,increments of $2,000,000 each year thereafter. In the l�S Government-Wide: FinanGiatatbnlents, the $25,000,000 sale of the water rights has been recorded as I General I Revenue, and the remaining receivable of $10,000,000 has been recorded as an Intergovernmental Receivable. 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 $18,000,000 of the $25,000,000 for certain public road and street 81 (18) CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 improvements previously financed by property owner assessments. The assessment debt relief will be provided to Newport Coast residents in equal installments of $1,200,000 over 15 years. The remaining $7,000,000 shall be used in locating, planning, and constructing a Community Center:,.: within the annexed area. The construction of the Cornrnunily Centeris'anticipat' TA commence between 2002 and 1. 2004. In the event tha# the - Community Center is 'construcfed for,._less than $7,000,000, 11 or not at all thd! Newport Coast :Committee has the option to allocate the funds to further reduce the, property owner 'assessments;' In the Government wide Statements, the $18,000,000 eutstandjng assessmen#' debt relief' has #teen 'recorded s_a Noncurrent 00 has been.restrioted in the Net Assets. 777777777-77= e ,i- 4cMlaJaulufl tlVll:1 . .•. '. '':; •, : �• The Cannery Village Fund which was reported as an'.Enterprise Fund in-P6 or yeaw been reclassified to the General Fund: The Cannery Village 'Fund was used to ';ac for the revenues and expenses of operating the ";Cannery Village parking - facility Xf City determined that the; operations were not material enough to warrant mdwidu reporting Capital Assets; I cost or 3) 0 ■ ■ ■ CITY OF NEWPORT BEACH Notes to Basic Financial Statements June 30, 2002 The effect of the restatements is shown below: Reclassification ,: Revaluation of Prior Period of Capitat Assets Adjustment Total General Fund: $ (124,338) $ $ $ (124,338) ■ Enterprise Funds: Water `° 26,670,873 - Wastewater 18,042,397 Total Enterprise Funds 44,713,270 $ 44,713,270 ■ Internal Service Fund. Equipment . 13,621 85;809 $ 99,430 ■ (19)- Subsequent Event Proposed Annexation .... The City adopted Resolutions 2000 -81 and 2001 -27 thaf' started a reorganization- . process M4:80uld lead to the annexation of two unincorporated areas: within or adjacent tb the City's sphere of influence: the areas known as eastern Santa Ana Heights and Bay Knolls:. The adoption of the resolutions allowed. the, City to,file a reorganization ■ application with the Orange County Local Agency Formation Commission(LAFCO). The application is the first step in: the reorganization process as, outlined in California. Law (Government Code §56000.et seq.) Under the proposed reorganization plan :(if approved by LAFCO.and area residents); City services for Santa Ana Heights and 7Bay Knolls would commence on July 1, 2003. The services that the City will provide include law Qnforcement fire, . paramedic, animal control, library, recreation, public . works, ■ general maintenance, and administrative services to the proposed areas of annexation. Contractual Commitments' The City has 'entered. tered. into a contract with.a private contractor to construct the second of three phases of the Balboa Village Improvements. The project involves construction of street pavement, sidewalks street furniture, new landscaping, and street lights in the Balboa Village. The contract-wai awarded #or $2,840,900. In September 2002, the City received $2,400,000 in Section 108 loan proceeds to assist with the funding. The loan is collateralized by future Community Development Block Grant allocations, average projected interest rate is 6.5% and the final maturity date is 2023. ■ 83 M ■ r ■ r ■ i r r i r r ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Supplementary Information -- ----- - - - - tY -- ----- - - - - NON -MAJOR GOVERNMENTAL FUNDS • 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 Traffic Congestion Relief Fund was established to account for all revenues received from the State . Treasury as per Assembly Bill 2928. These funds must be used only for maintenance or reconstruction costs on public streets or roads. 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 individualsitamilies. The Ackerman Donation Fund is used to account for the receipt and disbursement of funds received from the Ackerman Trust. These funds are split between the City and the University of California, Irvine. The City's . portion must be used for library and scholarship purposes. 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 solid waste. ■ of 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 Misc. Grants Fund is used to account for all other short-term grant programs. ■ 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. Non -major Permanent Funds . Permanent Funds are used to report resources that are legally restricted for the extent that only earnings, not principal, may be used for purposes that support the reporting government's programs. The City of Newport Beach Permanent Fund is as follows: The Bay Dredging Fund is used to account for the receipt of permanent endowments intended to fund the ongoing cost of maintaining and dredging of the Upper Newport Bay. ■ E£ CITY OF NEWPORT BEACH . Combining Balance Sheet Non -Major Governmental Funds June 30, 2002 ■ L s 86 . Special Revenue . State Traffic Congestion Asset . Gas Tax Relief Forfeiture Contributions Assets . Cash and investments $ 4,314,500 $ 228,851 ; $ 444,225, $ 109,276 Receivables: Accounts Lease 17,8001.1 - - - Intergovernmental receivables _ - - 15,681 - - - -- - Restricted cash with fiscatagent' Other ::- _- ■ Total Assets '$. 4,332,300... $ 244,532 $ 444,225 -.'$ 148,109 ■ Liabilities and Fund Balances - -. - Liabilities: Accounts payable .$ 243,294 $ $ 18,787 $ 44,402, Deferred revenue ' - - - 96,206' Due to other funds. Total,.Liabilities .; 243,294 - 16,787 46,608 Fund Balances: ■ Reserved"for encumbrances 1,612,374 - 53,993 +: ' 7,50.1.: Reserved for debt service Reservedfo�permanenfendownment .. - Unreserved'iti, Undesigriated 2,476,632 .244,532... 371 445' TotalFund Balances (Deficit) 4,089,006 244,532 425,438 7,501 ` Total'Liabilities and Fund Balances $ 4,332,300 $ 244,532 $ 444,225 $ 148,109: L s 86 . 0 L7 �i . Circulation and Building Excise Combined Arterial Highway Community Development Transportation Tax Transportation Rehabilitation Block Grant $ 5,433,857 $ 350,625 $ 1,913,130 $ $ - 52,287 '.529,904 195,429 $ 5.433,857 $350,625 $ 1,965,417 $, : 529,904- $ 195.429 - ■ $ 89,250 $ 102,435 _ $ .21,633 $ 1,200 $ 21,435 15 292;490 195 429 - ' 522;254 173,994 .: 89.;250 :;.' 102435. ,' . 21,648 816,944 379830, ., . 114084 756,564, .... -; 4,964-777 'k 134,106 1,187,205 (286,040). ::.(195,429) _. 5,344,BU 5,344,661. 248,190 1,943;769 (286,040) . $ 5,433,857 $ 350,625 $ 1;965,417 $ . 529,904 $ 195,429 - (continued) ■ . 87 CITY OF NEWPORT BEACH Combining Balance Sheet Non -Major Governmental Funds June 30, 2002 (continued) Special Revenue Supplemental Law Misc Enforcement Grants $ 568 $ 39,622 $.. 568 Air Quality 568 ::.. Ackerman Management Environmental Donation.....:,;;::.: - :;:District . Liability Assets .i .. Cash and investments "$ 218,647 $ 23,594 V 1682883_?:. Receivables: - Accounts 17,252 Lease 376,167. - Intergovernmental receivables Restricted cash with fiscal?agent - -- - .`. Other - -' - 197,941 Total Assets - 594814:.. '$ .23,594 $ 1,898;076 - Liabilities and Fund Balances - - - Liabilities: - - -- Accounts payable 1,038 $ 6,1301 Deferred revenue - 376,167 ". .. Due to otfier.funds To Liabilities 376,167 .:, 1,038 Supplemental Law Misc Enforcement Grants $ 568 $ 39,622 $.. 568 568 ::.. . Fund Balances: Reserved forencumbrances . 2,311 Reserved for debt service Reserved for permanent endownment Unreserved:. .. .. .. . 03 ■ r ■ ■ ■ ■ ■ . Debt Service . Library COP ■ ■ ■ ■ ■ $ 567,005 $ 567,005 Capital Projects Assessment CIOSA Bonita Canyon Oil Spill District Construction Development, Remedlation 124,308 55,397 $ 243,570 $ 5,325,782 $ 3,570 $ 2,330,118' - 22 .: 864.214. - - ' $'243,570 $ 5.325.784 '867784 $ 2,330,118 -- T,448,043.` .... ;. 567,005 243,570 $ - $S ..824.308.' $ 55,397;:.,. $ ,.294,224 .. -. . 294,224 .. 124,308 55,397 " 152,184 is 288;274. 144,986 587,851 567 005 91,386 .. 4,913,202 - ..667,401 T,448,043.` .... ;. 567,005 243,570 ..5,201;476 812,387 2,035,894 - $ 567,005 - -:$ 243,570 $ 5,325,784 $. 867,784.: $ 2,330,118. (continued) 01 CITY OF NEWPORT BEACH Combining Balance Sheet Non -Major Governmental Funds June 30, 2002 (continued) Assets Cash and investments .. $ `' 3,015 $ 22;665833 Receivables: - Accounts _ 73,885 Lease - - 376 167 -. Intergovernmental receivables - 793,301 - Restricted cash with 0scatagent'- - - 1431,221 Other -::` ' -:..'. ,- 9:97,941 -... - - :•: Total Assets -- Liabilities and Fund Balances Liabilities: Accountspagable $ - $ 1,024,772 •�` Deferred revenue - .999,929. - Due to other funds 696 248:., Total Liabilities' 2;720,949 Fund Balances: Reserved4orensumbrances:. 4;099,952 Reserves for debt service 567; 005 ': .:. Reserved for permanent £endownment... 3,000 i. .. 3'000 Unreserved:.. Undesigpated 15 18,147,442'" Total:Fund Balances : '' 3;015 22,817,399 ....: ' Total Liabilities and -- Fund Balances $ 3,015 $ 25,536,348 - - -- _ - s ■ ■ 91 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, 2002 Total reveni Expenditures:,... Current: General:g6vemm Public safety Debt service: Int ores t-and.fiscal charges total expenditures Excess (deficiency): of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other finaridno.sourres (uses) .1;162.214 211,436 74,402 Net change in fund balances Fund balances (deficit), beginning of year Fund balances (deficit), end of year ..166,031 2,106,780 539,054 Special Revenue 166,031 (624,566) Traffic (146�400) (20,504)'' State Congestion Asset Gas Tax..,... Relief Forfeiture Contributions Revenues: Other taxes $ Intergovernmental 1,208,426 179,336 1746;259 69,683 Licenses, permits and fees Charges for services Fines and forfeitures Investment income 182,545 21,402 21,693 Net increase in fair value of investments 91,243. 10,698 = —'-6,450 Donations 7t,470 Other 4;374 Total reveni Expenditures:,... Current: General:g6vemm Public safety Debt service: Int ores t-and.fiscal charges total expenditures Excess (deficiency): of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other finaridno.sourres (uses) .1;162.214 211,436 74,402 Net change in fund balances Fund balances (deficit), beginning of year Fund balances (deficit), end of year ..166,031 2,106,780 539,054 220,802 166,031 (624,566) (327,618) ,1 (146�400) (20,504)'' 1 6,420 (201,349) 7 92 ■ ■ 0 0 93 Special Revenue Circulation Building Arterial Community . and Excise Combined Highway Development Transportation Tax Transportation Rehabilitation .'. . : Block .Grant - - 1,135,306 237,414 697,352 56,453 152,778 206,851 20,498':" `77,695 ... - - . 103,392 10,245 3$,835 . 366,696 183,521 - , 1,251,836 ' �. .237,414 697,352 . 28,227.. .�... " ., . 205302. .247.;W W,704 972,395 527,353 320441 525,743. -275;44:: 640,704 972,395 527,353 . 91,252 (457,183) '- 2791441 (289,939) 171,809. . 30,000 - ■ _ .. - _ 30,000 ... - . 91,252 (457183) 279,441 (289,939) 201,609 _ 5,253,355 705,373 1,864,328 . 3,899 (397,038) $ 5,344,607 $ 248,190 $ 1,943,769$ (286,040). . (continued) 93 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, 2002 (continued) Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances (deficit), beginning of year Fund balances (deficit), end of year (61,288) 24;065 (79,206) 193,682 101,762 $ 218,647•' 556 M, ■ Special Revenue Air Quality Supplemental Ackerman Management Environmental Law Misc Donation __,District Liability Enforcement Grants Revenues: 7; Othertaxes $ $ Intergovernmental 79,546 144,141 75,524 Licenses, permits and fees Charges for services Fines and forfeitures Investment income 9,703 3,734 1321490:, W 2,917 Net increase in fair value of investments 4,850 1,866 31.230 1,458 Donations 1:85,000. Other Total revenues- 199,553:' 85,146 512;141 ':, 79,899 _144j688 Expenditures: Current General government Publicsafety .144,6861 79,899 Public works: 103,064 98,97.1 Community.Aevelopmen!t a Communio.servic a 174,588 Capital 6utlay Debtservire, Princilial Interesf and fiscal charges Total expenditures 174,588 103,064 98,971 T .: 144;686: - 79'899 Excess ( deficiency.) of revenues over expe I nditures z24,465 (17,948) 413,176 Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances (deficit), beginning of year Fund balances (deficit), end of year (61,288) 24;065 (79,206) 193,682 101,762 $ 218,647•' 556 M, ■ Debt Service Capital Projects . Library Assessment CIOSA Bonita Canyon Oil Spill COP District Construction Development- :.,.... 6emediation ■ 95 Z45;UUU ... .. .' :' 320,690: 565,690 1 669 759 148,138 1,342,743 3,319 579 . (553,520) (928,563) 178655 . (1,119,424) (3,084,251) • -. 550,992 25,113 - - . 550,992 .25,113 (2,528) (903,4501::,.; 178,655 (1,119,424) - (3,084,251) . 569,533 1,147,020 5,022,821 _. 1,931,811 5,120,145 $ 567,005 $ 243,570 $ 5,201,476 $:� 81 ?,387 $ .Z035;894 ■ -- (continued) ■ 95 Revenues: Other taxes Intergovernmental Licenses, permits and fees Charges for services Fines and forfeitures Investment income Net increase in fair value ofinvestments Donations Other Total revenues Expenditures: Current: General, government Public safety" Public vioa, Communitkdevelopment Community services Capital outlay Debt service, Principal.. Interest and.fiscal charges Total expenditures. Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balanci.§,s ,, Fund balances (deficit), beginning of year Fund balances (deficit), end of year 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, 2002 (continued) Permanent Fund Total Other Governmental Bay Dredging_ Funds $: 418,431 3,000 ::,3;875.987 309,231 . ......... 10; 1,201.387 5 2V`7,8,341 - 284,697 _745,570 3,015 -7,213,644 �7 44538 7 230,28Z' 205,302 ■ 174,588 12:000,194 ■ 245.000 320,690 13621,423 c (6,407,779) 612,525 (262,637) 349,888" 3,015 $ 22,817,399 96 El 0 0 97 CITY OF NEWPORT BEACH Budgetary Comparison Schedule State Gas Tax Special Revenue Fund ■ For the Year Ended June 30, 2002 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenues: . Intergovernmental V;i 1,392,500 1,208,426 $ (270,774) Investment income 300.000 304 000 182,545 (117,455) Net increase in fair value of investments': 91,243 91,243 Total revenues 1,692,500 4,779200 82,214 (296,986) Expenditures: Current Capital outlay, ,15g,53 4;36� 6 9 232 2,276,452 47� ciency of revenues under expenditures (4,467 453) (2,604,032)1 :,7(624:,566) 17 ,;9 9,466 Other financing uses- Tra nsf,ers out (160;000) (201,349) t 01,344): Net change in furdbal ance:..* 6 (4v 27,453) (2,605,381) (825,915) 1,9719;4166 Fund',b once j'Q'beginning'oQ-e' air.'.. 4,914,921 4,914.921 4,914,921 Fund '15aldrice,end of,year .. ......... ■ $ 287,468, 2,109,540 k: t)$ 4,089,006 1,979,466 0 0 97 CITY OF NEWPORT BEACH Budgetary Comparison Schedule Traffic Congestion Special Revenue Fund For the Year Ended June 30, 2002 Budgeted Amounts Original Final Actual Revenues: Intergovernmental Investment income Net increase in fair value of investments Total revenues 134;000 Expenditures: Current: Capital outlay;, 538,054 Deficiency of revenues under expenditures "(405,054) Fund balance, beginning of year 572,150 Fund balance, end of year $ 167;096 1:1:7 Variance with Final Budget Positive (Negative) $ 179,336 $ 45,336 21,402 21,402 10,698 10,698 134,000 211T,436 77,436 539,054 539,054 ■ ■ ■ CITY OF NEWPORT BEACH Budgetary Comparison Schedule Asset Forfeiture Special Revenue Fund For the Year Ended June 30, 2002 99 Variance with Final Budget Budget Amounts Positive Original Final Actual (Negative) Revenues: Intergovernmental $ 35,000 ! $.. 35;000 $ 46,259 $ 11,259 Investment income 2,000 2;000 21,693 19,693 Net increase in fair value of investments . 6,450 6,450 Total revenues 37,000 37,000 74,402 37,402 Expenditures: - Current: Public safety ' 255,233 255,233 220,802 34,431 Deficiency of revenues under expenditures . (218,233) (218,233) (146,400) 71 833 Other financing sources: Transfers in 6,420 6;420 Total other financing sources 6,420 6,420: ';.::Net'change in fund balance'. ., (218,233) (25:8,233) : .: (139,980) '` 78,253 ` Fund: balance beginning of yesir, 565,418 ` 566i i8 565,418 Fund balance,'end of year. $ 347;185 $ 347,165 $' 425,438 $ 78,253 99 CITY OF NEWPORT BEACH Budgetary Comparison Schedule Contributions Special Revenue Fund For the Year Ended June 30, 2002 100 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Intergovernmental .,$ . 1,290,099 :. $ 2,894,124 $ 69,683 $ (2,824,441) Donations izz 54000.. 194,800 71,470 (123,330) Other 4,374 4,374 Total revenues ,.._ 1,295,099 - 3,086 924 -i 145,,527 (2,943,397) Expenditures: Current: Capital outlay = 1,335,213 679,459 166,031' :::513,428 :Excess - (deficiency) of revenues.- - -; -: over (under) expenditures; _ (43,114) '2,409,465 -•.,. (20,504) (2,429:969) Fund balahce, beginning.of year 28,005 28,005 ' 28,005: Fund balance (deficit), end ofyeap $:2,437,470.. $ 7,501 100 . CITY OF NEWPORT BEACH Budgetary Comparison Schedule . Circulation and Transportation Special Revenue Fund For the Year Ended June 30, 2002 . Variance with Final Budget . Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Intergovernmental $; i $ $ - $ - . Licenses, permits and fees 56,453 56,453 Investment income 250,000 .. 250,000 206,851 (43,149) . Net increase in fair value of investments 103,392 103,392 Total revenues 250,000 250,000 366,696 116,696 Expenditures: .. ..... - Current: Public works ' 28,227 (28,227) . Capital outlay 2,202,544 1.,635,317 247,21,7 1,388,100 Total expenditures :: 2,202,544 1635,317 275,444 1,359,873 `Excess (deficiency) oft revenues .over(under)expenditures (1,952,544) (1,385,317)' 91,252 1,476;569 Fund balance, beginning of year .' 5,253,355 ;.5,253,355,:. 5,253,355 .. - . Fund balance, end of year $ 3,300,811 $ 3,868,038 $ 5,344,607 $ 1,476,569 0 101 CITY OF NEWPORT BEACH Budgetary Comparison Schedule Building Excise Tax Special Revenue Fund For the Year Ended June 30, 2002 102 ■ Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Licenses, permits and fees $ 275,,000 $ 2.75,000 $ 152,778 $ (122,222) Investment income 15,000 35000__ 20,498 5,498 Net increase in fair value of investments 10,245 10,245 Total revenues 290,000 29000 183,521 (106,479) Expenditures: Current: Capital outlay", '.` '- 896,856 755,224 640,704 114,520 Deficiency of revenues under expenditures ;.(606,856) (465224) (457,183) <8,041 Fund balance, beginning of year 705,373 705,373 705,373 Fund tia(ance, end of year % $ `! 98,517 $ 240;149 $ _148,190 $ . ,8,041 102 ■ . CITY OF NEWPORT BEACH ■ 103 Budgetary Comparison Schedule . Combined Transportation Special Revenue Fund For the Year Ended June 30, 2002 Variance ■ with Final Budget Budgeted Amounts Positive . Original Final Actual (Negative) Revenues: Intergovernmental $ .2,952,852 ;,, $ 2,952,852 $ 1,135,306 $ (1,817,546) Investment income 105,000 1:05;000 77,695 (27,305) ■ Net increase in fair value of investments.: 38,835 38,835 ■ Total revenues 3,057,852 3,057,852 h 251,836 (1,806,016) Expenditures: Current: . Capital outlay 3,836,352: 1,858;186 972,395 885,791 Excess (deficiency) of revenues . over (under) expenditures (778',500] 1,199,666 279,441 (920,225) ® Fund balance, beginning of year: 4,328 1,684,6 1166 32 1,664,328 Fund balance, end of year $ 885,828 $ 2,883;994 .:. $ 1,943,769 '. $ '' (920,225) ` ■ ■ 103 104 . CITY OF NEWPORT BEACH . Budgetary Comparison Schedule Arterial Highway Rehabilitation Special Revenue Fund For the Year Ended June 30, 2002 . with th Final Budget Budgeted Amounts Original Final Actual Positive (Negative) . Revenues: Intergovernmental $ 63$.flOD $1,065 987 $ 237,414 $ (828,573) . Expenditures: Current: Capital outlay $90,120 722 839 527,353_ 195,486 ■ Excess' (deficiency) of revenues . over (under) expenditures .: (252,120) 343,148 (289;939) (633,087) Fund balance, beginning of,year 3;899 3,899 3,899 Fund balance (deficit), end of year $ (248,221) $ : 347,047. $ (286,040) $ (633,087) �. 104 . ■ CITY OF NEWPORT BEACH Budgetary Comparison Schedule Community Development Block Grant Special Revenue Fund ■ For the Year Ended June 30, 2002 ■ Variance with Final Budget Budgeted Amounts Positive ■ Original Final Actual (Negative) Revenues: Intergovernmental $;520,000: $ 520,000 $ 697,352 $ 177,352 ■ Expenditures: Current: Community development `205,302 (205,302) ■ Capital outlay 793,163 793,163 320,441. : 472,722 ■Total expenditure 793,163 793,163 525743 267,420 Excess (deficiency) of revenues over( under)expenditures (273,163) (273,163) 171,609 444;772 ■ Other financing sources Transfers im 30,000 -. 30,000 ■ Transfers out (100,000)' (100,000) 100,000" , Total other financing sources (uses) ..;.: (100,000) (100,000) 30,000 130,000 ■ Net change in fund balance (373,163) :. (373,163) 201,609 574';772 ....... ■ .. Fund 'balance (defl6k), beginning of year (397,038) (397;038) (397,038) ■ ,., Fund balance (deficit), end of year, $ (770 201) - $ (770,201)' ' $ (195,429): $ 574,772 ,. ■ ■ ■ ■ ■ u ■ ■ 105 CITY OF NEWPORT BEACH ■ 106 Budgetary Comparison Schedule Ackerman Donation Special Revenue Fund For the Year Ended June 30, 2002. . Variance with Final . Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenues: . Ucenses,pennits and fees Investment income 9 000 = 9 000 9;703 703 Net increase in fair value of investments 4,850 4,850 . Donations 185,000,:i.::. :1:85,000 Total revenues 194,000 194,000 198,553` 5,553 . Expenditures: Current ■ Community services 209,192 187,986 174,588 13,398 Excess (deficiency) of revenues over (under) expenditures (15,192) 6,014 24,965' . 18,951 Fund balance, beginning of year 193,682 .193,682 193,682 Fund balance, end of year $ 178,490 $ 199 696 $ 218,647 $ 18 951 ■ ■ 106 ■ ■ ■ ■ ■ ■ ■ ■ CITY OF NEWPORT BEACH Budgetary Comparison Schedule Air Quality Management District Special Revenue Fund For the Year Ended June 30, 2002 Budgeted Amounts Original Final Revenues Variance with Final Budget Positive Actual (Negative) Intergovernmental $ 75,000 -; $,";.,:%7,"5z,00,0 $ 79,546 $ 4,546 Investment income 6,000 6,000 ' 3,734 (2,266) Net increase in fair value of investments` 1,666 1,866 Total revenues 81;000 81,000 85;146 4,146 Expenditures: Current: Public works 59,374 117812 103,064_ 14,748 Excess (deficiency) of revenues over (iinder) expenditures 21,626 (36,812) (17,918) 18,894 Other financing uses: Transfers out Lz (45,000) (45,000 (61,288) (16,288) . Net change in fund balance (23,374) (81;812) (79,206) 2,608;, Fund balance, beginning of year , 101,762 101;762 101,762 Fund ba(ance, end of year , :;. $ 78,388 $ 18';950 $ 22,556 $ 2,606 107 ■ 108 CITY OF NEWPORT BEACH . Budgetary Comparison Schedule Environmental Liability Special Revenue Fund For the Year Ended June 30, 2002 . Variance with Final Budget Budgeted Amounts Positive Revenues: Original Final Actual (Negative) Intergovernmental $, $ $ _ $ Investment income 62,480 62,480 Net increase in fair value of investments 31,230 31,230 . Total revenues 93,710 93,710 Expenditures: Current: Public works - 41,667 41,667 98,971 (57,304) . Deficiency of revenues under expenditures (41,667) (41,667) (5,261) 36,406 Fund balance beginning of year "lance, 1,478,105 1,478,105 1,478,105 Fund ba" end of year $ 1,436,438 $ 1,436,438 $ 1,4721844 i4ii,36,40 6 ■ 108 ■ CITY OF NEWPORT BEACH Budgetary Comparison Schedule Suplemental Law Enforcement Special Revenue Fund ■ For the Year Ended June 30, 2002 Variance ■ with Final Budget Budgeted Amounts Positive Final Actual (Negative) ■Original Revenues: Taxes and assessments $ $ $ $ Intergovernmental 165 000 145,000 144,141 (859) . Investment income 5,000 1,000: 545 (455) ■ ■ ■ ■ ■ ■ ■ ■ Total revenues 170,000 146,000. 144,686 - (1,314) Expenditures: Current: Public safety 165,000 165,000 144,686 - 20,314 Excess (deficiency) of revenues over 5,000 (19,000) 19,0001 109 CITY OF NEWPORT BEACH Budgetary Comparison Schedule Miscellaneous Grants Special Revenue Fund For the Year Ended June 30, 2002 . 110 i ■ ■ ■ ■ Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenues: Intergovernmental $ ;61,102:;7;,z.,$ .. 61,102 $ 75,524 $ 14,422 Investment income 2,917 2,917 Net increase in fair value of investments 1,458 1,458 Total revenues 61,102: 6.4,102 79,899 18,797 110 i ■ ■ ■ ■ - � .. ,mss . __ _ n_ \ ° as9' � � � -�e-c ' -. �, i + +.. � fir. ` �a �.� *- ,_ ,� ,,,,,_ _.. �si�3. -�� yy .. t - " _ , SST - r \ �" �- c F 9 � 1. ��.. ,. n, ... _. _ �S.d16p h. _ _ �Vw �,� A _ �.. ! I� � �� ` .S ,� \. ` � J � � �� •n ` �. � N iF L.� � '7 t ai'�.: �' 1. \i! 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. . CITY OF NEWPORT BEACH All Internal Service Funds Combining Statement of Net Assets ■ June 30, 2002 Total ■ Insurance Compensated Refiree Internal Assets Reserve Absence Insurance Equipment Service Funds Current Assets: Cash and investments $ 8,952,174 $ 1,643,574 $ 1,172,162 $ 7,000,624 $ 18,768,534 Receivables: Accounts 16,561 1,384 17,945 ■ Inventories Prepaid items = - 50,226; 249,259 249,259 50,226 Total Current Assets ` 8,952,174- 1,643,574 1,236,949 - - 7,251,267 19,085,964 Noncurrent Assets: . Capital Assets: Equipment - - 17,637,537 -. 17,637,537 Less accumulated depreciation - - - (10,371;267) - (10,371,267) ■ Total Capital Assets(Net of _ AccumulatedDepreciation) _ 7,266,270 7,266,270 . Total Assets 8952,174` _1,643,574 _ 1,238,949 -' -- 14,517537 ^'26,352,234 .:Liabilities - .- -- Current Liabilities: . Accounts payable and accrued liabilities 57,671. - 332,529 ;390,200 Accrued'payroll � - 45,365 .. .. - 42,050 - 87,415 . CapitaMeases current Workers' compensation current 1,850,000 - - , 393,995 :; 393,995 1,850,D00 Genetalllabikty- current 11000,000 1,1100,000 .;,., Compe, sated absences curre6ji' ! 1,400,000 --': - .. 1;400,000 . Total Current Liabilities 2,90),671 1,445 365 - 768;5747 5,121.,610 NoncurrerifLiabllbes: .,;.., 756,932 -. 158,932 Workers'. compensation q, 4 4,581,000 - .4,581,000 ■ Generafliability 2,270,000 2,270,000 Compensated absences - 6;756,088x. - :8;756,088 Total Noncurrent Liabilities 6,851,000 6,756,088' - 756,932 14,364,020 -TOta1 Liabilities 9,758,671 8,201,453 =. - : :1,525,506 19.485.630 :Net Assets Invested In capital assets, net of related = - - 6,115,342 `- 6,115,342 . Unrestricted (806,497) (6:557,879) 1,238,949' 6,876,689 751,262 Total Net Assets _ _ :$ - (806,497) $ (6,557 879) .:, .$. 1.238,949 -. $12,992,031 _' - -: $ 6.866.604 0 111 ■ CITY OF NEWPORT BEACH Internal Service Funds Combining Statement of Revenues, Expenses and Changes In Fund Net Assets For the Year Ended June 30, 2002 Insurance Compensated Retiree Reserve Absence Insurance Equipment Operating Revenues: Charges for services $ 5.043,344;-, -$ 1;330j581., $ 1,304,439 $ 3,754,174 Other :977= - - 13,774 Total Operating Revenues Operating Expenses: - Salaries and wages Depreciation Professional services,�`�"` Maintenance and supplies Fleet parts and supplies _ Workers' compensation - - Claims and judgments . Retiree Insurance - .- 1,036,473 Total Operating Expenses 2,474,433 1,377,812 '_ 1,035,473 2,936;769 Operating Income (Loss) .. .2,569,858 , (47,231) 26.,966 831,179 mopetating Revenues (Expenses): ■ 11 Total • Internal 10,866,425 Service Funds $ 11,432,508 14,751 99,430 11,447,259 r mets;(Adcumulated 905,252 1,615,763 90,382 16,388 r 308,984 1,819,250 655,183 1,377,812 r 1,036,473 7,825,487 T A91 777 188 .220 482 022 794 r ,423 r Deficit), July 1 ' (3,793;488) (6,596,457)::: 893,271 10,866,425 -- ::- 1,369,751 Restatement 99,430 99,430 r Net Assets (Accumulated - Deficit), July 1, as restated (3,793,488) (6,596,454" 893,271 10,965.8W" 11469,181 Net Assets (Accumulated,- -- ■ Deficit), June 30 $ (806,497) $'(6,557,879) $ 1,238,949 $ 12,992,031 $ 6,866,604 ■ ■ r ■ ■ 112 0 ■ CITY OF NEWPORT BEACH Combining Statement of Cash Flows - Internal Service Funds For the Year Ended June 30, 2002 • Total Insurance Compensated Retiree Internal ■ Cash flows from operating activities Reserve Absences Medical Equipment Service Funds Receipts from customers $ 5,043,314 $ 1,330,581 $ 1,293,536 $ 3,758,117 $ 11,425,548 Payments to employees (56,011) 395,251 - (694,738) (565,498) Payments to suppliers (2,945,817) (1,377,812) (1,086,699) (209,377) (5,619,705) Other operating cash reciepts 977 13,774 14,751 Net cash provided for operating activities .......2;042,463, 348,020 206,837 2,667,776 5,265,096 . Cash flows from noncspital financing actiwhes Cash received from other funds 873,049 873,049 Cash paid to other funds (131,420) (131,420) ■ Net cash used by noncapitat financing activities - 741,629 741,629 Cash flows from capital and related - - �- financing activities. Acquisition of capital assets. - - (1,753,613) - (1,753,613) Proceeds from sale`of capital assets 228,676 -- `= 228,676 ■ Principal paymerd- Interest paid (664,264):..: - (55,868) _ (664,264) - (55,868) Net cash used for capital - .and.relateofinancing activities : , . �. - - - - (2,245;009) :(2,245,069) . Cash flows from investing activities: - -: Interest.on investments 417,133 85,809' .-77,712 - 372,754 953,408 Nefcash provided for investing activitiesr 417,133 85,809 '. 77,712 372,754 953.408 . Net increase in cash .::and cash equivalents 2,459,596 433,829- 284,549 ,1,537090 -;; 4,715064 Cash and cash egirivalents July 1 _ 6 492,578 1,209,745. 687,613 5,463,534: 14,053.470 . Cash and cash equivalents June 30 $ .8.952,174 6 $1643,574 $ 1172.162. $ .7,000,624.,:::. $ 18,768534 Rewn6liation of operating income to net cash, .. ■ .. .,.. prowded.(used) by operating achvibes:.;. Cash flans tram operating activities , ■ Operating income(loss) 2.569,858 (47,231). 267,966 831,179 3.621,772 Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 1,615763 - 1,615,763 . Changes In operating assets and Iiabili0es:' (Increase) decrease in accounts receivable (10,903) 3,943-.. (6,960) (Increase) In inventories - - - (57,698) (57,698) (Increase) in prepaid items - - - (50,226) - -- - -- - (50,226) . Increase in accounts payable .- 42,766 - 264,075- 306,841 Increase (decrease) in accrued payroll (56,011) 45,965 10,514- (132) increase in workers'corn,pensab'on - - -` 232,186 - - - - -` -- 232,186 (Decrease) in genera(haMlity (746,336) - - - - _ -- (746,336) Increase in compensated absences 349,886. - _ 349,886 Total Adjustments (527,395)- 395,251 - (61,129) 1,836,597 1,643,324 . Net cash Provided by operating activities _ $ 2.042.463 $ 348.020 $ .206 637 $ 2.667.776 $ 5 265.096 Noncash Investing, capital, and financing activities: Disposal of fixed assets - (881,124) (881,124) Acquisition of equipment by capital leases - 910,848 910,848 . Total of noncash activities $ _ $ _ $ $ 29.724 $ 29 724 113 ■ ■ 2 0 114 0 ._� 7 y,.� �, _ _ - � . A."i, ,,..�.�?k.. .�.._ a � 3 _ ._. _.. �. _ 1 -. 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 Special Deposit Fund is used to account for special deposits held by the City in its fiduciary capacity. The Business Improvement District Fund is used to account for monies collected from local business districts for district property improvements and business . enhancement. CITY OF NEWPORT BEACH Agency Funds Combining Statement of Fiduciary Assets and Liabilities June 30, 2002 0 115 Special Special Business Assessment, District Deposit Improvement Assets Fund Fund Fund Totals • Cash and investments 1,650,223 $ 10301921 $ 159,818 $ 2,840,962 Restricted assets-cash and investments.-, 1,328,138 - 1,328,138 Total assets 2,978,361 1,030,921 159,818 $ 4,169,100 Liabilities Due to bondholders;- 2,978,361 $ 2,978,361 115 CITY OF NEWPORT BEACH Statement of Changes in Fiduciary Net Assets All Agency Funds For the Year Ended June 30, 2002 . Balance Balance ■ June 30, 2001 Additions Deductions June 30, 2002 Special Assessment: Assets Cash and investments $ 1,8583344 $. 802;126 $ (1,010,247) $ 1,650,223 Restricted assets - cash and investments 1,719,360 1,131,249. (:1,522,471) 1,328,138 . Total Assets $ 3,577,704=' $1,933,375 $ 2 532 718 $ 2,978,361 . Liabilities Due to bondholders $ 3;577,704 $.1;933,375 ' ° $, 2,532,718 ? $ 2,978,361 Special Deposits Assets Cash and investments $ 3,556,472 $1,713,655 $ 4,239,206 $ 1,030,921 ■ Liabilities Due to others $ 3,556,472 $1,713,655 $(4,239,206) $. 1,030,921 . Business Improvement District: Assets ■ Cash arid' investments. $ 273,691 $ 258,631:: $ (372,504) $'. 158,818 Liabilities . Due:toothers $ 273,691 $ 258,631' $::.(372,504) $ 159,818 Totals - All Agency. Funds: ■ Assets Cash and, investments $ 5,688,507. $ 2,774,412 $ (51621,957) $ .x,840,962 Restricted assets - cash and investments 1,719,366 1,131,249 (1,522,471) 1,328,138 Total Assets $ 7,407,867 $ 3,965,661 $ (7,144,428) $.4,169,100 Liabilities Due to bondholders $ . 3,5771704. $1,933,375 $ (2,532,71 $ 2,978,361 . Due to others 3,830;163 1,972,286 (4,611:,710) 159,818 Total Liabilities $ .:7,407,867 $ 3,905,661 $:(T,144,428) I� ■ 116 • ■ • CITY OF NEWPORT BEACH . Miscellaneous Statistics June 30, 2002 . General Information ■ Date of Incorportation Form of Government Population Permanent ..............: Summer .................. Tourist .............:...:.... ...................................... ............................... ...........................1906 .................. ....:: :.............................. .......................Council-Manager ■ . ...................................... ................ ........................................ 75,662 `...................................... ............................... ........................100,000 ....;........................... ............................... 20,000 to 100;000 per day ■ Housing units: ... .....:.......................... ............................... ..... .. 38,394 Occupancy Factor pe Area r dwelling unit ................. ............................... .... .......1.97 Square Miles Acres Land ........:....... ...........................25.0 ............................ . .................... 16,245 Bay:; . . ....................... 2. 5......... ............................... 1,600 Ocean......... ..................................... 23.0......................... ....................:...14,894 Total.. .................... ...... ............................... 50.5 ........................ ......................... 32,739 ■ PopulationDensity , ■ Per square mile ........... .. .....::................3,026.48 Per acre ........................... 4.66 Recreational Area..: Ocean Water .........:.. Acres ■ .................:.................... ............................... .........................14,894 Harbor Waters ...... Park........................................... ............................... .............:............1,598 s........................................................................................... ............................... 258 ■ Beaches ...:.. ::......... Total:..;. .................... ................:................................................... ............................... 237 ..................................... ............................... .........................16,987 ■ Water Frontage Miles Upper Bay Frontage.. .................................................................................................... 13 ■ Ocean ............................................................................................... ..................:.:::.:....10 Harbor.............:.:.............................................................................. .............................21 Total Water Frontage Newport 117 ....................................................................... ............... ::.:..........44 • Harbor . Boats ............................................................... ....................:......... : .......................... 9,000 Residential..................................::................... ............................... ..........................1,230 Commercial Slips and Side Ties ...................... ............................... ..........................2,119 . Bay Moorings ............ ...................................... ............................... ..........................1,221 Public Safety Police Fire . Number of Stations ..................... 1 ..................... e Number of Personnel ......... ............................238 .......................... ............................147 ■ Unaudited —See Accompanying Auditors' Report. 117 11 1992 -1993 $.4359,857::... $ 31,209,589 $ 12,779,215 $ 3,636,092 $8,520;758 $ 12,220,226 $ 1,155,407`.' $ 73,881,144 • 19931994 4,607,009 32,330,338 Governmental Revenues by Source (1) 5,910,752 .13,605,703 - 1,175,175 70,054,587 1994 -1995 55D5,610 33,389,922 (Last Ten Fiscal Years) 3,336,672 5,857,959 8,523,773 1,550,294. 72,825,573 1995 -1996 5,442,862 34,571,273 Fines, "i'2,952,247 5,916,194 11,291,759 . - 76,022,994 . Licenses, Inter- Charges Forfeitures Revenue from 6,585,335- ' 20,696,487 890,609 Fiscal Fees and governmental for and Use of Money 6,916,999 - -- 20,849,681 - - - -- 1,299,284 Year Taxes Permits Revenue Services Penalties and Property (2) Other Total . 129,190,898 1999 -2000 9,441,381 41,735,933 16,898,630 4,271,201 7,932;497 -- 13,984,120 1982 -1993 $38,471,775 $ 2,006,805 $ 7,621,643 $ 4,703.200.., $2,5142,969 $ 9,468,06D $ 1,031,526 $ 65,888,978 17,293,323 19931994 39,809,139 2,247,233 8,993289 .5077368 2,708,194 8,66D,599 1,841,189 69,335,012 38,613,906 1994 -1995 38,718,830 2,409,523 10794,000 ' '51109,513 3 158,530 9,876;426 1,089,385 71,865,207 . 1995 -1996 42,853,480 4,851,571 8,315,543 .6,276;416 2,855,063 11,000,272 6,540,913 82,695,258 1996 -1997 44,523,935 4Q81,669 11,871417. 7185,210 2529,015 10,497715 10,208,241 90,897,042 . 1997 -1998 49,385,360 7,303,302 - 1906,742 8,314,830 ^' 2,573,575 14;422,977 11,593,409 - 100,250,215 1998.1999 52,903,507 5,680.49§.'Y „,.15,188,324'” 8,779,962...,. 3,290,019 10,666,337 '31,884,689 128,374,344 1999.2000 58846994 X4,247,945 10867163 9068527 �- 3,442171 12,405800. -_ 1598826 100,387,026 ■ 2000 -2001 62908,305 4,553,923 11,463,635. . ?9,906,851 3,555,948., 16,0691217 8,439,595. 116,897,382 2001 -2002 65878,471 - 3350,958 '26,227740 10338,569_ 3,384164 14,157,694 2,529,470 - 125,867,066 (1) Includes General'Special Revenue, Debt Servksand Capital Protects Funds. -- . (2) Includes Investment Income-and Properly.lncome -T' ■ ct Governmental Expenditures by Function (1) '"'i '` (Last Ten Fiscal Years) Fiscal .General _ Public i - Public Communiy Community Capital :, Deb! . Year:.Govemmant Safety "' Wruke Develnnment: f'Swnrirnrt Ou9av �Swrvira . Tntal 1992 -1993 $.4359,857::... $ 31,209,589 $ 12,779,215 $ 3,636,092 $8,520;758 $ 12,220,226 $ 1,155,407`.' $ 73,881,144 . 19931994 4,607,009 32,330,338 15,018,898 3,406,712 5,910,752 .13,605,703 - 1,175,175 70,054,587 1994 -1995 55D5,610 33,389,922 14,661,343 3,336,672 5,857,959 8,523,773 1,550,294. 72,825,573 1995 -1996 5,442,862 34,571,273 14,779,614 "i'2,952,247 5,916,194 11,291,759 1,069,045 '. - 76,022,994 . 1996 -1997 5,673,321 < - 35,647,247 15,502,095 3,329,545 - 6,585,335- ' 20,696,487 890,609 88,324,639 1997 -1998 6,790,020 39168;311 16,579,275. "` 3,475,998 - 6,916,999 - -- 20,849,681 - - - -- 1,299,284 95,079,568 . 1998 -1999 7,471,850 _ :__. 40514,411 16,846,674 4,688,087 7,733,720 50,664,045 1,252,111 129,190,898 1999 -2000 9,441,381 41,735,933 16,898,630 4,271,201 7,932;497 -- 13,984,120 - 1,795,347 96,059,109 2WO -2001 10,239,134 453461306. 18,477,955: 3,842,610 8,623;119 17,293,323 1,777,945 105,600,392 . 2001 -2002 12,292,008 47,841,176 i 19,418,D67 4586192' °.�_ 9,418,041 38,613,906 - 1,758,073. 133,927,463 (1) Includes General, Special Revenue, Capital Projects and Debt Service Funds. . Source: City Administrative Services Department Unaudited -See Accompanying Audltors' Report. . F1 0 118 ■ ■ ■ ■ ■ ■ ■ $160 $140 $120 $100 O O S80 a L _O $60 $40 $20 $o Governmental Revenues and Expenditures (Last Ten Fiscal Years) 1992 -93 1993 -94 1994 -95 1995 -96 1996 -97 1997 -98 1998 -99 1999- 2000 -01 2001 -02 2000 2 Governmental Revenues by Source (Fiscal Year 2001 -2002) 11% 2% 3% 52% Governmental Expenditures by Function (Fiscal Year 2001 -2002) 1% 9% � 70 14% Unaudited -See Accompanying Auditors' Report. 119 37% ■Taxes • Licenses & Permits • Intergovernmental ■Charges for Services ■ Fines & Forfeitures ■ Use of Money & Property ■ Miscellaneous • General Government • Public Safety ■Public Works • Community Development ■Culture and Recreation • Capital Outlay • Debt Service 3% 8% i 21 2 Governmental Revenues by Source (Fiscal Year 2001 -2002) 11% 2% 3% 52% Governmental Expenditures by Function (Fiscal Year 2001 -2002) 1% 9% � 70 14% Unaudited -See Accompanying Auditors' Report. 119 37% ■Taxes • Licenses & Permits • Intergovernmental ■Charges for Services ■ Fines & Forfeitures ■ Use of Money & Property ■ Miscellaneous • General Government • Public Safety ■Public Works • Community Development ■Culture and Recreation • Capital Outlay • Debt Service 0 Fiscal Year Assessed and Estimated Actual Value of Taxable Property (Last Ten Fiscal Years) Total Secured Public Unsecured Assessed & Estimated Valuation Utility Valuation Valuation • . 1992 -1993 $11,182,809,052 $354,820 ................. ..... $12,076,539,722 1993 -1994 11,179,271,032 35020 866,424;09Q, ' 12,045,049,942 . 1994 -1995 11,178,202,789 354,820 .. 686,344,530 "' 11,864,902,139 19951996 11,078 ,48 354,820 725,943,222 11,804,599,524 ■ 1996 -1997 11,15428(1;162 354,820 754,8923821 11,909;533,803 1997 -1998 11,5511641,504 354 820 778,209 144 12,330,205,468 . 1998 -1999 12343,526,263 354,820 1,009,915,297 13,353,856,380; 1999 -2000 13,091';299,313 324;960 1,295,776,000 14,387,400,273 . 2000 -2001 15,087,602,671 2,000 (1); 915;394;966 16;002;999,637 2001- 2002 16;515,797;641:. 2,000 913,075,074 17,428,874,715 . (1) Effectl ii- e FY 00/01, Southern fCalifornia Edison, sold property significantly affecting the Public Utility Value.!: Secured Property Tax Levies and Collections: (Last Ten Fiscal Years) ■ TotAli Total Percent Delinquent ... % of Total Tax Fiscal . ..Current Current of Levy Tax Totsi .. Collections.. Year Levy` Collections Collected Collections Collections Total Levy.:: ■ 1992 - 1993:. ::; 18,859,889 (1) 18,508,590 98.14 %:.. 536,760 '1%396,649 702.85% 1993 -1994 17,870,028 (1) 17,131,159 95.87 %' 526,025 1707,184 96.81% . 1994 -1995 17,730,237 (1) 17,105,142 (2) 96.47% 409,355 (2). 17,514,497 98.78% 1995 -1996 17,843,233 (1)' ,17,432,840 _ 97.70% 368;913 -` 17,801;753 99.77% 1996 -1997 20,563,561 20,096,688 97.739!o 897,670 20,994,358 102.09% . 1997 -1998 21,144,$04=:.. 20,472,716 96.82% 1,040,120 21,512,836 101.74% 19981999 22,738,432'r, 22,084,910 97.13% 1,113,950 23,198,860 102.02% . 1999 -2000 24,667,494 24,207,104 98.13% 1,398,573 25,605;677 103.80% 2000 -2001 27,405,295 26;856,091. 98.00% 886,625 27,742,716 101.23% . 2001 -2002 31,298,541 (3) 30,651,143 97.93 %.. 102,00V 30,753,144 98.26% (1) Effective FY 92/93 -FY 95/96, Orange County reduced Secured Property Tax Levy as a result of the State Budget Process (2) Funds were withheld due to the Orange County Bankruptcy. . (3) Includes estimated levy for Newport Coast properties that were annexed on January 1, 2002. Source: County of Orange Auditor - Controller's Office Unaudited -See Accompanying Auditors' Report. . 120 ■ ■ ■ $18,000 $16,500 $15,000 m 00 $13,500 '0 ,$12.000 0 g $10,500 Q m -0 $9,000 j $7,500 °o w $6,000 w Q $4,500 f $3,000 $1,500 $0 Total Assessed Valuation /Property Tax Collections (Last Ten Fiscal Years) 992 -93 1993 -94 1994 -95 1995 -96 1996 -97 1997 -98 1998 -99 1999 -2000 2000 -01 2001 -02 $35,000 $30,000 m 0 $25,000 0 m 9 C $20,000 0 f w $15,000 c m 0 $10,000 v T Y $5,000 c a` $0 Total Property Tax Collections /Delinquencies .. (Last Ten Fiscal Years) $35,000 $2,000 $30,000 n: -. _ $1,750 m c $25000 4 -sz. $1.500 0 o a $1,250 LO w $20,000 i 0 o = f $1,000 $15000 •,`~ .2 0 ' 1 $750 c o $10,000 =' c V $500 c o - c H _ $5.00o $250 $0 $0 1992 -93 1993 -94 1994 -95 1995 -96 1996 -97 1997 -96 1998 -99 1999 -2000 2000 -01 2001 -02 Unaudited -See Accompanying Auditors' Report. 121 0 122 Construction Activity (Last Ten Fiscal Years) . Fiscal Building Permits Percentage Estimated Percentage Year Issued Change Valuation Change . 1992 -1993 7,251 0.23% $ 72,170,274 6.77% 1993 -1994 6,986 - 3.650/c 70,3391522 -2.54% 1994 -1995 7,672 9:82%: 79,691,510 13.30% 1995 . -1996 8,302 8.21% 145,7601839. 1996-1997 9,085 9.43% 203,944,317 39.92% ■ 1997-1998 10,332 13 78 °k... 224,507,349 10.08% 1998-109 12,076 16.88,% 302,598,185' 34.78% . 1999 -2000 "10,412 ' - 13:78% 220,623,249... jt 27.09% 2000 2001 9,361. - 10.09% 226,778,793 2.79% -2001 -2002 9'j 0 43.54% 145,048,360. - 36.04% ■ r." City Budding Department no ■Source: Bank Deposits (Last Ten Fiscal Years) (tHousands), . CalenderYear Bank Deposits . . 1992 $4,359,067 . 1993 4,582,022 1994 4,193,643 . 1995 4,219,849 _ 1996 3,560,374 . 1997. 3,251,245 1998 3;520,677 . 1999 3,373,053 . . 2000 3,214,598 ■ 2001 3;278;317 2002 data for bank deposits will not be available until 12 -31 -02 . Source: The Findley Reports on California Financial Insitutions Unaudited -See Accompanying Auditors' Report. 122 $350 in $300 D °y $250 e 0 M $200 Q $150 c 0 5 $100 N C 0 $50 $u $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 1992 Estimated Value of Construction /Number of Building Permits (Last Ten Fiscal Years) Bank Deposits (Millions of Dollars) 1993 1994 1995 1996 1997 1998 1999 2000 2001 Unaudited -See Accompanying Auditors' Report ■ ■ 123 Property Tax Rates -- Direct and Overlapping Governments (Per $100 of Assessed Value) (Last Ten Fiscal Years) Fiscal School County ,,,County Flood : County, City Metro Water Year Districts Improvement Contort . & School Levy District 1992 -1993 0.00239 0.00013 0:00065 1993 -1994 0.00000 0.00011 0:00067 1994 -1995 0.00000- 0.00013 0.00037 1995 -1996 0.00000 -. 0.00012 0.00000 1996 -1997 .0.00000 0.00000. i iz, .000000 1997 - 1998: 0,170000 0.00000 0.00000 :. 1998- 1999': ' oboo.00 0.00000 0.00000.: 1999-200V,'.:-' 0.00000 „ 0100000 0:00000 2000 2001::-' 0,00000: 0 00000:; 0.00000 20011-2.001.2.,; 0.00690 0.00000 0.00000 Source County of bQge Autl for - Controller's Office 1.00000 0:011171 1.01488 1.00000. 0.00326 '.;; 1.00404 1.00000 0.00881 ' *:: 1.00931 1.00000 - 0.00890- 1.00902 1.00000_ 0.00857 1.00857 1.00000 ' 0.00890 1.00890 1.00000 0.00890 1.00890 1.00000 0.00890. 1.00890', 1.00000 0.00880, 1.00880 1.00000 0.00770 1.01460 Amount of debt applicable to debt limit Legal debt margin (1) The fiscal year 2002 debt limit is based on assessed value being equivalent to 100% of market value. Source: _City Administrative Services Department Unaudited- See Accompanying Auditors' Report. 124 $3;311,203,922 $6,365,000 $3,304,838,922 r r ■ ■ r ■ r ■ ■ ■ ■ ■ r ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ CITY OF NEWPORT BEACH Principal Taxpayers June 30, 2002 Pr_in Dal Taxoaver Bloomingdales'Inc. Downey Savings & Loan Association HMH Properties, Inc. Irvine Apartment Communities Irvine Company Koll Center Newport Newport Beach North LLC Pacific Mutual Life lnsuranee Palk Newport Land Ltd. 92cckwell Semiconductor-Systems Inc. Property Tax (listed alphabetically) Total Top Ten Principal Taxpayers $ 2,330,920,945 11:10% (1) Percentange of total secured. assessed valuation. UnaudltedSee Accompanying Auditors' Report. Source: HdL, Coren and Care Co. 125 2001 -02 Assessed Percent Type of Business Valuation of Total f 1) Retail $ 35,459,752 0.17% Real Estate 61,751,833 0.29% Real Estate 65,204,572 ., ;: 0.31% Apartment Buildings 265,006,067 1.26% Real Estate 926,646,311 4.41% Office Buildings 59,241,982 0.28% Real Estate 127,762,327 :0.61% Financial Services 35,730,922 0.17% Real Estate 61,538,808 U:29% Aerospace 692.577,571 Total Top Ten Principal Taxpayers $ 2,330,920,945 11:10% (1) Percentange of total secured. assessed valuation. UnaudltedSee Accompanying Auditors' Report. Source: HdL, Coren and Care Co. 125 Schedule of Direct and Overlapping Bonded Debt June 30, 2002 2001 -02 Assessed Valuation: (after deducting $223,520,638 redevelopment incremental valuation) DIRECT AND OVERLAPPING BONDED DEBT: % Applicable Orange County Tester Plan Obligations :7.821 % Metropolitan Water District 1 8581.°% Newport Mesa Unified School District 59 304 % $17,522,410,818 Debt 6/30102 $9,731,279 8,330,922 23 721 600 Combined Direct Debf($6 ,,610,000) 0.04% Source: California Municipal Statistics, Inc..:: Unaudited -See Accompanying Auditors' Report 126 ■ ■ ■ Newport Mesa Unified School District Community Facilities District No. 90-1 - "` 11.263-%-.1 2,148,847 Santa Ana Unified School District r 11,950 % 6,730,240 Irvine Ranch Water District Improvement Diatricfs',� .. 0.092 - 26:880 °k =: 3,862,166 Bonita Canyon Public FaG1100s- Financing Aulhority:Comm. Facilities Dist. No. 98-1 ' 99.720::% ' ' . 44,849,630 - City of Newport Beach Special Improvement District No. 95 -1 100% 15,495,000 (1) City of Newport Beach 1915 Act Bonds i 100 %. 4,839;730 (2) Orange County General Fund Obligations - -- ':. : -' -- 7.821 % 79,452,679. Orange County pension Obligations 7:821:% 10,528,043:' . Orange County Board of Education Cerbficate's'of parbcipalion 7.821%, 1,564,20.0 Orange County TrensiiDiihict Adthority - - 7.821 % 818,250 Orange Couriy$anitadon District Nos. 5, 6 &_7 Certificates of Part icipation 7.538- 84,634 °k 9,833,924. . Orange County Water District Certificates: of Participation .:._ 1.453 % 3,112,326 Municipal Water Districtlof OrangeCounty Water: Facilities Corporation 0.061% 32;754 Coast Community College District Certificates of Partid tiort 27.561% 4,219,589 South Orange County Community:.College'District Certificates of Participation 1'A48 °k Newpor! Mass Unified School District Certificates of Participation 59.304 % 2,022,266 Santa Ana' Unifiied School Diirict C.eitificates-of.Participadon .. 11.950 % 5,392,537 .:;. Irvine Ranch! CerGfiCalesof P. articipation ,..' .:. .. 2.753% 1,450;831 City of Neviport Beach Certif ceteg'of Participation 100% 6;365,000 TOTAL GROSS DIRECT AND OVERLAPPING. BONDED. DEBT (1) x$244,611,123 Less Orange Ccunty"Transd Dist(jct Authorlty;(80% self - supporting) (494,600) Orange County Water Districf Certifieates of Participation,(100% self- supporting) (3,112326) MWDCO Water Facllities.Corporation (100% self- supporting) (32,754) TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT (3) $240,971,443 (1) Exciudes $15,495,000 refunding bonds dated 81110E (2) Excludes-14,839730 1915 Act bonds dated 811101.: - (3) 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 Debf($6 ,,610,000) 0.04% Source: California Municipal Statistics, Inc..:: Unaudited -See Accompanying Auditors' Report 126 ■ ■ ■ ■ ■ Revenue Bond Coverage (Last Ten Fiscal Years) (3) Net Revenue Fiscal Gross Operating Available for Debt Service Requirements Year Revenues (1) Expenses (2) Debt Service Principal Interest Total Coverage 1994 -1995 $ 14,817,854 $ 11,471,118 .$ 3,346,736 $ - $ 811,037 $ 811,037 7.27 1995 -1996 16,145,307 13,220,028 2,925,279 820,000 898,878 1,258,420 2.32 1996 -1997 18,221,967 14,651,987 3,569,980 845,000 854,130 1,699,130 2.10 1997 -1998 161497,212 12,350,445 4,146,767 875,000 784,390 1,659,390 2.50 1998 -1999 . 17,658,076 11,145,936 6,512,140 335,000 593,469 928,469 7.01 1999 -2000 17,770,491 11,713,223 6,057,268 1,025,000 551,668 1,576,668 3.84 2000 -2001 18,215,185 11,784,120 6,431,065 1,105,000 510,225 1,615,225, 3.98 2001 -2002 17,809,919 13,289,297 4,520,622 1,145,000 456,573 1,601,573 2.82 (1) Gross revenues includes operating revenues, interest and intergovernmental revenues in the Water Fund (2) Total Water Fund operating expense excludes depreciation. (3) No revenue bonds were issued prior to fiscal year 1994 -95. 127 N 0 0 128 • Demographic Statistics (Last Ten Fiscal Years) City Fiscal city Orange County Population Per Capita Median Unemployment Year Population Population W-of-County Income Age Rate (1) 1992-1993 65,172 2- 599, 717 2.51 % 27,755 38.4 4.3% 1993-1994 68,784 4,523,774 21,73%61 4%593 _440.7 4.3% • 1994-1995 69;301 2,564345 2.700k 50,51*5. 40.3 3.6% 1995-1996 10,698 2,615,646 2.68% ' 52,452 40.6:. 3 20/ 1996-1997 i69,0.69 2,67.2,457 2.58% 53,569 41.7 2.6V', 1997-1998 70 30 �0.1 : 2 7 017 Z58% 56,000 43.5 2.0% 1998-19.99 72,623 2,775.600. 2.62% 59,051 43.9 1,8% 1999-2D00:1, 73,965 : 2,828,400 i,2.62% 62,598,1' 44.4 1.6% 2000-201U.I.., 032 46'289 2,846;289- 2 460Y( 63,015 41.6 1.6%, 2001-2002 75 662 ' ......... .. ..... .... . . : : . 2,939500 ... ... .. .. . 2.57% (2) 40.9 2.5% (1) U.S-11-1 p6hrrient of LaW:0B'ure'auof Labor Statistics (2) Not -bvallab'le: until Source: -, -::City Library Services Department Unaudited-Sae-Accompanying Auditors' Report. ■ 0 0 128