HomeMy WebLinkAboutFiscal Year 2003-04 Financial StatementCITY OF NEWPORT BEACH
CALIFORNIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
YEAR ENDED JUNE 30, 2004
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Comprehensive Annual Financial Report
For the Year Ended June 30, 2004
Prepared by the Administrative Services Department
Dennis Danner, Director
THE CITY OF NEWPORT BEACH WAS INCORPORATED SEPTEMBER 19 1906
THE PRESENT CITY SEAL WAS ADOPTED JUNE 22, 1957
Introductory Section
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CITY OF NEWPORT BEACH
Comprehensive Annual Financial Report
Year Ended June 30, 2004
TABLE OF CONTENTS
INTRODUCTORY SECTION
(Unaudited)
Tableof Contents ......................................................................................... ............................... i
Letterof Transmittal ........................................................ ............................... ............................iii
GFOA Certificate of Achievement for Excellence in Financial Reporting .... ............................xvi
CSMFO Certificate of Award for Outstanding Financial Reporting .............. ...........................xvii
..
List of City Officials .............................................................,................... ............................... xvw
OrganizationChart ............................................. ................ ...................................................... xix
FINANCIAL SECTION
Independent Auditors' Report ................................................................ ..............................1
Management's Discussion and Analysis .............................................. ..............................3
(Required Supplementary Information)
Basic Financial Statements
Government -wide Financial Statements:
Statement of Net Assets .................................................................... .............................19
Statement of Activities ........................................................................ .............................20
Fund Financial Statements:
Governmental Funds:
BalanceSheet ................................................................................. .............................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:
GeneralFund ............................................................................ .............................28
Tide and Submerged Land Fund ............................................... .............................30
Newport Coast Annexation ...................................................... ...............................
31
Proprietary Funds:
Statementof Net Assets ............................................................. ...............................
33
Statement of Revenues, Expenses and Changes in Fund Net Assets .....................
34
Statement of Cash Flows ........................................................... ...............................
35
Fiduciary Funds:
Statement of Fiduciary Assets and Liabilities — Agency Funds ....... .............................37
Notes to the Financial Statements ................................................... ...............................
39
Supplementary Schedules
Non -Major Governmental Funds:
Combining Balance Sheet .................................................................. .............................88
Combining Statement of Revenues, Expenditures and Changes in
FundBalances ................................................................................... .............................94
Budgetary Comparison Schedules:
StateGas Tax Fund .........................................................................
............................... 99
Traffic Congestion Relief Fund ........................... ...............................
............................100
AssetForfeiture Fund ......................................... ...............................
............................101
ContributionsFund ............................................. ...............................
............................102
Circulation and Transportation Fund .................. ...............................
............................103
Building Excise Tax Fund ................................... ...............................
............................104
Combined Transportation Fund ......................... ...............................
............................105
Arterial Highway Rehabilitation Fund ................. ...............................
............................106
Community Development Block Grant Fund ...... ...............................
............................107
Ackerman Donation Fund .................................. ...............................
............................108
Air Quality Management District Fund ................. ...............................
..........................109
Environmental Liability Fund ................................ ...............................
..........................110
Supplemental Law Enforcement Fund ................. ...............................
..........................111
Miscellaneous Grants Fund ............................... ...............................
............................112
Internal Service Funds:
Combining Statement of Net Assets .................. ............................... ............................113
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets....... 114
Combining Statement of Cash Flows ................. ............................... ............................115
Fiduciary Funds:
Combining Statement of Fiduciary Assets and Liabilities ................. ............................117
Statement of Changes in Fiduciary Net Assets .. ............................... ............................118
STATISTICAL SECTION (Unaudited)
Miscellaneous Statistics .............................................. ............................... ............................119
Governmental Revenues by Source, Last Ten Fiscal Years ..................... ............................120
Governmental Expenditures by Function, Last Ten Fiscal Years .............. ............................120
Assessed and Estimated Actual Values of Taxable Property, Last Ten Fiscal Years ...........122
Secured Property Tax Levies and Collections, Last Ten Fiscal Years ...... ............................122
Construction Activity, Last Ten Fiscal Years ............... ............................... ............................124
Bank Deposits, Last Ten Fiscal Years ........................ ............................... ............................124
Property Tax Rates, Direct and Overlapping Governments, Last Ten Fiscal Years ..............126
Computation of Legal Debt Margin ............................. ............................... ............................126
Principal Property Taxpayers as of June 30, 2002 ..... ............................... ............................127
Schedule of Direct and Overlapping Bonded Debt ..... ............................... ............................128
Revenue Bond Coverage, Last Ten Fiscal Years ....... ............................... ............................129
Demographic Statistics, Last Ten Fiscal Years .......... ............................... ............................130
CITY OF NEWPORT BEACH
ADMINISTRATIVE SERVICES
Dennis Danner, Director /Treasurer
November 29, 2004
Honorable Mayor and Members of the
City Council
City of Newport Beach
Newport Beach, California
The City Charter and California state law require that the City of Newport Beach issue
annually a complete set of financial statements and that an independent firm of certified
public accountants audit this report in conformance with generally accepted auditing
standards (GAAS). The Comprehensive Annual Financial Report (CAFR) of the City of
Newport Beach for the year ended June 30, 2004, is hereby submitted.
The CAFR was prepared in conformance with generally accepted accounting principles
(GAAP) as promulgated by the Governmental Accounting Standards Board (GASB).
This report consists of City management's representations concerning the finances of
the City of Newport Beach. Responsibility for the accuracy and completeness of the
data presented rests with the City. Management of the City is also responsible for
establishing and maintaining an internal control structure designed to ensure that the
assets of the government are protected from loss, theft, or misuse, and to ensure that
adequate accounting data is compiled to allow for the preparation of financial
statements in conformity with generally accepted accounting principles. The internal
control structure is designed to provide reasonable, but not absolute, assurance that
these objectives are met. The concept of reasonable assurance recognizes that: (1) the
cost of a control should not exceed the benefits likely to be derived; and (2) the
valuation of costs and benefits requires estimates and judgments by management. We
believe the information presented in this report is complete and accurate in all material
respects, and that it is reported in a manner designed to fairly present the financial
position and results of operations of the various activities of the City of Newport Beach.
Further, the City of Newport Beach's financial statements have been audited by Conrad
and 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, 2004, 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, 2004, are fairly presented in conformity with GAAP. The independent
auditor's report is presented as the first component of the financial section of this
3300 Newport Boulevard • Post Office Box 1768 • Newport Beach, California 92658 -8915
Telephone: (949) 644 -3127 • Fax: (949) 644 -3339 •Website: www.city.newport- beach.ca.us
iii
report. In order to conform to GAAP, the City was required to implement GASB
Statement 34 that significantly changed the format and the required information
presented in the annual report. The new model 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 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 in the coastal center of Orange County, in the
heart of Southern California, with Los Angeles County to the north and San Diego
County to the south. There are currently 34 cities within the County offering one of the
finest climates in the United States. Orange County is now the second largest county in
California trailing only Los Angeles and surpassing San Diego and is the sixth largest
county in the nation. In fact, according to the 2000 Census, Orange County now has a
greater number of residents than twenty of the Country's states including Montana,
Mississippi, and New Hampshire.
The City of Newport Beach is one of Southern California's most scenic and dynamic
communities. It surrounds Newport Bay, well known for its picturesque islands and one
of the greatest natural yacht harbors in the world, accommodating over 9,000 boats of
all types docked within its 21 square mile harbor area. This bay area and the ten miles
of ocean beach offer outstanding fishing, swimming, surfing, and aquatic sports
activities. The City has a permanent population of 79,392. During the summer months,
the population grows to over 100,000 with 20,000 to 100,000 tourists daily. There are
fine residential areas, modern shopping facilities, and a quality school system. A major
campus of the University of California is located immediately adjacent to the City, and
eight other colleges are within a 30 -mile radius.
The City of Newport Beach was incorporated September 1, 1906. The current City
Charter was adopted in 1954. The City operates under a Council- Manager form of
government. Council members are elected by district but voted on by the population as
a whole, and serve four -year staggered terms. The governing council consists of the
mayor and six other members and is responsible for among other things, policy- making,
passing local ordinances, adopting the budget, appointing committees and hiring the
City Manager, City Attorney, and City Clerk. The City Manager is responsible for
carrying out the policies and ordinances of the City Council, for overseeing the day to
day operations of the City, and for appointing heads of departments. The City of
Newport Beach is a full service city providing its residents and visitors with the following
functional services: general governance, legal, financial, information technology, and
administrative management; police, fire, paramedic, lifeguard, and emergency medical
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transport services; engineering, construction, and maintenance of public facilities, public
streets, beaches, and parks; planning, zoning, and economic development services;
building inspection, plan check, and code enforcement services; libraries and cultural
and arts services; recreation and senior services; water, wastewater, rubbish disposal,
and street light utility services. The City provides water and sewer service to most areas
within City limits, but it does not provide gas, electrical, or other utility service. Public
elementary and secondary education is provided by school districts, which are separate
government entities.
The City's financial statements present the financial activity of the City of Newport
Beach (the primary government) and the Newport Beach Public Facilities Corporation (a
component unit of the City). The Corporation is blended into the City's financial
statements because of its operational and financial relationship with the City. Even
though it is a legally separate organization, City of Newport Beach elected officials have
continuing accountability for fiscal matters of the Corporation. Additional information
about the Newport Beach Public Facilities Corporation and the reporting entity in
general can be found in footnote 1 a of the notes to the financial statements.
LOCAL ECONOMIC FACTORS
From 1950 -2004, the population of the City increased from 12,120 to 79,392. As vacant
land becomes increasingly scarce, sources for future projections show that population
growth will continue, but at a slower rate. By the year 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 $103.8
million. The top three revenue categories include Property Taxes, Sales Taxes, and
Transient Occupancy Taxes (TOT). These account for 65% of General Fund revenues.
The remaining 35% of revenue is generated by significantly smaller and very diverse
sources.
v
General Fund Revenues
340%1 399%. ° ■ Property Taxes
■ Sales Taxes
RM
7%
20%
❑ Transient Occupancy Taxes
❑ All Other Sources
Property Taxes — Largely a residential community, residential property accounts for
nearly 80% of all City Property Tax. Of the City's 41,400 dwelling units, 60% of the
housing is single - family units and 40% are multi - family units. The City receives, on
average, approximately 16.5% of the property taxes generated within City limits. The
remainder goes to the school district, the County, and other government entities. The
affluent neighborhoods and relatively constant demand for scenic coastal property
account for the stability of property taxes in the City. Recent home sale prices by
Newport Beach zip code are as follows:
Median Home Sales"
For the Month Ending 10/31/2004
" Source: DataQuick Information Systems
Due to the demand and limited supply of coastal property, total assessed property
values over a ten -year period, increased an average of 8.9% per annum.
Vi
Median
Percentage
Sales
Change from
Zip Code
Price
2003
92625
T1,195,000
8.6%
92660
$1,250,000
27.7%
92661
$1,805,000
-2.4%
92662
$2,545,000
61.6%
92663
$1,170,000
98.0%
92657
$2,103,500
87.0%
" Source: DataQuick Information Systems
Due to the demand and limited supply of coastal property, total assessed property
values over a ten -year period, increased an average of 8.9% per annum.
Vi
Sales Taxes — The chart below demonstrates the diversity of the City Sales Tax
revenue stream. The largest segment, "Restaurants," accounts for only 20% of total
sales taxes and is represented by 296 restaurants. The next largest segment, "New
Auto Sales," accounts for 15% of total sales taxes and is represented by five
dealerships. The "All- Other," categorization accounts for another 15% and is
represented by 651 businesses. The City's sales tax base is largely diverse and is not
dependent on any one segment or any one individual merchant.
Sales Taxes by Business Segment
15°% 20%
■Restaurants - 296 ■New Auto Sales - 5
2 0 Department Stores - 25 0 Miscellaneous Retail - 645
3%
3g; Q ■Apparel Stores - 133 ■ Leasing - 56
3% ■ Furniture / Appliance -227 0 Food Markets - 36
4% ' 5%
■ Misc. Vehicle Sales - 50 ■Office Equipment - 76
6 °/
a °r°
❑ Service Stations - 16 ■ Light Industry - 181
6% 710% ■ Other -651
9%
Transient Occupancy Taxes (TOT) — The TOT accrues to the City at a rate of 10% of
room charges (with 18% of the collection going to the local Conference and Visitors
Bureau). The City distinguishes its transient occupancy taxpayers in two broad property
type categories, commercial and residential property. The commercial category is
composed of nine hotels (Balboa Bay Club, Extended Stay America, Four Seasons
Hotel, Hyatt Newporter Hotel, Marriott Ownership Resorts, Marriott Suites, Marriott
Hotel & Tennis Club, Newport Hotel, and Sutton Place Hotel) and eleven inns and
motels. The residential category is made up of some 581 vacation rentals. Together,
they account for nearly $8.0 million in annual TOT revenue as follows:
vii
Annual
Revenues
Percent
In Millions
of Total
Commercial Property:
Hotels
$ 6.7
84%
Inns / Motels
$ 0.4
5%
Residential Property:
Vacation Rentals (581 Units)
$ 0.9
11%
$ 8.0
100%
vii
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U.S. Economy — National, state and local economies have experienced solid, broad
based economic growth in the last year despite sharply rising fuel costs and uneven job
growth. The gains have been fueled by strong performances in interest sensitive sectors
such as housing, business capital investment, and continued strength in consumer
spending.
Looking ahead, many economists expect economic growth to taper modestly in 2005
due to the rising energy costs, high household debt levels, and mild increases in interest
rates. The outlook beyond 2005 becomes a bit uncertain as the dollar continues to
decline amidst soaring federal trade and budget deficits. The combined effect of rising
inflation due to higher energy costs, rising interest rates, high household debt levels,
and a deflating dollar may be enough to significantly dampen consumer spending.
State of California — The State has had significant structural budget shortfalls since
2001 -02 when revenues plunged following the recession and steep stock market
decline. The annual gap between projected revenues and expenditures has been
massive, reaching as much as twenty -five percent of General Fund spending. The
2004 -05 budget grappled with a $15 billion dollar deficit. While the State has addressed
the annual shortfalls in each of the past three budgets, many of the budget - balancing
actions involved limited -term solutions such as substantial borrowing, spending
deferrals, accounting shifts, and diversions of local government tax revenues.
Although revenues are sharply up in 2004 -05, the Legislative Analyst Office (LAO)
predicts, "Even in the face of an expanding economy and strengthening revenues, it is
unlikely that California will be able to simply grow its way out of this shortfall due to the
size and persistence of the budget gap." Because of the State's reliance on limited -term
solutions, it was clear when the 2004 -05 budget was adopted that the State will
continue to face substantial budget shortfalls in the future until real and ongoing
solutions are adopted to close the budget gap. In approaching the 2005 -06 budget,
California's policymakers face a deceptively difficult challenge.
Local Economy — Since geographic and socioeconomic conditions in Orange County
and the City are very desirable, property values in Newport Beach are projected to
remain high, and the City's property tax revenues are anticipated to maintain a
favorable trend for many years to come. The total Newport Beach assessed valuation
for 2003 -04 increased by nearly 9.7% and the ten year average is 8.9 %.
The outlook for Sales Tax and Transient Occupancy Taxes are expected to remain solid
but leveling a bit for 2004 -05 generally following the expected national consumer
spending trend. Sales tax collections through the first quarter of 2004 -05 are tracking on
target and hotel management is encouraged by relatively high occupancies.
Viii
Local Economic Concerns — For many years the City has been contending with financial
uncertainty due to anticipated State "takeaways" and rising pension costs.
State Takeaways — History has shown that when the State is in trouble, it has a
tendency to permanently dip into local governments' pockets. One example of this has
been the 13 year -old practice of shifting local property taxes to a special Educational
Revenue Augmentation Fund (ERAF) in each county to be distributed to schools,
allowing the State's General Fund responsibility for school funding to be reduced and
the monies spent elsewhere in the State budget. In Newport Beach, ERAF versions I &
II have cost taxpayers nearly $50 million dollars in lost property tax dollars that would
have otherwise been used to fund City operations and capital improvements.
For the coming years, the State has introduced three new budget balancing actions as
part of SB 1096 that heavily impact local governments. The three elements are
commonly referred to as "ERAF III ", the "Triple Flip" and the "VLF Swap."
ERAF III — for Fiscal Years 2004 -05 and 2005 -06 only, the City will be losing an
additional $2,264,302 of property taxes to the State, made up by a formulae of
1/3 property tax, 1/3 sales tax, and 1/3 vehicle license fees.
TRIPLE FLIP — Beginning with the September 2004, sales tax payment (received
in October 2004) 25% of the City's sales tax will be shifted to the State as a
dedicated repayment source for the State's economic recovery bonds. The shift
is based on the actual 2003 -04 sales tax allocation to the City with a statewide
estimated growth rate applied. This shift will be made up, dollar for dollar, with an
allocation from the County ERAF account with two payments, due on or before
January 31St and May 1St of each fiscal year with any true up payments due in
January, 18 months after the beginning of the fiscal year. The Triple Flip will be in
effect until the State recovery bonds are paid in full.
VLF SWAP — Beginning in January 2005, the Vehicle License Fee is permanently
reduced to 0.65% from 2.0% of the vehicle's fair market value. Any loss to cities
by this rate reduction will be made up, dollar for dollar, with an allocation from the
County's ERAF account with two payments, due on or before January 31St and
May 31St of each year. This allocation will grow by any corresponding growth in
the City's secured property tax growth.
Since only ERAF III results in a real loss of funding for the City for fiscal years
2004 -05 and 2005 -06, the fiscal effects of the Triple Flip and VLF Swap is mostly
a cash flow issue - since we will now receive payments for both of these items
twice a year vs. monthly. This should have little effect on the City since our
current portfolio investment rates are so low. It will cause accounting issues, i.e.,
property tax in lieu of sales tax, and property tax in lieu of vehicle license fees
must be recorded. However, it will make tracking of "real" property tax revenues
much more difficult.
ix
Defined Benefit Pension Costs — The City contracts with the California Public
Employees' Retirement System (PERS) for certain defined pension benefits. The City's
contributions to the plan include a fixed employer paid member contribution and an
actuarially determined employer contribution that fluctuates each year based on an
annual actuarial plan valuation. This variable rate employer contribution includes the
normal cost of providing the contracted benefits plus or minus an amortization of plan
changes and net actuarial gains and losses since the last valuation period. It is the
City's policy to make contributions to the plan equaling at least 100% of the actuarially
required contribution (annual pension cost).
Benefit revisions in recent years have and 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% at age 60 to 2% at age 55 and the police
safety employees benefit formula increase from 2% at age 50 to 3% at age 50. Newport
Beach fire and marine safety employees have a 3% at age 55 benefit formula. 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.
More significant than the benefit changes have been the pension asset investment
losses caused by the downturn in the equities markets between 2000 and 2002.
Although PERS has a fifteen -year average compounded return on investments of
9.38 %, recent actuarial investment losses have a significant impact on actuarially
required employer contributions. Until recently PERS actuaries assumed an annual
investment return of 8.25 %. The actual investment returns for fiscal years ended 2001,
2002, and 2003 were -7.2 %, -5.9 %, and 3.9% respectively. This produced a three -year
actuarial loss of - 15.45 %, - 14.15 %, and -4.35% respectively or a three -year cumulative
actuarial loss of - 33.95 %. Because of asset smoothing techniques, only a portion of the
total loss for these years has been reflected in employer contribution rates through
2005 -06. The balance of the loss will have an adverse impact on employer contribution
rates in subsequent years. The 2004 investment returns rebounded to achieve a
16.57% market value rate of return. However, due to the same asset smoothing
technique used on actuarial losses, the asset gain will be spread over many years. The
net result is that the City can expect the employer contribution rates to continue to rise
for the next several years.
To put things in perspective, the chart below represents the total PERS cost of both the
Miscellaneous and Safety pensions for the past five years as well as an estimate of the
next two years.
x
Total Actual and Estimated Contributions to
Cal PERS Retirement Plan
(In Millions)
$15
$10
$5
P
2000 2001 2002 2003 2004 2005 2006
Est. Est.
For more information on the City's pension plan and funding levels, see footnote 10 in
the notes to the financial statements.
OTHER FACTORS EFFECTING FINANCIAL CONDITION
Post Employment Health Plan — The City of Newport Beach provides post -
employment health benefits for certain retirees. At the end of the current fiscal year,
there were 312 retirees enrolled in City's health plans out of the 589 retirees eligible to
receive 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
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.
Employee Bargaining Agreements — Current employee bargaining unit agreements
provide for salary and benefit increases ranging from 2% to 4% of salary and benefits.
All safety employee agreements are due to expire in December, 2004. All miscellaneous
agreements will expire in June, 2005. There will be many factors considered during
negotiations to renew these agreements.
Summary of Economic Status — Even though the local economy remains solid, the
rippling effect of the past economic recession is still very serious. As previously
discussed, the State's continued budget crisis, rapidly increasing pension costs, and
economic uncertainties may have a profound impact on local governments for many
years to come.
xi
Due to a conservative fiscal policy and strong local economic vitality, the City has been
able to weather the foregoing financial uncertainties thus far with little impact. Our
number one revenue source, property tax, has experienced strong growth for the past
several years due to the annexation of Newport Coast, the strong real estate market in
Orange County, and low interest rates especially as Pre - Proposition 13 homes are sold
and reassessed at today's market prices. In addition, the City has taken a conservative
approach to forecasting revenues, often assuming a "worst case scenario" of State
actions.
Due to the uncertainty of State actions and anticipating the increase in pension costs,
the City has chosen, for the past three years, to hold the operating budget flat, defer
capital projects where feasible, and shore up reserves. This fiscal conservatism has
helped stabilize the City's finances and as a result, we are able to maintain our course
without cuts in service. The City's current fiscal posture is relatively strong and we are
as prepared as we can be for economic uncertainties of this magnitude. Over the past
several years the City has funded a pension reserve at $9.0 million to help amortize the
rapidly rising pension costs. To date, we have not had to draw on that reserve to fund
our pension obligations. As of June 30, 2004, the City's General Fund Contingency and
Stabilization reserves were fully funded at nearly $14.3 million. In addition, the City has
designated nearly $5.7 million for planned capital projects. A lot can go wrong in the
coming years, but the City has positioned itself well to work through this crisis with the
intent to limit the impact on public services as much as possible.
STEWARDSHIP
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 proposed budget document to the City Council. The City Council holds
a budget hearing and adopts a budget on or before June 30, the close of the City's
fiscal year.
Cash Management — It is the City's policy to invest all temporarily idle short-term funds
and longer -term reserves in a manner that will maximize return without sacrificing
security or jeopardizing liquidity requirements. Idle funds are invested in accordance
with the Government Code and a formal Investment Policy approved by the City
Council. The policy, which is reviewed and updated annually, allows investments in a
variety of specific instruments, as well as certain state, county, and private sector
investment pools and asset management services. Certificates of deposit, demand
deposits, bankers acceptances, U.S. Government and agency securities, commercial
paper, repurchase agreements, and the Local Agency Investment Fund are examples.
xii
The City's current investment strategy is to normally place most of the funds with five
private sector investment management firms. Each of these intermediaries is guided by
and constrained to an investment program at least as restrictive as the policy governing
the City's direct investments. Regular reporting, both in writing and by personal
presentation, is required. Additionally, with regard to the private sector firms, well -
established and highly reputable third party custodians hold all cash or securities
managed by them on the City's behalf. Smaller, more liquid portions of the portfolio are
invested directly by City staff or placed with the State Pool (LAIF). For more information
on the City's investment policy, see footnote 4 in the notes to the financial statements.
Risk Management — The City maintains a risk management program, which is a
combination of self- insured retention, excess insurance coverage, and written policies
regarding department safety procedures. The City is also insured for environmental
liabilities associated with waste disposal. As part of the City's Risk Management
program, resources are aggressively set aside in an Internal Service Fund (Insurance
Reserve Fund) to meet current and probable losses. All claims are investigated, valued,
reserved, and defended and /or settled in accordance with generally accepted industry
practices. Additional information on the City of Newport Beach's risk management
activity can be found in footnote 8 in the notes to the financial statements.
OTHER INFORMATION
Awards — The City has prepared a comprehensive annual financial report for twelve
straight years. The City has been fortunate to receive state and national awards for
excellence in financial reporting each of those years.
The Government Finance Officers Association of the United States and Canada
(GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to
the City of Newport Beach for its comprehensive annual financial report for the fiscal
year ended June 30, 2003. In order to be awarded a Certificate of Achievement, a
government unit must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted
accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our
current comprehensive annual financial report continues to conform to the Certificate of
Achievement Program's requirements and we are submitting it to GFOA to determine its
eligibility for another certificate.
The California Society of Municipal Finance Officers (CSMFO) is a state organization
which sponsors extensive training and emphasizes high standards in all aspects of
municipal finance operations, including financial reporting. As a result of last year's
report, the City of Newport Beach is fortunate to have remained among the ranks of
California cities that have met the rigorous standards of financial reporting required of
xiii
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 year as well.
ACKNOWLEDGMENTS
Preparation of this report was accomplished through the efficient and dedicated
services of virtually everyone in the City's Accounting Division and Print Shop. In
addition, members of the Administrative Services Department would like to thank the
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.
Hom L. Bludau
City Manager
xiv
Dennis C. Danner
Administrative Services Director
This page left blank intentionally.
xv
Certificate of
Achievement
for Excellence
in Financial
��'i`'ot�l`0
Presented to
City ®f Newport Beach,
CaEfomia
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2003
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
xvi
California Society Of
OHUnicipal 31inancr, OfTicers
Certificate of Award
,t
111p 1 jri13jj!1 117111111
Presented to the
I � � / 'I
t
This certificate is issued in recognition ofineeting professional standards and criteria in reporting
PO y which reflect a high level of quality in the annual financial statements
and in the underlying accounting system from which the reports were prepared
z
f ' March 1, 2004
t,
g �
,x
Chair, Pr.f.ianal & Technical Stand.,& Committ r
Dedicated to Excellence in Municipal Financial Management
xvii
NEWPORT BEACH CITY OFFICIALS
City Council
I&
Tod W. Ridgeway
Mayor
Steven Rosansky Garold B. Adams Don Webb
Council Member Mayor Pro Tern Council Member
6 �.
Steve Bromberg Richard A. Nichols John Heffernan
Council Member Council Member Council Member
Principal Administrative Officers
q U
Homer L. Bludau
City Manager
LaVonne M. Harkless Robert H. Burnham
City Clerk City Attorney
Sharon Wood .......... ...............................
Assistant City Manager /Director of Community & Economic Development
DaveKiff ............................................................................
............................... ......................Assistant City Manager
Dennis C. Danner .....................................................
............................... Administrative Services Director /Treasurer
BobMcDonell ..............................................................................
............................... ..........................Chief of Police
TimRiley .......................................................................................................................
............................... Fire Chief
David E. Niederhaus ..........................................................................
............................... General Services Director
Marie Knight ...............................................
............................... .....................Recreation & Senior Services Director
Patricia L. Temple .............................................................................................
............................... Planning Director
JayElbettar .......................................................................................................
............................... Building Director
Steve Badum .............................................................................................
............................... Public Works Director
Diana Axley ......................................................................................
............................... Human Resources Director
Eldon Davidson .............................................................................
............................... ......................Utilities Director
Linda Katsouleas .................................................................%:................
............................... Library Services Director
xvw
ELECTORATE
O
ELECTED OFFICIALS
Fiscal Year 2003 -2004
16, 2003
ASS IGTANT CITY MANAGER
ASSISTANT CITY MANAGER
MAYOR
BOARD OF LIBRARY TRUSTEES —
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Advance Planning
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Fire Supshowion(Operations) Ocean Lifeguards
Atlministration
Training and Education Hazardous Meh is
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Fire Prevention Junior LlfeguaM Program
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CIwL SERVICE BOARD
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CITY CLERK
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HARBOR COMMISSION
L — — — — -- J� I
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O
ELECTED OFFICIALS
Fiscal Year 2003 -2004
16, 2003
ASS IGTANT CITY MANAGER
ASSISTANT CITY MANAGER
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PLANNING
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Current Plans & Prejecis
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Advance Planning
II
I
FIRE
Oil & Gas
Fire Supshowion(Operations) Ocean Lifeguards
Atlministration
Training and Education Hazardous Meh is
Fire Prevention Junior LlfeguaM Program
I
Administration Emergency Medical Services
II
BUILDING
U—
Plan Checking
— —
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Pertdlons
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ADMINISTRATIVE SERVICES
Engineering
Purchasing &Warehousing
A,
CIP Management
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Treasury Management Billing 8 Receivables
Construction Management
GeograpM1ic Information System TelecR..m wdons
Development Services
Management Information Systems Revenue
I
HUMAN RESOURCES
�I
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Personnel Administration
Parke and Trees Operations Sii
Sol Management
Field Maintenance Traffic Signs &Markings
Risk Management
Building Maintenance Refuse Collection
Labor Relations
O
ELECTED OFFICIALS
Fiscal Year 2003 -2004
16, 2003
ASS IGTANT CITY MANAGER
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Pier¢Inlwm has
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UTILITIES
I
Water
Waste —ler
Electrical
Oil & Gas
Atlministration
I
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POLICE
Patrol
Taff Support Service,
Donations Animal Control
Parking
I
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PUBLIC WORKS
Engineering
CIP Management
Construction Management
Development Services
Traffic
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GENERAL SERVICES
Parke and Trees Operations Sii
Field Maintenance Traffic Signs &Markings
Building Maintenance Refuse Collection
Equipment Maintenance Recycling
RECREATION &SENIOR SERVICES
�I
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Senior Services
LIBRARY SERVICES
Library
CuIW21Ads
r - - - --I
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COUNCILAPPOINTED BOARDS & COMMISSIONS
Ax
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COUNCILAPPOINTED POSITIONS
CITY DEPARTMENTS
This page left blank intentionally.
xx
Financial Section
N .
N .
�l
COe AD AND
CERTIFIED PUBLIC ACCOUNTANTS
?01 DRIVE, 0
AS S O CI LSD
I VI E, CALIFORNIA FORNIA 92F
(949) 474 -2020
Fax (941)) 267 -5520
City Council
City of Newport Beach
Newport Beach, California
Independent Auditor's Report
We have audited the accompanying financial statements of the governmental activities, the business -
type activities, each major fund, and the aggregate remaining fund infonnation of the City of Newport
Beach, California, as of and for the year ended June 30, 2004, which collectively comprise the City's
basic financial statements, as listed in the table of contents. These financial statements are the
responsibility of the management of the City of Newport Beach. Our responsibility is to express
opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and Goverment Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business -type activities, each major fund,
and the aggregate remaining Rind information of the City of Newport Beach, California, as of June 30,
2004, and the respective changes in financial position and cash flows, where applicable, of the City of
Newport Beach, California and the respective budgetary comparison information for the general fund
and major special revenue funds of the City for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
The information identified in the accompanying table of contents as management's discussion and
analysis are not a required part of the basic financial statements, but are supplementary information
required by the Governmental 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 required supplementary information. However, we did not audit the information and
express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Newport Beach's basic financial statements. The introductory section,
combining and individual nonmajor fund financial statements and statistical tables are presented for
purposes of additional analysis and are not a required part of the basic financial statements. The
combining and individual nonmajor fund financial statements have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in
all material respects in relation to the basic financial statements taken as a whole. The introductory
section and statistical tables have not been subjected to the auditing procedures applied in the audit of
the basic financial statements and, accordingly, we express no opinion on them.
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
City Council
City of Newport Beach
Newport Beach, California
In accordance with Government Auditing Standards, we have also issued a report dated November 12,
2004 on our consideration of the City's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts and 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.
November 12, 2004
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, 2004. This analysis should be read in conjunction with the
Transmittal Letter at the front of this report and the accompanying Basic Financial Statements.
FINANCIAL HIGHLIGHTS
Long -term Economic Resource (Government -wide) Focus — Economic resources are
differentiated from financial resources in that the economic measurement focus measures
changes in net assets as soon as the event occurs regardless of the timing of related cash
flows. Therefore, this measurement focus includes both current spendable resources and fixed
non - spendable assets, and long -term claims against these assets. The resulting net asset
utilizing this measurement focus provides one measure of the City's overall long -term financial
condition.
• The assets of the City exceeded liabilities at the close of the most recent fiscal year by
$1.721 billion. The vast majority of this figure is represented by illiquid capital assets
including land and infrastructure. Capital assets net of accumulated depreciation and
any related debt totaled $1.607 billion, while the remaining balance of net assets totaled
$113.8 million. Of this amount, $68.3 million represents unrestricted net assets that may
be used to meet the City's ongoing obligations to citizens and creditors for both
governmental and business -type activities.
• The City's total net assets increased $101.9 million (6.3 %) to $1.721 billion as a result
of current year activities. The increase is attributable to a $102.7 million special item,
capital contribution related to the annexation two previously unincorporated areas
known as East Santa Ana Heights and Bay Knolls. Excluding the special item, net
assets decreased $0.8 million.
The City's total debt decreased by $4.0 million during the current fiscal year from $58.2
million to $54.2 million. The decrease is the net result of regular debt service payments,
a net increase in the worker's comp payable, and net decreases in claims and
judgments payable and compensated absences.
Short -term Financial Resource (Fund) Focus — The Financial resources focus measures
inflows of current spendable assets. The resulting net difference between current financial
assets and current financial liabilities otherwise known as fund balance (or net working capital
in the private sector) is a measure the City's ability to finance activities in the near term.
• At the close of the current fiscal year, the City's Governmental Funds reported a
combined ending fund balance of $83.5 million, an increase of $9.0 million.
Approximately $72 million is unreserved fund balance available to fund current
obligations at the City Council's discretion. Of the $72 million unreserved fund balance,
City Council has designated $14.3 for stabilization and unspecified contingencies while
3
the remaining $57.7 million is designated for capital projects, appropriations, and other
special purposes.
• The General Fund reported an increase of $5.0 million in fund balance after transferring
$16.4 million to other funds. Of this transfer, $13.1 million represented a routine transfer
to subsidize the operations of the Tide and Submerged Land Fund, while $2.0 million
represented a nonrecurring transfer to bolster certain Internal Service fund operations.
• At the end of the current fiscal year, unreserved fund balance for the General Fund was
$37.7 million, or 42% of total General Fund expenditures. Although unreserved and
available to fund current obligations, 100% of this balance is designated for
contingencies, stabilization, capital projects, appropriations, and other special purposes.
1011VA4 WA IATA7L0la I: l=Iy10/_10[N/_1W-3 IF_A14�d21011K
The financial section of the comprehensive annual financial report contains the following
information: Independent Auditor's Report, Management's Discussion and Analysis (this
section), the Basic Financial Statements, and the Supplementary Information section, an
optional section that presents combining and budgetary schedules for individual non -major
funds. The Basic Financial Statements are comprised of three components: 1) Government -
wide Financial Statements, 2) Fund Financial Statements and, 3) Notes to the Financial
Statements. The Management's Discussion and Analysis is intended to be an introduction to
the Basic Financial Statements.
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements — The Government -wide Financial Statements are
intended to provide a "Big Picture" view of the City as a whole using accounting methods
similar to those used by private sector companies. The statement of net assets includes all of
the City's assets (including non - spendable assets like streets, roads, and land rights) and
liabilities (including long -term liabilities that may be paid over twenty or so more years). All of
the current year revenues and expenses are accounted for in the statement of activities
regardless of when cash is received or paid.
The two Government -wide Financial Statements report the City's net assets and how they
have changed. Net assets — the difference between the City's assets and liabilities — is one
way to measure the City's financial health, or position. Over time, increases or decreases in
the City's net assets are an indicator of whether its financial health is improving or
deteriorating, respectively. To assess the overall health of the City, one should also consider
additional non - financial factors such as changes in the City's property tax base and the
condition of the City's roads.
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
4
departments, and general administration. Taxes and other general revenues finance
most of these activities.
Business -type Activities — The City accounts for its Water and Wastewater utilities as
business enterprises. The City charges fees to customers to recover the cost of
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.
The City utilizes three broad categories of funds:
Governmental Funds — Governmental Funds are used to account for essentially the
same functions reported as Governmental Activities in the Government -wide Financial
Statements. However, unlike the Government -wide Financial Statements,
Governmental Fund Financial Statements utilize the financial resources measurement
focus and thus concentrate on near -term inflows and outflows of spendable resources,
as well as on balances of spendable resources available at the end of the fiscal year.
Consequently, the Governmental Fund Financial Statements provide a detailed short-
term view that helps a reader determine whether there are more or fewer financial
resources that can be spent in the near future to finance City programs. Also included in
the Governmental Funds are Permanent Funds. These funds are used to report
resources that are legally restricted for the extent that only earnings, not principal, may
be used for purposes that support City programs.
Proprietary Funds — Services for which the City charges customers a fee are generally
reported in Proprietary Funds (Enterprise Funds and Internal Service Funds). Like the
Government -wide Financial Statements, these funds provide both long and short-term
financial information utilizing the economic resources measurement focus. The City's
Enterprise Funds (Water and Wastewater Funds) are individual funds represented in
the combined presentation of Business -type Activities in the Government -wide Financial
Statements. The individual fund presentation provides more detailed information about
each business segment, its operating statements, and statements of cash flow. The City
also uses Internal Service Funds that are utilized to report and allocate the cost of
certain centrally managed and operated activities (e.g. fleet maintenance, risk
management, etc.). Because the Internal Service Funds primarily serve the
government, they are reported with Governmental Activities rather than the Business -
type Activities in the Government -wide Financial Statements.
Fiduciary Funds — The City utilizes Fiduciary Funds to account for assets held by the
City in a trustee capacity, or as an agent for other governmental entities, private
organizations, or individuals. All of the City's fiduciary activities are reported in a
separate statement of fiduciary net assets and a statement of changes in fiduciary net
assets. We exclude these activities from the City's Government -wide Financial
Statements because the City cannot use these assets to finance its operations.
5
Notes to the Financial Statements - The financial statements also include the Notes to the
Financial Statements that provide important narrative details about the information contained in
the financial statements. Information contained in the Notes to the Financial Statements is
critical to a reader's full understanding of the Government -wide and Fund Financial
Statements.
Supplementary Information - In addition to the required elements of the Basic Financial
Statements, we have also included a Supplementary Information section, which includes
budgetary and combining schedules that provide additional details about the City's non -major
Governmental Funds, Internal Service Funds, and Fiduciary Funds.
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Net Assets - Net assets may serve over time as a useful indicator of a government's financial
position. The City's combined net assets for the year ended June 30, 2004, as shown in Table
1, were $1.721 billion.
Current and other assets
Capital assets
Total assets
Long -term liabilities outstanding
Other liabilities
Total liabilities
Net assets
Invested in capital assets, net of debt
Restricted
Unrestricted
Total net assets, as restated
Table 1
Net Assets
(in thousands)
Governmental Activities
2003 2004
$ 124,006
$ 128,078
1,441,059
1,538,211
1,565,065
1,666,290
48,437
45,615
17,283
15,756
65,720
61,372
1,412,372
1,512,651
37,651
45,494
49,322
46,773
$ 1,499,345
$ 1,604,918
Business -Type Activities
2003 2004
$ 26,763 $ 25,822
101,677 101,316
128,441 127,138
9,765
2,536
8,535
2,903
12,301
11,438
91,912 94,207
24,228 21,494
$ 116,140 $ 115,700
Total
2003 2004
$ 150,770 $ 153,900
1,542,736 1,639,528
1,693,506 1,793,428
58,202
19,818
54,150
18,659
78,020
72,809
1,504,285 1,606,858
37,651 45,494
73,550 68,266
$ 1,615,485 $ 1,720,618
Invested in Capital Assets - By far the largest component of net assets, $1.607 billion
(93.4 %), reflects the City's investment in capital assets (e.g., land, buildings, infrastructure,
and equipment) less accumulated depreciation and any related outstanding debt used to
acquire those assets. The City's capital assets do not represent a financial resource and
consequently are not readily available for funding current obligations.
Restricted Assets - An additional portion of the City's net assets, $45.5 million (2.7 %),
represents resources that are subject to external restrictions on how they may be used.
C
Unrestricted Assets - The remaining balance of unrestricted net assets, $68.3 million (3.9 %)
may be used to meet the City's ongoing obligations to citizens and creditors.
Overall the City's net assets increased $101.9 million during the current fiscal year. This
increase is attributable to a $102.7 million special item, capital contribution related to the
annexation of two previously unincorporated areas known as East Santa Ana Heights and Bay
Knolls (see Note (16) in the Notes to the Financial Statements). Excluding this special item, net
assets decreased $0.8 million in the current year. The key financial activity for the year ended
June 30, 2004 is as follows:
Revenues:
Program Revenues:
Charges for services
Operating grants and capital contributions
Capital grants and contributions
General Revenues:
Taxes:
Property taxes
Sales tax
Transient occupancy taxes
Othertaxes
Investment related income
Property income
Miscellaneous
Share of joint venture net income
Special Item:
Capital contributions
Total revenues
Expenses:
General government
Public safety
Public works
Community development
Community services
Interest
Water
Wastewater
Total expenses
Increases in net assets before transfers
Transfers
Increase in net assets
Net assets, beginning, as restated
Net assets, ending
Table 2
Changes in Net Assets
(in thousands)
Governmental Activities
Business -Type
Activities
Total
2003
2004
2003
2004
2003
2004
$ 29,683
$ 31,812
$ 19,258 $
21,312
$ 48,941 $
53,124
8,751
10,681
-
-
8,751
10,681
4,147
675
-
-
4,147
675
39,475
43,632
-
-
39,475
43,632
20,134
21,844
-
-
20,134
21,844
8,055
8,045
-
-
8,055
8,045
9,524
10,049
-
-
9,524
10,049
2,430
224
946
116
3,376
340
-
-
30
30
30
30
1,426
215
-
-
1,426
215
389
147
-
-
389
147
17,837
102,713
-
215
17,837
102,929
141,850
230,036
20,234
21,673
162,085
251,709
10,800
11,428
-
-
10,800
11,426
56,522
58,179
-
-
56,522
58,179
32,089
38,128
-
-
32,089
38,128
5,782
6,230
-
-
5,782
6,230
10,404
14,742
-
-
10,404
14,742
674
542
-
-
674
542
-
-
14,540
17,185
14,540
17,185
-
-
3,115
3,364
3,115
3,364
116,271
129,248
17,655
20,549
133,926
149,797
25,579
100,788
2,579
1,124
28,158
101,912
33
58
(33)
(58)
-
-
25,612
100,846
2,546
1,066
28,158
101,912
1,473,733
1,504,072
113,594
114,634
1,587, 327
1,618,706
$ 1,499,345
$ 1,604,918
$ 116,140 $
115,700
$ 1,615,485 $
1,720,618
7
Governmental Activities — The cost of all governmental activities in the current fiscal year
was $129.2 million. As shown in the statement of activities, $32.4 million of the costs was paid
by those who directly benefited from the programs, $11.4 million was financed by contributions
and grants received from other governmental organizations, developers, and property owners
for both capital and operating activities, and $86 million was subsidized through general City
revenues.
Net assets for governmental activities of the City at the beginning of the year were $1.5 billion,
and increased by $100.8 million by the end of the year accounting for 99% of the total growth
of net asset for the City as a whole. The growth was attributable to a special item, capital
contribution discussed above.
The City is a full service city providing residents and visitors with the following functional
services:
General Government is comprised of six departments (City Council, City Clerk, City Manager,
City Attorney, Human Resources, and Administrative Services) providing general governance,
executive management, legal services, records management, risk management, finance,
accounting, and information technology services.
Public Safety is comprised of two departments (Police and Fire) providing general law
enforcement, fire suppression and prevention services, paramedic and medical transport
services, disaster preparedness, and ocean lifeguard services.
Public Works is comprised of two departments (Public Works and General Services) providing,
engineering, construction and maintenance of public streets, highways, buildings, beaches,
parks, and related infrastructure; as well as traffic engineering, street lighting, and trash
disposal services.
Community Development is comprised of two departments (Planning and Building) that
provide planning and zoning services; economic development services, and building plan
check and code enforcement services.
Community Services is comprised of two departments (Libraries & Arts and Recreation &
Senior Services) providing library services, cultural and arts programs, recreation services, and
senior social and transportation services.
Business Enterprise Operations are overseen by one department (Utilities) providing water and
wastewater services.
K
Each programs' net cost (total cost less revenues generated by the activities) is presented
below. The net cost shows the extent to which the City's general taxes support each of the
City's programs.
General government
Public safety
Public works
Community development
Community services
Interest
$60
$50
$40
$30
$20
$10
$0
Table 3
Governmental Activities
(in thousands)
2003
Total Cost Net Cost
of Service of Service
$ 10,800
$ (7,791)
56,522
(43,808)
32,089
(18,426)
5,782
(1,759)
10,404
(1,232)
674
(674)
$ 116,271 $ (73,691)
2004
Total Cost Net Cost
of Service of Service
$ 11,428
$ (9,301)
58,179
(41,030)
38,128
(26,161)
6,230
(1,034)
14,742
(7,451)
542
(542)
$ 129,248
$ (85,519)
Table 4
Program Expenses and Revenue - Governmental Activities
Year Ended June 30, 2004
(in Millions)
General Public Safety Public Works Community Community Interest
Government Development Services
■Total Expenses ■Program Revenues
Of the $86 million in general revenues that financed the Governmental Activities, 52% was
utilized for Public Safety, 22% was utilized for Public Works, and the remaining 26%
supplemented Community Development, Community Services, General Government, and
Interest.
0
62%
Sources of Revenue
(Excluding Special Item)
10%
Table 5
Governmental Activities
Year Ended June 30, 2004
■ Charges for Services
■ Contributions
❑ Taxes
❑ Other
28%
Functional Expenses
9% 1% 9%
• General Government
• Public Safety
:3 Public Works
o Community Development
8% ■ Community Services
■ Interest
Major Governmental Activities in the current fiscal year included the following:
Revenues:
• Excluding transfers and the special item, total program and general revenues in the current
year amounted to $127.3 million. Of this amount, 34% represents program revenue, 34% is
from property taxes, and 24% is from sales taxes and transient occupancy taxes. The
remaining revenue sources of 8% are represented by significantly smaller sources and are
broadly diverse.
• As mentioned above, the City reported a special item related to the capital contribution of
right -of -way, pavement, sidewalks, and other infrastructure. The contribution resulted in a
one time infusion of $102.7 million in the statement of activities, and increased
governmental land and infrastructure assets.
Excluding the transfers and special items, total program and general revenues are up $3.3
million. The net increase over prior year is a combination of a few key factors:
o At nearly $44 million per year, property taxes represent the largest individual
recurring source of revenue for the City. They are up $4.1 million or 10.4% in
the current year. Over the past ten years, property taxes revenues have
increased an average of 8.9% per year. The current increase is above the
average due to recent annexations and continued new construction activity in
the Newport Coast area of the City.
10
• At nearly $21.8 and $8.0 million respectively, sales taxes and transient
occupancy taxes represent the number two and three top individual revenue
sources for the City. Sales taxes are up $1.7 million (8.5 %) from the prior year
while transient occupancy taxes remained relatively flat.
• Charges for services were up $2.7 million from the previous year from the net
effect of increases and decreases within the various functions of the City. The
most significant swings within this account related to increases in Public Safety
and General Government charges for services and minor decreases in the
other functions.
• Operating and capital grants were down $1.5 million over the prior year
primarily due to the unusually high activity in the prior year. Nearly $1.1 million
of donations were received for the Mariners Library Project alone in the prior
year.
• Very low interest rates in the fixed income equities market combined with a
changing interest rate environment had a combined negative impact on
investment income. Investment income combined with the net decrease in the
fair value of investments resulted in a $2.2 million decrease in revenues from
the prior year.
• All other general tax revenues were up a net $0.5 million (less than 1 %) while
all other revenues were down approximately $1.4 million.
Expenses:
• In the current year, expenses for all governmental activities are $129.2 million. Overall, the
amount is up $12.9 million (11 %) from the prior year which can be attributed to the following
factors:
• General Government expenses are up $.6 million (5.8 %) when compared to
the prior year. This increase represents one time expenses related to the
recent annexations.
• Public Safety expenses are up $3.9 million (7 %) in the current year, reflecting
the third full year of the City providing services to the newly annexed areas of
town. In addition to the increase in safety services provided, safety PERS
rates increased from an annual average of 12% in 2002 -2003 to 17.5% in
2003 -2004.
• Public works expenditures were up $6 million (18.9 %) which include costs
associated with repair and maintenance of City streets, infrastructure and
facilities.
• Community Services' expenses went up $4.4 million (41.7 %) in the current
year, due to a large one -time scholarship distribution to UCI, various water
quality studies, and other miscellaneous projects.
11
Business -type Activities — Business -type activities are financed primarily by fees charged to
external parties for goods and services. The City's two business -type activities, water and
wastewater utilities, produced a $1.0 million increase in net assets. The increase in net assets
was comprised of operating income of $1.9 million from water activities and offsetting non -
operating expenses of $1.0 million including interest expense of $367,743 and a loss on
removal of assets totaling $789,807.
$20
$15
$10
$5
$0
Table 6
Program Expense & Revenue - Business -type Activities
Year Ended June 30, 2004
(in Millions)
Water Wastewater
■Total Expenses ■Program Revenues
Major Business -type Activities in the current fiscal year included the following:
Water
Of the $17.2 million in water related expenses, $7.2 million (42 %) is for the purchase of water,
$3.4 million (19.6 %) is for maintenance, supplies and depreciation of the water system, $3.2
million (19 %) covers employee related costs, and the remaining $3.4 million (19.4 %) is
collectively attributable to the amount paid to internal services funds, interest related to debt
service payments, loss on removal of fixed assets, and other miscellaneous expenses.
Wastewater
Of the $3.4 million in wastewater related expenses, $1.4 million (41 %) is maintenance,
supplies and depreciation of the wastewater system, $1 million (32 %) is employee related
costs, $466,152 is loss incurred on removal of fixed assets, and the remaining 13% is
attributable to other individually insignificant expenses.
12
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City uses fund accounting to highlight available financial resources and to
ensure and demonstrate compliance with finance - related legal requirements.
Governmental Funds — Utilizing the financial resources measurement focus, the City's
Governmental Funds provide information on near -term inflows and outflows, and balances of
spendable resources. This information is useful in assessing the City's financing requirements.
In particular, unreserved fund balance may serve as a useful measure of a government's net
resources available for spending at the end of the fiscal year.
Fund Balance — As of the end of the current fiscal year, the City's Governmental Funds
reported combined fund balances of $83.5 million, an increase of $9.0 million from the
prior year. The General Fund represented $44.4 million or 53.2% of the combined fund
balances of the Governmental Funds.
Reserved Fund Balance — The City has $11.6 million in fund balance that is reserved
to indicate it is not available to finance new activities because it has already been
committed: 1) to fulfill contractual obligations and purchase orders ($7.1 million), 2) as a
debt service reserve consistent with bond covenants ($566,157), 3) as a reserve for
affordable housing ($2.7 million), and 4) for a variety of other restrictions that make
these resources unavailable for spending ($1.3 million).
Unreserved Fund Balance — The remaining $71.9 million is classified as unreserved
fund balance, which is available for spending at the City's discretion.
Major activities in the Governmental Funds in the current fiscal year included the following:
• The General Fund ended the year with a $44.4 million fund balance, a net increase of $8.1
million. Excluding net transfers out of $16.4 million, excess revenues over expenditures
totaled $21.1 million. See Note (13) in the Notes to the Financial Statements for more
information regarding interfund transfers.
• The activities of the Tide and Submerged Land Fund are routinely subsidized by the
General Fund. At year end, the General Fund transferred sufficient resources ($13.2
million) to cover the Tide and Submerged Land Fund's deficit and other outstanding
commitments and designations of fund balance. The Tide and Submerged Land Fund
ended the current year with $460,536 in fund balance.
• The Newport Coast Annexation Fund ended the year with a $17.8 million fund balance. The
net increase of $3.9 million in fund balance in the current year is a combination of $5.0
million received from the Irvine Ranch Water District as per our agreement and the
regularly scheduled debt service payments.
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.
13
Major activities in the Enterprise Funds in the current fiscal year included the following:
• Net assets in the Water Fund grew by $1.4 million and decreased in the Wastewater Fund
by $346,505. Unrestricted net assets at year -end were $17.9 million for the Water Fund,
and $3.5 million in the Wastewater Fund.
• Other factors concerning the finances of these two funds have already been addressed
above in the discussion of the City's business -type activities.
Major activities in the Internal Service Funds in the current fiscal year included the following:
• Net assets at fiscal year end for the Internal Service Funds was $6.8 million. Included in
this amount is an accumulated deficit in the Insurance Reserve Fund and the Compensated
Absence Fund in the amounts of $3.4 million and $6.2 million, respectively.
• Net assets increased $2.1 million in the current year. The increase is a combination of
increases in the various Internal Service Funds; namely, $836,418 in the Insurance
Reserve Fund, $611,843 in the Compensated Absence Fund, $440,409 in Retiree
Insurance, all resulting from a decrease in premium rates. Also a contributing factor, the
Equipment Maintenance Fund contributed $231,544 of the increase in current year net
assets through user fees charged to departments related to the maintenance and
replacement of the City's rolling stock fleet.
GENERAL FUND BUDGETARY HIGHLIGHTS
The final appropriations for the General Fund at year -end were $1.5 million more than the
original budget and total actual expenditures were $21.5 million less than the final budget. The
factors contributing to the final variance can be briefly summarized as follows:
Changes to Original Budget
• $1.9 million increase as a result of accepting a U.S. Department of Justice, Office of
Community Oriented Policing Services (COPS) Technology grant award.
The transaction combined with several smaller amendments up and down throughout the year
resulted in a net increase of nearly $1.5 million. Actual expenditures were significantly less and
revenues exceeded budgetary estimates eliminating the need to draw upon existing fund
balance.
Variance with Final Budget
• The timing of capital projects in this fund account for over $5.8 million of this variance.
Of this amount, $3.5 million was encumbered and $2.3 was re- budgeted to be
expended during the following fiscal year.
• As a change in inter -fund reimbursement policy, approximately $16.0 million of costs
budgeted in the General fund were reclassified to the Tide and Submerged Lands fund.
Although the Tide and Submerged Land fund budget was amended for the increase, the
14
General Fund budget was never reduced. In the previous reimbursement procedure, the
General Fund was reimbursed for a small portion of the costs to maintain the tidelands
area by a transfer -in from the Tide & Submerged Lands fund.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City's investment in capital assets for governmental and business -type activities as of
June 30, 2004, amounts to $1.64 billion (net of accumulated depreciation). This investment in
a broad range of capital assets includes land, buildings and systems, improvements,
machinery and equipment, park facilities, roads, storm drains, piers, oil wells, sound walls, and
bridges. The total net increase (including additions and deletions) of $97.4 million represents a
6% increase over last year. The $97.4 million net increase is the net result of additions of $116
million, of which $102.7 million is attributable to the special item, capital contribution, and
deletions of $19 million.
Table 7
Capital Assets at Year End
(net of depreciation, in thousands)
Governmental Activities Business -Type Activities
2003 2003
as restated 2004 as restated 2004
Total
2003
as restated 2004
Land
$ 1,219,745
$ 1,314,840
$ 2,016
$ 2,016
$ 1,221,761
$ 1,316,856
Structures
22,151
25,070
119
114
22,270
25,184
Equipment
8,615
7,711
2
17
8,617
7,728
Infrastructure
180,102
186,571
93,633
96,496
273,735
283,067
Work in progress
11,762
4,020
4,018
2,673
15,780
6,692
Totals $ 1,442,375 $ 1,538,211 $ 99,789 $ 101,316 $ 1,542,164 $ 1,639,528
Major capital asset events during the current fiscal year included the following:
• Excluding the $102.7 million in capital contributions related to the special item
mentioned above, the City capitalized $24.0 million in capital assets in the current year.
Of the $24.0 million, $9.2 million was paid for through current year expenses and the
remaining $14.8 million represents additions from work in progress started in previous
years.
• Of the $119.0 million capitalized as governmental assets in the current year, $102.7
million represents the capital contribution disclosed as a special item, $6.7 million paid
in previous years for completion of Bonita Canyon Park, and $3.7 million in work in
progress. Of the $8.0 million capitalized in the current year as business -type assets,
$4.0 million represented additions for major repairs and upgrades to the water mains,
$1.4 million in additions to wastewater and water pump stations, and $2.6 million as
current year additions to the Big Canyon Reservoir Cover Project.
15
Additional information on the City's capital assets can be found in Note (5) of the Notes
to the Financial Statements.
Long -term Debt
At the end of the current fiscal year, the City had total long -term debt outstanding of $54.2
million for all governmental and business -type activities.
Certificates of participation
Note payable
Pre - annexation agreement
CDBG Loan
Capital leases
Revenue bonds
Claims and judgments
Workers' compensation payable
Compensated absences
Totals
Table 8
Outstanding Debt at Year -End
(in thousands)
Governmental Activities Business -Type Activities
2003 2004 2003 2004
Total
2003 2004
$ 6,110,000 $
5,845,000
$ - $ - $ 6,110,000
$ 5,845,000
2,082,483
1,939,133
- - 2,082,483
1,939,133
16,800,000
15,600,000
- - 16,800,000
15,600,000
2,400,000
2,340,000
- - 2,400,000
2,340,000
1,293,586
862,975
- - 1,293,586
862,975
-
-
9,765,000 8,535,000 9,765,000
8,535,000
4,285,236
2,839,000
- - 4,285,236
2,839,000
7,326,000
8,393,227
- - 7,326,000
8,393,227
8,139,727
7,796,024
- - 8,139,727
7,796,024
$ 48,437,032 $
45,615,359
S 9,765,000 $ 8.535,000 $ 58,202,032
$ 54,150,359
The City's total debt decreased by $4.0 million during the current fiscal year as the net result of
regular debt service payments; claims and judgments, and compensated absences payable
decreased by $1.8 million. The City's Revenue Bonds and Certificates of Participation were
insured and therefore, maintain "AAA" rating from Standard & Poor's Corporation and an "Aaa"
from Moody's Investors Services.
Additional information on the City's long -term debt can be found in Note (6) of the Notes to the
Financial Statements.
FACTORS EFFECTING NEXT YEAR'S BUDGET
Overall the 2004 -2005 operating budget excluding capital improvement projects and internal
charges increased 1.85% over the 2003 -2004 amended budget. A brief summary of the factors
considered when preparing the 2004 -2005 budget are as follows:
The State of California budget deficit resulted in several budget balancing actions as
part of SB 1096 that heavily impact local governments. The most significant component
ERAF III will cause the City to lose nearly $2.3 million in property tax revenues in 2004-
2005 and 2005 -2006.
16
• Current employee bargaining unit agreements provide for salary and benefit increases
ranging from 2% to 4% of salary and benefits. All safety employee agreements are due
to expire in December, 2004. All miscellaneous agreements will expire in June, 2005.
There will be many factors considered during negotiations to renew these agreements.
• Investment losses in the equities markets between 2000 and 2002 have caused the
City's pension provider, Cal PERS to revise employer contribution rates significantly.
The increased rates will cause pension costs for the City to increase nearly $3.6 million
in fiscal year 2004 -2005.
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.
17
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lu
CITY OF NEWPORT BEACH
Statement of Net Assets
June 30, 2004
Assets:
Cash and investments (note 4)
Receivables:
Accounts
Notes
Interest
Intergovernmental receivables
Restricted cash with fiscal agent (note 4)
Internal balances
Investment in joint venture (note 15)
Prepaid items
Inventory
Other
Capital assets, (note 5):
Non - depreciable
Depreciable
Accumulated depreciation
Total assets
Liabilities:
Accounts payable
Accrued salaries and benefits
Accrued interest payable
Deposits payable
Deferred revenue
Noncurrent liabilities (note 6):
Due within one year
Due in more than one year
Total liabilities
Net Assets:
Invested in capital assets, net of
accumulated depreciation and related debt
Restricted for:
Community development
Public safety
Public works
Community services
Debt Service
Endowment - nonexpendable
Unrestricted
Total net assets
Governmental
Business -type
Activities
Activities
Total
$ 102,646,182
$ 19,311,046
$ 121,957,228
5,400,946
4,195,732
9,596,678
50,000
-
50,000
951,776
-
951,776
10,521,829
867,299
11,389,128
5,040,828
1,425,597
6,466,425
(22,219)
22,219
-
2,656,819
-
2,656,819
333,141
-
333,141
496,894
-
496,894
2,187
-
2,187
1,318,859,392
4,689,026
1,323,548,418
331,895,356
138,003,150
469,898,506
(112,543,347)
(41,376,069)
(153,919,416)
1,666,289,784
127,138,000
1,793,427,784
5,963,016
2,436,219
8,399,235
4,765,474
209,186
4,974,660
155,153
183,871
339,024
2,967,365
73,492
3,040,857
1,905,326
-
1,905,326
8,180,933
1,280,000
9,460,933
37,434,426
7,255,000
44,689,426
61,371,693
11,437,768
72,809,461
1,512,651,096
94,206,704
1,606,857,800
11,799,749
-
11,799,749
894,388
-
894,388
17,207,876
-
17,207,876
13,950,695
-
13,950,695
566,157
-
566,157
1,075,217
-
1,075,217
46,772,913
21,493,528
68,266,441
$ 1,604,918,091 $ 115,700,232 $ 1,720,618,323
See accompanying notes to basic financial statements
19
Functions /Programs
Primary government:
Governmental activities:
General government
Public safety
Public works
Community development
Community services
Interest on long -term debt
Total governmental activities
Business -type activities:
Water
Wastewater
Total business -type activities
Total primary government
CITY OF NEWPORT BEACH
Statement of Activities
Year Ended June 30, 2004
17,185,034 18,430,000
3,363,954 2,882,793
20,548,988 21,312,793
18,430,000
2,882,793
21,312,793
$ 149,797,247 $ 53,686,152 $ 10,681,329 $ 674,815 $ 65,042,296
See accompanying notes to basic financial statements
20
General revenues:
Taxes:
Property taxes
Sales taxes
Transient occupancy taxes
Business license tax
Franchise taxes
Motor vehicle license tax
Othertaxes
Investment income
Net decrease in fair
value of investments
Other
Property income
Share of joint venture net income (note 15)
Special Item:
Capital contributions (note 16)
Transfers
Total general revenues, special items
capital contributions and transfers
Change in net assets
Net assets at beginning of year,
as restated (notes 5 and 18 )
Net assets at end of year
Program Revenues
Operating
Capital
Total
Charges for
Grants and
Grants and
Program
Expenses
Services
Contributions
Contributions
Revenues
$ 11,428,379
$ 2,109,141
$ 18,333
$ - $
2,127,474
58,178,633
15,739,912
1,408,680
-
17,148,592
38,127,832
5,481,464
5,898,419
586,499
11,966,382
6,229,785
5,196,276
-
-
5,196,276
14,741,504
3,846,566
3,355,897
88,316
7,290,779
542,126
-
-
-
-
129,248,259
32,373,359
10,681,329
674,815
43,729,503
17,185,034 18,430,000
3,363,954 2,882,793
20,548,988 21,312,793
18,430,000
2,882,793
21,312,793
$ 149,797,247 $ 53,686,152 $ 10,681,329 $ 674,815 $ 65,042,296
See accompanying notes to basic financial statements
20
General revenues:
Taxes:
Property taxes
Sales taxes
Transient occupancy taxes
Business license tax
Franchise taxes
Motor vehicle license tax
Othertaxes
Investment income
Net decrease in fair
value of investments
Other
Property income
Share of joint venture net income (note 15)
Special Item:
Capital contributions (note 16)
Transfers
Total general revenues, special items
capital contributions and transfers
Change in net assets
Net assets at beginning of year,
as restated (notes 5 and 18 )
Net assets at end of year
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental Business -type
1,244,966
Activities Activities
Total
$ (9,300,905) $ -
$ (9,300,905)
(41,030,041) -
(41,030,041)
(26,161,450) -
(26,161,450)
(1,033,509) -
(1,033,509)
(7,450,725) -
(7,450,725)
(542,126) -
(542,126)
(85,518,756) - (85,518,756)
-
1,244,966
1,244,966
-
(481,161)
(481,161)
-
763,805
763,805
$ (85,518,756)
$ 763,805
$ (84,754,951)
43,631,829
-
43,631,829
21,843,884
-
21,843,884
8,045,132
-
8,045,132
2,830,127
-
2,830,127
2,765,519
-
2,765,519
3,624,917
-
3,624,917
266,642
-
266,642
584,415
203,041
787,456
(360,586)
(87,078)
(447,664)
214,536
-
214,536
29,280
29,280
146,819
-
146,819
102, 713, 421
215,331
102, 928, 752
57,783
(57,783)
-
186,364,438
302,791
186,667,229
100, 845, 682
1,066,596
101, 912, 278
1, 504, 072, 409
114, 633, 636
1, 618, 706, 045
$ 1,604,918,091
$ 115,700,232
$ 1,720,618,323
See accompanying notes to basic financial statements
21
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22
Governmental Funds
GOVERNMENTALFUNDS
Major Funds
The General Fund is used to account for fiscal resources which are dedicated to
governmental operations of the City, and not required to be accounted for in another
fund.
The Tide and Submerged Land Fund is a Special Revenue Fund used to account for
all revenues and expenditures related to the operation of the City's tidelands, including
beaches and marinas.
The Newport Coast Annexation Fund is a Special Revenue Fund used to account for
revenues and expenditures related to the Newport Coast Annexation Agreement.
Non -major Funds
Non -major governmental funds are those governmental funds which do not meet the
criteria of a major fund. For reporting purposes in this section, they are combined
together as Other Governmental Funds.
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23
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2004
See accompanying notes to basic financial statements
24
Tide and
Newport
Other
Submerged
Coast
Governmental
Assets
General
Land
Annexation
Funds
Totals
Cash and investments (note 4)
$
43,565,944
$ 264,938
$
17,753,391
$
20,824,699
$ 82,408,972
Receivables:
Accounts
3,646,052
790,085
-
949,388
5,385,525
Notes
50,000
-
-
-
50,000
Interest
951,776
-
-
-
951,776
Intergovernmental receivables
4,972,801
-
5,000,000
549,028
10,521,829
Restricted cash with fiscal agent (note 4)
-
-
-
5,040,828
5,040,828
Due from other funds (notel2)
3,250,242
-
-
-
3,250,242
Prepaid items
256,947
-
-
-
256,947
Inventory
178,630
-
-
-
178,630
Other
2,187
2,187
Total assets
$
56,872,392
$ 1,055,023
$
22,753,391
$
27,366,130
$ 108,046,936
Liabilities and Fund Balances
Liabilities:
Accounts payable
$
3,516,578
$ 400,665
$
-
$
1,149,191
$ 5,066,434
Accrued payroll
4,667,882
45,662
-
-
4,713,544
Deposits payable
2,819,205
148,160
-
-
2,967,365
Deferred revenue
1,424,347
-
5,000,000
2,097,261
8,521,608
Due to other funds (note 12)
3,250,242
3,250,242
Total liabilities
12,428,012
594,487
5,000,000
6,496,694
24,519,193
Fund balances:
Reserved for encumbrances
3,527,179
340,208
575,000
2,631,885
7,074,272
Reserved for debt service
-
-
-
566,157
566,157
Reserved for permanent endowment
-
-
-
775,781
775,781
Reserved for affordable housing
2,665,823
-
-
-
2,665,823
Reserved for prepaid items
256,947
-
-
-
256,947
Reserved for inventories
178,630
-
-
-
178,630
Reserved for long -term receivable
50,000
-
-
-
50,000
Unreserved:
Designated for special purposes
16,424,018
120,328
10,600,000
-
27,144,346
Designated, reported in:
Special Revenue Funds
17,852,302
17,852,302
Designated for stabilization
2,379,885
-
-
-
2,379,885
Designated for contingencies
11,899,427
-
-
-
11,899,427
Designated for capital projects
2,266,169
-
6,578,391
-
8,844,560
Designated for appropriations
4,796,302
-
-
-
4,796,302
Undesignated, reported in:
Special Revenue Funds
-
-
-
(956,689)
(956,689)
Total fund balances
44,444,380
460,536
17,753,391
20,869,436
83,527,743
Total liabilities and
and fund balances
$
56,872,392
$ 1,055,023
$
22,753,391
$
27,366,130
$ 108,046,936
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, 2004
Fund balances of governmental funds $ 83,527,743
Amounts reported for governmental activities in the statement of net assets are
different because:
Capital assets net of accumulated depreciation have not been included
as financial resources in governmental fund activity. Amount excludes
capital assets from internal service funds which are added below. 1,531,207,853
Long term debt from the General Long Term Debt Account Group that have not
been included in the governmental fund activity. Amounts exclude long -term
debt activity from internal service funds which have been added below:
Certificates of participation payable (5,845,000)
Note payable (1,939,133)
Pre - annexation agreement (15,600,000)
CDBG loan (2,340,000)
Accrued interest payable for the current portion of interest due on long -term debt
has not been reported in the governmental funds. (155,153)
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
deferred revenue in the governmental funds. 6,616,282
Internal service funds are used by management to charge the costs of certain
activities, such as self- insurance, workers' compensation, compensated absences,
retiree insurance and fleet management, to individual funds. The assets (including
capital assets) and liabilities of the internal service funds must be added to the
statement of net assets. 6,810,899
Investment in joint ventures is not a current financial resource and therefore not reported
in the governmental funds. 2,656,819
Internal balance created by the consolidation of internal service fund activities
related to enterprise funds is not reported in the governmental funds. (22,219)
Net assets of governmental activities $ 1,604,918,091
See accompanying notes to basic financial statements
25
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
Year Ended June 30, 2004
Other financing sources (uses)
Transfers in (note 13)
266,902
Tide and
Newport
Other
16,553,395
Transfers out (note 13)
(16,415,061)
Submerged
Coast
Governmental
(18,495,612)
Total other financing sources
General
Land
Annexation
Funds
Totals
Revenues
(16,148,159)
13,1609502
(49,119)
1,094,559
(1,942,217)
Taxes and assessments:
4,952,285
(353,316)
3,832,530
(2,853,775)
5,577,724
Property
$ 43,631,829
$ -
$ -
$ -
$ 43,631,829
Sales
21,843,884
-
-
-
21,843,884
Transient occupancy
8,045,132
-
-
-
8,045,132
Other
5,901,921
-
-
451,985
6,353,906
Intergovernmental
6,013,990
18,333
5,000,000
5,075,700
16,108,023
Licenses and permits
3,310,934
1,227,565
-
891.,133
5,429,632
Charges for services
11,478,222
38,560
-
-
11,516,782
Fines and forfeitures
3,509,540
-
-
96,423
3,605,963
Investment income
399,492
26,540
159,341
302,140
887,513
Net decrease in fair value of investments
(178,350)
(11,830)
(71,025)
(99,381)
(360,586)
Property income
6,175,985
5,681,686
-
-
11,857,671
Donations
634,811
-
-
2,069,556
2,704,367
Other
217,743
-
260,457
478,200
Total revenues
110,985,133
6,980,854
5,088,316
9,048,013
132,102,316
Expenditures
Current:
General government
10,964,789
59,467
-
-
11,024,256
Public safety
41,510,043
15,021,036
-
318,639
56,849,718
Public works
19,083,467
2,802,037
-
895,392
22,780,896
Community development
5,283,407
287,143
-
152,481
5,723,031
Community services
8,448,887
1,178,187
-
1,200,272
10,827,346
Capital outlay
4,594,096
909,740
6,667
9,678,047
15,188,550
Debt service (note 6):
Principal
-
143,350
1,200,000
325,000
1,668,350
Interest and fiscal charges
93,712
426,516
520,228
Total expenditures
89,884,689
20,494,672
1,206,667
12,996,347
124,582,375
Excess (deficiency) of revenues
over expenditures
21,100,444
(13,513,818)
3,881,649
(3,948,334)
7,519,941
Other financing sources (uses)
Transfers in (note 13)
266,902
13,160,502
1,200,000
1,925,991
16,553,395
Transfers out (note 13)
(16,415,061)
(1,249,119)
(831,432)
(18,495,612)
Total other financing sources
(uses)
(16,148,159)
13,1609502
(49,119)
1,094,559
(1,942,217)
Net change in fund balances
4,952,285
(353,316)
3,832,530
(2,853,775)
5,577,724
Fund balances, beginning
36,322,784
813,852
13,920,861
23,482,295
74,539,792
Restatement (note 18)
3,169,311
-
-
240,916
3,410,227
Restated fund balance
39,492,095
813,852
13,920,861
23,723,211
77,950,019
Fund balances, ending
$ 44,444,380
$ 460,536
$ 17,753,391
$ 20,869,436
$ 83,527,743
See accompanying notes to basic financial statements
26
CITY OF NEWPORT BEACH
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmenal Funds
to the Statement of Activities
Year ended June 30, 2004
Net change in fund balances - total governmental funds $ 5,577,724
Amounts reported for governmental activities in the statement of activities differ
from the amounts reported in the statement of activities because:
Donations of capital assets do not report revenue in the governmental funds 102,713,421
Governmental funds report capital outlays as expenditures. However, in the statement
of activities, the costs of those assets is allocated over their estimated useful lives
as depreciation expense. This is the amount by which capital outlays exceeded
depreciation in the current period. (6,274,477)
Repayment of debt service principal is an expenditure in the governmental funds, but the
repayment reduces long -term liabilities in the statement of net assets. 1,668,350
Proceeds from long -term debt is an other financing source in the governmental funds, but
new debt issuances increase long -term liabilities in the statement of net assets.
Accrued Interest for debt service. This is the net change in accrued interest for the current period. 7,266
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
deferred revenue in the governmental funds.This is the net change in deferred revenue for the current
period. (4,709,236)
Internal service funds are used by management to charge the costs of certain
activities, such as self- insurance, workers' compensation, compensated absences,
retiree insurance and fleet management, to individual funds. The net revenue of the internal
service funds is reported in the statement of activities. 2,120,213
Investment in joint ventures creates an explicit, measurable equity interest reported only
in the statement of activities. 146,819
Internal balance created by the consolidation of internal service funds activities related to enterprise funds
is reflected as a reduction of revenues in the statement of activities. (404,398)
Change in net assets of governmental activities $ 100,845,682
See accompanying notes to basic financial statements
27
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2004
See accompanying notes to basic financial statements
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Taxes and assessments:
Property
$ 39,825,460
$ 39,825,460
$ 43,631,829
$ 3,806,369
Sales
20,548,500
20,548,500
21,843,884
1,295,384
Transient occupancy
8,372,160
8,372,160
8,045,132
(327,028)
Other
5,227,500
5,227,500
5,901,921
674,421
Intergovernmental
2,723,956
3,684,391
6,013,990
2,329,599
Licenses and permits
2,023,010
2,023,010
3,310,934
1,287,924
Charges for services
10,587,395
11,063,288
11,478,222
414,934
Fines and forfeitures
3,161,250
3,191,250
3,509,540
318,290
Investment income
-
1,200,000
399,492
(800,508)
Net decrease in fair value of investments
-
-
(178,350)
(178,350)
Property income
6,820,088
5,659,088
6,175,985
516,897
Donations
250,000
708,942
634,811
(74,131)
Other
115,000
408,620
217,743
(190,877)
Total revenues
99,654,319
101,912,209
110,985,133
9,072,924
Expenditures
General government:
City council
918,417
918,096
1,068,221
(150,123)
City clerk
304,047
306,411
294,781
11,630
City attorney
937,624
1,103,765
1,071,587
32,178
City manager
1,654,856
2,403,410
2,145,717
257,693
Administrative services
5,236,168
5,331,449
5,219,479
111,970
Human resources
1,230,616
1,235,790
1,165,004
70,786
Total General government
10,281,728
11,298,923
10,964,789
334,134
Public safety:
Police
32,512,193
32,825,249
26,501,256
6,323,993
Fire
24,044,873
24,131,478
15,008,787
9,122,691
Total Public safety
56,557,066
56,956,727
41,510,043
15,446,684
Public works:
General services
16,507,714
16,975,049
14,685,024
2,290,025
Public works
3,877,352
3,870,844
3,373,792
497,052
Utilities
1,013,085
1,013,857
1,024,651
(10,794)
Total Public works
21,398,151
21,859,750
19,083,467
2,776,283
See accompanying notes to basic financial statements
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
(continued)
Other financing sources (uses)
Transfers in
-
-
266,902
Variance with
Transfers out
(562,685)
(13,723,187)
(16,415,061)
Final Budget
Long -term debt issued
Budgeted Amounts
-
Positive
-
Original
Final
Actual
(Negative)
Community development:
sources (uses)
(562,685)
(13,723,187)
(16,148,159)
Planning
2,979,381
3,011,077
2,217,736
793,341
Building
2,752,232
2,953,608
3,065,671
(112,063)
Total Community development
5,731,613
5,964,685
5,283,407
681,278
3,169,311
3,169,311
3,169,311
Community services:
39,492,095
39,492,095
39,492,095
-
Library Services
4,940,731
5,280,331
5,090,337
189,994
Recreation and senior services
3,397,963
3,491,211
3,358,550
132,661
Total Community services
8,338,694
8,771,542
8,448,887
322,655
Capital outlay
7,442,503
6,464,031
4,594,096
1,869,935
Debt service:
Principal
42,922
42,922
-
42,922
Interest and fiscal charges
5,078
5,078
-
5,078
Total Debt service
48,000
48,000
-
48,000
Total expenditures
109,797,755
111,363,658
89,884,689
21,478,969
Excess (deficiency) of revenues
over expenditures
(10,143,436)
(9,451,449)
21,100,444
30,551,893
Other financing sources (uses)
Transfers in
-
-
266,902
266,902
Transfers out
(562,685)
(13,723,187)
(16,415,061)
(2,691,874)
Long -term debt issued
-
-
-
-
Total other financing
sources (uses)
(562,685)
(13,723,187)
(16,148,159)
(2,424,972)
Net change in fund balance
(10,706,121)
(23,174,636)
4,952,285
28,126,921
Fund balance, beginning
36,322,784
36,322,784
36,322,784
-
Restatement
3,169,311
3,169,311
3,169,311
Restated fund Balance
39,492,095
39,492,095
39,492,095
-
Fund balance, ending
$ 28,785,974
$ 16,317,459
$ 44,444,380
$ 28,126,921
See accompanying notes to basic financial statements
29
Revenues
Intergovernmental
Licenses and permits
Charges for services
Investment income
Net decrease in fair value of investments
Property income
Other
Total revenues
Expenditures
General government
Public safety
Public works
Community services
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
CITY OF NEWPORT BEACH
Tide and Submerged Land
Budgetary Comparison Statement
For the Year Ended June 30, 2004
Budaeted Amounts
Original Final
$ - $ 18,333
1,174,000 1,174,000
33,500 33,500
5,159,006
5,159,006
Actual
$ 18,333
1,227,565
38,560
26,540
(11,830)
5,681,686
Variance with
Final Budget
Positive
(Negative)
53,565
5,060
26,540
(11,830)
522,680
6,366,506
6,384,839
6,980,854
596,015
59,467
59,467
59,467
-
15,021,036
15,021,036
15,021,036
-
2,791,003
2,791,003
2,802,037
(11,034)
1,094,049
1,226,989
1,178,187
48,802
287,143
287,143
287,143
-
1,378,466
1,250,346
909,740
340,606
143,350
143,350
143,350
-
93,712
93,712
93,712
-
20,868,226
20,873,046
20,494,672
378,374
Excess (deficiency) of revenues
over expenditures (14,501,720) (14,488,207) (13,513,818) 974,389
Other financing sources (uses)
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balance
Fund balance, beginning
Fund balance, ending
13,160,502 13,160,502
(3,297,590) - -
(3,297,590) 13,160,502 13,160,502
(17,799,310) (1,327,705) (353,316) 974,389
813,852 813,852 813,852 -
$ (16,985,458) $ (513,853) $ 460,536 $ 974,389
See accompanying notes to basic financial statements
C
CITY OF NEWPORT BEACH
Newport Coast Annexation
Budgetary Comparison Statement
For the Year Ended June 30, 2004
Expenditures
Capital outlay - 623,322 6,667 616,655
Debt service (note 6):
Principal 1,200,000 1,200,000 1,200,000 -
Total expenditures 1,200,000 1,823,322 1,206,667 616,655
Excess (deficiency) of revenues
over expenditures 4,102,000 3,478,678 3,881,649 (830,339)
Other financing uses
Transfers in
1,200,000
1,200,000
1,200,000
Variance
Transfers out
(1,362,000)
(1,362,000)
(1,249,119)
with Final
Total other financing sources (uses)
(162,000)
(162,000)
(49,119)
Budget
Net change in fund balance
Budgeted Amounts
3,316,678
Positive
(943,220)
Original
Final
Actual
(Negative)
Revenues
Fund balance, ending
$ 18,200,322
$ 17,521,280
Intergovernmental
$ 5,000,000
$ 5,000,000
$ 5,000,000
$
Investment income
302,000
302,000
159,341
(142,659)
Net decrease in fair value of investments
-
-
(71,025)
(71,025)
Total revenues
5,302,000
5,302,000
5,088,316
(213,684)
Expenditures
Capital outlay - 623,322 6,667 616,655
Debt service (note 6):
Principal 1,200,000 1,200,000 1,200,000 -
Total expenditures 1,200,000 1,823,322 1,206,667 616,655
Excess (deficiency) of revenues
over expenditures 4,102,000 3,478,678 3,881,649 (830,339)
Other financing uses
Transfers in
1,200,000
1,200,000
1,200,000
-
Transfers out
(1,362,000)
(1,362,000)
(1,249,119)
112,881
Total other financing sources (uses)
(162,000)
(162,000)
(49,119)
112,881
Net change in fund balance
3,940,000
3,316,678
3,832,530
(943,220)
Fund balance, beginning
14,260,322
14,204,602
13,920,861
(283,741)
Fund balance, ending
$ 18,200,322
$ 17,521,280
$ 17,753,391
$ 232,111
See accompanying notes to basic financial statements
31
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32
Proprietary Funds
- -r-.�,
y
'aim a•�'�I�iM 3%� -
PROPRIETARY FUNDS
Business -type Activities
The Water Fund is a Major Fund used to account for the operations of the City's water
utility, a self- supporting activity which is entirely financed though user charges.
The Wastewater Fund is a Major Fund used to account for the operations of the City's
wastewater system, a self- supporting activity which is entirely financed through user
charges.
Governmental Activities
The Internal Service Funds are used to allocate the cost of providing goods and
services by one department to other departments on a cost reimbursement basis.
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Net Assets
June 30, 2004
Assets
Current assets:
Cash and investments (note 4)
Restricted cash with fiscal agent (note 4)
Receivables:
Accounts
Intergovernmental receivables
Inventories
Prepaid items
Total current assets
Noncurrent assets:
Capital assets (note 5):
Land
Structures
Equipment
Infrastructure
Work in progress
Less accumulated depreciation
Total capital assets (net of accumulated depreciation)
Total noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Accrued payroll
Capital leases - current
Workers compensation - current
General liability - current
Compensated absences - current
Total current liabilities
Current liabilities payable from restricted assets:
Deposits payable 73,468
Accrued interest payable 183,871
Bonds payable (note 6) 1,280,000
Total current liabilities payable from restricted assets 1,537,339
Noncurrent liabilities (note 6):
Bonds payable
Capital leases
Workers' compensation
General liability
Compensated absences
Total noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets, net of related debt
Unrestricted
Total Net Assets
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
Net assets of business -type activities
7,255,000
24 73,492
- 183,871
,280,000
24 1,537,363
- 7,255,000
- - - 420,773
5,893,680
488,617
6,596,024
7,255,000 7,255,000 13,399,094
11,187,300 250,468 11,437,768 20,839,738
65,547,242 28,659,462 94,206,704 6,140,573
17,954,699 3,516,610 21,471,309 670,326
$ 83,501,941 $ 32,176,072 115,678,013 $ 6,810,899
22,219
$ 115,700,232
See accompanying notes to basic financial statements
33
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 16,118,900
$ 3,192,146
$ 19,311,046
$ 20,237,210
1,425,597
-
1,425,597
-
3,620,800
574,932
4,195,732
15,421
867,299
-
867,299
-
-
-
-
318,264
-
-
-
76,194
22,032,596
3,767,078
25,799,674
20,647,089
2,016,450
-
2,016,450
-
205,793
-
205,793
-
148,191
-
148,191
19,539,273
98,599,168
39,049,998
137,649,166
-
2,624,299
48,277
2,672,576
-
(30,937,256)
(10,438,813)
(41,376,069)
(12,535,725)
72,656,645
28,659,462
101,316,107
7,003,548
72,656,645
28,659,462
101,316,107
7,003,548
94, 689,241
32,426,540
127,115,781
27, 650,637
2,237,936
198,283
2,436,219
896,582
157,025
52,161
209,186
51,930
-
-
-
442,202
-
-
-
2,499,547
-
-
-
2,350,383
,200,000
2,394,961
250,444
2,645,405
7,440,644
Current liabilities payable from restricted assets:
Deposits payable 73,468
Accrued interest payable 183,871
Bonds payable (note 6) 1,280,000
Total current liabilities payable from restricted assets 1,537,339
Noncurrent liabilities (note 6):
Bonds payable
Capital leases
Workers' compensation
General liability
Compensated absences
Total noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets, net of related debt
Unrestricted
Total Net Assets
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
Net assets of business -type activities
7,255,000
24 73,492
- 183,871
,280,000
24 1,537,363
- 7,255,000
- - - 420,773
5,893,680
488,617
6,596,024
7,255,000 7,255,000 13,399,094
11,187,300 250,468 11,437,768 20,839,738
65,547,242 28,659,462 94,206,704 6,140,573
17,954,699 3,516,610 21,471,309 670,326
$ 83,501,941 $ 32,176,072 115,678,013 $ 6,810,899
22,219
$ 115,700,232
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, 2004
Enterprise Funds
Operating revenues:
Charges for sales and services:
Water sales
Intergovernmental
Sewer service and connection fees
Other
Total operating revenues
Operating expenses:
Purchase of water
Salaries and benefits
Depreciation
Professional services
Maintenance and supplies
System maintenance
Fleet parts and supplies
Workers' compensation
Claims and judgments
Compensated absences
Retiree insurance
Other
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Investment income
Net decrease in fair value of investments
Property income
Loss on removal of fixed assets
Interest expense
Other fiscal charges
Total nonoperating revenues (expenses)
Income (loss) before transfers
Capital contributions - donated capital
Transfers in (out) (note 13)
Change in net assets
Net assets, beginning of year
Restatement (note 18)
Net assets, beginning of year, as restated
Net assets, end of year
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
Change in net assets of business -type activities
Water Wastewater
$ 16,656,037
Governmental
Total
Activities
Enterprise
Internal Service
Funds
Funds
$ 16,656,037
$ -
$ 16,656,037
$ -
1,608,507
-
1,608,507
-
-
2,867,925
2,867,925
-
165,456
14,868
180,324
12,632,831
18,430,000
2,882,793
21,312,793
12,632,831
7,194,252
-
7,194,252
-
3,210,794
1,066,509
4,277,303
1,076,288
1,250,879
512,519
1,763,398
1,707,231
1,451,855
289,989
1,741,844
29,113
706,616
380,032
1,086,648
1,183,643
1,415,556
476,284
1,891,840
-
-
-
-
327,254
-
-
-
4,366,625
-
-
-
1,862,345
-
-
-
918,644
-
-
-
1,199,546
1,277,381
176,085
1,453,466
-
16,507,333
2,901,418
19,408,751
12,670,689
1,922,667
(18,625)
1,904,042
(37,858)
172,396
30,645
203,041
183,137
(73,418)
(13,660)
(87,078)
(81,631)
29,280
-
29,280
-
(323,655)
(466,152)
(789,807)
85,730
(367,743)
-
(367,743)
(29,164)
(4,906)
-
(4,906)
-
(568,046)
(449,1fi7)
(1,017,213)
158,072
1,354,621
(467,792)
886,829
120,214
86,519
128,812
215,331
-
(50,258)
(7,525)
(57,783)
2,000,000
1,390,882
(346,505)
1,044,377
2,120,214
83,856,371
32,665,592
4,690,685
(1,745,312)
(143,015)
-
82,111,059
32,522,577
4,690,685
$ 83,501,941
$ 32,176,072
$ 6,810,899
22,219
$ 1,066,596
See accompanying notes to basic financial statements
34
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Cash Flows
For the Year ended June 30, 2004
Cash flows from operating activities:
Cash received from customers or user departments
Cash payments to employees for services
Cash payments to suppliers for goods and services
Cash received (payments made) for other operating activities
Net cash provided (used) by operating activities
Cash flows from noncapifal financing activities:
Cash received from other funds
Cash paid to other funds
Net cash provided by (used for) noncapital financing activities
Cash flows from capital related financing activities:
Acquisition of capital assets
Proceeds from sale of capital assets
Principal payments on long -term liabilities
Interest paid on long -tern liabilities
Other fiscal charges
Net cash used for capital related financing activities
Cash flows from investing activities:
Interest on investments
Property income
Net cash provided by investing activities
Net increase (decrease) in cash and
cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation of cash equivalents to the statement of net assets
Cash and investments reported on statement of net assets
Cash and investments with fiscal agent reported on statement of net assets
Cash and cash equivalents
Reconciliation of operating income to net cash
used for operating activities:
Operating income (loss)
Adjustments to reconcile operating income
to net cash used for operating activities:
Depreciation
(Increase) decrease in accounts receivable
(Increase) in intergovem mental receivable
(Increase) in inventories
(increase) in prepaid items
Increase in accounts payable and accrued payroll
(Decrease) in accrued interest payable
(Decrease) in deposits payable
Increase in workers' compensation
(Decrease) in general liability
(Decrease) in compensated absences
Total adjustments
Net cash used for operating activities
Noncash investing, capital and financing activities:
Disposal of fixed assets
Loss on disposal of fixed assets
Contribution of capital assets from government
(Decrease) in fair value of investments
Total of noncash ac8vities
2,000,000
(50,258) (7,525) (57,783)
(50,258) (7,525) (57,783) 2,000,000
(3,626,111)
Enterprise Funds
(238,992)
(3,865,103)
(1,140,130)
-
Governmental
-
Total
Activities
(1,230,000)
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 17,213,841
$ 2,822,617
$ 20,036,458
$ 12,634,686
(3,153,393)
(1,046,063)
(4,199,456)
(5,556,570)
(10,528,693)
(1,091,634)
(11,620,327)
(5,700,748)
(1,111,925)
(161,217)
(1,273,142)
5,063
2,419,830
523,703
2,943,533
1,382,431
2,000,000
(50,258) (7,525) (57,783)
(50,258) (7,525) (57,783) 2,000,000
(3,626,111)
(238,992)
(3,865,103)
(1,140,130)
-
-
-
121,449
(1,230,000)
-
(1,230,000)
(430,611)
(367,743)
-
(367,743)
(29,164)
(4,906)
(4,906)
(5,228,760)
(238,992)
(5,467,752)
(1,478,456)
98,978
16,985
115,963
101,506
29,280
29,280
128,258
16,985
145,243
101, 506
(2,730,930)
294,171
(2,436,759)
2,005,481
20,275,427
2,897,975
23,173,402
18,231,729
$ 17,544,497
$
3,192,146
$
20,736,643
$ 20,237,210
$ 16,118,900
$
3,192,146
$
19,311,046
$ 20,237,210
1,425,597
1,425,597
$ 17,544,497
$
3,192,146
$
20,736,643
$ 20,237,210
$ 1,922,667
$
(18,625)
$
1,904,042
(37,858)
1,250,879
512,519
1,763,398
1,707,231
(178,190)
(45,308)
(223,498)
6,918
(867,299)
-
(867,299)
-
-
-
-
(121,395)
-
-
-
(29,126)
322,202
75,117
397,319
579,373
(25,215)
-
(25,215)
-
(5,214)
-
(5,214)
-
-
-
-
1,067,227
-
-
-
(1,446,236)
343,703)
497,163
542,328
1,039,491
1,420,289
$ 2,419,830
$
523,703
$
2,943,533
$ 1,382,431
$ 3,707,829
$
1,328,782
$
5,036,611
$ 35,719
323,655
466,152
789,807
-
86,519
128,812
215,331
-
(73,418)
(13,660)
(87,078)
(81,630)
$ 4,044,585
$
1,910,086
$
5,954,671
$ (45,911)
See accompanying notes to basic financial statements
35
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Ir
Fiduciary Funds
FIDUCIARY FUNDS
Agency Funds, a type of Fiduciary Funds, are used to account for assets held by the
City as an agent for other government entities, private organizations, or individuals.
CITY OF NEWPORT BEACH
Agency Funds
Statement of Fiduciary Assets and Liabilities
June 30, 2004
Assets
Cash and investments (note 4)
Restricted assets -cash and investments (note 4)
Total assets
Liabilities
Due to bondholders
Due to others
Total liabilities
Totals
$ 3,199,383
1,266,072
$ 4,465,455
$ 4,277,721
187,734
$ 4,465,455
See accompanying notes to basic financial statements
37
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C
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
(1) Summary of Significant Accounting Policies
The basic financial statements of the City of Newport Beach (the "City ") have been
prepared in conformity with generally accepted accounting principles ( "GAAP ") as
applicable to government units. The Governmental Accounting Standards Board
( "GASB ") is the accepted standard - setting body for establishing governmental
accounting and financial reporting principles.
a. Reporting Entity
The City of Newport Beach was incorporated on September 1, 1906. The current
City Charter was adopted in 1954. The City operates under a Council- Manager
form of government and provides the following services: public safety (police,
fire, and marine), highway and streets, cultural and recreation, public
improvements, planning and zoning, utilities, and general administrative services.
The financial statements present the financial activity of the City of Newport
Beach (the primary government) and its component unit. The component unit
discussed below is included in the City's reporting entity because of the
significance of its operational or financial relationship with the City. This entity is
legally separate from the City. However, the City of Newport Beach's elected
officials have continuing full or partial accountability for fiscal matters of the
component unit. The financial reporting entity consists of: (1) the City, (2)
organizations for which the City is financially accountable, and (3) organizations
for which the nature and significance of their relationship with the City are such
that exclusion would cause the City's financial statements to be misleading or
incomplete.
An organization is fiscally dependent on the primary government if it is unable to
adopt its budget, levy taxes or set rates or charges, or issue bonded debt without
approval by the primary government. In a blended presentation, a component
unit's balances and transactions are reported in a manner similar to the balances
and transactions of the City. Component units are presented on a blended basis
when the component unit's governing body is substantially the same as the City's
or the component unit provides services almost entirely to the City.
Blended Component Unit
The financial statements of the City of Newport Beach include the financial
activities of the Newport Beach Public Facilities Corporation (the "Corporation ").
The Corporation was formed on March 9, 1992, for the purpose of assisting the
City of Newport Beach in the financing of public improvements, including a public
library. The Corporation is governed by a Board of Directors comprised of seven
individuals appointed by the City Council of the City of Newport Beach. The
Corporation's financial data and transactions are included in the debt service
W
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
fund. Separate financial statements are not prepared for the Corporation. The
debt service fund is used solely to account for the activities of the Corporation
and contains no other City debt financing activities.
b. Basis of Accounting and Measurement Focus
The basic financial statements of the City are composed of the following:
• Government -wide financial statements
• Fund financial statements
• Notes to the financial statements
Financial reporting is based upon all GASB pronouncements, as well as the
FASB Statements and Interpretations, APB Opinions, and Accounting Research
Bulletins that were issued on or after November 30, 1989 that do not conflict with
or contradict GASB pronouncements.
Government -wide Financial Statements
Government -wide financial statements display information about the reporting
government as a whole, except for its fiduciary activities. These statements
include separate columns for the governmental and business -type activities of
the primary government (including its blended component units). The City of
Newport Beach has no discretely presented component units. Eliminations have
been made in the Statement of Activities so that certain allocated expenses are
recorded only once (by the function to which they were allocated). However,
general government expenses have not been allocated as indirect expenses to
the various functions of the City.
Government -wide financial statements are presented using the economic
resources measurement focus and the accrual basis of accounting. Under the
economic resources measurement focus, all (both current and long -term)
economic resources and obligations of the reporting government are reported in
the government -wide financial statements. Basis of accounting refers to when
revenues and expenses are recognized in the accounts and reported in the
financial statements. Under the accrual basis of accounting, revenues, expenses,
gains, losses, assets, and liabilities resulting from exchange and exchange -like
transactions are recognized when the exchange takes place.
Program revenues include charges for services, special assessments, and
payments made by parties outside of the reporting government's citizenry if that
money is restricted to a particular program. Program revenues are netted with
program expenses in the statement of activities to present the net cost of each
program.
40
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Amounts paid to acquire capital assets are capitalized as assets in the
government -wide financial statements, rather than reported as an expenditure.
Proceeds of long -term debt are recorded as a liability in the government -wide
financial statements, rather than as another financing source. Amounts paid to
reduce long -term indebtedness of the reporting government are reported as a
reduction of the related liability, rather than as an expenditure.
Fund Financial Statements
The underlying accounting system of the City is organized and operated on the
basis of separate funds, each of which is considered to be a separate accounting
entity. The operations of each fund are accounted for with a separate set of self -
balancing accounts that comprise its assets, liabilities, fund equity, revenues and
expenditures or expenses, as appropriate. Governmental resources are allocated
to and accounted for in individual funds based upon the purposes for which they
are to be spent and the means by which spending activities are controlled.
Fund financial statements for the primary government's governmental,
proprietary, and fiduciary funds are presented after the government -wide
financial statements. These statements display information about major funds
individually and non -major funds in the aggregate for governmental and
enterprise funds. Fiduciary statements include financial information for fiduciary
funds. Fiduciary funds of the City primarily represent assets held by the City in a
custodial capacity for other individuals or organizations.
Governmental Funds
In the fund financial statements, governmental funds are presented using the
modified - accrual basis of accounting. Their revenues are recognized when they
become measurable and available as net current assets. Measurable means that
the amounts can be estimated, or otherwise determined. Available means that
the amounts were collected during the reporting period or soon enough thereafter
to be available to finance the expenditures accrued for the reporting period. The
City uses an availability period of 60 days.
Sales taxes, property taxes, franchise taxes, gas taxes, motor vehicle license
fee, transient occupancy taxes, grants, and interest associated with the current
fiscal period are all considered to be susceptible to accrual and so have been
recognized as revenues of the current fiscal period to the extent normally
collected within the availability period. Other revenue items are considered to be
measurable and available when cash is received by the City.
Revenue recognition is subject to the measurability and availability criteria for the
governmental funds in the fund financial statements. Exchange transactions are
recognized as revenues in the period in which they are earned (i.e., the related
goods or services are provided). Locally imposed derived tax revenues are
recognized as revenues in the period in which the underlying exchange
41
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
transaction upon which they are based takes place. Imposed non - exchange
transactions are recognized as revenues in the period for which they were
imposed. If the period of use is not specified, they are recognized as revenues
when an enforceable legal claim to the revenues arises or when they are
received, whichever occurs first. Government - mandated and voluntary non -
exchange transactions are recognized as revenues when all applicable eligibility
requirements have been met.
In the fund financial statements, governmental funds are presented using the
current financial resources measurement focus. This means that only current
assets and current liabilities are generally included on their balance sheets. The
reported fund balance (net current assets) is considered to be a measure of
"available spendable resources." Governmental fund operating statements
present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets. Accordingly, they
are said to present a summary of sources and uses of "available spendable
resources" during a period.
Non - current portions of long -term receivables due to governmental funds are
reported on their balance sheets in spite of their spending measurement focus.
Special reporting treatments are used to indicate, however, that they should not
be considered "available spendable resources," since they do not represent net
current assets. Recognition of governmental fund type revenue represented by
non - current receivables is deferred until they become current receivables. Non-
current portions of other long -term receivables are offset by fund balance reserve
accounts. Revenues, expenses, gains, losses, assets, and liabilities resulting
from non - exchange transaction are recognized in accordance with the
requirements of GASB Statement No. 33.
Because of their spending measurement focus, expenditure recognition for
governmental fund types excludes amounts represented by non - current liabilities.
Since they do not affect net current assets, such long -term amounts are not
recognized as governmental fund type expenditures or fund liabilities.
Amounts expended to acquire capital assets are recorded as expenditures in the
year that resources were expended, rather than as fund assets. The proceeds of
long -term debt are recorded as other financing sources rather than as a fund
liability. Amounts paid to reduce long -term indebtedness are reported as fund
expenditures.
When both restricted and unrestricted resources are combined in a fund,
expenses are considered to be paid first from restricted resources, and then from
unrestricted resources.
42
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Proorietary & Fiduciary Funds
The City's enterprise and internal service funds are proprietary funds. In the fund
financial statements, proprietary and fiduciary funds are presented using the
accrual basis of accounting. Revenues are recognized when they are earned and
expenses are recognized when the related goods or services are delivered. In
the fund financial statements, proprietary funds are presented using the
economic resources measurement focus. This means that all assets and all
liabilities (whether current or non - current) associated with their activity are
included on their balance sheets. Proprietary fund type operating statements
present increases (revenues) and decreases (expenses) in total net assets.
Proprietary fund operating revenues, such as charges for services, result from
exchange transactions associated with principal activity of the fund. Exchange
transactions are those in which each party receives and gives up essentially
equal values. Non - operating revenues, such as subsidies, taxes, and investment
earnings result from non - exchange transactions or ancillary activities. Amounts
paid to acquire capital assets are capitalized as assets in the proprietary fund
financial statements, rather than reported as expenditure. Proceeds of long -term
debt are recorded as a liability in the proprietary fund financial statements, rather
than as other financing source. Amounts paid to reduce long -term indebtedness
of the proprietary funds are reported as a reduction of the related liability, rather
than as expenditure.
Agency funds are custodial in nature (assets equal liabilities) and do not involve
the recording of City revenues and expenses.
C. Fund Classifications
The City utilizes the following broad categories of funds:
Major Funds
Major funds are those funds which are either material or of particular importance.
Major Governmental Funds — Governmental funds are generally used to account
for tax supported activities. The following governmental funds met the criteria of a
major fund:
General Fund
The General Fund is the general operating fund of the City. It is used to
account for all activities, except those required to be accounted for in another
fund.
43
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Tide and Submerged Land
The Tide and Submerged Land Fund is used to account for all revenues and
expenditures related to the operation of the City's tidelands, including
beaches and marinas.
Newport Coast Annexation Fund
The Newport Coast Annexation Fund is used to account for revenues and
expenditures related to the Newport Coast Annexation Agreement.
Major Proprietary Funds — Proprietary funds are used to report an activity for
which a fee is charged to external users to recover the cost of operation.
Water Fund
The Water Fund is an enterprise fund used to account for the activities
associated with the transmission and distribution of potable water by the City
to its users.
Wastewater Fund
The Wastewater Fund is an enterprise fund used to account for the activities
associated with providing sewer services by the City to its users.
Internal Service Funds — The Internal Service Funds are used to account for
the City's self- insured general liability and workers' compensation, compensated
absences, retiree insurance, and the cost of maintaining and replacing the City's
rolling stock fleet. City departments are the primary users of these services and
are charged a fee on a cost reimbursement basis.
Fiduciary Funds — The Fiduciary Funds are used to account for assets held by
the City as an agent for property owners with special assessments, local
businesses in business improvements districts, and other individuals who have
made miscellaneous special deposits with the City.
Cash and Investments
For purposes of the statement of cash flows, cash and cash equivalents are
defined to be cash on hand, demand deposits and highly liquid investments with
a maturity of three months or less from the date of purchase. For financial
statement presentation purposes, cash and cash equivalents are shown as cash
and investments and restricted cash and investments in the proprietary funds.
Investments
Investments are generally stated at fair value.
Cash and investments are pooled to maximize investment yields. The net change
in fair value and interest earned on the investments is allocated to the
44
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
respective funds based on each fund's average monthly cash and investments
balance.
The City's investment in LAIF is $5,063,942 at June 30, 2004. This investment
value is based on information provided by the State Treasurer's Office. The
carrying value of the City's position in the fund is materially consistent with the
fair value of the fund shares. This pool is under the regulatory oversight of the
State Treasurer's Office. The LAIF Board consists of five members as designated
by Statute. The Chairman is the State Treasurer, or his designated
representative. Two members qualified by training and experience in the field of
investment of finance, and two members who are treasurers, finance or fiscal
officers or business managers employed by any County, City or local district or
municipal corporation of this state, are appointed by the State Treasurer. The
term of each appointment is two years, or at the pleasure of the appointing
authority.
e. Intergovernmental Receivables
Intergovernmental receivables represent grant reimbursement requests, capital
project billings, and pending transfers of taxes and fees collected by other
government agencies. As of June 30, 2004, the balance of this account was
$11,389,128 of which $5,000,000 represents a receivable from the Irvine Ranch
Water District in conjunction with the Newport Coast Pre - annexation Agreement.
See Note (17) for more information.
f. Inventories
Inventories are valued at cost, which approximates market, using the first -in, first -
out method. The City follows the consumption method for inventory control. The
costs of governmental fund type inventories are recorded as expenditures when
consumed.
g. Notes Receivable
Included in notes receivable is a $50,000 loan to the City Manager to purchase a
home in the City. As required by the City Charter and the employment
agreement, the City Manager has to establish residency in, and become an
elector of, the City of Newport Beach. The City Manager shall pay a simple
interest on the unpaid balance of the loan, which shall be due on or before
September 15`h of each fiscal year.
The interest rate on the loan shall be the average rate of return on all City
investments during the fiscal year. The City Manager may, but is not required to
make payments to reduce the principal amount of the loan at any time and
45
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
payments to reduce the principal shall not be subject to any pre - payment penalty.
The entire unpaid balance of the loan is due March 26, 2012, or at the City
Manager's separation from City employment.
h. Capital Assets
Capital assets, which include land, structures, equipment, and infrastructure
assets, are reported in the applicable governmental or business -type activities
columns in the Government -wide Financial Statements. Capital assets are
recorded at cost where historical records are available and at an estimated
original cost where no historical records exist. Equipment purchased in excess of
$5,000 is capitalized if it has an expected useful life of three years or more.
Building, infrastructure, and improvements are capitalized if cost is in excess of
$30,000. The cost of normal maintenance and repairs that do not add to the
value of the asset's lives are not capitalized. The City chose to value and report
on infrastructure assets in their entirety (e.g. Prior to 1980).
Major capital outlay for capital assets and improvements are capitalized as
projects are constructed. For debt - financed capital assets, interest incurred
during the construction phase is reflected in the capitalization value of the asset
constructed, net of interest earned on the invested proceeds over the same
period. Capital assets acquired through lease obligations are valued at the
present value of future lease payments at the date acquired. Contributed capital
assets are valued at their estimated fair market value at the date of contribution.
Capital assets used in operations are depreciated over their estimated useful
lives using the straight -line method in the government -wide financial statements
and in the fund financial statements of the proprietary funds. Depreciation is
charged as an expense against operations and accumulated depreciation is
reported on the respective balance sheet. The range of lives used for
depreciation purposes for each fixed asset class as follows:
Structures
30 -75 years
Equipment
3 -15 years
Infrastructure
20 -75 years
L Claims and Judgments
The City accounts for material claims and judgments and associated legal and
administrative costs when it is probable that the liability claim has been incurred
and the amount of the loss can be reasonably estimated. The City records the
estimated loss liabilities in the Internal Service Fund. Included therein are claims
incurred but not reported, which consists of (a) known loss events expected to be
presented as claims later, (b) unknown loss events that are expected to become
claims, and (c) expected future development on claims already reported. This is
46
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
based upon historical actual results that have established a reliable pattern
supplemented by specific information about current matters. Small dollar claims
and judgments are recorded as expenditures when paid.
j. Property Taxes
The assessment, levy, and collection of property taxes are the responsibility of
the County of Orange. The City records property taxes as revenue when
received from the County, except at year -end, when property taxes received
within 60 days are accrued as revenue. Property taxes are assessed and
collected each fiscal year according to the following property tax calendar:
Lien date
March 1
Levy date
July 1
Due dates
November 1
— 1 t installment
March 1 — 2nd
installment
Collection dates
December 10
— 1st installment
April 10 — 2 "d
installment
k. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused
vacation and limited amounts of earned but unused sick leave benefits, which will
be paid to employees upon separation from City service. Beginning in fiscal year
1990, the City adopted a general leave plan to replace the traditional vacation
and sick leave plan. The City uses a general leave plan which permits a
maximum of three years' accrual for every employee, above which the excess is
paid out as current compensation. All employees hired prior to January 1, 1990,
were given the option of remaining in the traditional vacation and sick leave plan
or enrolling in the general leave plan. All employees hired on or after January 1,
1990, are automatically enrolled in the general leave plan. Compensated
absences are accrued in the Compensated Absence Internal Service Fund when
employee services have been rendered and when it becomes probable that the
City will compensate the employees for benefits through paid time off or cash
payments at termination or retirement. Benefits that have been earned but are
not yet available for use because employees have not met certain conditions are
accrued to the extent it is probable that the employees will meet the conditions
for compensation in the future.
Deferred Revenue
Deferred revenues are those where asset recognition has been met, but the
revenue recognition criteria have not been met.
47
(2)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Reconciliation of Government -wide and Fund Financial Statements
a. Explanation of Differences Between Governmental Funds Balance Sheet
and the Statement of Net Assets
The "total fund balances' of the City's governmental funds $83,527,743 differs
from "net assets" of governmental activities $1,604,918,091 reported in the
statement of net assets. This difference primarily results from the long -term
economic focus of the statement of net assets versus the current financial
resources focus of the governmental fund balance sheets.
Capital Related Items
When capital assets (property, plant, and equipment) that are to be used in
governmental activities are purchased or constructed, the cost of those assets
are reported as expenditures in governmental funds. However, the statement of
net assets includes those capital assets among the assets of the City as a whole.
Cost of capital assets
$1,631,215,475
Accumulated depreciation
(100,007,622)
Total capital assets, net'
$1,531,207,853
"Amount excludes net capital assets of $7,003,548 from
Internal Service funds.
Long -term Debt Transactions
Long -term liabilities applicable to the City's governmental activities are not due
and payable in the current period and accordingly are not reported as fund
liabilities. All liabilities (both current and long -term) are reported in the statement
of net assets. Balances at June 30, 2004 were:
Certificates of participation
$ 5,845,000
Note payable
1,939,132
Pre - annexation agreement
15,600,000
CDBG Loan
2,340.000
Total
$25.724.132
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Accrued Interest
Accrued liabilities in the statement of net assets differ from the amount reported
in governmental funds due to accrued interest on outstanding debt payable (see
Note 6).
Accrued interest added 155 153
Investment in Joint Venture
Investment in joint ventures is not a current financial resource and hence
reported only in the statement of net assets.
Net equity in joint venture $2.565.819
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 $6.616.282
Internal Service Funds
Internal service funds are used by management to charge the costs of certain
activities (such as equipment management and self- insurance authorities) to
individual funds. The assets (including capital assets) and liabilities of the internal
service funds are included in governmental activities in the statement of net
assets, because they primarily serve governmental activities of the City.
Internal Service Funds $6.810.899
Reclassifications and Eliminations
Interfund balances must generally be eliminated in the government -wide
statements, except for net residual amounts due between governmental
activities. Amounts involving fiduciary funds should be reported as external
transactions. Any allocations must reduce the expenses of the function from
which the expenses are being allocated, so that expenses are reported only once
— in the function in which they are allocated.
Investments in joint ventures are not a current financial resource and are not
reported in the governmental funds. Therefore, it is added for the statement of
net assets. Interfund balance created due to the consolidation of internal service
activities to governmental and enterprise funds is not reported in the fund
statements and must be added to the statement of net assets.
49
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
(2) Explanation of Differences between Governmental Funds
(a) Balance Sheet and the Statement of Net Assets, (Continued)
Total Capital
Governmental Related
Assets Funds Items
Long -term
Accumulated Debt Interest
Depreciation Transactions Payable
Cash and investments
$ 82,408,972 - -
Receivables:
$ 5,066,434 - - - -
Accounts
5,385,525 - -
Notes
50,000 - -
Lease
- -
Interest
951,776 - -
Intergovemmental receivables
10,521,829 - -
Restdcted cash with fiscal agent
5,040,828 - -
Interfund balances
3,250,242 - -
Due from other funds
- -
Imestment in joint venture
- - -
Prepaid items
256,947 - -
Inventory
178,630 - -
Other
2,187 - -
Capital assets
- 1,631,215,475 -
Accumulated depreciation
- - (100,007,622)
Total assets
S 108,046,936 1,631,215,475 (100,007,622)
Liabilities and Fund Balances I Net Assets
Liabilities:
Accounts payable
$ 5,066,434 - - - -
Accrued payroll
4,713,544 - - - -
Accmed interest payable
- - - - 155,153
Deposits payable
2,967,365 - - - -
Capital leases payable
- - - - -
Claims payable
- - - - -
Workers' compensation payable
- - - - -
Compensated absences payable
- - - - -
COP payable - current
- - - - -
Note payable - current
- - - - -
Deferred revenue
8,521,608 - - - -
Interfund payables
- - - - -
Due to other funds
3,250,242 - - - -
Long -term liabilities
- - - 25,724,133 -
Total liabilities
24,519,193 - - 25,724,133 155,153
Fund balances / net assets
83,527,743 1,631,215,475 (100,007,622) (25,724,133) (155,153)
Total liabilities and
and fund balances / net assets
$ 108,046,936 $ 1,631,215,475 (100,007,622) - -
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Investment
Certain
Internal
Reclassifications
in Joint
Deferred
service
and
Statement of
Venture
Revenue
Funds
Eliminations
Net Assets
-
-
20,237,210
-
102,646,182
-
-
15,421
-
5,400,946
-
-
-
-
50,000
-
-
-
-
951,776
-
-
-
-
10,521,829
-
-
-
-
5,040,828
-
-
-
(3,250,242)
-
2,656,819
-
2,656,819
-
-
76,194
-
333,141
-
-
318,264
-
496,894
-
-
2,187
-
-
19,539,273
-
1,650,754,748
-
-
(12,535,725)
-
(112,543,347)
2,656,819
-
27,650.637
(3,250,242)
1,666,312,003
-
-
896,582
-
5,963,016
-
-
51,930
-
4,765,474
-
-
-
-
155,153
-
-
-
-
2,967,365
-
-
442,202
-
442,202
-
-
2,350,383
-
2,350,383
-
-
2,499,547
-
2,499,547
-
1,200,000
-
1,200,000
-
(6,616,282)
-
-
1,905,326
-
-
-
22,219
22,219
-
-
(3,250,242)
-
- - 13,399,094 - 39,123,227
(6,616,282) 20,839,738 (3,228,023) 61,393,912
2,656,819 6,616,282 6,810,899 (22,219) 1,604,918,091
2,656.819 - 27,650,637 (3,250,242) 1,666,312,003
51
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
b. Explanation of Differences between Enterprise Funds and Government -wide
Statement of Net Assets
Total net assets of the City's Enterprise Funds of $115,678,013 differs from net
assets of the business -type activities of $115,700,232 reported in the
government -wide statement of net assets. The difference, $22,219 results from
the consolidation of internal service fund activities related to the enterprise funds.
(2) Reconciliation of government -wide and fund financial statements
(b) Explanation of Differences between Enterprise Funds and
Government -wide Statement of Net Assets. (Continued)
Assets
Cash and investments
Receivables:
Accounts
Restricted cash with fiscal agent
Interfund balances
Intergovernmental receivables
Capital assets, net
Total assets
Liabilities and Fund Balances I Net Assets
Liabilities:
Accounts payable
Accrued payroll
Accrued interest payable
Interfund balances
Deposits payable
Noncurrent liabilities:
Due within one year
Due in more than one year
Total liabilities
Net Assets
Total Internal Government wide
Enterprise Service Statement of
Funds Funds Net Assets
$ 19,311,046 $ - $ 19,311,046
4,195,732 - 4,195,732
1,425,597 1,425,597
- 22,219 22,219
867,299 867,299
101,316,107 - 101,316,107
$ 127,115,781 $ 22,219 $ 127,138,000
$ 2,436,219 $
- $ 2,436,219
209,186
- 209,186
183,871
- 183,871
73,492
- 73,492
1,280,000
- 1,280,000
7,255,000
7,255,000
11,437,768
11,437,768
Invested in capital assets, net of related debt 101,316,107 - 101,316,107
Restricted for debt service - - -
Unrestricted 14,361,906 22,219 14,384,125
$ 115,678,013 $ 22,219 $ 115,700,232
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
C. Explanation of Differences between Governmental Fund Operating
Statements and the Statement of Activities
The "net change in fund balances" for governmental funds $5,577,724 differs
from the "change in net assets" for governmental activities $100,845,682
reported in the statement of activities. The differences arise primarily from the
long -term economic focus of the statement of activities versus the current
financial resources focus of the governmental funds. The effect of the difference
is illustrated below.
Capital Related Items
When capital assets that are to be used in governmental activities are purchased
or constructed, the resources expended for those assets are reported as
expenditures in governmental funds. However, in the statement of activities, the
cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense. In governmental funds, significant maintenance projects
are reclassified as functional expenses in the statement of net assets. Also,
contributed capital is not recorded in governmental funds; therefore it is added for
the statement of net assets. Beginning net assets in the statement of activities
has been changed to reflect a correction in valuation of infrastructure. See Note
(18) for more information.
Capital outlay
Net change to Internal Service Fund capital
assets
Contributed capital
Net change in capital related items
Depreciation expense
Deletions to accumulated depreciation
Net change in accumulated depreciation
53
$5,032,590
(4,953,586)
102.713.421
$102 792 425
($8,535,061)
986.262
($7.548.7991
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Long -term Debt Transactions
Repayment of debt service is reported as an expenditure in governmental funds
and, thus, has the effect of reducing fund balance because current financial
resources have been used. Issuance of debt is reported as an other financing
source in governmental funds, thus increasing fund balance. For the City as a
whole, however, the principal payments reduce the liabilities, and proceeds from
long term debt increase liabilities in the statement of net assets.
Certificates of Participation $265,000
Note payable 143,350
Pre - annexation agreement 1,200,000
CDBG loan 60.000
Total principal payments made $1.668.350
Accrued Interest
Interest accrued on outstanding debt payable is not recorded as an expenditure
in governmental funds, and, thus has been added to the statement of activities.
Net change in accrued interest 7 2
Investment in Joint Venture
Investment in joint ventures creates an explicit, measurable equity interest
reported only in the statement of activities.
Net change in investment in joint venture 1118 819
I
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
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 ($4 709 2361
Internal Service Funds
Internal service funds are used by management to charge the costs of certain
activities, such as equipment management and self- insurance activities, to
individual funds. The adjustments for internal service funds "closes" those funds
by reimbursing or charging additional amounts to participating departments in
individual funds for costs over or under charged for those activities.
Net change in Internal Service Funds $2.120.213
Reclassification and Eliminations
Interfund balances must generally be eliminated in the government -wide financial
statements, except for net residual amounts due between governmental and
business -type activities. Any allocations must reduce the expenses of the
function from which the expenses are being allocated, so that expenses are
reported only once — in the function in which they are allocated. Amounts
involving fiduciary funds should be reported as external transactions.
55
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
(2) Reconciliation of Government -wide and Fund Financial Statements
(c) Explanation of Differences between Governmental Fund
Operating Statements and the Statement of Activities, (Continued)
Fund balances I net assets
beginning of year, as restated 77,950,019 1,528,423,050 (93,654,141) (27,392,483) (162,419)
Fund balances I net assets,
end of year $ 83,527,743 $ 1,631,215,475 $ (100,007,622) $ (25,724,133) $ (155,153)
56
Total
Capital
Long -term
Governmental
Related
Accumulated
Debt Accrued
Funds
Items
Depreciation
Transactions Interest
Revenues:
Taxes and assessments
$ 79,874,751
$ -
$ -
$ - $ -
Intergovernmental
16,108,023
-
-
- -
Licenses and permits
5,429,632
-
-
- -
Chargesforservices
11,516,782
-
-
- -
Fines and forfeitures
3,605,963
-
-
- -
Investment income
887,513
-
-
-
Net increase in fair value of investments
(360,586)
-
-
- -
Property income
11,857,671
-
-
- -
Share of joint venture net income
-
-
-
- -
Donations
2,704,367
-
-
- -
Contributed capital
102,713,421
-
- -
Gain on sale of capital assets
-
-
-
- -
Other
478,200
Total revenues
132,102,316
102,713,421
Expenditures:
Current:
General government
11,024,256
-
208,258
Public safety
56,849,718
1,140,130
(622,864)
- -
Public works
22,780,896
1,204,022
5,942,396
-
Community development
5,723,031
-
99,731
-
Community services
10,827,346
2,609,434
725,960
-
Capital outlay
15,188,550
(5,032,590)
-
- -
Debt service:
Principal retirement
1,668,350
-
-
(1,668,350) -
Interest and fiscal charges
520,228
(7,266)
Total expenses
124,582,375
(79,004)
613531481
(1,668,350) (7,266)
Other financing sources (uses):
Transfers in
16,553,395
-
-
- -
Transfers out
(18,495,612)
-
-
- -
Proceeds from long -term debt
Total other financing sources
(uses)
(1,942,217)
Net change in fund balances I
net assets
5,577,724
102,792,425
(6,353,481)
1,668,350 7,266
Fund balances I net assets
beginning of year, as restated 77,950,019 1,528,423,050 (93,654,141) (27,392,483) (162,419)
Fund balances I net assets,
end of year $ 83,527,743 $ 1,631,215,475 $ (100,007,622) $ (25,724,133) $ (155,153)
56
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Investment
Certain
Internal
Reclassifications
703,733
in Joint
Deferred
Service
and
Statement of
Venture
Revenue
Fund
Eliminations
Activities
$ -
$ -
$ -
$ -
$ 79,874,751
-
(4,709,236)
-
-
11,398,787
-
-
-
-
5,429,632
-
-
-
(404,398)
11,112,384
-
-
-
-
3,605,963
-
-
183,137
1,070,650
-
-
(81,631)
-
(442,217)
-
-
-
-
11,857,671
146,819
-
-
-
146,819
-
-
-
-
2,704,367
-
-
-
-
102,713,421
-
-
85,730
-
85,730
478,200
146,819
(4,709,236)
187,236
(404,398)
230,036,158
(45,109)
240,974
11,428,379
107,916
703,733
58,178,633
42,286
8,158,232
38,127,832
(40,134)
447,157
6,229,785
(27,100)
605,864
14,741,504
(10,155,960)
-
29,164 542,126
67,023 129,248,259
2,000,000 (18,495,612) 57,783
- 18,495,612 -
2,000,000 57,783
146,819 (4,709,236) 2,120,213 (404,398) 100,845,682
2,510,000
11,325,518
4,690,686
382,179
1,504,072,409
$ 2,656,819
$ 6,616,282
$ 6,810,899 _L _____L22,2191
$ 1,604,918,091
57
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Explanation of Differences between Enterprise Funds Operating Statement
and the Statement of Activities
The change in net assets for the City's enterprise funds $1,044,377 differs from
the change in net assets of the business -type activities $1,448,775 reported in
the government -wide statement of activities. The difference $404,398 results
from the consolidation of internal service fund activities related to the enterprise
funds.
j22) Reconciliation of Government -wide and Fund Financial Statement
(d) Explanation of Differences between Enterprise Funds
Operating Statement and the Statement of Activities, (Continued)
Total
Internal
Business -type activities
Enterprise
Service
Statement of
Funds
Fund
Activities
Operating revenues:
Charges for sales and services:
Water sales
$ 16,656,037
$ -
$ 16,656,037
Intergovernmental
1,608,507
-
1,608,507
Sewer service and connection fees
2,867,925
-
2,867,925
Other
180,324
180,324
Total operating revenues
21,312,793
21,312,793
Operating expenses:
Purchase of Water
7,194,252
-
7,194,252
Salaries and wages
4,277,303
-
4,277,303
Depreciation
1,763,398
-
1,763,398
Professional Services
1,741,844
-
1,741,844
Maintenance and supplies
1,086,648
(404,398)
682,250
System maintenance
1,891,840
-
1,891,840
Other
1,453,466
1,453,466
Total operating expenses
19,408,751
(404,398)
19,004,353
Operating income
1,904,042
404,398
2,308,440
Nonoperating revenues (expenses):
Investment income
203,041
-
203,041
Net increase in fair value of investments
(87,078)
-
(87,078)
Property income
29,280
-
29,280
Loss on removal of fixed assets
(789,807)
-
(789,807)
Interest expense
(367,743)
-
(367,743)
Other
(4,906)
(4,906)
Total other financing sources
(1,017,213)
(1,133,176)
Income before transfers
886,829
404,398
1,175,264
Capital contributions
215,331
-
215,331
Transfers out
(57,783)
(57,783)
Change in net assets
1,044,377
404,398
1,448,775
Net assets, beginning of year
116,521,963
(382,179)
116,139,784
Restatement
(1,888,327)
(1,888,327)
Net assets, beginning of year, as restated
114,633,636
(382,179)
114,251,457
Net assets, end of year
$ 115,678,013
$ 22,219
$ 115,700,232
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
(3) Budgetary Control and Compliance
The City adheres to the following general procedures in establishing the budgetary data
reflected in the financial statements:
During April, the City Manager submits to the City Council a proposed operating
budget for the fiscal year commencing the following July 1. The operating budget
includes proposed expenditures and the means of financing them. Public
hearings are conducted at City Council meetings to obtain taxpayer comments.
Prior to July 1, the budget is legally adopted through passage of an appropriation
resolution.
• Budgets are adopted on an annual basis consistent with generally accepted
accounting principles for General and Special Revenue Funds.
• The City of Newport Beach does not present budget information on Capital
Projects Funds since the City approved project - length budgets. These project -
length budgets authorize total expenditures over the duration of a construction
project rather than year -by -year budgeting.
• The City of Newport Beach does not present budget information on Debt Service
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 legal level of budgetary control is at the fund level. The City Manager is
authorized to transfer budgeted amounts between departments within any fund;
however, any revisions which alter the total appropriations of any fund must be
approved by City Council.
• At fiscal year -end, budget appropriations lapse. Budget appropriations for
incomplete capital projects are re- budgeted in the following fiscal year by Council
action and are included in the revisions noted above. Projects that are not started
during the budget year are reevaluated in the following year.
• Encumbrances represent commitments related to unperformed contracts for
goods and services. The City utilizes an encumbrance system as a management
control technique to assist in controlling expenditures. Under this system,
encumbrance accounting for the expenditure of funds is recorded in order to
indicate outstanding commitments and is employed in the governmental fund
types. Encumbrances outstanding at year -end are reported as reservations of
fund balances since they do not constitute expenditures or liabilities.
Encumbrances and their related budgets are honored in the subsequent year to
fulfill these commitments and are presented in the original adopted budget.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Expenditures exceeded appropriations in the following non -major governmental funds.
Appropriations Expenditures Variance
Air Quality Management District
$
25,000
$
96,003
$
(71,003)
Miscellaneous Grants
$
40,000
$
42,423
$
(2,423)
Supplemental Law Enforcement
$
119,171
$
119,411
$
(240)
The following funds reported deficit fund balances:
Special Revenue Funds
Contributions $ 956,689
Capital Projects Funds
Assessment Districts $ 171,619
Internal Service Funds
Insurance Reserve $3,390,487
Compensated Absences $6,236,986
(4) Cash and Investments
The City has elected to pool all cash and investments of all funds, except for funds
required to be held by outside fiscal agents under the provisions of certificates of
participation.
Cash and investments (including cash and investments with fiscal agents) at June 30,
2004, consisted of the following:
Governmental activities $ 107,687,010
Business -type activities 20,736,643
Fiduciary funds 4,465,455
Total $ 132,889,108
.o]
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Total carrying value of cash and investments at June 30, 2004, consisted of the
following:
Pooled cash deposits
$ 2,331,394
Pooled investments
122,825,217
Total unrestricted cash and investments
125,156,611
Restricted cash and investments:
Cash and investments with fiscal agents
7,732,497
Total cash and investments
$ 132,889,108
Authorized Deposits /Investments
Under the provisions of the City's investment policy, and in accordance with Section
53601 of the California Government Code, the City may deposit and invest in the
following:
• Certificates of Deposit (or Time Deposits)
• Negotiable Certificates of Deposit
• Bankers Acceptances
• U.S. Treasury Issues
• Securities of Federal Agencies and Federal Instrumentalities
• Commercial paper
• Repurchase Agreements and Reverse Repurchase Agreements
• Passbook Savings Accounts
• Local Agency Investment Fund (State of California Investment Pool)
• County Investment Pools (Los Angeles)
• Money Market Funds /Mutual Funds
• Medium Term Corporate Bonds /Notes
• Mortgage- backed securities and Asset - backed securities
• Municipal Bonds
The City investment policy contains several additional requirements, including the
following investment limitations (as a percentage of the total portfolio): 10% for
certificates of deposit, 30% for negotiable certificates of deposit, 30% for bankers
acceptances, 25% for commercial paper, 10% for reverse repurchase agreements, 5%
for the Los Angeles County investment pool, 30% for medium term notes, 20% for asset -
backed securities, 15% for municipal bonds, and 20% for money market funds.
61
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Deposits
Deposits consist of cash and demand deposits accounts. Deposits in banks are
maintained in financial institutions that provide Federal Depository Insurance
Corporation protection on the bank balances. The California Government Code requires
California banks and savings and loan associations to secure a city's deposits by
pledging government securities as collateral. The market value of pledged securities
must equal at least 110% of a city's deposits. California law also allows financial
institutions to secure 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:
Category 1 Insured or collateralized with securities held by the City or its agent
in the City's name.
Category 2 Collateralized with securities held by the pledging financial
institution's trust department or agent in the City's name.
Category 3 Uncol lateral ized.
As of June 30, 2004, the City's deposit balances were as follows:
Category Bank Carving
1 2 3 Balance Amount
Petty Cash $ - $ - $ $ - $ 28,232
Deposits:
Demand deposits 300,000 2,859,161 3,159,161 2,303,162
Total deposits $ 300,000 $ 2,859,161 $ $ 3,159,161 $ 2,331,394
Investments
The investments that are represented by specific identifiable investment securities are
classified as to credit risk by three categories as follows:
Category 1 Insured, registered, or securities held by the City or its agent in the
City's name.
Category 2 Uninsured and unregistered, with securities held by the
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 trust department or agent but not in the City's name.
REA
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
The City's investments at June 30, 2004, are summarized below for the credit risk and
carrying amounts:
* Not subject to categorization.
63
Category
Carrying
1
2 3
Amount
Pooled Investments
U.S. Treasury Notes $ -
$ 25,308,675 $ -
$ 25,308,675
Federal Home Loan Bank -
24,526,871 -
24,526,871
Federal Farm Credit Bank -
1,237,660 -
1,237,660
Federal Home Loan
Mortgage Corporation -
20,773,967 -
20,773,967
Federal National Mortgage
Association -
27,635,434 -
27,635,434
Other Government
Securities -
971,400 -
971,400
Money market funds* -
- -
1,175,874
Medium term notes -
11,486,691 -
11,486,691
Commercial Paper -
4,644,704 -
4,644,704
State of California:
Local Agency
Investment Fund* -
- -
5,063,942
Total pooled investments $ -
$ 116,585,402 $ -
$ 122,825,217
Investments with fiscal agents:
Mutual funds invested in US Government Securities*
$ 7,732,497
* Not subject to categorization.
63
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
(5) Capital Assets
Capital asset activity for the year ended June 30, 2004 was as follows:
Governmental Activities:
Non - depreciable:
Land
Work in progress
Depreciable:
Structures
Equipment
Infrastructure
Less accumulated depreciation for:
Structures
Equipment
Infrastructure
Net
Beginning
Balance, as
Restated
$ 1,219,744,818
11,762,360
30,962,194
21,701,565
263,198,888
1,547,369,825
(8,811,284)
(13,086,801)
(83,096,463)
(104,994,548)
Balance
Additions Deletions June 30, 2004
$ 97,537,247
3,375,944
3,656,020
1,225,219
13,070,142
118,864,572
(637,049)
(2,138, 580)
(5,759,432)
(8,535,061)
$ (2,442,416)
(11,118,561)
(167,018)
(547,632)
(1,204,022)
(15,479,649)
66,807
557,190
362,265
986,262
$ 1,314,839,649
4,019,743
34,451,196
22,379,152
275,065,008
1,650,754,748
(9,381,526)
(14,668,191)
(88,493,630)
(112,543,347)
$ 1,442,375,277 $ 110,329,511 $ (14,493,387) $ 1,538,211,401
Beginning balance has been restated to include correction of value of infrastructure and
related accumulated depreciation. See Note (18) for further discussion.
64
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Business -type Activities:
Non - depreciable:
Land
Work in progress
Depreciable:
Structures
Equipment
Infrastructure
Less accumulated depreciation for:
Structures
Equipment
Infrastructure
Net
Beginning
Governmental
Business -type
Balance, as
Activities
General government
Balance
Restated
Additions
Deletions
June 30, 2004
Public works
6,304,661
-
$ 2,016,450
$ -
$ -
$ 2,016,450
4,018,136
2,668,386
(4,013,946)
2,672,576
205,793
-
-
205,793
132,246
15,945
$ 1,763,398
148,191
133,261,781
5,410,050
(1,022,665)
137,649,166
139,634,406
8,094,381
(5,036,611)
142,692,176
(86,450) (5,145) (91,595)
(130,070) (1,088) - (131,158)
(39,629,009) (1,757,165) 232,858 (41,153,316)
(39,845,529) (1,763,398) 232,858 (41,376,069)
$ 99,788,877 $ 6,330,983 $ (4,803,753) $ 101,316,107
Beginning balance has been restated to include correction of work in progress, City -owned
water and sewer lines, and related accumulated depreciation. See Note (18) for further
discussion.
Depreciation expense was charged in the following functions in the Statement of Activities:
65
Governmental
Business -type
Activities
Activities
General government
$ 208,258
$ -
Public safety
1,129,644
-
Public works
6,304,661
-
Community development
99,731
-
Community service
792,767
-
Water
-
1,250,879
Wastewater
-
512,519
$ 8,535,061
$ 1,763,398
65
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
(6) Long -Term Debt
Changes in Long -Term Liabilities
Long -term liability for the year ended June 30, 2004, was as follows:
Governmental activities:
Certificates of participation payable
Note payable
Pre - annexation agreement
CDBG Loan
Capital leases payable
Workers' compensations payable
Claims and judgements payable
Compensated absences
Total governmental activities
Business -type activities:
Water Revenue Bonds payable
Total
Amounts
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
$ 6,110,000
$ - $
(265,000) $
5,845,000
$ 275,000
2,082,483
-
(143,350)
1,939,133
149,801
16,800,000
-
(1,200,000)
15,600,000
1,200,000
2,400,000
-
(60,000)
2,340,000
64,000
1,293,586
-
(430,611)
862,975
442,202
7,326,000
5,433,852
(4,366,625)
8,393,227
2,499,547
4,285,236
416,109
(1,862,345)
2,839,000
2,350,383
8,139,727
574,941
(918,644)
7,796,024
1,200,000
48,437,032
6,424,902
(9,246,575)
45,615,359
8,180,933
9,765,000
-
(1,230,000)
8,535,000
1,280,000
$ 58,202,032 $ 6,424,902 $ (10,476,575) $ 54,150,359 $ 9,460,933
Internal service funds predominantly serve the governmental funds. Accordingly, long -term
liabilities for them are included as part of the above totals for governmental activities. Also,
liabilities for workers' compensation, claims and judgments, and compensated absences
are typically liquidated from the Internal Service funds through resources collected from
individual funds.
..
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Governmental Activities
• Certificates of Participation
In Fiscal Year 1998 -99, the Newport Beach Public Facilities Corporation issued
$7,330,000 of Refunding Certificates of Participation to advance refund the 1992
Certificates of Participation used to finance the construction of the Central Library. The
refunding was undertaken to reduce total debt service payments over the next twenty
years by $690,228 and resulted in an economic gain of $495,745. The Refunded
Certificates were executed and delivered pursuant to the Prior Trust Agreement. The
City has previously entered into a project lease with the Newport Beach Public
Facilities Corporation to lease certain property, facilities, improvements, and
equipment.
The lease payments made by the City are held by a trustee who makes semi - annual
payments on the Certificates of Participation. The lease payments began May 15,
1994, and are in amounts sufficient to cover the payment of principal and interest of
the Certificates. The 1998 Certificates consist of $2,995,000 of Serial Certificates with
interest rates from 3.6% to 4.55% and $4,335,000 of Term Certificates with interest
rates from 5.05% to 5.15 %. Interest on the Certificates is payable semiannually on
June 1 and December 1 of each year. Future principal payments range from $275,000
to $535,000 through June 1, 2019. Principal payments are payable annually on June 1
of each year. At June 30, 2004, the City has a required cash reserve balance for debt
service of $566,157, which is recorded as a restricted asset and reservation of fund
balance in the Debt Service Fund. The outstanding balance at June 30, 2004,
amounted to $5,845,000.
The annual amortization requirements of the Certificates of Participation are as
follows:
Year Ending
June 30
Principal
Interest
Total
2005
$ 275,000
$ 286,688
561,688
2006
290,000
275,000
565,000
2007
300,000
262,530
562,530
2008
315,000
249,480
564,480
2009
330,000
235,462
565,462
2010 -2014
1,905,000
919,428
2,824,428
2015 -2019
2,430,000
386,435
2,816,435
$ 5,845,000
$ 2,615,023
$ 8,460,023
67
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
• Note Payable
Note payable consists of a note to the California Department of Boating and
Waterways in 1987 for a loan in the amount of $3,300,000. The note is payable in
thirty annual principal and interest installments of $237,062 at 4.5% rate of interest
beginning August 1, 1987. The outstanding balance at June 30, 2004, amounted to
$1,939,132.
The annual amortization requirements for the Note Payable are as follows:
Year Ending
June 30
Principal
Interest
Total
2005
149,801
87,261
237,062
2006
156,542
80,520
237,062
2007
163,587
73,475
237,062
2008
170,948
66,114
237,062
2009
178,641
58,421
237,062
2010 -2014
1,021,259
164,041
1,185, 300
2015 -2016
98,354
6,688
105,042
$ 1,939,132
$ 536,520
$ 2,475,652
• Newport Coast Pre - Annexation Agreement Payable
In conjunction with the January 1, 2002, annexation of Newport Coast, the City entered
into an agreement payable with the Newport Coast Committee for a total of
$18,000,000 to reduce property owner assessments used to finance certain road and
street improvements. The principal -only agreement which began in the 2003 fiscal
year, is payable over a period of fifteen years in equal installments of $1,200,000. The
outstanding balance at June 30, 2004, amounted to $15,600,000.
• CDBG Loan
In fiscal year 2003, the City received $2,400,000 in Section 108 loan proceeds to
assist with the funding for the Balboa Village Improvement Program. The loan is
collateralized by future Community Development Block Grant allocations with an
average interest rate of 6.5 %. Future principal payments range from $64,000 to
$208,000 through June 30, 2023. The outstanding balance at June 30, 2004,
amounted to $2,340,000.
M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
The annual amortization requirements for the CDBG Loan are as follows:
Year Ending
June 30
2005
2006
2007
2008
2009
2010 -2014
2015 -2019
2020 -2023
• Capital Leases
Principal
64,000
69,000
73,000
78,000
84,000
510,000
706,000
756,000
Interest
122,301
120,514
118,224
115,482
112,253
495,741
334,880
95,595
Total
186,301
189,514
191,224
193,482
196,253
1,005,741
1,040,880
851,595
$ 2,340,000 $ 1,514,990 $ 3,854,990
Rolling Stock Leases - Equipment Maintenance Internal Service Fund: In fiscal year
2003, the City entered into a lease- purchase agreement, payable monthly, as lessee
for financing the acquisition of heavy duty street maintenance vehicles and fire trucks.
The term of the lease is five years and the interest rate for the lease is 2.72 %. The
lease agreement qualifies as a capital lease for accounting purposes as the title
transfers at the end of the lease term or the lease contains a bargain purchase option,
and therefore have been recorded at the present value of their future minimum lease
payment as of the inception date. The assets acquired through capital leases, totaling
$6,754,827, were classified as equipment in the Equipment Maintenance Internal
Service Fund.
Future minimum lease payments under the leases are as follows:
Year Ending June 30
Payments
2005
$ 459,776
2006
261,321
2007
119,567
2008
49,820
Total minimum lease payments
890,484
Less: amount representing interest
(27,509)
Present value of future
minimum lease payments
$ 862,975
.•
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
• Claims and Judgments
The City retains the risk of loss for general liability and workers' compensation claims
as described in note (8). These amounts represent estimates of amounts to be paid for
reported general liability and workers' compensation claims including incurred- but -not-
reported claims based upon past experience, modified for current trends and
information. While the ultimate amount of losses incurred through June 30, 2004, is
dependent on future developments, based upon information from the City's attorneys,
the City's claims administrators and others involved with the administration of the
programs, City management believes the accrual is adequate to cover such losses.
The estimated liability at June 30, 2004, for general liability amounted to $2,839,000
and for workers' compensation was $8,393,227.
• Compensated Absences
The City's policies relating to compensated absences are described in Note (1). This
liability, to be paid in future years from available and future resources, at June 30,
2004, is $7,796,024.
Business -tvoe activities
• Water Revenue Bonds
In Fiscal Year 1998 -99, the City issued $14,225,000 of Refunding Water Revenue
Bonds to refund the 1994 Water Revenue Bonds used to finance the construction and
acquisition of water storage and transmission facilities. The refunding was undertaken
to reduce total debt service payments over a ten -year period by $481,153 and resulted
in an economic gain of $418,469. The bonds are secured by a pledge of net revenues
of the water fund. The 1998 Serial Bonds bear interest ranging from 3.6% to 4.5 %. At
June 30, 2004, the City has a required cash reserve balance of $1,425,597 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, 2004, the outstanding principal balance was $8,535,000, and accrued
interest payable was $183,871.
70
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
The annual amortization requirements for the Water Revenue Bonds are as follows:
Year Ending
June 30
2005
2006
2007
2008
2009
2010
Principal Interest Total
$ 1,280,000 $ 341,183 $ 1,621,183
1,330,000
1,385,000
1,445,000
1,510,000
1,585,000
$ 8,535,000
Limited Obligation Bonds
Special Assessment Districts Bonds
286,693
229,331
168,833
104,545
35,663
$ 1,166,248
1,616,693
1,614,331
1,613,833
1,614,545
1,620,663
$ 9,701,248
The City has issued certain Assessment District and Community Facilities District
Bonds. Although the City collects and disburses funds for these districts, the City has no
obligation or duty to pay any delinquency out of any available funds of the City. Neither
the faith and credit nor the taxing power of the City is pledged to the payment of the
bonds, and therefore the bonded indebtedness is not shown in the financial statements
of the City. The City holds reserve funds on behalf of bondholders; the assets are
recorded in the Special Assessment Agency Fund. Bonds outstanding at June 30, 2004
for each district under the Bond Acts of 1911 and 1915, and other special assessments,
are as follows:
71
Bonds Outstanding
Assessment District
Original Issue
June 30, 2004
No.
59
McFadden Square
$ 530,609
$ 150,000
No.
60
Bay Avenue
236,533
70,000
No.
61
East Bay Front
127,299
35,000
No.
62
Hazel Drive
335,210
95,000
No.
63
Newport Island
536,531
195,000
No.
64
Channel Road
180,794
85,000
No.
65
Rocky Point
53,125
16,000
No.
66
East Newport
171,911
75,000
No.
67
CDM Blk -133
64,431
37,000
No.
70
Bay Shores
1,380,996
1,380,996
No.
71
Balboa Boulevard
796,942
550,000
No.
72
Balboa Coves
192,908
120,000
No.
74
Island Avenue
222,629
200,000
No.
78
Little Balboa Island
1,348,196
1,145,000
No.
79
Beacon Bay
1,215,134
1,120,000
No.
82
Corona del Mar
274,967
245,000
No.
86
Balboa Peninsula
300,174
300,174
No.
95 -1
CIOSA Refunding Series A
15,495,000
14,310,000
71
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Other Limited Obligation Bonds
The City has issued revenue bonds for the purpose of advancing the net proceeds of the
bonds to Hoag Memorial Hospital Presbyterian for the purposes of financing the
acquisition, construction and equipping of health facilities located within the City.
The bonds are limited obligations of the City payable from payments required to be
made by Hoag Memorial Hospital. The City is not obligated to pay the principal or
interest of the bonds except from payments made by Hoag, and neither the faith and
credit nor the taxing power of the City is pledged to the payment of the principal and
interest on the bonds.
Bonds outstanding at June 30, 2004 are as follows:
Series 1992 $ 91,000,000
Series 1996 100,000,000
Series 1999 125,000,000
The revenue bonds are subject to, at the option of Hoag Memorial Hospital Presbyterian,
optional and mandatory tender for purchase. If no tender or purchase is made, varying
redemption payments on the 1992 bonds commence on October 1, 2013 and are
required to be made through October 1, 2022. For the Series 1996 bonds, if no tender
for purchase is made, redemption is required to be made on October 1, 2026. If no
tender or purchase is made for the Series 1999 bonds, redemption is required to be
made on December 1, 2029.
(8) Risk Management — General Liability and Workers' Compensation
The City is exposed to various risks of loss related to torts, theft of, damage to, and
destruction of assets, errors and omissions, injuries to employees, and natural disasters.
The City carries commercial insurance with independent third parties for loss risks
associated with real and personal property, and automotive liability. The City purchases
fidelity bonds for employees in key positions. Settled claims from these risks have not
exceeded commercial insurance coverage for the past three years. For general liability,
the City has excess insurance coverage of $25 million per occurrence with a self- insured
retention (SIR) of $500,000 per occurrence.
For workers' compensation and employer's liability insurance, the City has excess
insurance coverage of $1,000,000 per occurrence with a $300,000 SIR. This coverage
provides for work - related accidents and diseases.
The Insurance Reserve fund was established to account for costs associated with
general liability, workers' compensation, and compensated absence benefits. The
Insurance Reserve fund is accounted for as an internal service fund where assets are
set aside for risk management, administration, claim settlements and benefit
72
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
distribution. A premium is charged to each fund that accounts for part-time or full -time
employees. The total charge allocated to each of the funds is calculated using trends in
actual experience after considering unexpected and unusual claims.
Fund Liabilities are reported when it is probable that a loss has occurred and the amount
of the loss can be reasonably estimated. Liabilities include an amount for claims that
have been incurred but not reported (IBNR). Claims liabilities are calculated considering
the effects of inflation, recent claim settlement trends including frequency and amount of
payouts and other economic and social factors. The total liability claims payable include
$11,232,227 which represents the discounted present value at June 30, 2004; the
claims were discounted using an interest rate of five percent.
Unpaid claims, beginning of fiscal year
Incurred claims (including IBNR)
Claim payments
Unpaid claims, end of fiscal year
Genera
June 30, 2003
$ 3,270,000
6,283,585
(5,268,349)
$ 4,285,236
I Liability
June 30, 2004
$ 4,285,236
416,109
(1,862,345)
$ 2,839,000
Workers' Compensation
June 30, 2003
June 30, 2004
$ 6,431,000
$ 7,326,000
4,403,179
5,433,852
(3,508,179)
(4,366,625)
$ 7,326,000
$ 8,393,227
For the past three years, no payment on any claim or judgment has exceeded the
amount of applicable insurance.
(9) Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with
Internal Revenue Code Section 457. The plan, available to all City employees, permits
them to defer a portion of their salary until future years.
Section 457 plan assets were placed in trust for the exclusive benefit of all employees
and their beneficiaries. Therefore, all employee assets held in Section 457 plans are not
the property of the City and are not subject to the claims of the City's general creditors.
The assets under the plan, which are not included in the accompanying financial
statements, totaled $48,589,186 at June 30, 2004.
73
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
(10) Pension Plan
Plan Description - Defined Benefit Plan
The City contributes to the California Public Employees Retirement System (PERS), an
agent multiple - employer public employee defined benefit pension plan. PERS provides
retirement and disability benefits, annual cost -of- living adjustments, and death benefits
to plan members and beneficiaries. PERS acts as a common investment and
administrative agent for participating public entities within the State of California. Benefit
provisions and all other requirements are established by state statute and city ordinance.
Copies of PERS' annual financial report may be obtained from their executive office: 400
P Street, Sacramento, CA 95814.
Fundinq Policy
Participants are required to contribute 7% (9% for safety employees) of their annual
covered salary. The City makes the contributions required of City employees on their
behalf and for their account. The City is required to contribute at an actuarially
determined rate; the current rate is 0.00% for non - safety employees and 17.584% for
safety employees of annual covered payroll. The contribution requirements of plan
members and the City are established and may be amended by PERS.
Annual Pension Cost
For 2004, the City's annual pension cost of $8,883,565 for PERS was equal to the City's
required and actual contributions. A summary of principle assumptions and methods
used to determine the annual required contribution is shown below:
Valuation Date
Actuarial Cost Method
Amortization Method
Average Remaining
Period
Asset Valuation Method
Actuarial Assumptions
Investment Rate of
Return
Projected Salary
Increases
Miscellaneous Plan
June 30, 2003
Entry Age Actuarial Cost
Method
Level Percent of Payroll
15 Years as of the Valuation
Date
3 Year Smoothed Market
7.75% (net of administrative
expenses)
3.25% to 14.45% depending
on age, service, and type of
employment
74
Safety Plan
June 30, 2003
Entry Age Actuarial Cost
Method
Level Percent of Payroll
18 Years as of the Valuation
Date
3 Year Smoothed Market
7.75% (net of administrative
expenses)
3.25% to 13.15% depending
on age, service, and type of
employment
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Inflation Rate
Payroll Growth
Post Retirement Benefit
Increases
3.00%
3.25%
2.00% per year cost -of- living
adjustments
3.00%
3.25%
2.00% per year cost -of- living
adjustments
Initial unfunded liabilities are amortized over a closed period that depends on the plan's
date of entry into PERS. Subsequent plan amendments are amortized as a level percent
of pay over a closed 20 -year period. Gains and losses that occur in the operation of the
plan are amortized over a rolling period, which results in an amortization of 10% of
unamortized gains and loses each year. If the plan's accrued liability exceeds the
actuarial value of plan assets, then the amortization payment on the total unfunded
liability may not be lower than the payment calculated over a 30 -year amortization
period.
THREE -YEAR TREND INFORMATION FOR PERS ($ Amount in Thousands)
Fiscal Annual Pension
Year Cost (APC)
6/30/02 $5,020
6/30/03
6/30/04
$6,283
75
Percentage of Net Pension
APC Contributed Obligation
100% $0
100% $0
100% $0
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
SCHEDULE OF FUNDING PROGRESS FOR PIERS ($ Amount in Thousands
06/30/2003
Misc. $139,983 $134,113 $5,870 95.8% $31,586 18.584%
Safety 229,155 188,309 40,846 82.2% 23,941 170.611%
Total $369,138 $322,422 $46,716 87.3% $55,527 84.132%
More current information regarding actuarial data is not yet available from PIERS
Plan Description - Defined Contribution Plan
As of January 1, 1992, the City entered into a defined contribution plan with Public
Agency Retirement System ( "PARS ") for all of its part-time employees. In a defined
contribution plan, benefits depend solely on amounts contributed to the plan plus
investment earnings. All part-time employees are eligible to participate from the date of
employment. Federal legislation requires contributions of at least 7.5% to a retirement
plan, and City Council resolved to match the employees' contributions of 3.75 %. The
City's contributions for each employee (and interest earned by the accounts) are fully
vested immediately.
For the year ended June 30, 2004, the City's covered payroll for employees participating
in the plan was $2,714,124. The City made employer contributions of $101,780 (3.75%
of current covered payroll). Assets of the plan totaled $1,668,612 at June 30, 2004.
(11) Post - Employment Health Care Benefits
As established by a City Council approved Memorandum of Understanding between the
City and its employees, the City provides post - employment health care benefits.
Employees who retire from the City with seven years of service and participate in PIERS
retirement are eligible to receive health care benefits covering themselves and a
76
Entry Age
Unfunded
Normal
Actuarial
Liability
Annual
Valuation
Accrued
Value of
(Excess
Funded
Covered
UAAL as a
Date
Liability
Assets
Assets)
Status
Payroll
% of Payroll
(A)
(B)
(A - B)
(B / A)
(C)
[(A -B) / C]
06/30/2001
Misc.
$110,252
$141,132
($30,880)
128.0%
$26,865
(114.945 %)
Safety
197,338
195,209
2,129
98.9%
21,816
9.759%
Total
$307,590
$336,341
_j?L751j
109.3%
$48,681
(59.060 %)
06/30/2002
Misc.
$120,030
$132,552
($12,522)
110.4%
$29,910
(41.866 %)
Safety
212,722
184,202
$28,520
86.6%
22,955
124.243%
Total
$332,752
$316,754
$15,998
95.2%
$52,865
30.262%
06/30/2003
Misc. $139,983 $134,113 $5,870 95.8% $31,586 18.584%
Safety 229,155 188,309 40,846 82.2% 23,941 170.611%
Total $369,138 $322,422 $46,716 87.3% $55,527 84.132%
More current information regarding actuarial data is not yet available from PIERS
Plan Description - Defined Contribution Plan
As of January 1, 1992, the City entered into a defined contribution plan with Public
Agency Retirement System ( "PARS ") for all of its part-time employees. In a defined
contribution plan, benefits depend solely on amounts contributed to the plan plus
investment earnings. All part-time employees are eligible to participate from the date of
employment. Federal legislation requires contributions of at least 7.5% to a retirement
plan, and City Council resolved to match the employees' contributions of 3.75 %. The
City's contributions for each employee (and interest earned by the accounts) are fully
vested immediately.
For the year ended June 30, 2004, the City's covered payroll for employees participating
in the plan was $2,714,124. The City made employer contributions of $101,780 (3.75%
of current covered payroll). Assets of the plan totaled $1,668,612 at June 30, 2004.
(11) Post - Employment Health Care Benefits
As established by a City Council approved Memorandum of Understanding between the
City and its employees, the City provides post - employment health care benefits.
Employees who retire from the City with seven years of service and participate in PIERS
retirement are eligible to receive health care benefits covering themselves and a
76
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
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 employees split the
remaining premium at a rate of 25% each. This program is funded on a pay -as- you -go
basis. As of June 30, 2004, 312 retirees are enrolled in City's health plans out of the 589
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.
Contributions 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 are as follows:
Year Ending
June 30
2002
2003
2004
(12) Interfund Receivables and Pavables
Post - employment Health
Care Expenditure
$ 706,538
$ 844,316
$1,017,692
At June 30, 2004, interfund receivables and payables were as follows:
General Fund
Nonmajor funds
Total
Due From
$ 3,250,242
$ 3,250,242
Due to
3,250,242
$ 3,250,242
Interfund receivables and payables were created in order to eliminate deficit cash
balances in special revenue and capital projects funds.
77
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
(13) Interfund Transfers
Interfund transfers at June 30, 2004, consisted of the following:
General Fund
oNon -major Funds
N
Newport Coast
m
Annexation Fund
]Water Fund
Wastewater Fund
Total
Transfers In:
Tide and Coast Insurance
Submerged Annexation Reserve Non -major
General Fund Land Fund Fund Funds Total
$ - $ 13,160,502 $ - $2,000,000 $1,254,559 $ 16,415,061
160,000 - - - 671,432 831,432
49,119 - 1,200,000 - - 1,249,119
50,258 - - - - 50,258
7,525 - - - - 7,525
$ 266,902 $ 13,160,502 $1,200,000 $2,000,000 $1,925,991 $ 18,553,395
The City typically uses transfers to fund ongoing subsidies. The general fund transferred
$13,160,502 to subsidize for the maintenance and operation of the Tide and Submerged
Land Fund. As required by the pre- annexation agreement, interest accrued in the
amount of $49,119 in the Newport Coast Annexation fund, but is due to and was
subsequently transferred to the General Fund.
(14) Reserved and Designated Fund Balances
The City has set up `reserves" of fund equity to segregate fund balances which are not
appropriable for expenditure in future periods, or which are legally set aside for a
specific future use. Fund "designations' also may be established to indicate tentative
plans for financial resource utilization in a future period.
The following provides explanations as to the nature and purpose of each reserve and
designation.
Reserved for encumbrances
Amounts reserved for encumbrances are commitments for materials and services on
purchase orders and contracts that are legally committed but not expended by fiscal
yearend.
Reserved for debt service
This account sets aside a portion of fund balance to meet the annual debt service
requirements.
E.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Reserved for permanent endowment
This account reflects a permanent endowment established for the maintenance and
dredging of Upper Newport Bay.
Reserved for prepaid items
This account reflects prepaid items which are not available, spendable resources.
Reserved for inventories
This account reflects the value of inventories purchased by the City but not yet issued to
the operating departments.
Reserved for long -term receivable
This account reflects the value of the note receivable which is not an available and
spendable resource.
Designated for special projects
This account reflects funds that have been designated for special projects which vary in
nature.
Designation for stabilization
This account stabilizes fluctuating revenues and expenditures, providing stability by
smoothing out year -to -year volatility in the City's finances.
Designated for contingencies
Contingency designations represent funds for unexpected emergencies.
Designated for capital projects
This account reflects unspent appropriations committed to capital projects in the prior
year.
(15) Joint Venture Agreements
Bonita Canyon Public Facilities Financing Authority
The Bonita Canyon Public Facilities Financing Authority (Authority) is a joint venture
formed by the City of Newport Beach, Irvine Unified School District, and Newport-Mesa
Unified School District. The Authority's Board is comprised of two members appointed by
each of the member agencies. The Authority created Community Facilities District 98 -1
to finance public facilities that will benefit the properties within their boundaries. The
Authority issued $45,000,000 of special tax bonds that will be repaid by special
assessments; the City is not obligated in any manner to repay the bonds. The Authority
paid the City $30,577,712 (81.7 %) to pay for the costs of acquiring and constructing
public facilities including parks and road improvements. At June 30, 2004, the remaining
bond proceeds are held in trust as restricted cash totaling $922,025. 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
79
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Authority's activities and the Authority is not fiscally dependent on the City. The City's
equity interest in this joint venture is not readily determinable. Complete separate
financial statements can be obtained at the Newport Mesa Unified School District, 2985
Bear Street, Suite 8M, Costa Mesa, California.
Air Borne Law Enforcement
The City is a participant in a joint venture agreement with the City of Costa Mesa for the
operation of the Air Borne Law Enforcement program (ABLE). The oversight Board
consists of the Chiefs of Police of Costa Mesa and Newport Beach and one appointee
for each Member Agency for a total of four (4) Board Members. The Cities have a 50
percent interest in the venture, with each City having provided an initial investment of
two helicopters and related equipment. The City of Newport Beach's cost of participating
in the ABLE program is recorded in the General Fund, which provides for the
maintenance and operation of the program as well as replacement of capital equipment
used in the operation of the program. Annually, the amounts paid by the City to this joint
venture are approximately $500,000. Operation costs are offset by fees collected from
surrounding cities that may subscribe to regular patrol or request assistance on an as-
needed basis. Shared equally between the Cities of Newport Beach and Costa Mesa,
the City's share of net income from subscribers and other cities amounts to $146,819 for
fiscal year 2003 -04. The City's 50% interest in the net equity of this joint venture at
June 30, 2004, amounts to $2,656,819. 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 withdrew from its membership in a joint venture agreement
with the Cities of Huntington Beach and Fountain Valley for the operation of the Central
Net Training facility on September 30, 2003. The oversight board consisted 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 were based on the number of personnel using the training
facilities and was recorded in the General Fund as an expenditure for service. The City
did not have a material measurable equity interest in the joint venture. Upon termination
of the agreement, the property and assets of the joint venture became the property of
the City of Huntington Beach. The amount paid by the City to the joint venture for the
quarter ending September 30, 2003, was $36,869. Complete financial statements can be
obtained at the Central Net offices at 18301 Gothard Street, Huntington Beach,
California.
Metro Cities Fire Authority
The City of Newport Beach is a Member of a joint venture agreement with the Cities of
Anaheim, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, and Orange for
the operation of a communication network to provide fire suppression, emergency
medical assistance, and rescue services. The oversight board consists of one voting
member and one alternate appointed by the governing body of each member agency.
The City of Newport Beach's costs are based each fiscal year upon the number of
Ell
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
recorded incidents attributable to the City divided by the recorded incidents attributable
to all members during the year and, are recorded in the General Fund as an expenditure
for service. Upon termination of the agreement, the proceeds from the sale of the
property and assets of the joint venture will be paid to each member agency pursuant to
their fair share percentage. Annually, the amounts paid by the City to this joint venture
are approximately $376,806. The City's 9.95% interest in the net equity of this joint
venture at June 30, 2004, amounts to $80,229. Complete separate financial statements
can be obtained at the Metro Cities Fire Authority offices at 201 S. Anaheim Boulevard,
Suite 302, Anaheim, California.
(16) Special Item
Capital Contributions
Annexations
In late 2002, the Orange County Local Agency Formation Commission (LAFCO) certified
and approved a reorganization plan that allowed the City to annex two unincorporated
areas within or adjacent to the City's sphere of influence. The areas are known as
eastern Santa Ana Heights and Bay Knolls. The services that the City is providing to the
annexed areas include law enforcement, fire, paramedic, animal control, library,
recreation, public works, general maintenance, and administrative services. The services
to Santa Ana Heights and Bay Knolls commenced on July 1, 2003.
The annexation resulted in contributed capital of $102,713,421 consisting of Land and
Infrastructure. In the Government -wide Financial Statements, the contributed capital is
recorded as a special item in the Statement of Activities. The City considers the
annexation an infrequent event and therefore has classified this transaction as a special
item. This amount is also reported as a current year addition to Capital Assets as land
and infrastructure on the Government -wide Statement of Net Assets.
(17) Commitments and Contingencies
Claims and Judgments
Numerous claims and suits have been filed against the City in the normal course of
business. The estimated liability under such claims, based upon information received
from the City Attorney, contracted attorneys and the Risk Manager, has been estimated
and recorded as accrued claims and judgments payable (See Note 6).
Circulation Improvement and Open Space Agreement
The City entered into a Circulation Improvement and Open Space Agreement (CIOSA)
with a developer whereby the City could receive a loan amount up to $14,395,572 to be
used only for certain transportation and circulation improvements, of which $10,722,124
a
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
had been received as of June 30, 2004. The City agreed to match the contribution
(without interest) by pledging 50% of future Fair Share Fees (developer impact fees)
which are recorded in the Circulation and Transportation Special Revenue Fund. During
the year ended June 30, 2004, the City received $681,046 of Fair Share Fees, and
$340,523 was paid to the CIOSA Construction capital projects fund. Through June 30,
2004, $2,331,434 of Fair Share Fees has been paid. No additional liability has been
recorded, because any future repayment is uncertain; any amounts not contributed by
February 20, 2016, will be forgiven.
Newport Coast Pre - Annexation Agreement
In Fiscal Year 2001 -02, the City entered into a Pre- Annexation Agreement with the
Newport Coast Committee that stipulated certain terms and conditions for the
annexation of property collectively known as Newport Coast.
In conjunction with the annexation, the City also agreed to sell the water service rights
for the annexed area to Irvine Ranch Water District for $25.0 million. Of the $25.0 million
payable from the Irvine Ranch Water District, $15.0 million was received in the current
year and the remaining $10.0 million is due in three installments ranging from $2.0 to
$5.0 million through January 1, 2008. At June 30, 2004, the remaining receivable of $5.0
million has been recorded as an Intergovernmental Receivable in the Newport Coast
Annexation Special Revenue Fund.
Among other basic provisions, the Pre- Annexation Agreement stipulates specific
requirements for the use of proceeds from the sale of the water rights to Irvine Ranch
Water District. The City has entered into an agreement to reimburse Newport Coast
residents $18.0 million of the $25.0 million for certain public road and street
improvements previously financed by property owner assessments. The assessment
debt relief will be provided to Newport Coast residents in equal installments of $1.2
million over 15 years. The remaining $7.0 million may be used in locating, planning, and
constructing a Community Center within the annexed area. In the event that the
Community Center is constructed for less than $7.0 million, or not at all, the Newport
Coast Committee has the option to allocate the funds to further reduce the property
owner assessments. In the Government -wide Statements, the $16.8 million outstanding
assessment debt relief has been recorded as a Noncurrent Liability, and the $7.0 million,
including applicable interest earnings, has been restricted in the Net Assets.
[£
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Construction and contractual commitments for major construction projects are as follows:
Total
Project
Budget
Project
To Date
Expenses
General Plan $
835,193
$ 416,868
City Hall Expansion Design
606,285
-
CDM Pavement Rehab
1,040,660
37,095
Jamboree Rd Ford /Bison
1,066,000
39,795
Newport Coast Community Center
623,322
6,667
Big Canyon Cover Project
6,216,466
2,905,626
Fire Station #7 Land
3,092,000
-
Mariners Library
1,000,000
(18) Fund Balance /Net Asset Restatements
Unexpended
Commitments
$ 597,330
606,285
1,001,106
836,374
575,000
3,312,014
3,092,000
1,000,000
General Fund beginning balance has been restated for the over - accrual of prior periods'
payroll and allocation of prior periods' interest to Assessment District $626,113 and the
reclassification of Affordable Housing Deposits Payable to Restricted Reserves
$2,543,198, for a total of $3,169,311.
Assessment District beginning fund balance has been restated by $240,916 for the
allocation of prior periods' interest to all the Assessment Districts.
Beginning Net Assets have been restated by the net effect of changes resulting from the
correction of an error in the valuation of City -owned capital assets. The adjustment
increased the government -type activities beginning net assets by $1,316,741 and
decreased the business -type activities beginning net assets by $1,888,327.
The overall effect of the adjustments noted above resulted in an increase of beginning
net assets in the Statement of Activities of $4,726,971 for governmental activities, and a
decrease of beginning net assets of ($1,506,148) for business -type activities.
19
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
Beginning Beginning
Fund Balance /Net Fund Balance /Net
Assets Assets as
July 1, 2003 Adjustments Restated
Fund Balance
General Fund $ 36,322,784 $ 3,169,311 $ 39,492,095
Assessment District 674,046 240,916 914,962
Net Assets
Government -type Activities:
Infrastructure
262,182,202
1,016,686
263,198,888
Accumulated Depreciation
(83,396,518)
300,055
(83,096,463)
Net Capital Asset
178,785,684
1,316,741
180,102,425
Business -type Activities:
Work in progress
3,672,560
345,577
4,018,137
Infrastructure
135,478,407
(2,216,626)
133,261,781
Accumulated Depreciation
(39,611,731)
(17,278)
(39,629,009)
Net Capital Asset
$ 99,539,236
$ (1,888,327)
$ 97,650,909
(19) Subsequent Event
The City has issued certain limited obligation, 1911 Act assessment district,
improvement bonds listed as follows:
District Name
Assessment District 75 Balboa Business District
Assessment District 68 Newport Shores
Assessment District 69 West Newport
Par Value
$821,204
Issue Date
July 1, 2004
$3,813,562 September 1, 2004
$4,978,498 September 1, 2004
The bonds are issued in serial maturities over fifteen years ranging from 1.5% to 5.5 %.
The proceeds of these bonds, together with certain investment earnings, and certain
other monies will be used to finance the cost of the undergrounding power, telephone,
and cable facilities. Bond proceeds will also be used to establish a debt service reserve
fund and to pay the costs of issuance of the Bonds. The aggregate assessed value
[L
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2004
levied in the three districts exceeds $600 million. Although the City will be collecting and
disbursing funds for these districts, the City has no obligation or duty to pay any
delinquency out of any available funds of the City. Neither the faith and credit nor the
taxing power of the City is pledged to the payment of the bonds.
[a
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EE
Non Major Governmental Funds
IZ111111]04 EITi /_l MI61M CZSILT /=1:701hTil=1►111 CA111111111ZI11:1
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 individuals /families.
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 of solid waste.
The Supplemental Law Enforcement Services Fund (SLESF) is used to account for revenues received from
the county to be used exclusively for front line law enforcement services.
The 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 C /OSA Construction Fund is used to account for the receipt and expenditure of funds for the Circulation
Improvement and Open Space Agreement (CIOSA). The improvements include street and frontage
improvements.
The Bonita Canyon Development Fund is used to account for the receipt and expenditure of funds for the
Bonita Canyon Public Facilities Agreement. The improvements include certain public parks and recreation
facilities, and street improvements and facilities.
The Oil Spill Remediation Fund is used to account for the receipt of the settlement proceeds from the
American Trader Company. These funds must be used on projects affecting the areas damaged by the spill.
The Mariners Library Fund is used to account for the receipt and expenditure of funds for the Mariners Library
Capital Project.
The Fire Station 7 Fund is used to account for the property acquisition, design and construction of a new
fire station which will replace a temporary fire station that provides service in the northern part of the city.
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.
The Ackerman Fund is used to account for the receipt of permanent endowments intended as follows: 75% of
the fund's proceeds will be used for the purchase of High Tech Library Equipment while the remaining 25%
will be used for Scholarships for needy students.
:�l
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Restricted cash with fiscal agent
Due from other funds
Prepaid items
Inventory
Other
Total Assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Accrued payroll
Deferred revenue
Due to other funds
Total Liabilities
Fund balances:
Reserved for encumbrances
Reserved for debt service
Reserved for permanent endowment
Unreserved:
Designated for special purposes
Undesignated
Total fund balances (deficit)
Total liabilities and
fund balances
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2004
Special Revenue
Traffic
State Congestion Asset
$ 3,727,627 $
$ 146,760 $ -
- 907,719
4,000 144,362
$ 3,727,627 $ $ 150,760 $ 1,052,081
$ 124,639 $ - $ 15,952 $ 178,300
- - - 1,455,235
375,235
124,639 - 15,952 2,008,770
1,400,242
- 37,376
-
2,202,746
- 97,432
-
-
- -
(956,689)
3,602,988
- 134,808
(956,689)
$ 3,727,627 $
- $ 150,760
$ 1,052,081
Circulation
Building
$ 7,558
Arterial
Community
and
Excise
Combined
Highway
Development Ackerman
Transportation
Tax
Transportation
Rehabilitation
Block Grant Donation
$ 4,464,964
$ 352,922
$ 2,309,499
$ 6,450
$ - $ -
-
-
-
-
375,464 -
-
-
-
-
460,646 -
-
-
$ 352,922
$ 2,309,499
2,187
$ 4,464,964
$ 352,922
_L LL
$ 6,450
$ 838,297 $
$ 154,661
$ 17,761
$ 7,558
$ - $ 40,236 $ -
-
-
233,388
- 375,464 -
-
-
-
- 375,007 -
154,661
17,761
240,946
- 790,707 -
-
53,290
903,610
6,450 10,154 -
4,310,303
281,871
1,164,943
- 37,436 -
4,310,303
335,161
2,068,553
6,450 47,590 -
$ 4,464,964
$ 352,922
$ 2,309,499
$ 6,450 $ 838,297 $ -
continued
W
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2004
(continued)
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ 6,507
Special Revenue
Accrued payroll
-
Air Quality
Deferred revenue
Supplemental
- - -
Management
Environmental
Law Misc
Total Liabilities
District
Liability
Enforcement Grants
Assets
Reserved for encumbrances
-
Cash and investments
$ 30,122
$ 1,926,921
$ - S -
Receivables:
-
- - -
Unreserved:
Accounts
-
8,495
-
Intergovernmental receivables
25,202
-
- -
Restricted cash with fiscal agent
-
-
- -
Due from other funds
-
-
- -
Prepaid items
-
-
- -
Inventory
-
-
- -
Other
-
-
Total Assets
$ 55,324
$ 1,935,416
$ $
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ 6,507
-
Accrued payroll
-
- - -
Deferred revenue
-
- - -
Due to other funds
-
- - -
Total Liabilities
6,507
- - -
Fund balances:
Reserved for encumbrances
-
3,699 - -
Reserved for debt service
-
- - -
Reserved for permanent endowment
-
- - -
Unreserved:
Designated for special purposes
48,817
1,931,717 - -
Undesignated
-
- - -
Total fund balances (deficit)
48,817
1,935,416 - -
Total liabilities and
fund balances
$ 55,324
$ 1,935,416
.11
Debt Service Capital Projects
Library Assessment CIOSA Bonita Canyon Oil Spill Mariners
COP District Construction Development Remediation Library
$ - $ 415,067 $ 4,434,341 $ 5,210 $ 955,595 $ 972;504
- - - - 33,174
566,157 - - 922,025 - -
$ 566,157 $ 415,067 $ 4,434,341 $ 927,235 $ 955,595 $ 1,005,678
$ - $ 586,686 $ - $ - $ 9,341 $ 6,050
- - - - - 33,174
586,686 - - 9,341 39,224
- - - - 75,048 142,016
566,157 - - - - -
(171,619) 4,434,341 927,235 871,206 824,438
566,157 (171,619) 4,434,341 927,235 946,254 966,454
$ 566,157 $ 415,067 $ 4,434,341 $ 927,235 $ 955,595 $ 1,005,678
(continued)
91
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Restricted cash with fiscal agent
Due from other funds
Prepaid items
Inventory
Other
Total Assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Accrued payroll
Deferred revenue
Due to other funds
Total Liabilities
Fund balances:
Reserved for encumbrances
Reserved for debt service
Reserved for permanent endowment
Unreserved:
Designated for special purposes
Undesignated
Total fund balances
Total liabilities and
fund balances
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2004
(continued)
Capital Projects Permanent Fund
Total
Other
Ackerman Governmental
Fire Station 7 Bay Dredging Donation Funds
$ - $ 3,165 $ 1,073,552 $ 20,824,699
- - 949,388
549,028
3,092,000 - - 5,040,828
- 2,187
$ 3,092,000 $ 3,165 $ 1,073,552 $ 27,366,130
2,500,000
2,500,000
$ 1,500 $ 1,149,191
- - 2,097,261
3,250,242
1,500 6,496,694
.2,631,885
- - 566,157
- 3,000 772,781 775,781
592,000 165 299,271 17,852,302
- - - (956,689)
592,000 3,165 1,072,052 20,869,436
$ 3,092,000 $ 3,165 $ 1,073,552 $ 27,366,130
'A
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Revenues:
Other taxes
Intergovernmental
Licenses, permits and fees
Fines and forfeitures
Investment income
Net decrease in fair value of investments
Donations
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
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 balances
Fund balances (deficit), beginning
Restatement
Restated fund balance (deficit)
Fund balances (deficit), ending
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, 2004
Special Revenue
1,505,531 2,037 61,290 1,358,218
156,805
1,549,294 84,493 - 1,857,443
1,549,294 84,493 156,805 1,857,443
(43,763) (82,456) (95,515) (499,225)
(160,000)
(160,000)
(203,763) (82,456)
3,806,751 82,456
3,806,751 82,456
$ 3,602,988 $ -
E
(95,515) (499,225)
230,323 (457,464)
230,323 (457,464)
$ 134,808 $ (956,689)
Traffic
State
Congestion
Asset
Gas Tax
Relief
Forfeiture Contributions
1,484,796
-
2,677 1,308,218
-
-
56,975
37,410
3,704
2,978 -
(16,675)
(1,667)
(1,340) -
50,000
1,505,531 2,037 61,290 1,358,218
156,805
1,549,294 84,493 - 1,857,443
1,549,294 84,493 156,805 1,857,443
(43,763) (82,456) (95,515) (499,225)
(160,000)
(160,000)
(203,763) (82,456)
3,806,751 82,456
3,806,751 82,456
$ 3,602,988 $ -
E
(95,515) (499,225)
230,323 (457,464)
230,323 (457,464)
$ 134,808 $ (956,689)
- - 152,481 -
- - - - - 1,500
1,121,902 153,918 1,248,191 85,175 718,732 -
- - - - 60,000 -
- - - - 123,581 -
1,121,902 153,918 1,248,191 85,175 1,054,794 1,500
(413,272) 57,861 64,400 605,367 (1,049,196) 44,750
(340,523) - - - - (330,909)
(340,523) - - - - (330,909)
(753,795) 57,861 64,400 605,367 (1,049,196) (286,159)
5,064,098 277,300 2,004,153 (598,917) 1,096,786 286,159
5,064,098 277,300 2,004,153 (598,917) 1,096,786 286,159
$ 4,310,303 $ 335,161 $ 2,068,553 $ 6,450 $ 47,590 $ -
(continued)
95
Special Revenue
Circulation
Building
Arterial
Community
and
Excise
Combined
Highway
Development
Ackerman
Transportation
Tax
Transportation
Rehabilitation
Block Grant
Donation
-
-
1,300,089
690,542
-
-
681,046
210,087
-
-
-
-
49,768
3,053
22,556
-
5,598
-
(22,184)
(1,361)
(10,054)
-
-
-
-
-
-
-
-
46,250
708,630
211,779
1,312,591
690,542
5,598
46,250
- - 152,481 -
- - - - - 1,500
1,121,902 153,918 1,248,191 85,175 718,732 -
- - - - 60,000 -
- - - - 123,581 -
1,121,902 153,918 1,248,191 85,175 1,054,794 1,500
(413,272) 57,861 64,400 605,367 (1,049,196) 44,750
(340,523) - - - - (330,909)
(340,523) - - - - (330,909)
(753,795) 57,861 64,400 605,367 (1,049,196) (286,159)
5,064,098 277,300 2,004,153 (598,917) 1,096,786 286,159
5,064,098 277,300 2,004,153 (598,917) 1,096,786 286,159
$ 4,310,303 $ 335,161 $ 2,068,553 $ 6,450 $ 47,590 $ -
(continued)
95
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, 2004
(continued)
Expenditures:
Current:
General government - - - -
Public safety - - 119,411 42,423
Public works 96,003 154,389 - -
Community development - - - -
Community services - - - -
Capital outlay - - - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 96,003 154,389 119,411 42,423
Excess (deficiency) of revenues
over expenditures 48,817 188,559 - -
Other financing sources (uses):
Transfers in - -
Transfers out -
Total other financing sources (uses) - -
Net change in fund balances 48,817 188,559 -
Fund balances (deficit), beginning - 1,746,857 -
Restatement - -
Restated fund balance (deficit) - 1,746,857 -
Fund balances (deficit), ending $ 48,817 $ 1,935,416
0•
Special Revenue
Air Quality
Supplemental
Management
Environmental
Law
Misc
District
Liability
Enforcement
Grants
Revenues:
Othertaxes
$ -
$ 332,814
$ 119,171
$ -
Intergovernmental
144,692
-
-
-
Licenses, permits and fees
-
-
-
-
Fines and forfeitures
-
-
-
39,448
Investment income
231
18,284
436
5,409
Net decrease in fair value of investments
(103)
(8,150)
(196)
(2,434)
Donations
-
-
-
-
Other
-
-
-
Total revenues
144,820
342,948
119,411
42,423
Expenditures:
Current:
General government - - - -
Public safety - - 119,411 42,423
Public works 96,003 154,389 - -
Community development - - - -
Community services - - - -
Capital outlay - - - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 96,003 154,389 119,411 42,423
Excess (deficiency) of revenues
over expenditures 48,817 188,559 - -
Other financing sources (uses):
Transfers in - -
Transfers out -
Total other financing sources (uses) - -
Net change in fund balances 48,817 188,559 -
Fund balances (deficit), beginning - 1,746,857 -
Restatement - -
Restated fund balance (deficit) - 1,746,857 -
Fund balances (deficit), ending $ 48,817 $ 1,935,416
0•
Debt Service Capital Projects
Library
Assessment
CIOSA
Bonita Canyon
Oil Spill
Mariners
COP
District
Construction
Development
Remediation
Library
$ -
$ -
S -
S -
$ -
$ -
-
-
-
-
-
144,686
2,687
5,501
47,903
65,517
12,642
9,630
-
-
(21.,353)
-
(5,635)
(4,292)
-
-
-
-
-
38,269
-
260,457
-
-
-
-
2,687
265,958
26,550
65,517
7,007
188,293
-
-
645,000
-
-
-
-
1,352,539
516,451
81,792
609,107
299,010
265,000
-
-
-
-
-
302,935
-
-
-
-
-
567,935
1,352,539
1,161,451
81,792
609,107
299,010
(565,248)
(1,086,581)
(1,134,901)
(16,275)
(602,100)
(110,717)
565,088
-
340,523
-
-
97,471
565,088
-
340,523
-
-
97,471
(160)
(1,086,581)
(794,378)
(16,275)
(602,100)
(13,246)
566,317
674,046
5,228,719
943,510
1,548,354
979,700
-
240,916
-
-
-
-
566,317
914,962
5,228,719
943,510
1,548,354
979,700
$ 566,157
$ (171,619)
$ 4,434,341
$ 927,235
$ 946,254
$ 966,454
(continued)
97
Revenues:
Other taxes
Intergovernmental
Licenses, permits and fees
Fines and forfeitures
Investment income
Net decrease in fair value of investments
Donations
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
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
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, 2004
(continued)
Capital Projects Permanent Funds
325,000
Total
426,516
Other
-
Ackerman
Governmental
Fire Station 7 Bay Dredging
Donation
Funds
$ - $ -
$ -
$ 451,985
- -
-
5,075,700
- -
-
891,133
(831,432)
-
96,423
- 32
8,801
302,140
- (14)
(3,923)
(99,381)
- -
1,935,037
2,069,556
- -
-
260,457
- 18
1,939,915
9,048,013
592,000
Total other financing sources (uses) 592,000
Net change in fund balances
Fund balances (deficit), beginning
Restatement
Restated fund balance (deficit)
592,000
318,639
895,392
- 152,481
1,198,772 1,200,272
- 9,678,047
Fund balances (deficit), ending $ 592,000 $ 3,165 $ 1,072,052 $ 20,869,436
325,000
426,516
-
1,198,772
12,996,347
18
741,143
(3,948,334)
-
330,909
1,925,991
-
-
(831,432)
-
330,909
1,094,559
18
1,072,052
(2,853,775)
3,147
-
23,482,295
240,916
3,147
-
23,723,211
Fund balances (deficit), ending $ 592,000 $ 3,165 $ 1,072,052 $ 20,869,436
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2004
Revenues:
Intergovernmental
Investment income
Net decrease in fair value of investments
Total revenues
Expenditures:
Capital outlay
Excess (deficiency) of revenues
over expenditures
Other financing uses:
Transfers out
Net change in fund balance
Fund balance, beginning
Fund balance, ending
(160,000) (160,000) (160,000)
(1,338,600) (2,182,432) (203,763) 1,978,669
3,806,751 3,806,751 3,806,751 -
$ 2,468,151 $ 1,624,319 $ 3,602,988 $ 1,978,669
0•
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 1,357,500
$ 1,357,500
$ 1,484,796
$ 127,296
55,000
55,000
37,410
(17,590)
-
-
(16,675)
(16,675)
1,412,500
1,412,500
1,505,531
93,031
2,591,100
3,434,932
1,549,294
1,885,638
(1,178,600)
(2,022,432)
(43,763)
1,978,669
(160,000) (160,000) (160,000)
(1,338,600) (2,182,432) (203,763) 1,978,669
3,806,751 3,806,751 3,806,751 -
$ 2,468,151 $ 1,624,319 $ 3,602,988 $ 1,978,669
0•
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Traffic Congestion Special Revenue Fund
For the Year Ended June 30, 2004
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues
Investment income $ - $ - $ 3,704 $ 3,704
Net decrease in fair value of investments - - (1,667) (1,667)
Total revenues - - 2,037 2,037
Expenditures
Capital outlay 34,000 84,493 84,493 -
Net change in fund balance (34,000) (84,493) (82,456) 2,037
Fund balance, beginning 82,456 82,456 82,456 -
Fund balance (deficit), ending $ 48,456 $ (2,037) $ - $ 2,037
100
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2004
101
Variance
with Final
Budget
Budget Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Intergovernmental
$ -
$ -
$ 59,652
$ 59,652
Investment income
2,978
2,978
Net decrease in fair value of investments
-
-
(1,340)
(1,340)
Total revenues
61,290
61,290
Expenditures
Current:
Public safety
268,631
256,359
156,805
99,554
Net change in fund balance
(268,631)
(256,359)
(95,515)
160,844
Fund balance, beginning
230,323
230,323
230,323
-
Fund balance (deficit), ending
$ (38,308)
$ (26,036)
$ 134,808
$ 160,844
101
Revenues
Intergovernmental
Donations
Total revenues
Expenditures
Capital outlay
Net change in fund balance
Fund balance (deficit), beginning
Fund balance (deficit), ending
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Contributions Special Revenue Fund
For the Year Ended June 30, 2004
102
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
$ 4,804,521
$ 2,925,602
$ 1,308,218
$(1,617,384)
1,068,270
263,430
50,000
(213,430)
5,872,791
3,189,032
1,358,218
(1,830,814)
9,001,732
2,776,693
1,857,443
919,250
(3,128,941)
412,339
(499,225)
(911,564)
(457,464)
(457,464)
(457,464)
-
$ (3,586,405)
$ (45,125)
$ (956,689)
$ (911,564)
102
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Circulation and Transportation Special Revenue Fund
For the Year Ended June 30, 2004
Original
Revenues
Licenses, permits and fees $ -
Investment income
Net decrease in fair value of investments
Total revenues -
Expenditures
Capital outlay
Excess (deficiency) of revenues
over expenditures
Other financing uses:
Transfers out
Net change in fund balance
Fund balance, beginning
Fund balance, ending
2,968,392 1,704,256 1,121,902 582,354
(2,968,392) (1,704,256) (413,272) 1,290,984
(80,000) (80,000) (340,523) 260,523
(3,048,392) (1,784,256) (753,795) 1,551,507
5,064,098 5,064,098 5,064,098 -
$ 2,015,706 $ 3,279,842 $ 4,310,303 $ 1,030,461
103
Variance
with Final
Budget
Amounts
Positive
Final Actual
(Negative)
$ - $ 681,046
$ 681,046
- 49,768
49,768
- (22,184)
(22,184)
- 708,630
708,630
2,968,392 1,704,256 1,121,902 582,354
(2,968,392) (1,704,256) (413,272) 1,290,984
(80,000) (80,000) (340,523) 260,523
(3,048,392) (1,784,256) (753,795) 1,551,507
5,064,098 5,064,098 5,064,098 -
$ 2,015,706 $ 3,279,842 $ 4,310,303 $ 1,030,461
103
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Building Excise Tax Special Revenue Fund
For the Year Ended June 30, 2004
104
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Licenses, permits and fees
$ 150,000
$ 150,000
$ 210,087
$ 60,087
Investment income
-
-
3,053
3,053
Net decrease in fair value of investments
(1,361)
(1,361)
Total revenues
150,000
150,000
211,779
61,779
Expenditures
Capital outlay
385,537
190,542
153,918
36,624
Net change in fund balance
(235,537)
(40,542)
57,861
98,403
Fund balance, beginning
277,300
277,300
277,300
-
Fund balance, ending
$ 41,763
$ 236,758
$ 335,161
$ 98,403
104
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Combined Transportation Special Revenue Fund
For the Year Ended June 30, 2004
105
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Intergovernmental
$ 1,765,000
$ 1,765,000
$ 1,300,089
$ (464,911)
Investment income
105,000
105,000
22,556
(82,444)
Net decrease in fair value of investments
-
-
(10,054)
(10,054)
Total revenues
1,870,000
1,870,000
1,312,591
(557,409)
Expenditures
Capital outlay
2,843,625
2,384,763
1,248,191
1,136,572
Net change in fund balance
(973,625)
(514,763)
64,400
579,163
Fund balance, beginning
2,004,153
2,004,153
2,004,153
-
Fund balance, ending
$ 1,030,528
$ 1,489,390
$ 2,068,553
$ 579,163
105
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Arterial Highway Rehabilitation Special Revenue Fund
For the Year Ended June 30, 2004
Revenues
Intergovernmental
Expenditures
Capital outlay
Net change in fund balance
Fund balance (deficit), beginning
Fund balance (deficit), ending
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 78,908 $ 78,908 $ 690,542 $ 611,634
308,037 308,037 85,175 222,862
(229,129) (229,129) 605,367 834,496
(598,917) (598,917) (598,917) -
$ (828,046) $ (828,046) $ 6,450 $ 834,496
106
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2004
Revenues:
Intergovernmental
Investment income
Total revenues
Expenditures:
Current:
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources:
Transfers out
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
Budgeted Amounts
Original Final
$ 426,000 $ 426,000
426,000 426,000
200,054 202,554
749,891 811,391
Variance
with Final
Budget
Positive
Actual (Negative)
$ - $ (426,000)
5,598 5,598
5,598 (420,402)
152,481 50,073
718,732 92,659
60,000
60,000
60,000
-
154,050
154,050
123,581
30,469
1,163,995
1,227,995
1,054,794
173,201
(737,995)
(801,995)
(1,049,196)
(247,201)
(15,450)
(15,450)
-
15,450
(753,445)
(817,445)
(1,049,196)
(231,751)
1,096,786
1,096,786
1,096,786
$ 343,341 $
279,341
$ 47,590
$ (231,751)
107
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Ackerman Donation Special Revenue Fund
For the Year Ended June 30, 2004
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues
Donations $ 46,250 $ 46,250 $ 46,250 $ -
Expenditures
Current:
Community services 1,500 1,500 1,500
Excess of revenues over expenditures 44,750 44,750 44,750
Other financing uses
Transfer out (330,909) (330,909) (330,909) -
Net change in fund balance (286,159) (286,159) (286,159)
Fund balance, beginning 286,159 286,159 286,159
Fund balance, ending $ - $ - $ - $
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2004
109
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Intergovernmental
$ 90,000
$ 90,000
$ 144,692
$ 54,692
Investment income
-
-
231
231
Net decrease in fair value of investments
-
-
(103)
(103)
Total revenues
90,000
90,000
144,820
54,820
Expenditures
Current:
Public works
70,000
25,000
96,003
(71,003)
Excess (deficiency) of revenues
over expenditures
20,000
65,000
48,817
(16,183)
Other financing uses
Transfers out
(45,000)
(45,000)
-
45,000
Net change in fund balance
(25,000)
20,000
48,817
28,817
Fund balance, beginning
-
-
-
-
Fund balance (deficit), ending
$ (25,000)
$ 20,000
$ 48,817
$ 28,817
109
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Environmental Liability Special Revenue Fund
For the Year Ended June 30, 2004
110
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Taxes
$ 462,000
$ 462,000
$ 332,814
$ (129,186)
Investment income
25,000
25,000
18,284
(6,716)
Net decrease in fair value of investments
-
-
(8,150)
(8,150)
Total revenues
487,000
487,000
342,948
(144,052)
Expenditures
Current:
Public works
101,737
159,117
154,389
4,728
Net change in fund balance
385,263
327,883
188,559
(139,324)
Fund balance, beginning
1,746,857
1,746,857
1,746,857
Fund balance (deficit), ending
$ 2,132,120
$ 2,074,740
$ 1,935,416
$ (139,324)
110
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Supplemental Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2004
111
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Intergovernmental
$ 140,000
$ 119,171
$ 119,171
$ -
Investment income
436
436
Net decrease in fair value of investments
-
-
(196)
(196)
Total revenues
140,000
119,171
119,411
240
Expenditures
Current:
Public safety
150,279
119,171
119,411
(240)
Net change in fund balance
(10,279)
-
-
-
Fund balance, beginning
Fund balance (deficit), ending
$ (10,279)
$ -
$ -
$ -
111
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Miscellaneous Grants Special Revenue Fund
For the Year Ended June 30, 2004
Net change in fund balance - - - -
Fund balance, beginning
Fund balance, ending
112
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Intergovernmental
$ 40,000
$ 40,000
$ 39,448
$ (552)
Investment income
-
-
5,409
5,409
Net decrease in fair value of investments
-
-
(2,434)
(2,434)
Total revenues
40,000
40,000
42,423
2,423
Expenditures
Current:
Public safety
40,000
40,000
42,423
(2,423)
Net change in fund balance - - - -
Fund balance, beginning
Fund balance, ending
112
Internal Service Funds
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.
Assets
Current assets:
Cash and investments
Receivables:
Accounts
Inventories
Prepaid items
Total current assets
Noncurrent assets:
Capital assets:
Equipment
Less accumulated depreciation
Total capital assets (net of
accumulated depreciation)
CITY OF NEWPORT BEACH
All Internal Service Funds
Combining Statement of Net Assets
June 30, 2004
Total
Insurance Compensated Retiree Internal
Reserve Absence Insurance Equipment Service Funds
$ 8,002,087 $ 1,559,038 $ 2,069,715 $ 8,606,370 $ 20,237,210
- 6,348 9,073 15,421
- - - 318,264 318,264
76,194 76,194
8,002,087 1,559,038 2,152,257 8,933,707 20,647,089
19, 539, 273 19, 539, 273
(12,535,725) (12,535,725)
7,003,548 7,003,548
Total assets
8,002,087
1,559,038 2,152,257
15,937,255
27,650,637
Liabilities
Current liabilities:
Accounts payable and accrued liabilities
160,347
- -
736,235
896,582
Accrued payroll
-
- -
51,930
51,930
Capital leases - current
-
- -
442,202
442,202
Workers' compensation - current
2,499,547
- -
-
2,499,547
General liability - current
2,350,383
- -
-
2,350,383
Compensated absences - current
1,200,000
1,200,000
Total current liabilities
5,010,277
1,200,000 -
1,230,367
7,440,644
Noncurrent liabilities:
Capital leases
-
- -
420,773
420,773
Workers' compensation
5,893,680
- -
-
5,893,680
General liability
488,617
- -
-
488,617
Compensated absences
-
6,596,024 -
-
6,596,024
Total Noncurrent liabilities
6,382,297
6,596,024 -
420,773
13,399,094
Total liabilities
11,392,574
7,796,024 -
1,651,140
20,839,738
Net Assets
Invested in capital assets, net of related
-
- -
6,140,573
6,140,573
Unrestricted
(3,390,487)
(6,236,986) 2,152,257
8,145,542
670,326
Total net assets
_L a,390,487)
_L L236,9861 $ 2,152,257
$14,286,115
$ 6,810,899
113
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Revenues, Expenses
and Changes in Fund Net Assets
For the Year Ended June 30, 2004
Operating income (loss)
Nonoperating revenues (expenses):
Investment income
Net decrease in fair value of investments
Gain on sale of fixed assets
Interest expense
Total nonoperating revenues
Income (loss) before transfers
Transfers in ( note 13)
Change in net assets
Net assets (accumulated
deficit), beginning
Net assets (accumulated
deficit), ending
(1,200,467)
603,970
430,249
128,390
(37,858)
Total
Insurance
Compensated
Retiree
14,204
Internal
84,054
Reserve
Absence
Insurance
Equipment
Service Funds
Operating revenues:
-
-
-
85,730
85,730
Charges for services
$ 5,028,122
$ 1,522,614
$ 1,629,795
$ 4,447,237
$ 12,627,768
Other
381
103,154
158,072
4,682
5,063
Total operating revenues
5,028,503
1,522,614
1,629,795
4,451,919
12,632,831
Operating expenses:
2,000,000
836,418
611,843
440,409
231,544
Salaries and wages
-
-
-
1,076,288
1,076,288
Depreciation
-
-
-
1,707,231
1,707,231
Professional services
-
-
-
29,113
29,113
Maintenance and supplies
-
-
-
1,183,643
1,183,643
Fleet parts and supplies
-
-
-
327,254
327,254
Workers' compensation
4,366,625
-
-
-
4,366,625
Claims and judgments
1,862,345
-
-
-
1,862,345
Compensated absences
-
918,644
-
-
918,644
Retiree Insurance
-
-
1,199,546
-
1,199,546
Total operating expenses
6,228,970
918,644
1,199,546
4,323,529
12,670,689
Operating income (loss)
Nonoperating revenues (expenses):
Investment income
Net decrease in fair value of investments
Gain on sale of fixed assets
Interest expense
Total nonoperating revenues
Income (loss) before transfers
Transfers in ( note 13)
Change in net assets
Net assets (accumulated
deficit), beginning
Net assets (accumulated
deficit), ending
(1,200,467)
603,970
430,249
128,390
(37,858)
66,548
14,204
18,331
84,054
183,137
(29,663)
(6,331)
(8,171)
(37,466)
(81,631)
-
-
-
85,730
85,730
(29,164)
(29,164)
36,885
7,873
10,160
103,154
158,072
(1,163,582)
611,843
440,409
231,544
120,214
2,000,000
2,000,000
836,418
611,843
440,409
231,544
2,120,214
(4,226,905) (6,848,829) 1,711,848 14,054,571
$ (3,390,487) $ (6,236,986) $ 2,152,257 $ 14,286,115
114
4,690,685
$ 6,810,899
CITY OF NEWPORT BEACH
Combining Statement of Cash Flows - Internal Service Funds
For the Year Ended June 30, 2004
Cash flows from operating activities
Receipts from user departments
Payments to employees
Payments to suppliers
Other operating cash receipts
Net cash provided (used) for operating activities
Insurance
Compensated
Retiree
121,449
Reserve
Absences
Medical
Equipment
$ 5,028,122
$ 1,522,614
$ 1,635,942
$ 4,448,008
(3,232,844)
(1,266,027)
-
(1,057,699)
(3,308,581)
417,430
(1,228,672)
(1,163,495)
381
1,294,578
1,652,285
4,682
(1,512,922)
256,587
407,270
2,231,496
Cash Flows from noncapital financing activities:
Cash received from other funds 2,0001000
Net cash provided by noncapital financinq activitie! 2,000.000
Cash flows from capital and related
financing activities:
Acquisition of capital assets
Proceeds from sale of capital assets
Principal payment
Interest paid
Net cash used for capital
and related financing activities
Cash flows from investing activities:
Interest on investments
Net cash provided for investing activities
Net increase in cash
and cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation of operating income to net cash
provided (used) by operating activities:
Cash Flows from operating activities
Operating income (loss)
Adjustments to reconcile operating income (loss;
to net cash provided by operating activities
Depreciation
Changes in operating assets and liabilities.
Decrease in accounts receivable
(Increase) in inventories
(Increase) in prepaid items
Increase (decrease) in accounts payable and accrued
accrued payroll
Increase in workers' compensation
(Decrease) in general liability
(Decrease) in compensated. absences
Total adjustments
Total
Internal
Service Funds
$ 12,634,686
(5,556,570)
(5,700,748)
5,063
1,382,431
_ 2,000,000
2,000,000
(1,140,130)
(1,140,130)
121,449
121,449
(430,611)
(430,611)
(29,164)
(29,164)
(1,478,456) (1,478,456)
36,885
7,873
10,160
46,588
101,506
36,885
7,873
10,160
46,588
101,506
523,963
264,460
417,430
799,628
2,005,481
7,478,124
1,294,578
1,652,285
7,806,742
18,231,729
$ 8,002,087
$ 1,559,038
$ 2,069,715
$ 8,606,370
$ 20,237,210
$ (1,200,467) $ 603,970 $ 430,249 $ 128,390 $ (37,858)
1,707,231 1,707,231
6,147 771 6,918
- (121,395) (121,395)
(29,126) - (29,126)
66,554 (3,680) - 516,499 579,373
1,067,227 - - - 1,067,227
(1,446,236) - - - (1,446,236)
- (343,703) - - (343,703)
(312,455) (347,383) (22,979) 2,103,106 1,420,289
Net cash provided (used) by operating activitie! $ (1,512.922) $ 256.587 $ 407,270 $ 2231,496 $ 1.382.431
Noncash investing, capital, and financing activities:
Disposal of fixed assets - - - 35,719 35,719
(Decrease) in fair value of investments (29,663) (6,331) (8,170) (37,466) (81,630)
Total of noncash activities $ (29,663) $ (6,331) $ (8,170) $ (1,747) $ (45,911)
115
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116
Fiduciary Funds
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. 2004
Special
Special
Business
Assessment District
Deposit
Improvement
Assets Fund
Fund
Fund
Totals
Cash and investments $ 3,011,649
$
$ 187,734
$ 3,199,383
Restricted assets -cash and investments 1,266,072
-
1,266,072
Total assets $ 4,277,721
$
$ 187,734
$ 4,465,455
Liabilities
Due to bondholders $ 4,277,721 $ - $ - $ 4,277,721
Due to others - - 187,734 187,734
Total liabilities $ 4,277,721 $ - $ 187,734 $ 4,465,455
117
Special Assessment:
Assets
Cash and investments
Restricted assets - cash
and investments
Total Assets
Liabilities
Due to bondholders
Special Deposit:
Assets
Cash and investments
Liabilities
Due to others
Business Improvement District:
Assets
Cash and investments
Liabilities
Due to others
Totals - All Agency Funds:
Assets
Cash and investments
Restricted assets - cash
and investments
Total Assets
CITY OF NEWPORT BEACH
Statement of Changes in Fiduciary Net Assets
All Agency Funds
For the Year Ended June 30, 2004
Balance
June 30, 2003
$ 2,114,256
1,307,077
$ 3,421,333
$ 3,421,333
Additions Deductions
$ 4,051,479
1,206,372
$ 5,257,851
$ 5,257,851
$ (3,154,086)
(1,247,377)
_L a,401,4631
$ (4,401,463)
Balance
June 30, 2004
$ 3,011,649
1,266,072
$ 4,277,721
$ 4,277,721
$
74,750
$
13,937
$
(88,687) $
$
74,750
$
13,937
$
(88,687) $
$
184,842
$
271,146
$ (268,254)
$
187,734
$
184,842
$
271,146
$ (268,254)
$
187,734
$ 2,373,848
1,307,077
$ 3,680,925
$ 4,336,562
$ 1,206,372
$ 5,542,934
Liabilities
Due to bondholders $ 3,421,333 $ 5,257,851
Due to others 259,592 285,083
Total Liabilities $ 3,680,925 $ 5,542,934
118
$ (3,511,027)
$ (1,247,377)
_L_(4,758,404)
$ (4,401,463)
(356,941)
$ (4,758,404)
$ 3,199,383
1,266,072
$ 4,465,455
$ 4,277,721
187,734
$ 4,465,455
Statistical Section
A
N .
V)
^F
N .
n
A
con
n
ti.
N .
CITY OF NEWPORT BEACH
Miscellaneous Statistics
June 30, 2004
General Information
Dateof Incorportation ................................................................. ............................... 1906
Form of Government ............................................... ............................... Council- Manager
Population
Permanent............................................................................... ............................... 79,392
Summer................................................................................. ............................... 100,000
Tourist ...................................................... ............................... 20,000 to 100,000 per day
Housingunits .................................................. ............................... .........................41,400
Occupancy Factor per dwelling unit ............................................ ............................... 2.00
Area
Square Miles
Acres
Land.... ...............................
...........................25.9 .................. ...............................
16,584
Bay..................................................................
2. 5.................... ...............................
1,600
Ocean.. ...............................
........................... 23.0 .................. ...............................
14,894
Total...............................
............................... 51.4 .................. ...............................
33,078
Population Density
Per square mile ................. .......................3,062.91
Per acre ...........................
4.79
Recreational Area
Acres
OceanWater ...........................................................................
...............................
14,894
HarborWaters ...........................................................................
...............................
1,598
Parks............................................................................................
...............................
258
Beaches.......................................................................................
...............................
237
Total........................................................................................
...............................
16,987
Water Frontage
Miles
UpperBay Frontage .......................................................................
...............................
13
Ocean.............................................................................................
...............................
10
Harbor............................................................................................
...............................
21
TotalWater Frontage .......................................................................
.............................44
Newport Harbor
Boats.........................................................................................
...............................
9,900
Residential.................................................................................
...............................
1,230
Commercial Slips and Side Ties ................................................
...............................
2,330
BayMoorings ............................................................................
...............................
1,235
Public Safety
Police
Fire
Numberof Stations ............. ..............................1
............................. ...............................
8
Number of Personnel ......... ............................237
....................... ...............................
148
Unaudited — See Accompanying Auditors' Report.
119
Governmental Revenues by Source (1)
(Last Ten Fiscal Years)
(1) Includes General, Special Revenue, Debt Service and Capital Projects Funds
(2) Includes Investment Income and Property Income.
Governmental Expenditures by Function (1)
(Last Ten Fiscal Years)
Fiscal
General
Public
Public
Community
Fines,
Capital
Debt
Year
Government
Licenses,
Inter-
Charges
Forfeitures
Revenue from
Service
Total
Fiscal
5,505,610
Fees and
governmental
for
and
Use of Money
1,550,294
72,825,573
Year
Taxes
Permits
Revenue
Services
Penalties
and Property (2)
Other
Total
1994 -1995
39,719,830
2,409,523
10,704,000
5,109,513
3,156,530
9,676,426
1,089,385
71,865,207
1995 -1996
42,853,480
4,851,571
8,315,543
6,278,416
2,855,063
11,000,272
6,540,913
82,695,258
1996 -1997
44,523,935
4,081,509
11,871,417
7,165,210
2,529,015
10,497,715
10,208,241
90,897,042
1997 -1998
49,385,380
7,303,302
19,656,742
8,314,830
2,573,575
11,422,977
1,593,409
100,250,215
1998 -1999
52,903,507
5,680,496
15,189,324
8,779,962
3,290,019
10,666,337
31,864,699
128,374,344
1999 -2000
58,846,994
4,247,945
10,867,163
9,068,527
3,442,171
12,405,600
1,508,626
100,387,026
2000 -2001
62,908,305
4,553,923
11,463,635
9,906,851
3,555,946
16,069,217
8,439,505
116,897,382
2001 -2002
65,878,471
3,350,958
26,227,740
10,338,569
3,384,164
14,157,694
2,529,470
125,867,066
2002 -2003
72;864,836
4,397,520
10,379,792
11,156,294
3,448,826
14,235,813
4,530,599
121,013,680
2003 -2004
79,874,751
5,429,632
16,108,023
11,516,782
3,605,963
12,384,598
3,182,567
132,102,316
(1) Includes General, Special Revenue, Debt Service and Capital Projects Funds
(2) Includes Investment Income and Property Income.
Governmental Expenditures by Function (1)
(Last Ten Fiscal Years)
Fiscal
General
Public
Public
Community
Community
Capital
Debt
Year
Government
Safety
Works
Development
Services
Outlay
Service
Total
1994 -1995
5,505,610
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
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
39,168,311
16,579,275
3,475,998
6,916,999
20,849,681
1,299,284
95,079,568
1998 -1999
7,471,850
40,514,411
16,846,674
4,688,087
7,733,720
50,684,045
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
2000 -2001
10,239,134
45,346,306
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
19,418,067
4,586,192
9,418,041
38,613,906
1,758,073
133,927,463
2002 -2003
9,689,275
53,035,377
19,368,504
5,457,498
11,273,886
14,684,897
2,352,721
115,862,158
2003 -2004
11,024,256
56,849,718
22,780,896
5,723,031
10,827,346
15,188,550
2,188,578
124,582,375
(1) Includes General, Special Revenue, Capital Projects and Debt Service Funds
Source: City Administrative Services Department
Unaudited -See Accompanying Auditors' Report.
120
W-111dH
140.00
120.00
w
A
O 100.00
O
w
O 80.00
N
C
O 60.00
40.00
20.00
0.00
Governmental Revenues and Expenditures
(Last Ten Fiscal Years)
■ Revenues
■ Expenditures
6.
1994 -95 1995 -96 1996 -97 1997 -98 1998 -99 1999- 2000 -01 2001 -02 2002 -03 2003 -04
2000
Governmental Revenues by Source
(Fiscal Year 2003 -2004)
00/ 9% 2%
90,
12%
4 %0
9°
5%
31%
Governmental Expenditures by Function
(Fiscal Year 2003 -2004)
12% 2% 9%
Unaudited -See Accompanying Auditors' Report.
121
5%
• Taxes
• Licenses & Permits
• Intergovernmental
• Charges for Services
• Fines & Forfeitures
• Use of Money & Property
• Miscellaneous
■ General Government
O Public Safety
❑Public Works
❑ Community Development
❑ Culture and Recreation
■ Capital Outlay
❑ Debt Service
Assessed and Estimated Actual Value of Taxable Property
(Last Ten Fiscal Years)
Secured Unsecured Total Assessed &
Fiscal Year Valuation Public Utility Valuation Estimated Valuation
1994 -1995
11,178,202,789
354,820
686,344,530
11,864,902,139
1995 -1996
11,078,301,482
354,820
725,943,222
11,804,599,524
1996 -1997
11,154,286,162
354,820
754,892,821
11,909,533,803
1997 -1998
11,551,641,504
354,820
778,209,144
12,330,205,468
1998 -1999
12,343,526,263
354,820
1,009,975,297
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
2002 -2003
20,990,583,190
16,531,505 (2)
1,067,598,118
22,074,712,813
2003 -2004
22,666,005,413
16,531,505
1,346,385,536
24,028,922,454
(1) Southern
California Edison sold property significantly affecting
the Public Utility
Value.
(2) Pacific Bell acquired property significantly
affecting the
Public Utility Value.
27,405,295
Source: County of Orange Auditor - Controller's Office
Secured Property Tax Levies and Collections
(Last Ten Fiscal Years)
Fiscal Year
Total
Current
Levy
Total Current
Collections
Percent
of Levy
Collected
Delinquent
Tax
Collections
Total
Collections
% of Total Tax
Collections
Total Levy
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
97.73%
897,670
20,994,358
102.09%
1997 -1998
21,144,504
20,472,716
96.82%
1,040,120
21,512,836
101.74%
1998 -1999
22,738,432
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%
102,001
30,753,144
98.26%
2002 -2003
37,092,528
36,351,026
98.00%
529,986
36,881,012
99.43%
2003 -2004
42,469,238
41,420,410
97.53%
670,685
42,091,095
99.11%
(1) Effective FY 92/93- 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.
122
$26,000
$24,000
$22,000
0 $20,000
m $18,000
0
$16,000
i
c $14,000
O
$12,000
A
v $10,000
a
y $8,000
N
4 $6,000
a
1 $4,000
$2,000
$0
Total Assessed Valuation /Property Tax Collections
(Last Ten Fiscal Years)
OTotal Assessed Valuation
--0- Property Tax Collections
$45,000
N $40,000
`N
o $35,000
O
$30,000
ry
c $25,000
`r
N $20,000
c
a
m $15,000
$10,000
3
O
~ $5,000
$0
1994 -95 1995 -96 1996 -97 1997 -98 1998 -99 1999 -2000 2000 -01 2001 -02 2002 -03 2003 -04
Total Property Tax Collections /Delinquencies
(Last Ten Fiscal Years)
Total Collections _
-0- Delinquent Collections
F
1994 -95 1995 -96 1996 -97 1997 -98 1998 -99 1999 -2000 2000 -01 2001 -02 2002 -03 2003 -04
Unaudited -See Accompanying Auditors' Report.
123
$45,000
$40,000
w
`m
$35,000 0
0
$30,000 ,wo
c
N
N
$25,000 0
r
F
$20,000 c
d
$15,000 0
U
X
N
$10,000 �T
L
N
$5,000 0
a
$0
$2,000
N
$1,750 `m
O
$1,500 6
N
a
$1,250
x
$1,000 c
0
w
$750 2
0
U
$500 y
L_
$250 m
0
$0
$45,000
N $40,000
`N
o $35,000
O
$30,000
ry
c $25,000
`r
N $20,000
c
a
m $15,000
$10,000
3
O
~ $5,000
$0
1994 -95 1995 -96 1996 -97 1997 -98 1998 -99 1999 -2000 2000 -01 2001 -02 2002 -03 2003 -04
Total Property Tax Collections /Delinquencies
(Last Ten Fiscal Years)
Total Collections _
-0- Delinquent Collections
F
1994 -95 1995 -96 1996 -97 1997 -98 1998 -99 1999 -2000 2000 -01 2001 -02 2002 -03 2003 -04
Unaudited -See Accompanying Auditors' Report.
123
$45,000
$40,000
w
`m
$35,000 0
0
$30,000 ,wo
c
N
N
$25,000 0
r
F
$20,000 c
d
$15,000 0
U
X
N
$10,000 �T
L
N
$5,000 0
a
$0
$2,000
N
$1,750 `m
O
$1,500 6
N
a
$1,250
x
$1,000 c
0
w
$750 2
0
U
$500 y
L_
$250 m
0
$0
Construction Activity
(Last Ten Fiscal Years)
Fiscal
Building Permits
Percentage
Estimated
Percentage
Year
Issued
Change
Valuation
Change
1999
3,607,965
2000
3,455,359
2001
1994 -1995
7,672
9.82%
79,691,510
13.30%
1995 -1996
8,302
8.21%
145,760,839
82.91%
1996 -1997
9,085
9.43%
203,944,317
39.92%
1997 -1998
10,332
13.73%
224,507,349
10.08%
1998 -1999
12,076
16.88%
302,598,185
34.78%
1999 -2000
10,412
- 13.78%
220,623,249
- 27.09%
2000 -2001
9,361
- 10.09%
226,778,793
2.79%
2001 -2002
9,030
-3.54%
145,048,360
- 36.04%
2002 -2003
9,483
5.02%
187,489,183
29.26%
2003 -2004
11,628
22.62%
208,840,537
11.39%
Source: City Building Department
Bank Deposits
(Last Ten Fiscal Years)
(thousands)
Calendar Year Bank Deposits
1994
4,468,401
1995
4,430,534
1996
3,757,025
1997
3,431,100
1998
3,719,517
1999
3,607,965
2000
3,455,359
2001
3,542,539
2002
4,117,157
2003
5,105,026
2004 data for bank deposits will not be available until 12 -31 -04
Source: The Findley Reports on California Financial Insitutions
Unaudited -See Accompanying Auditors' Report.
124
$350
$300
0
0
`o
N $250
0
$200
Q $150
0
$100
c
0 $50
$0
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1994
Estimated Value of Construction /Number of Building Permits
(Last Ten Fiscal Years)
16,000
Estimated Value of Construction
$ Number of Building Permits 14,000
A 12,000
{Y / /jam 10,000 E
8,000 0
6,000 Z
4,000
2,000
0
1994 -95 1995 -96 1996 -97 1997 -98 1998 -99 1999 -2000 2000 -01 2001 -02 2002 -03 2003 -04
Bank Deposits
(Millions of Dollars)
1995 1996 1997 1998 1999 2000 2001 2002 2003
Unaudited -See Accompanying Auditors' Report
125
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
Control
& School Levy
District
Total
1994 -1995
0.00000
0.00013
0.00037
1.00000
0.00881
1.00931
1995 -1996
0.00000
0.00012
0.00000
1.00000
0.00890
1.00902
1996 -1997
0.00000
0.00000
0.00000
1.00000
0.00857
1.00857
1997 -1998
0.00000
0.00000
0.00000
1.00000
0.00890
1.00890
1998 -1999
0.00000
0.00000
0.00000
1.00000
0.00890
1.00890
1999 -2000
0.00000
0.00000
0.00000
1.00000
0.00890
1.00890
2000 -2001
0.00000
0.00000
0.00000
1.00000
0.00880
1.00880
2001 -2002
0.00690
0.00000
0.00000
1.00000
0.00770
1.01460
2002 -2003
0.00674
0.00000
0.00000
1.00000
0.00670
1.01344
2003 -2004 0.01224 0.00000 0.00000 1.00000 0.00610 1.01834
Source: County of Orange Auditor - Controller's Office
Computation of Legal Debt Margin
June 30, 2004
Total assessed value of all real & personal property $24,028,922,454 (1)
Debt limit percentage 15%
Total debt limit $3,604,338,368
Amount of debt applicable to debt limit $5,845,000
Legal debt margin $3,598,493,368
(1) The fiscal year 2004 debt limit is based on assessed value being equivalent to 100% of market value.
Source: City Administrative Services Department
Unaudited- See Accompanying Auditors' Report.
126
CITY OF NEWPORT BEACH
Principal Taxpaver
Balboa Bay Club
Cornerstone Partners IV LLC
CSDV Limited Partnership
HMH Properties Inc.
Irvine Apartment Communities
Jazz Semiconductor Inc.
Newport Beach North LLC
Park Newport Land Ltd.
Rockwell Semiconductor Systems Inc.
The Irvine Company
Principal Taxpayers
June 30, 2004
Property Tax
(listed alphabetically)
Total Top Ten Principal Taxpayers $ 2,193,866,719 10.44%
(1) Percentange of total secured assessed valuation.
Unaudited -See Accompanying Auditors' Report.
Source: HdL, Coren and Cone Co.
127
2003 -04
Assessed
Percent
Type of Business
Valuation
of Total 1
Hospitality
$ 95,872,185
0.42%
Real Estate
69,200,000
0.31%
Real Estate
73,542,754
0.32%
Apartment Buildings
71,585,391
0.32%
Real Estate
327,200,886
1.44%
Aerospace
58,837,541
0.26%
Real Estate
132,811,300
0.59%
Real Estate
64,024,966
0.28%
Aerospace
106,007,747
0.47%
Real Estate
1,194,783,949
5.27%
Total Top Ten Principal Taxpayers $ 2,193,866,719 10.44%
(1) Percentange of total secured assessed valuation.
Unaudited -See Accompanying Auditors' Report.
Source: HdL, Coren and Cone Co.
127
Schedule of Direct and Overlapping Bonded Debt
June 30, 2004
2003 -04 Assessed Valuation:
$24,152,007,032
(after deducting $439,592,217 redevelopment incremental valuation)
DIRECT AND OVERLAPPING BONDED DEBT:
%Applicable
Debt 6130/04
OVERLAPPING TAX AND ASSESSMENT DEBT:
Orange County Teeter Plan Obligations
9.319%
$11,595,166
Metropolitan Water District
1.977%
8,846,581
Coast Community College District
32.885%
36,173,500
Rancho Santiago Community College District
3.707%
3,563,354
Laguna Beach Unified School District
6.546%
2,401,400
Laguna Beach Unified School District Community Facilities District No. 98 -1
100%
7,658,627
Newport Mesa Unified School District
70.809%
77,241,998
Newport Mesa Unified School District Community Facilities District No. 90 -1
17.535%
3,121,230
Santa Ana Unified School District
9.098%
12,975,855
Irvine Ranch Water District improvement Districts
0.049-100%
60,150,643
Bonita Canyon Public Facilities Financing Authority Comm. Facilities Dist. No. 98 -1
81.407%
36,083,653
City of Newport Beach Special Improvement District No. 95 -1
100%
14,635,000
City of Newport Beach 1915 Act Bonds
100%
5,453,996
Orange County Assessment District No. 88 -1
100%
42,634,366
Orange County Assessment District No. 99 -1R
100%
20,155,000
Orange County Assessment District No. 01 -1
100%
39,840,000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
382,530,369
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Orange County General Fund Obligations
9.319%
86,323,668
Orange County Pension Obligations
9.319%
10,882,029
Orange County Board of Education Certificates of Participation
9.319%
1,859,141
Orange County Transit District Authority
9.319 %
460,359
Orange County Water District Certificates of Participation
12.920%
19,310,878
Municipal Water District of Orange County Water Facilities Corporation
11.133%
4,644,131
Coast Community College District Certificates of Participation
32.885%
2,522,280
South Orange County Community College District Certificates of Participation
2.315%
969,522
Newport Mesa Unified School District Certificates of Participation
70.809%
1,918,924
Santa Ana Unified School District Certificates of Participation
9.098%
4,420,508
Irvine Ranch Water District Certificates of Participation
12.083%
5,896,504
City of Newport Beach Certificates of Participation
100%
5,845,000
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT
145,052,944
TOTAL GROSS DIRECT AND OVERLAPPING BONDED DEBT
$527,583,313 (1)
Less: Orange County Transit District Authority (80% self- supporting)
(368,287)
MWDCO Water Facilities Corporation (100% self- supporting)
(4,644,131)
TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT $522,570,895
(1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and
tax allocation bonds and non - bonded capital lease obligations.
Ratios to Assessed Valuation:
Combined Direct Debt ($5,845,000) 0.02%
Total Gross Combined Debt 2.18%
Total Net Combined Debt 2.16%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/04: $0
Source: California Municipal Statistics, Inc.
Unaudited -See Accompanying Auditors' Report.
128
Revenue Bond Coverage
(Last Ten Fiscal Years)
Net Revenue
Fiscal
Year
Grass
Revenues (1)
Operating
Expenses (2)
Available for
Debt Service
Debt Service Requirements
Hrincipal interest
Total
Covera
1994 -1995
14,817,854
11,471,118
3,346,736
0
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
16,497,212
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
2002 -2003
17,326,604
12,430,144
4,896,460
1,185,000
465,573 1,650,573
2.97
2003 -2004
18,558,258
15,256,454
3,301,804
1,230,000
392,958 1,622,958
2.03
(1) Gross revenues includes operating revenues, interest and intergovernmental revenues in the Water Fund
(2) Total Water Fund operating expense excludes depreciation.
129
Demographic Statistics
(Last Ten Fiscal Years)
Source: City Library Services Department
Unaudited -See Accompanying Auditors' Report.
130
City
Fiscal
City
Orange County
Population
Per Capita
Median
Unemployment
Year
Population
Population
% of County
Income
Age
Rate
1994 -1995
69,301
2,564,345
2.70%
50,515
40.3
3.6%
1995 -1996
70,098
2,615,046
2.68%
52,452
40.6
3.2%
1996 -1997
69,069
2,672,457
2.58%
53,569
41.7
2.6%
1997 -1998
70,030
2,710,718
2.58%
56,000
43.5
2.0%
1998 -1999
72,623
2,775,600
2.62%
59,051
43.9
1.8%
1999 -2000
73,965
2,828,400
2.62%
62,598
44.4
1.6%
2000 -2001
70,032
2,846,289
2.46%
63,015
41.6
1.6%
2001 -2002
75,662
2,939,500
2.57%
64,303
40.9
2.5%
2002 -2003
79,392
2,978,000
2.67%
67,073
50.8
2.4%
2003 -2004
80,800
3,017,300
2.68%
67,256
50.3
1.9%
Source: City Library Services Department
Unaudited -See Accompanying Auditors' Report.
130