HomeMy WebLinkAboutFiscal Year 2007-08 Financial Statementr
O1.V.\ U!
♦s. \I. \19 WA
&10 14 I•\ M!» 1101!
W P
�LIF
O
Comprehensive Annual Financial Report
For the Year Ended June 30, 2008
Prepared by the Administrative Services Department
Dennis C. Danner, Director
The City of Newport Beach was incorporated September 1, 1906
The present City Seal was adopted July 22, 1957
Introductory Section
I I II ! 1
t t Y r YY
� r r
\♦ 1 r r r J J
J
♦\ ♦ � I v J
Y
0
1Y,cn/� ff
11 S II2FTrr! 1
is
0
0
con
m
n
eta .
CITY OF NEWPORT BEACH
Comprehensive Annual Financial Report
Year Ended June 30, 2008
TABLE OF CONTENTS
INTRODUCTORY SECTION
(Unaudited)
Tableof Contents ............................................................ ...............................
Letter of Transmittal... .............................................. ............... .....................
GFOA Certificate of Achievement for Excellence in Financial Reporting ......
List of City Officials ......................................................... ...............................
OrganizationChart .......................................................... ...............................
FINANCIAL SECTION
.........................1
......................... 5
....................... 20
....................... 21
....................... 22
Independent Auditors' Report ............................................................... .............................25
Management's Discussion and Analysis ............................................. .............................29
(Required Supplementary Information)
Basic Financial Statements
Government -wide Financial Statements:
Statement of Net Assets .................................................................... .............................49
Statement of Activities ...................................................................... ............................... 50
Fund Financial Statements:
Governmental Funds:
BalanceSheet ................................................................................. .............................58
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets ............................................................ .............................59
Statement of Revenues, Expenditures and Changes in Fund Balances ...................... 60
Reconciliation of Statement of Revenues, Expenditures and Changes
In Fund Balances of Governmental Funds to the Statement of Activities ..............61
Budgetary Comparison Statements:
GeneralFund ............................................................................ .............................62
Tide and Submerged Land Fund ............................................... .............................64
ContributionsFund .................................................................... .............................65
Proprietary Funds:
Statement of Net Assets ............................................................. ............................... 69
Statement of Revenues, Expenses and Changes in Fund Net Assets .....................70
Statement of Cash Flows ........................................................... ............................... 71
Fiduciary Funds:
Statement of Fiduciary Assets and Liabilities — Agency Funds ..... ............................... 75
Notes to the Financial Statements ..................................................... .............................79
1
Supplementary Schedules
Non -Major Governmental Funds:
Combining Balance Sheet .................................. ............................... ............................138
Combining Statement of Revenues, Expenditures and Changes in
FundBalances ................................................... ............................... ............................144
Budgetary Comparison Schedules:
StateGas Tax Fund ........................................... ............................... ............................150
Asset Forfeiture Fund ........................................ ............................... ............................151
OTSDUI Grant Fund ......................................... ............................... ............................152
186
JAGFund ........................................................... ............................... ............................153
Circulation and Transportation Fund .................. ............................... ............................154
Building Excise Tax Fund ................................... ............................... ............................155
Combined Transportation Fund ......................... ............................... ............................156
Arterial Highway Rehabilitation Fund ................. ............................... ............................157
Community Development Block Grant Fund ...... ............................... ............................158
Air Quality Management District Fund ................. ............................... ..........................159
194
Environmental Liability Fund .............................. ............................... ............................160
Supplemental Law Enforcement Fund ............... ............................... ............................161
Traffic Congestion Relief Fund ........................... ............................... ............................162
Newport Coast Annexation Fund ....................... ............................... ............................163
Proposition 1B Transportation Fund .................. ............................... ............................164
Internal Service Funds:
Combining Statement of Net Assets .................. ............................... ............................167
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets.......
168
Combining Statement of Cash Flows ................. ............................... ............................169
Fiduciary Funds:
Combining Statement of Fiduciary Assets and Liabilities ................. ............................173
Statement of Changes in Fiduciary Net Assets .. ............................... ............................174
STATISTICAL SECTION (Unaudited)
Financial Trends:
NetAssets by Component ....................................... ............................... ............................179
Changesin Net Assets ............................................. ............................... ............................180
Fund Balances of Governmental Funds ................... ............................... ............................182
Changes in Fund Balance of Governmental Funds . ............................... ............................183
Revenue Capacity:
Assessed Value and Estimated Actual Value of Taxable Property ......... ............................185
Property Tax Rates, Direct and Overlapping Governments, Last Ten Fiscal Years ...........
186
Principal Property Taxpayers as of June 30, 2008 .. ............................... ............................187
Property Tax Levies & Collections ........................... ............................... ............................188
Debt Capacity:
Ratio of Outstanding Debt by Type .......................... ............................... ............................190
Ratio of General Bonded Debt Outstanding .............. ............................... ...........................192
Schedule of Direct and Overlapping Debt ................. ............................... ...........................193
Computation of Legal Debt Margin ................................... ................ ..................................
194
Revenue Bond Coverage, Last Ten Fiscal Years .... ............................... ............................196
K
Demographic and Economic Information
Demographic and Economic Statistics, Last Ten Fiscal Years ............... ............................198
PrincipalEmployers ................................................. ............................... ............................199
Operating Information:
Full Time City Employees by Function ...................... ............................... ...........................201
Operating Indicators by Function ............................. ............................... ............................202
Capital Asset Statistics by Function ......................... ............................... ............................204
Water Sold by Customer Type ................................. ............................... ............................206
WaterRates ............................................................. ............................... ............................207
MajorWater Customers ........................................... ............................... ............................208
9
This page left blank intentionally.
CITY OF NEWPORT BEACH
ADMINISTRATIVE SERVICES
Dennis Danner, Director /Treasurer
December 15, 2008
Honorable Mayor and Members of the
City Council,
and Citizens of the City of Newport Beach
Newport Beach, California
The City Charter and California state law require that the City of Newport Beach issue
annually a complete set of financial statements and that an independent firm of certified
public accountants audit this report in conformance with generally accepted auditing
standards (GARS). The Comprehensive Annual Financial Report (CAFR) of the City of
Newport Beach for the year ended June 30, 2008, 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.
The City of Newport Beach's financial statements have been audited by Mayer Hoffman
McCann P.C., a firm of licensed certified public accountants. The goal of the audit was
to provide reasonable assurance that the financial statements of the City of Newport
Beach for the fiscal year ended June 30, 2008, 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, 2008, are fairly
presented in conformity with GAAP. The independent auditor's report is presented as
the first component of the financial section of this report.
3300 Newport Boulevard • Post Office Box 1768 • Newport Beach, California 92658 -8915
Telephone: (949) 644 -3127 • Fax: (949) 644 -3339 •Website: www.city.newport- beach.ca.us
A narrative introduction, overview, and analysis accompany the basic financial
statements in the form of the Management's Discussion and Analysis (MD &A). The
letter of transmittal is designed to complement the MD &A and should be read in
conjunction with it. The City of Newport Beach MD &A can be found immediately
following the report of the independent auditors and will provide further information
regarding the format and content of this report.
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 general vicinity of Newport Beach and the County of Orange relative to the counties
of Los Angeles, San Bernardino, Riverside and San Diego is illustrated on the map
below:
Los
Angeles v
County leg
Bernardino
® 0 County
Riverside
0
Orange County
1County
NEWPORT
BEAN
v m
Soul}
Diego
County
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 84,554. 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 following map illustrates the communities within the City of Newport Beach; the
City's bay, recreational harbor and beachfront topography; and the City's location
relative to the bordering cities of Costa Mesa to the north, Irvine to the east and Laguna
Beach to the south.
Lassa Mere
LMo Isle
N
11ro
7
W
aeon
The City of Newport Beach was incorporated September 1, 1906. The current City
Charter was adopted in 1954. The City operates under a Council- Manager form of
government. Council Members are elected by district but voted on by the population as
a whole, and serve four -year staggered terms. The governing council consists of the
mayor and six other members and is responsible for among other things, policy- making,
passing local ordinances, adopting the budget, appointing committees and hiring the
City Manager, City Attorney, and City Clerk. The City Manager is responsible for
carrying out the policies and ordinances of the City Council, for overseeing the day to
day operations of the City, and for appointing heads of departments. The City of
Newport Beach is a full service city providing its residents and visitors with the following
functional services: general governance, legal, financial, information technology, and
administrative management; police, fire, paramedic, lifeguard, and emergency medical
transport services; engineering, construction, and maintenance of public facilities, public
streets, beaches, and parks; planning, zoning, and economic development services;
building inspection, plan check, and code enforcement services; libraries and cultural
and arts services; recreation and senior services; and 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 1a of the notes to the financial statements.
LOCAL ECONOMIC MIX
From 1950 to 2008, the population of the City increased from 12,120 to 84,554. As
vacant land becomes increasingly scarce, population growth is expected to flatten
considerably as the City becomes relatively built -out. According to the Center for
Demographic Research at California State University Fullerton, the City of Newport
Beach will be home to an estimated 88,340 residents by 2010 and 91,321 residents by
the year 2015.
Newport Beach's physical setting encompasses about 25.3 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.
U
This current land use mix produces General Fund revenues of approximately
$159 million. Tax revenues represent nearly 74.6% of all General Fund revenues. The
remaining 25.4% is generated by a large number of very diverse sources. The top three
individual revenue sources, Property Taxes, Sales Taxes and Transient Occupancy
Taxes (TOT), represent 69.4% of all General Fund revenues.
General Fund Revenues
■ Property Taxes
25.4% ■ Sales Taxes
■ Sales Tax In Lieu
■ Transient Occupancy Taxes
5.2%
■ Other Taxes
8.1% ■ All Other Sources
5.0%
Property Taxes — Largely a residential community, residential property accounts for
nearly 42.5% of all General Fund revenues. Of the City's 41,850 dwelling units, 60% of
the housing is single - family units and 40% is multi - family units. The City receives, on
average, approximately 16.5% of the property taxes generated within City limits. The
remainder goes to school districts, the County, and other government entities.
Sales Taxes — In March of 2004, voters approved Proposition 57 which allowed the
State to enact revenue swapping procedures commonly referred to as the "Triple Flip."
In doing so, Sales Taxes were reallocated to cities in two separate revenue streams
"Sales Taxes" and "Sales Taxes In Lieu" which impacted the timing and distribution
method but did not materially impact the revenue category in total. Sales Taxes in total
represent 18.8% of all General Fund revenues.
9
The City's sales tax base is generated from a relatively diverse business community
and is not dependent on any one merchant or industry. The following chart
demonstrates the diversity of the City sales tax revenue. The largest segment, "Auto
Sales - New," accounts for 20% of total sales taxes and is represented by 10
dealerships. The next largest segment, "Restaurants," accounts for 19.1% of total sales
taxes and is represented by 336 restaurants. The "Other" categorization accounts for
another 16.3% and is represented by 1,020 businesses.
Sales Tax by Business Segment
2.6%
3.4 %_\
3.5% __-
4.91. '
6.5%
■ New Auto Sales - 10
• Restaurants -336
• Leasing- 51
• Department Stores - 33
• Miscellaneous Retail - 790
• Apparel Stores - 185
■ Service Stations -17
• Food Markets - 36
• Furniture / Appliance - 289
• Misc. Vehicle Sales - 47
• Other- 1020
Transient Occupancy Taxes (TOT) — The TOT accrues to the City at a rate of 10% of
room charges (with 18% of this collection going to the local Conference and Visitors
Bureau). The City distinguishes its transient occupancy taxpayers in two broad property
type categories, commercial and residential property. The commercial category is
composed of approximately twenty inns, motels, hotels and resorts and accounts for
89% of TOT revenues. The residential category is made up of some 700 vacation
rentals representing only 11% of TOT revenue. Together, they account for nearly
$12.8 million in annual TOT revenue.
Annual
Revenue Percent
(In Millions) of Total
Commercial Property:
Inns, Motels and Hotels $11.4 89%
Residential Property:
Vacation Rentals $ 1.4 11%
$12.8 100%
10
I=Ko]� M 7A IIK6l1jI Kola] : E-1lyi T81 to] :k34aa*01Iki lei y6YN_1M:JA_1�I�II�W
U.S. Economy — Although, on December 1, 2008, the National Bureau of Economic
Research (NBER) officially announced the U.S. economy slipped into recession in 2007,
it is clear the nation's economy has been slowing since 2004. In its current state, the
U.S. and World economy abroad has become increasingly fragile. According to a
Rueters article, "the NBER does not define a recession as two consecutive quarters of
decline in real gross domestic product, as is the rule of thumb in many countries.
Instead, it looks for a decline in economic activity, spread across the economy and
lasting more than a few months." The NBER felt the broad decline in economic activity
in 2008 met this test. Even today, this current recession is among the longest on record
and many economists believe this recession will continue though the middle of 2009.
As illustrated below, the California Legislative Analysts Office (LAO) predicts the Gross
Domestic Product (GDP) growth to continue its downward slide through 2009 before
rebounding in 2010.
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
U.S. Real GDP Growth
2004 2005 2006 2007 2008 2009 2010
Estimated Projected Projected
3.6% 1 3.1% 1 2.9% 1 2.0% 1.3% -1.0% 1.5%
Source: LAO's Economic Forecast
State of California — The economic outlook for the State generally mirrors that of the
nation as a whole, although problems in the real estate market appear to be more
pronounced in California than the rest of the nation resulting in a slightly more
depressed outlook. The State has had significant structural budget shortfalls since
2001 -02 when revenues plunged following the steep stock market decline. The current
economic recession will further erode the State's revenue base. State finances heavily
depend on personal income taxes (PIT), sales and use taxes (SUT) and corporate
income and franchise taxes, together representing 95% of the State's General Fund
budget. Given the depressed California real estate market and plunging stock values,
11
capital gains income will likely remain repressed. Reduced wealth, combined with the
near collapse of the financial and credit markets and job losses in a broad range of
industries have resulted in considerable consumer fear resulting in a sharp contraction
of consumer spending further impacting SUT and corporate income tax revenue
prospects.
The dramatic decreases in State revenues paint a particularly bleak overall budget
outlook. As demonstrated in the following chart, the annual gap between projected
revenues and expenditures has been massive and continues to exist into the
foreseeable future unless corrective actions are taken.
0
-s
-10
-1s
-20
-2s
State Budget Operating Shortfalls
(In Billions)
2008 -09 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14
Source: lAO's California Fiscal Outlook
Considering previously accumulated fund balance of $2.9 billion, the projected
cumulative deficit, from the annual operating shortfalls illustrated above, is projected to
be -$8.4 billion at the end 2008 -09 and -$27.9 billion at the end to 2009 -10. A plan that
permanently addresses the State's structural deficit represents an enormous challenge
and will require substantial ongoing solutions.
LOCAL ECONOMY
Local Impact of the State's Budget - The impact of the State's budget crisis on the
City of Newport Beach is currently unknown. However, as the State's budget deficits
continue to balloon, there is a considerable downside risk that the State may attempt to
shift the burden to local governments by reallocating revenues or permanently shifting
revenues. In the early nineties, the State enacted a number of permanent revenue
shifts from local governments to schools. The cumulative impact of the ERAF shifts I, II
& III since 1993 have cost City of Newport Beach taxpayers in excess of $78 million.
12
With the passage of California Proposition 1A in 2004 voters elected to make it much
more difficult for State legislators to raid local government finances. Proposition 1A
does the following:
1. Strengthens prohibitions against unfunded State mandates by requiring the State to
suspend State mandates in any year the Legislature does not fully fund the
reimbursement of costs associated with those mandates;
2. Expands definition of a State mandate to include transfer of responsibility of a
program for which the State previously had full or partial responsibility; and
3. Prohibits the State from
• Reducing the local Bradley -Burns Uniform Sales & Use Tax rate or altering its
method of allocation, except to comply with federal law or an interstate compact;
• Decreasing Vehicle License Fee (VLF) revenue from the 0.65 percent rate
without providing replacement funding to cities and counties; and
• Shifting property taxes from cities, counties or special districts, with the following
exceptions:
a) The State may reallocate among cities, counties and special districts (but not
schools or any other local entity) with a two - thirds vote of both houses of the
Legislature.
b) Beginning in FY 2008 -09, the State may borrow up to 8 percent of the
property tax revenue within a county (currently about $1.3 billion on a
statewide basis) if:
— The governor declares a "fiscal hardship';
— The Legislature enacts an urgency statute by a two- thirds vote;
— The funds are repaid within three years;
— The FY 2003 -04 VLF backfill gap has been repaid;
— Any previous borrowing of this kind has been repaid; and
— The State has not borrowed from the revenues more than twice in 10 years.
Although the State will continue to face substantial budget shortfalls for the next several
years, this proposition limits the State's ability to divert tax revenues that were intended
for local government. California's policymakers therefore face an even more difficult
challenge in resolving their budget problems.
13
Property Taxes - Unlike many cities, property taxes, not sales taxes, are the number
one source of revenue for the City, representing 42.5% of all General Fund revenues.
Due to the limited supply of scenic coastal property and the unique access to the scenic
Newport Bay and one of the best recreational yacht harbors, the Newport Beach
community consists of 70% affluent residential neighborhoods and 30% high -end
commercial districts.
Sales data for the month of November, 2008, demonstrates the relatively high density of
affluence throughout the residential communities.
CITY OF NEWPORT BEACH
Median Home Sales*
Month Ending November 2008
% Price
Number
Median
Change from
of Home
Sales
Zip Code
Sales
Price
92625
$
3,000,000
92660
$
1,225,000
92661
$
3,450,000
92663
$
2,350,000
92657
$
1,393,000
% Price
Number
Sales
Change from
of Home
Change from
2007
Sales
2007
89.9%
9
50.0%
-18.6%
8
-52.9%
0.0%
2
-66.7%
-9.6%
1
-85.7%
-40.1%
5
25.0%
* Source: DataQuick Information Systems
Due to a vigorous demand for coastal property, the City has enjoyed long -term stability
in its number one revenue source. Over a ten -year period, assessed valuation
increased an average of 11.1 % per annum and 7.6% over a twenty -year period. Even
after considering recent market corrections, assessed property values are still expected
to increase but at a much slower pace during the next few years.
Since Californians passed Proposition 13 in 1978, assessed property value is
reassessed to market value only when the property changes ownership. Otherwise, the
assessed value grows by no more than 2% per year. This practice creates a constant
lag and buffer between assessed and market values. Even though Proposition 13
insulates the tax base from erratic market value gyrations, the real estate boom of the
early 2000's led to dramatic increases in local property tax revenues. Those increases
reflected a combination of soaring real estate prices and historically high sales rates
(both of which led to large reassessments).
14
While the City's operating budget is typically built around a 4% annual growth in
property tax collections, the following chart illustrates that assessed property values
increased to a high of 12.6% in 2005 -06 before dropping to 9.8% in 2006 -07, 8.7% in
2007 -08 and 5.96% in 2008 -09. Although assessed value growth has slowed for the
last several years and will likely continue to decrease in 2009 -2010, we are hopeful that
assessed valuations will modestly rebound in years thereafter.
14.00%
12.00
10.00
8.00
6.00
4.00
2.00
0.00
-2.00
20 Year Assessed Property Value Growth
♦Assessed Value Growth
Typical Budgeted Growth
— Trendline (3 Yr Average Growth)
rn m m rn rn T rn m T 4 4
M O N M N W n W OI O
0 M m 0 m m M co m 0 Co °O
N
4 `' 4
Q CJ
°O o °O
N N
4 4
o
0 0
N N
4
[
°O
N
4
r`
°O
N
4
M
°O
N
"The 2000 -03 datapoint was normalized to reduce the impact the Newport Coast Annexation had on the
assessed valuation growth trendline.
Sales and Transient Occupancy Revenues - Because sales tax and TOT revenues
follow the whim of consumer sentiment, they are impacted with much greater volatility
than property taxes. The current economic recession, falling home prices and
tightening credit policies have significantly depressed consumer spending patterns.
Although 2007 -08 sales taxes produced a modest increase, 2008 -09 and the first half of
2009 -10 will likely contract precipitously until consumer confidence is restored.
Transient occupancy tax collections would generally expect to follow a similar trend as
sales taxes but due to recent hotel expansions and the addition of a new luxury resort,
the additional rooms for rent will likely bolster TOT tax revenues enough to maintain or
exceed 2007 -08 levels.
15
OTHER FACTORS IMPACTING FISCAL PLANNING
Defined Benefit Pension Costs — The City contracts with the California Public
Employees' Retirement System (CaIPERS) for certain defined pension benefits. The
City's contributions to the plan include a fixed employer paid member contribution and
an actuarially determined employer contribution that fluctuates each year based on an
annual actuarial plan valuation. This variable rate employer contribution includes the
normal cost of providing the contracted benefits plus or minus an amortization of plan
changes and net actuarial gains and losses since the last valuation period. It is the
City's policy to make contributions to the plan equaling at least 100% of the actuarially
required contribution (annual pension cost). Because the City pays the entire actuarially
required contribution each year, by definition, its net pension obligation at the end of
each year is $0. For more information on the City's pension plan and funding levels,
see Footnote 10 in the notes to the financial statements.
Post Employment Healthcare Plans — New Plan: Effective January 2006, the City and
employee associations agreed to major changes in the Post Employment Healthcare
Plan. All employees and eligible retirees will participate in a Health Reimbursement
Arrangement (HRA). All employees, hired after January 1, 2006, and certain
employees hired prior to this date, as well as employees who elected to fully convert
(Fully Converted) to a defined contribution formula, participate in a program that
requires mandatory employee and employer contributions. However, once these
contributions have been made to the employee's account, the City has no further
funding obligation to the Plan.
Old Plan: Employees with greater than five years of service or miscellaneous
employees that had a combined factor of age and years of service that is greater than,
or equal to, 50 (47 for safety employees) had the option to retain a hybrid of the former
defined benefit or fully convert to the new plan. Employees electing to retain a hybrid of
the former defined benefit formula (Hybrid) participate in a program requiring mandatory
defined contributions by employees and the City, as well as a defined benefit consisting
of an ongoing contribution from the City to the participant's HRA account, each month
after retirement. Employees who retired prior to January 1, 2006, continue to receive an
ongoing defined benefit consisting of a contribution made by the City to the participant's
HRA account each month. The defined benefit portion of the plan is closed to new
participants.
Funding: The City has elected to prefund a portion of this obligation by placing
previously accumulated cash reserves into a benefit trust and set a plan in motion to
amortize the remaining unfunded liability over a twenty -year period. During the current
year, the City placed $8.8 million in trust, reducing the City's unfunded accrued liability
(UAL) to $49.8 million. For more information concerning the City's OPEB obligation,
please see Footnote 11 in the notes to the financial statements.
16
Comprehensive Facilities Replacement Plan — Recently, City staff, along with a
citizen -based committee, developed an entity -wide master replacement plan for all
major critical facilities. Through a combination of utilizing cash resources and staggered
debt issues, the intent of the plan was to develop a perpetual, systematic basis for
replacing critical facilities with a level contribution from the operating budget. As of June
30, 2008, the City has set aside $20 million to pre -fund this effort.
STEWARDSHIP
The City has taken a conservative approach to forecasting revenues, often assuming a
"worst case scenario." This fiscal conservatism has helped stabilize the City's finances
and as a result, we are able to maintain our course without drastic cuts in service. The
City has demonstrated fiscal discipline with an ability to prepare balanced budgets and
save during prosperous and difficult economic periods.
The General Fund ended the year with a $79.0 million fund balance, a net increase of
$9.1 million even after transferring $5.9 to the Insurance Reserve internal service fund
to bolster cash reserves used to fund workers' compensation and general liability
claims. Of this amount, $6.8 million is reserved to indicate it is not available to finance
new activities because it has already been committed to fulfill contractual obligations or
it is otherwise legally restricted beyond the City Council's control. Within the Council's
discretion, the City Council has designated $18.9 million for contingencies, $14.0 million
for unspecified future appropriations, $6.4 million for capital projects that were not
completed during the fiscal year, and $33.0 million designated for other special
purposes including $20.0 million for facilities identified for replacement in the City's
facilities replacement plan.
Budget — The annual budget serves as the foundation for the City of Newport Beach's
financial planning and control. The Administrative Services Department, with City
Manager direction, develops budget guidelines and appropriation limits for each
department every year in January. The departments then submit revenue and
expenditure appropriation requests which are summarized by the Administrative
Services Department and presented to the City Manager for review. The City Manager
then meets with each department and prepares a proposed budget document for the
City Council. The City Council holds a budget hearing and adopts a budget on or
before June 30, the close of the City's fiscal year.
Budgets are adopted for the General Fund and Special Revenue Funds. The legal level
of budgetary control is at the fund level. The City Manager is authorized to transfer
budgeted amounts between departments within any fund; however, any revisions which
increase the total appropriations of any fund over $10,000 must be approved by the City
Council.
Cash Management — It is the City's policy to invest all temporarily idle short-term funds
and longer -term reserves in a manner that will maximize return without sacrificing
17
security or jeopardizing liquidity requirements. Idle funds are invested in accordance
with the Government Code and a formal investment policy approved by the City
Council. The policy, which is reviewed and updated annually, allows investments in a
variety of specific instruments, as well as certain State, County, and private sector
investment pools and asset management services. Certificates of deposit, demand
deposits, bankers acceptances, U.S. Government and agency securities, commercial
paper, repurchase agreements, and the State Treasurer's Local Agency Investment
Fund (LAIF) are examples.
The City's current investment strategy is to 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, which is 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 placed in money market accounts or with the State Treasurer's LAIF. For
more information on the City's investment policy, see Footnote 4 in the notes to the
financial statements.
Risk Management — The City maintains a risk management program, which is a
combination of self- insured retention, excess insurance coverage and written policies
regarding department safety procedures. The City is also insured for environmental
liabilities associated with waste disposal. As part of the City's risk management
program, resources are aggressively set aside in an Internal Service Fund (Insurance
Reserve Fund) to meet current and probable losses. All claims are investigated,
valued, reserved, and defended and /or settled in accordance with generally accepted
industry practices. Additional information on the City of Newport Beach's risk
management activity can be found in Footnote 8 in the notes to the financial statements.
AWARDS & ACKNOWLEDGMENTS
Awards — The City has prepared a comprehensive annual financial report for fourteen
straight years. The City has been fortunate to receive 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, 2007. 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
is
Achievement program requirements and we are submitting it to GFOA to determine its
eligibility for another certificate.
Acknowledgments - Preparation of this report was accomplished through the efficient
and dedicated services of virtually everyone in the City's Accounting Division and Print
Shop. In addition, members of the Administrative Services Department would like to
thank the City Manager, and the Mayor and City Council for their interest and support in
planning and conducting the financial operations of the City in a responsible and
progressive manner. We would also like to thank our auditors, Mayer Hoffman McCann
P.C., for their time and assistance in the preparation of the report. This report was
completely prepared and published by City employees.
Homer t. Bludau
City Manager
19
, �x
Dennis C. Danner
Administrative Services Director
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Newport Beach
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2007
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.
µ0E OFpi
��• T, (3. x
/ / ° °NIRUSIA
Ah0
\CO Ma
President
Executive Director
20
NEWPORT BEACH CITY OFFICIALS
CITY COUNCIL
L to R: Council Members Michael F. Henn and Keith D. Curry, Mayor Edward D. Selich,
Council Members Steven Rosansky, Nancy Gardner and Don Webb, and Mayor Pro Tem Leslie Daigle
L to R: City Manager Homer Bludau, City Attorney Robin Clauson and City Clerk LaVonne Harkless
Sharon Wood............
Dave Kiff ...................
Dennis C. Danner.....
Jay Elbettar ..............
Steve Lewis ..............
Mark Harmon............
Barbara Ramsey ......
Cynthia Pirtle............
David Lepo ...............
John Klein .................
Steve Badum............
Laura Deitweiler.......
Steve Myrter .............
........................ Assistant City Manager /Director of Community & Economic Development
................................................... ............................... ......................Assistant City Manager
.......................................... ............................... Administrative Services Director /Treasurer
................................................................................... ............................... Building Director
.............................................................................................. ............................... Fire Chief
.................................................................... ............................... General Services Director
.................................................................. ............................... Human Resources Director
...................................................................... ............................... Library Services Director
.................................................................................. ............................... Planning Director
.................................................................. ............................... .........................Police Chief
........................................................................... ............................... Public Works Director
........... . ..... .. ......... I ....................... ............................ Recreation & Senior Services Director
................... ............................... ........... ............................... ......................Utilities Director
ELECTORATE
r BUILONGOODE 1
BOARD OF APPEALS
r , CITV CLERK
CIVIL SERVICE BOARD
L- - - - - -J
PLANNING COMMISSION
L- - - - - -J FF
ASSISTANT CITY MANAGER
mom Niya. Emnomic oev.mpmem
CcAe smOcer cnt
PLANNING
Lard Use and Development
Lnng -Range Planning
Planning Commission Support
Housing Programs
BUILDING
Administrator, Plan ChecklPermit Services
Public Counter Inspections
Use and Occupancy Residential Building Ramrods
FIRE
Fire Suppression (Operations) Ocean Lifeguards
Training and Education Havardoue Materials
Fire Prevention Junior❑feguard Program
Administration Emergency Medical Services
POLICE
Patrol Support Services
Traffic Chief of Police
Detective
MAYOR
COUNCIL
II CITYATTORNEY II
CITY MANAGER.
ADMINISTRATIVE SERVICES
AccountinglRepoding /Budgeting
Treasury Management
Billing &Receivable.
Paymi ccounts Peye 1.
I
Cashledng
Geographic Information Systems
Revenue
Information Technology
Purchasing& Warehousing
Printing & Postal Service s
O
ELECTED OFFICIALS
Fiscal Year 2008 -2009
r - - - - - - i
BOARD OF LIBRARYTRUSTEES
L- - - - - -J
r PARK$ BEAC, 1
RECREATION COMMISSION
ION
- CITY ARTS COMMISSION
L- - - - - -J
r- - - - - -�
HARBOR COMMISSION
L- - - - - -J
ASSISTANTCITY MANAGER
n.rmrRa.-
PudlclMV..
Enumnmemet,rd an,
UTILITIES
Water Service Wastewater Collodion
Electrical Services Oil & Gas Production
Administration Street Lights
GENERAL SERVICES
Parks and Trees
Operators Support
Field Maintenance
Traffic Signs & Markings
Building Maintenance
Refuse Collection
Equipment Maintenance
Recycling
PUBLIC WORKS
Engirermig CIP Design & Construction
Infmstructure Master Planning Development Be,,..
Tmfd Planning &Engineadng Public Right of Way Permitting
LIBRARY SERVICES
Central Library &Branches
Information& Reference Services
Adult & Youth Progams
Ads & Cultural Services
Literacy Services
Board of Library Trustees Suppod
City Arts Commission Support
Sister City Association Support
RECREATION & SENIOR SERVICES
Youth& Adult Spoils Programs Senior Programs& Services
PlaygroundlPark Development Special Events
Facility Managemenb'Reservatlons PB &R Commission Support
HUMAN RESOURCES
RecmAndent
General Liability
Employ.. /Uflor Halatlons
Benefits Administration
I
ClassificationlCompensation
Workers Compensation
Citywide Training
Retiree Counseling &Benefits
Civil Service8card Suppot
Grievances &Disciplines
r - - - -j mi
COUNCILAPPOINTED BOARDS & COMMISSIONS COUNCILAPPOINTED POSITIONS CITV DEPARTMENTS
Financial Section
�zi
Mayer Hoffman McCann P.C.
An Independent CPA Firm
Conrad Government Services Division
2301 Dupont Drive, Suite 200
Irvine, California 92612
949 - 474 -2020 ph
949 - 263 -5520 fx
www.mhrn- pc.corn
City Council
City of Newport Beach
Newport Beach, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Newport Beach, California, as of and for the year ended June 30, 2008, which
collectively comprise the City's basic financial statements, as listed in the table of contents.
These financial statements are the responsibility of the City of Newport Beach's management.
Our responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free 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 the 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 fund information of the City of Newport Beach, as of
June 30, 2008, 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.
As described further in note 11 to the financial statements the City changed its method of
accounting for post employment benefits for fiscal years ending on or after June 30, 2008.
The information identified in the accompanying table of contents as management's discussion
and analysis and required supplementary information is not a required part of the basic financial
statements, but is supplementary information required by the accounting standards generally
accepted in the United States of America. We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit the
information and express no opinion on it.
25
City Council
City of Newport Beach
Newport Beach, California
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Newport Beach's basic financial statements. The introductory
section, combining and individual nonmajor fund financial statements, schedules and statistical
tables are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The combining and individual nornmajor fund financial statements and
schedules have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole. The introductory section and statistical tables have
not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
In accordance with Government Auditing Standards, we have also issued a report dated
December 22, 2008 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, grant
agreements and other matters. The purpose of that report is to describe the scope of our testing,
and not to provide an opinion on the internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
Irvine, California
December 22, 2008
IA.w,er ISG �srw�z I?Jr�wo+.m /f
26
Management's
Discussion and Analysis
27
a
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, 2008. 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 assets utilizing this measurement focus provides one measure of the
City's overall long -term financial condition.
• The assets of the City exceeded liabilities at the close of the most recent fiscal
year by $2.3 billion. The vast majority of this figure is represented by illiquid
capital assets including land and infrastructure. Capital assets net of
accumulated depreciation and any related debt totaled $2.158 billion, while the
remaining balance of net assets totaled $142.4 million. Of this amount, $101.4
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 $45.8 million (1.80 %) to $2.3 billion as a
result of current year activities. The increase is partially attributable to the
annexation of West Santa Ana Heights and contributions for cooperative projects
including Santa Ana Heights Fire Station and several smaller capital projects.
The City's total debt decreased by $1.7 million, from $53.4 million to $51.7
million, during the current fiscal year. The decrease is the net result of regular
debt service payments.
Short -term Financial Resources (Fund) Focus — The financial resources focus
measures inflows of current spendable assets. The resulting net difference between
current financial assets and current financial liabilities otherwise known as fund balance
(or net working capital in the private sector) is a measure of the City's ability to finance
activities in the near term.
• At the close of the current fiscal year, the City's Governmental Funds reported a
combined ending fund balance of $117 million, an increase of $19.6 million.
Approximately $98.1 million is unreserved fund balance available to fund current
obligations at the City Council's discretion. Of the $98.1 million unreserved fund
29
balance, City Council has designated $18.9 million for contingencies, $14.0 for
unspecified future appropriations, $6.4 million for capital projects that were not
completed during the fiscal year, and $34.0 million designated for other special
purposes including $20 million for facilities identified for replacement in the City's
facilities replacement plan. The remaining $24.8 million is made up of smaller
amounts designated across various funds.
The General Fund reported an increase of $9.1 million in fund balance after
transferring $29 million to other funds. Of this transfer, $17.4 million represented
a routine transfer to subsidize the operations of the Tide and Submerged Land
Fund and a $5.9 million transfer to the Insurance Reserve internal service fund to
bolster cash reserves used to fund worker's compensation and general liability
claims. Also included was a $2.7 million transfer to the Retiree Insurance internal
service fund representing the City's annual required contribution to the retiree
medical program. The remaining $3 million represented various nonrecurring
transfers to other funds.
• At the end of the current fiscal year, unreserved fund balance for the General
Fund was $72.3 million, or 57.3% of total General Fund expenditures. Although
unreserved and available to fund current obligations, 100% of this balance is
designated for contingencies, capital projects, appropriations, and other special
purposes.
1917/4N9IArJ 01 aI n1:8aI, /_10 1dL1I-IIF_AI=I Jd4,11 &y
The financial section of the comprehensive annual financial report contains the following
information: Independent Auditors' 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. Management's Discussion and Analysis is intended to be an
introduction to the Basic Financial Statements.
H9I, EX, ldr_14'lr_A94M4,kV
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.
30
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, community
services and general administration. Taxes and other general revenues finance
most of these activities.
Business -type Activities — The City accounts for its Water and Wastewater
utilities as business enterprises. The City charges fees to customers to recover
the cost of providing Water and Wastewater services.
Fund Financial Statements — Funds are accounting devices that the City uses to track
and control resources intended for specific purposes. The Fund Financial Statements
provide more detailed information about the City's most significant funds (major funds)
but not the City as a whole. Some funds are required by State and Federal law or by
bond covenants. Other funds are utilized simply to control and manage resources
intended for particular purposes.
The City utilizes three broad categories of funds:
Governmental Funds — Governmental Funds are used to account for essentially
the same functions reported as Governmental Activities in the Government -wide
Financial Statements. However, unlike the Government -wide Financial
Statements, Governmental Fund Financial Statements utilize the financial
resources measurement focus and thus concentrate on near -term inflows and
outflows of spendable resources, as well as on balances of spendable resources
available at the end of the fiscal year. Consequently, the Governmental Fund
Financial Statements provide a detailed short-term view that helps a reader
determine whether there are more or fewer financial resources that can be spent
in the near future to finance City programs. Also included in the Governmental
Funds are Permanent Funds. These funds are used to report resources that are
legally restricted to the extent that only earnings, not principal, may be used for
purposes that support City programs.
Proprietary Funds — Services for which the City charges customers a fee are
generally reported in Proprietary Funds (Enterprise Funds and Internal Service
Funds). Like the Government -wide Financial Statements, these funds provide
31
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.
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, 2008, as
shown in Table 1, were $2.3 billion.
32
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
Business -Type Activities
Total
2007
2008
2007
2008
2007
2008
$ 155,365
$ 175,010
$ 20,832
$ 18,315
$ 176,197
$ 193,325
2,050,294
2,070,835
110,285
108,954
2,160,579
2,179,789
2,205,659
2,245,845
131,117
127,269
2,336,776
2,373,114
55,029
48,600
4,540
3,095
53,369
51,695
18,797
17,527
3,537
3,195
22,334
20,722
67,626
66,127
8,077
6,290
75,703
72,417
2,020,826 2,050,925
35,770 40,989
75,237 87,803
$ 2,131.833 $ 2.179.717
107,231 107,314
15,809 13.639
S123,040 $ 120.953
2,128,057 2,158,239
35,770 40,989
91,046 101,442
$ 2,254,873 $ 2,300,670
Invested in Capital Assets - By far the largest component of net assets, $2.158 billion
(93.8%), 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, $41 million (1.8%),
represents resources that are subject to external restrictions on how they may be used.
Unrestricted Assets - The remaining balance of unrestricted net assets, $101.4 million
(4.4 %), may be used to meet the City's ongoing obligations to citizens and creditors.
Overall, the City's net assets increased $45.8 million in the current fiscal year. The
increase is largely attributable to capital contributions of $31 million related the
annexation of West Santa Ana Heights and capital construction projects. Other key
financial activity for the year ended June 30, 2008, is shown in Table 2.
33
Table 2
Changes in Net Assets
(in thousands)
Expenses:
General government
Public safety
Public works
Community development
Community services
Interest
Water
Wastewater
Total expenses
Increases in net assets
Net assets, beginning, as restated
Net assets, ending, as restated
14,166
69,795
39,180
9,021
23,304
523
15,557
75,821
42,631
10,053
19,147
532
-
-
Governmental Activities
Business -Type Activities
Total
155,989
163,741
2007
2008
2007
2008
2007
2008
Revenues:
5 2.179.717
$123.040
$ 120,953
Program Revenues:
Charges for services
$ 38,919
$ 40,122
$ 21,454
$ 20,823
$ 60,373 $
60,945
Operating grants and capital contributions
16,425
15,779
-
-
16,425
15,779
Capital grants and contributions
6,904
31,038
-
-
6,904
31,038
General Revenues:
Taxes:
Property taxes
63,003
67,389
-
-
63,003
67,389
Sales tax
21,088
21,855
-
-
21,088
21,855
Sales tax in -lieu
7,348
8,018
-
-
7,348
8,018
Transient occupancy taxes
12,059
12,751
-
-
12,059
12,751
Othertaxes
8,776
8,277
-
-
8,776
8,277
Intergovernmental (Unrestricted):
-
-
Motor Vehicle License Tax
515
373
-
-
515
373
Investment related income
2,631
4,164
736
662
3,367
4,826
Property income
-
-
-
-
-
-
Miscellaneous
2,232
1,859
-
-
2,232
1,859
Share of joint venture net income (loss)
-
-
-
-
-
-
Total revenues
179,900
211,625
22,190
21,485
202,090
233,110
Expenses:
General government
Public safety
Public works
Community development
Community services
Interest
Water
Wastewater
Total expenses
Increases in net assets
Net assets, beginning, as restated
Net assets, ending, as restated
14,166
69,795
39,180
9,021
23,304
523
15,557
75,821
42,631
10,053
19,147
532
-
-
-
-
17,400
3,260
20,148
3,423
155,989
163,741
20,660
23,571
23,911
2,107,922
47,884
2.131,833
1,530
121,510
(2,086)
123,039
$2,131,833
5 2.179.717
$123.040
$ 120,953
14,166
15,557
69,795
75,821
39,180
42,631
9,021
10,053
23,304
19,147
523
532
17,400
20,148
3,260
3,423
176,649 187,312
25,441 45,798
2,235,632 2,254,872
$2,261,073 $2,300.670
Governmental Activities - The cost of all governmental activities in the current fiscal
year was $163.7 million. As shown in the statement of activities, $40.1 million of the
cost was paid by those who directly benefited from the programs, $46.8 million was
financed by contributions and grants received from other governmental organizations,
developers, and property owners for both capital and operating activities, and
$76.8 million was subsidized through general City revenues.
Net assets were restated to reflect the City's election to retroactively implement
GASB 45 related to the retiree post employment medical benefits.
Net assets, as restated, for governmental activities of the City at the beginning of the
year were $2.132 billion, and increased by $47.9 million by the end of the year. The
growth was primarily attributable to an overall increase in general revenues of
34
$7 million, an increase in program revenues from charges for services of $1.2 million,
an increase from operating grants and capital grants of $23.5 million.
The City is a full service city providing residents and visitors with the following functional
services:
General Government is comprised of six departments (City Council, City Clerk, City
Manager, City Attorney, Human Resources, and Administrative Services) providing
general governance, executive management, legal services, records management, risk
management, finance, accounting, and information technology services.
Public Safety is comprised of two departments (Police and Fire) providing general law
enforcement, fire suppression and prevention services, paramedic and medical
transport services, disaster preparedness, and ocean lifeguard services.
Public Works is comprised of two departments (Public Works and General Services)
providing engineering, construction and maintenance of public streets, highways,
buildings, beaches, parks, and related infrastructure; as well as traffic engineering,
street lighting, and trash disposal services.
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 (Library Services 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.
Each program's net cost (total cost less revenues generated by the activities) is
presented in Tables 3 and 4. The net cost shows the extent to which the City's general
taxes support each of the City's programs.
35
General government
Public safety
Public works
Community development
Community services
Interest
80.000
70.000
60.000
50.000
40.000
30.000
20.000
10.000
Table 3
Governmental Activities
(in thousands)
2007
Total Cost Net Cost
of Service of Service
$ 14,166
$ (10,364)
69,795
(52,681)
39,180
(17,241)
9,021
(3,338)
23,304
(9,846)
523
(523)
$ 155,989 $ (93,993)
2008
Total Cost Net Cost
of Service of Service
$ 15,557
$ (12,376)
75,821
(57,155)
42,631
2,519
10,053
(4,456)
19,147
(4,801)
532
(533)
$ 163,741 $ (76,802)
Table 4
Program Expenses and Revenue - Governmental Activities
Year Ended June 30, 2008
(in millions)
General Public Safety Public Works Community Community Interest
Government Development Services
■Total Expenses ❑ Program Revenues
Of the $76.8 million in program revenues that financed the governmental activities,
$57.2 million was utilized for public safety, $12.4 million was utilized for general
government, $4.5 million was utilized for community development, $4.8 million was
utilized for community services and $532,569 was utilized for interest on long -term debt.
The net cost of funding Public Works activities decreased dramatically over 2007 again
36
due to capital contributions associated with the annexation of West Santa Ana Heights.
Interest costs only represent 1/3 of 1 % of total governmental activities.
56
Table 5
Governmental Activities
Year Ended June 30, 2008
Sources of Revenue
19%
of
❑ Charges for Services
■ Contributions
❑Taxes
❑Other
Functional Expenses
General Government
■ Pub is Safety
❑ Public Works
❑ Community Develop me nt
■ Community Services
❑ Interest
Major Governmental Activities in the current fiscal year included the following:
Revenues:
Excluding transfers, total program and general revenues in the current year
amounted to $211.6 million. Of this amount, 41% represents program generated
37
revenue (19% charges for services and 22% capital grants and contributions), while
the remaining 59% represents general revenue sources (56% taxes and 3% from
other sources).
• The City reported $31 million in capital contributions representing a 350% increase
over the prior year. The vast majority of this increase is attributable to the right -of -way
acquired when West Santa Ana Heights was annexed. Capital contributions related
to the construction of Fire Station 7 also contributed to this total.
• The $7 million increase in General Revenues over the prior year is a combination of a
few key factors:
o At $67.4 million, property taxes represent the largest individual recurring
source of revenue for the City. Over the past ten years, assessed
values have increased an average of 11.1% per year. Assessed
property values increased 8.7% in the current year. Property tax
collections, in total, including unsecured property and prior year
collections, increased $4.4 million or 7% in the current year.
o At nearly $21.9 million and $12.8 million respectively, sales taxes and
transient occupancy taxes represent the number two and three top
individual revenue sources for the City. Sales taxes increased
$7 million or 3.7% from the prior year while transient occupancy taxes
increased $.6 million or 5.7% from the prior year.
o Investment income increased $1.5 million or 58% over the prior year
due to increasing cash reserve balances and generally favorable fixed
income yields for most of the year.
Expenses:
• In the current year, expenses for all governmental activities totaled $164 million.
Overall, an increase of $8 million (5 %) from the prior year, which can be attributed to
the following factors:
o General Government expenses increased $1.4 million (10 %) when
compared to the prior year due to legal consulting fees concerning
group homes and site planning for a new Civic Center.
o Public Safety expenses are up $6 million (9 %) in the current year. The
increase is primarily due to increases in salaries and benefits, and
additional grant funded personnel.
o Public Works expenses were up $3.5 million (9 %) for costs associated
with capital contributions benefiting other agencies, water quality
studies and other major infrastructure maintenance projects that were
not capitalized.
38
o Community Development expenses increased $1 million (11 %) in the
current year, due to professional services contracts associated with a
major revision of the zoning code, City -wide wayfinding signage
improvements and various other studies.
o Community Service expenditures decreased $4.2 million (18 %) due to
the construction of the Back Bay Science Center in the prior year which
represented a one -time capital contribution benefiting another
governmental entity.
Business -type Activities — Business -type activities are financed primarily by fees
charged to external parties for goods and services. The City's two business -type
activities, water and wastewater utilities, produced a $2.1 million decrease in net assets.
The decrease in net assets was comprised of an operating loss of $1.6 million, non -
operating expenses of $576,714, and an off - setting $124,743 consolidation adjustment
related to internal service fund activities.
25.000
20.000
15.000
10.000
5.000
Table 6
Program Expense & Revenue - Business -type Activities
Year Ended June 30, 2008
(in millions)
Water Wastewater
■Total Expenses ■Program Revenues
Major Business -type Activities in the current fiscal year included the following:
Water
Of the $20.1 million in water related expenses, $6.6 million (32.8 %) is for the purchase
of water, $4.4 million (21.9 %) is for maintenance, supplies, and depreciation of the
water system, $3.9 million (19.5°/x) covers employee related costs, $1.7 million (8.4 %) is
for professional services, and the remaining $3.5 million (17.4 %) is collectively
39
attributable to other miscellaneous expenses, interest on outstanding debt, and loss on
removal of capital assets.
Wastewater
Of the $3.4 million in wastewater related expenses, $1.3 million (39 %) is for
maintenance, supplies, and depreciation of the wastewater system, $1.4 million (40.1 %)
is for employee related costs, and the remaining $714,366 (20.9 %) is attributable to
other individually insignificant expenses.
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 $117 million, an increase of
$19.6 million from the prior year. The General Fund represented $79 million or
67.5% of the combined fund balances of the Governmental Funds.
Reserved Fund Balance — The City has $18.9 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
($11.4 million), 2) for permanent endowment ($4.6 million), 3) as a reserve for
affordable housing ($1.7 million), and 4) for a variety of other restrictions that
make these resources unavailable for spending ($1.2 million).
Unreserved Fund Balance — The remaining $98.1 million is classified as
unreserved fund balance, which is available for spending at the City Council's
discretion but may be designated for special purposes. Of the $98.1 million
unreserved fund balance, City Council has designated $18.9 million for
contingencies, $14.0 million for unspecified future appropriations, $6.4 million for
capital projects that were not completed during the fiscal year, and $34.0 million
designated for other special purposes including $20 million for facilities identified
for replacement in the City's facilities replacement plan. The remaining
$24.8 million is made up of smaller amounts designated across various funds.
Major activities in the Governmental Funds in the current fiscal year included the
following:
40
• The General Fund ended the year with a $79 million fund balance, a net increase
of $9.1 million after transferring $29 million to other funds. Of this transfer,
$17.4 million represented a routine transfer to subsidize the operations of the
Tide and Submerged Land Fund and a $5.9 million transfer to the Insurance
Reserve internal service fund to bolster cash reserves used to fund workers'
compensation and general liability claims. Also included, was a $2.7 million
transfer to the Retiree Insurance internal service fund representing the City's
annual required contribution to the retiree medical program. The remaining
$3 million represented various nonrecurring transfers to other funds.
• 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
($17.4 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 $1.7 million in fund balance.
• The Contributions Fund reported revenues and expenditures of approximately
$2.5 million related to a variety of grants and cooperative agreements associated
with water quality projects, street projects and park improvement projects.
Proprietary Funds — The City's Proprietary Funds (Enterprise and Internal Service
Funds) presented in the Fund Financial Statements section basically provide the same
type of information in the Government -wide Financial Statements, but include individual
segment information.
Major activities in the Enterprise Funds in the current fiscal year included the following:
• Net assets in the Water Fund decreased $2.4 million largely due to a relatively high
level of water transmission maintenance expenses, increasing energy costs and
increases in the cost of supplies. Net assets in Wastewater Fund increased by
$223,988. Unrestricted net assets at year end were $10.4 million for the Water Fund,
and $3.2 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 in the Internal Service Funds increased $7.6 million in the current year.
The increase is primarily attributable to a $5.9 million cash transfer from the General
Fund to the Insurance Reserve fund intended to bolster cash reserves in this fund.
Net assets decreased in the Retiree Insurance fund due to the City's election not to
fund the accrued liabilities associated with an "implied subsidy" calculated in
accordance with GASB 45. Also a contributing factor, the Equipment Maintenance
Fund net assets increased by $2.2 million in the current year through user fees
41
charged to departments for maintenance and replacement of the City's rolling stock
fleet.
GENERAL FUND BUDGETARY HIGHLIGHTS
Final budgeted revenues for the General Fund increased $6.9 million from the original
budget during the year ended June 30, 2008. Significant factors contributing to this
fluctuation are highlighted as follows:
Final budgeted property taxes revenues increased $1.6 million from the original
budget due to higher than expected assessed property valuations and collections.
Final budgeted expenditures for the General Fund decreased $19.3 million from the
original budget during the year ended June 30, 2008. Significant factors contributing to
this fluctuation are highlighted as follows:
• Public safety and public works functions were decreased by $18.4 million and
$3.6 million respectively. This budget reduction was primarily due to a routine
allocation of expenditures from General Fund cost centers to the Tidelands Fund for
police, fire and beach maintenance services utilized in support of tidelands
operations.
• Budgeted expenditures for community services increased $1.2 million due to
amendments reflecting additional expenditures related to new grants for library
materials, operations, maintenance and repairs.
• Final budgeted capital outlays from the General Fund increased $1.1 million from the
original budget during the year ended June 30, 2008, due to amendments reflecting
additional expenditures for 1) Mariners Park restroom for $639,800, 2) McFadden
Square monument for $235,500, and 3) various smaller budgetary increases.
• During the current year, final transfers out budgeted for the General Fund varied
from the original budget by approximately $21.6 million primarily due to the
expenditure allocation to the Tidelands Fund, a $5.9 million transfer to the Insurance
Reserve internal service fund and a $2.7 million transfer to the Retiree Insurance
internal service fund.
Variance with Final Budget
Actual revenues exceeded final budget by $5.0 million for the year ended June 30,
2008. Significant factors contributing to this favorable variance are summarized as
follows:
42
• A $2 million favorable variance was realized due to higher than expected
investment yields in the early part of the year and an increase in the fair value of
investments measured at the end of the year.
• A $385,000 favorable variance was realized due to higher than expected
transient occupancy tax revenues.
• A $364,000 favorable variance was realized due to higher than expected regular
parking fines.
• A $843,000 favorable variance was realized due to higher than expected charges
for services in connection with plan checking fees, engineering fees, paramedic
service fees and various staff service fees.
• A $732,000 favorable variance was realized due to unexpected timing
differences associated with the collection of intergovernmental grant revenues.
• A $643,000 favorable variance was realized do to an increase in unexpected
other revenues.
Actual General Fund expenditures of $126 million were significantly less than final
budgetary estimates of $132.1 million. Significant factors contributing to this $6.1 million
favorable variance are summarized as follows:
• A $2.9 million favorable variance was realized from capital improvement projects
that were not completed by year end.
• A $1.1 million favorable variance was realized in Public Works expenditures due
to the cost allocation to the Tidelands Fund.
• A $1.2 million favorable variance was realized from Community Development,
primarily due to expenditure re- budgets to the following fiscal year for
professional and technical services related to rewriting the zoning codes for the
General Plan Update.
Conservative budgeting, timing of expenditures and favorable variances contributed to
the $8.4 million net increase in General Fund, fund balance.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City's investment in capital assets for governmental and business -type activities as
of June 30, 2008, amounts to $2.180 billion (net of accumulated depreciation). This
investment is comprised of a broad range of capital assets including land, buildings,
machinery and equipment, park facilities, road improvements, storm drains, piers, oil
wells, sound walls and bridges. The total net increase (including additions and
deletions) of $19.2 million represents a 0.9% increase over last year. The $19.2 million
net increase is the result of additions of $46.1 million, and deletions of $26.9 million.
43
Table 7
Capital Assets at Year End
(net of depreciation, in thousands)
Major capital asset events during the current fiscal year included the following:
• The City capitalized $46.1 million in capital assets in the current year. Of the
$46.1 million, $21.4 million was paid for through current year expenses, the
remaining $24.7 million represents additions from work in progress started in
previous years.
• Of the $44.2 million capitalized as governmental assets in the current year,
$22.6 million represents additions from work in progress started in previous
years.
Of the $1.9 million capitalized in the current year as business -type assets, $3.6 million
represented additions for infrastructure consisting of major repairs and upgrades to the
water mains, additions to wastewater and water pump stations, and completion of the
Irvine Avenue & Dover Drive Water Transmission Main improvement project.
Additional information on the City's capital assets can be found in Note (5) of the Notes
to the Financial Statements.
Long -term Debt
At the end of the current fiscal year, the City had total long -term debt outstanding of
$51.7 million for all governmental and business -type activities.
44
Governmental Activities
Business -Type Activities
Total
2007
2008
2007
2008
2007
2008
Land
$ 1,785,699
$ 1,807,381
$ 2,016
$ 2,016
$ 1,787,715 $
1,809,397
Structures
35,847
54,641
99
94
35,946
54,735
Equipment
9,073
8,964
7
28
9,080
8,992
Infrastructure
194,376
194,541
106,001
106,503
300,377
301,044
Work in progress
25,299
5,307
2,162
313
27,461
5,620
Totals
$ 2,050,294
$ 2,070,834
$ 110,285
$ 108,954
$ 2,160,579 $
2,179,788
Major capital asset events during the current fiscal year included the following:
• The City capitalized $46.1 million in capital assets in the current year. Of the
$46.1 million, $21.4 million was paid for through current year expenses, the
remaining $24.7 million represents additions from work in progress started in
previous years.
• Of the $44.2 million capitalized as governmental assets in the current year,
$22.6 million represents additions from work in progress started in previous
years.
Of the $1.9 million capitalized in the current year as business -type assets, $3.6 million
represented additions for infrastructure consisting of major repairs and upgrades to the
water mains, additions to wastewater and water pump stations, and completion of the
Irvine Avenue & Dover Drive Water Transmission Main improvement project.
Additional information on the City's capital assets can be found in Note (5) of the Notes
to the Financial Statements.
Long -term Debt
At the end of the current fiscal year, the City had total long -term debt outstanding of
$51.7 million for all governmental and business -type activities.
44
Certificates of participation
Note payable
Pre - annexation agreement
CDBG Loan
Purchase Installment Agreement
Capital leases
Revenue bonds
Claims and judgments
Workers' compensation payable
Compensated absences
Net OPEB Obligation
Totals
Table 8
Outstanding Debt at Year -End
(in thousands)
Governmental Business -Type Total
Activities Activities
2007 2008 2007 2008 2007
$ 4,980 $ 4,665 $ - $ - $ 4,980
1,469 1,298 - - 1,469
12,000 10,800 - - 12,000
2,134 2,056 - - 2,134
3,000 1,500 3,000
50 - - - 50
4,837
5,614
11,442
11,334
8,917
9,113
-
2,221
$ 48,829
$ 48,601
4,540 3,095
$ 4,540 $ 3,095
2008
4,665
1,298
10,800
2,056
1,500
4,540
3,095
4,837
5,614
11,442
11,334
8,917
9,113
-
2,221
$ 53,369
$ 51,696
The City's total debt decreased $1.6 million during the current fiscal year. The
cumulative decrease is the net result of regular debt service payments, offsetting
increases in claims and judgments payable of $3 million, compensated absences
payable of $2 million, and an increase in a net OPEB obligation. The net OPEB
obligation of $2.2 million resulted in the City's election not to fund the implicit subsidy
associated with GASB 45 and the City's post employment Retiree Medical plan.
Additional information on the City's long -term debt and OPEB Obligation can be found
in Note (6) and Note (11) of the Notes to the Financial Statements.
FACTORS AFFECTING NEXT YEAR'S BUDGET
Overall the 2008 -2009 operating budget, excluding capital improvement projects and
internal service charges, increased 2.01 % over the 2007 -2008 amended budget. A brief
summary of the factors considered when preparing the 2008 -2009 budget are as
follows:
• In January of 2008, the City Council established seven new priorities related to the
City's resource allocation and retained five of the existing priorities from 2007.
These priorities which included: the new City Hall design, the Facilities Financing
Plan, the resolution of group homes /code enforcement issues, the Water Quality
Master Plan, benchmarking of the City's services to ensure continuous
improvement, Banning Ranch, traffic flow improvements, Airport Policy
Implementation, alignment of policies /codes with the General Plan, parks and
recreational facilities, improved communication with the public, and an update of
fees to ensure cost recovery, provided the basis for the Fiscal Year 2008 -2009
budget.
45
• Salary and benefit contracts with the Firefighters Association and the Fire
Management Association expired December 31, 2007, but the Firefighters
Association contract was subsequently settled. The Fire Management Association
contract remains unsettled as negotiations with this group continue. Although the
precise settlement details were not available when the 2008 -09 Budget was
developed, the City did reserve sufficient resources in anticipation of the
negotiations. The Lifeguard Management Association contract expires December
31, 2008 and negotiations with this group are currently underway.
• In the fall of 2006, we began a comprehensive cost allocation study to identify
overhead expenses City -wide and by department. Concurrent with the cost
allocation study, we conducted a cost of services study to ensure our fees and
charges were appropriate. The last time we completed similar studies was in 1996.
Both of these projects were completed and submitted to Council. The cost of
services and cost allocation plan models allowed City staff to recommend to the City
Council increases to the Master Fee Schedule. The potential revenue associated
with the implementation of the new fee schedule is estimated to be $3.5 million.
Although the nationwide troubles in the housing market have slowed the growth of
Newport Beach assessed property values from 9.8% in 2006 -07 to 8.7% in 2007 -08,
and 5.9% in 2008 -09, the 2008 -09 Budget was built around a very conservative 4%
assessed value growth assumption. Although assessed values do not appear to be
negatively impacting the 2008 -09 Budget, many factors associated with the housing
market crisis are being considered for future fiscal years.
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. The City's Budgets, Comprehensive Annual Financial
Reports as well as other City financial information can be found on the City's website at:
www. city. newport- beach.ca.us /financial info.
46
Government -wide
Financial Statements
47
CITY OF NEWPORT BEACH
Statement of Net Assets
June 30. 2008
Assets:
Cash and investments (note 4)
Receivables:
Accounts
Notes
Interest
Intergovernmental receivables
Cash with fiscal agent (note 4)
Internal balances
Investment in joint venture (note 15)
Prepaid items
Inventory
Capital assets, (note 5):
Non - depreciable
Depreciable
Accumulated depreciation
Total assets
Liabilities:
Accounts payable
Accrued salaries and benefits
Accrued interest payable
Deposits payable
Unearned revenue
Noncurrent liabilities (note 6):
Due within one year
Due in more than one year
Total liabilities
Net Assets:
Invested in capital assets, net of related debt
Restricted for:
Community development
Public safety
Public works
Community services
Debt Service
Permanent Funds:
Nonexpendable
Expendable
Unrestricted
Total net assets
Governmental
Business -type
Activities
Activities
Total
$ 144,985,859
$ 12,353,815
$ 157,339,674
11,939,299
4,401,794
16,341,093
50,000
-
50,000
1,827,739
1,827,739
9,621,652
-
9,621,652
3,030,912
1,454,305
4,485,217
(53,060)
53,060
-
2,595,599
-
2,595,599
432,696
25,000
457,696
579,144
-
579,144
1,812,688,602
2,329,399
1,815,018,001
397,216,271
155,366,368
552,582,639
(139,069,938)
(48,741,469)
(187,811,407)
2,245,844,775
127,242,272
2,373,087,047
7,298,543
2,917,600
10,216,143
3,755,995
135,696
3,891,691
156,300
72,463
228,763
3,071,059
68,883
3,139,942
3,244,715
-
3,244,715
9,629,855
1,510,000
11,139,855
38,971,019
1,585,000
40,556,019
66,127,486
6,289,642
72,417,128
2,050,925,370
107,313,603
2,158,238,973
5,214,589
-
5,214,589
399,008
-
399,008
22,195,061
-
22,195,061
7,049,847
-
7,049,847
565,989
-
565,989
4,629,781
-
4,629,781
934,648
-
934,648
87,802,996
13,639,027
101,442,023
$ 2,179,717,289
S 120,952,630
$ 2,300,669,919
See accompanying notes to basic financial statements
49
CITY OF NEWPORT BEACH
Statement of Activities
Year Ended June 30, 2008
General revenues:
Taxes:
Property tax
Sales tax
Sales tax in -lieu
Transient occupancy tax
Business license tax
Franchise tax
Other taxes
Intergovernmental (Unrestricted):
Motor vehicle license tax
Investment income
Net increase in fair
value of investments
Other
Total general revenues
Change in net assets
Net assets at beginning of year,
as restated (note 17 )
Net assets at end of year
See accompanying notes to basic financial statements
50
Operating
Capital
Total
Charges for
Grants and
Grants and
Program
Expenses
Services
Contributions
Contributions
Revenues
Functions /Programs
Primary government:
Governmental activities:
General government
$ 15,556,657
$ 3,055,982
$ 124,461
$ - $
3,180,443
Public safety
75,821,082
16,649,400
2,016,742
-
18,666,142
Public works
42,631,401
5,616,118
9,508,355
30,025,596
45,150,069
Community development
10,052,871
5,597,309
-
-
55597,309
Community services
19,146,588
9,203,513
4,129,293
1,012,319
14,345,125
Interest on long -term debt
532,569
-
-
-
Total governmental activities
163,741,168
40,122,322
15,778,851
31,037,915
86,939,088
Business -type activities:
Water
20,148,517
17,270,511
-
-
17,270,511
Wastewater
3,423,592
3,552,780
-
-
3,552,780
Total business -type activities
23,572,109
20,823,291
-
-
20,823,291
Total primary government
$ 187,313,277
$ 60,945,613
$ 15,778,851
$ 31,037,915 $
107,762,379
General revenues:
Taxes:
Property tax
Sales tax
Sales tax in -lieu
Transient occupancy tax
Business license tax
Franchise tax
Other taxes
Intergovernmental (Unrestricted):
Motor vehicle license tax
Investment income
Net increase in fair
value of investments
Other
Total general revenues
Change in net assets
Net assets at beginning of year,
as restated (note 17 )
Net assets at end of year
See accompanying notes to basic financial statements
50
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental Business -type
(2,878,006)
Activities Activities
Total
$ (12,376,214) $ -
$ (12,376,214)
(57,154,940) -
(57,154,940)
2,518,668 -
2,518,668
(4,455,562) -
(4,455,562)
(4,801,463) -
(4,801,463)
(532,569) -
(532,569)
(76,802,080) -
(76,802,080)
-
(2,878,006)
(2,878,006)
-
129,188
129,188
-
(2,748,818)
(2,748,818)
$ (76,802,080)
$ (2,748,818)
$ (79,550,898)
67,388,838
-
67,388,838
21,855,242
-
21,855,242
8,017,539
-
8,017,539
12,751,518
-
12,751,518
4,119,108
-
4,119,108
3,853,119
-
3,853,119
304,920
-
304,920
373,350
-
373,350
3,655,314
588,870
4,244,184
508,485
72,913
581,398
1,858,883
1,858,883
124,686,316
661,783
125,348,099
47,884,236
(2,087,035)
45,797,201
2,131,833,053
123,039,665
2,254,872,718
$ 2,179,717,289
$ 120,952,630
$ 2,300,669,919
See accompanying notes to basic financial statements
51
This page left blank intentionally.
52
Fund
Financial Statements
53
y
Governmental Funds
55
GOVERNMENTAL FUNDS
Major Funds
The General Fund is used to account for fiscal resources which are dedicated to
governmental operations of the City, and not required to be accounted for in
another fund.
The Tide and Submerged Land Fund is a Special Revenue Fund used to
account for all revenues and expenditures related to the operation of the City's
tidelands, including beaches and marinas.
The Contributions Fund is used to account for revenues received from other
government agencies or private developers and expended for specific streets,
highway, construction, or water quality projects.
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.
56
This page left blank intentionally.
57
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2008
See accompanying notes to basic financial statements
58
Tide and
Other
Submerged
Governmental
Assets
General
Land
Contributions
Funds
Totals
Cash and investments
$
75,278,961
$ 1,454,824
$
2,115,166
$ 32,611,212
$ 111,460,163
Receivables:
Accounts
6,291,724
1,208,343
1,847,374
910,878
10,258,319
Notes
50,000
-
-
-
50,000
Interest
1,827,739
-
-
-
1,827,739
Intergovernmental receivables
5,552,883
-
1,263,645
2,805,124
9,621,652
Cash with fiscal agent
-
-
-
3,030,912
3,030,912
Due from other funds (notel2)
3,297,073
-
-
-
3,297,073
Prepaid items
127,836
-
-
137,728
265,564
Inventory
229,546
229,546
Total assets
$
92,655,762
$ 2,663,167
$
5,226,185
$ 39,495,854
$ 140,040,968
Liabilities and Fund Balances
Liabilities:
Accounts payable
$
5,054,805
$ 799,117
$
214,928
$ 734,294
$ 6,803,144
Accrued payroll
3,688,974
31,343
-
-
3,720,317
Deposits payable
2,913,141
157,918
-
-
3,071,059
Unearned revenue
1,911,171
-
801,487
532,057
3,244,715
Unavailable revenue
28,532
-
2,559,015
1,607,945
4,195,492
Due to other funds (note 12)
2,009,179
2,009,179
Total liabilities
13,596,623
988,378
3,575,430
4,883,475
23,043,906
Fund balances:
Reserved for encumbrances
4,712,988
1,415,088
856,506
4,455,273
11,439,855
Reserved for debt service
-
-
-
565,989
565,989
Reserved for permanent endowment
-
-
-
4,629,781
4,629,781
Reserved for affordable housing
1,686,724
-
-
-
1,686,724
Reserved for prepaid items
127,836
-
-
137,728
265,564
Reserved for inventories
229,546
-
-
-
229,546
Reserved for long -term receivable
50,000
-
-
-
50,000
Unreserved:
Designated for special purposes
32,931,278
259,701
794,249
-
33,985,228
Designated, reported in:
Special revenue funds
-
-
-
21,167,789
21,167,789
Capital projects funds
-
-
-
4,475,016
4,475,016
Permanent funds
-
-
-
934,648
934,648
Designated for contingencies
18,868,974
-
-
-
18,868,974
Designated for capital projects
6,418,065
-
-
-
6,418,065
Designated for appropriations
14,033,728
-
-
-
14,033,728
Undesignated, reported in:
Special Revenue Funds
-
-
-
(550,783)
(550,783)
Capital projects funds
(1,203,062)
(1,203,062)
Total fund balances
79,059,139
1,674,789
1,650,755
34,612,379
116,997,062
Total liabilities and
and fund balances
$
92,655,762
$ 2,663,167
$
5,226,185
$ 39,495,854
$ 140,040,968
See accompanying notes to basic financial statements
58
CITY OF NEWPORT BEACH
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
June 30, 2008
Fund balances of governmental funds $ 116,997,062
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. 2,063,209,639
Long term debt that have not been reported in the governmental fund activity.
Amounts exclude long -term debt activity from internal service funds
which have been added below:
Certificates of participation payable (4,665,000)
Note payable (1,298,254)
Pre - annexation agreement (10,800,000)
CDBG loan (2,056,000)
Purchase agreement (1,500,000)
Accrued interest payable for the current portion of interest due on long -term debt (156,300)
has not been reported in the governmental funds.
Some of the revenue will be collected after year -end, but is not available soon 4,195,492
enough to pay for the current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.
Internal service funds are used by management to charge the costs of certain
activities, such as self- insurance, workers' compensation, compensated absences,
retiree insurance and fleet management, to individual funds. The assets (including
capital assets) and liabilities of the internal service funds must be added to the
statement of net assets. 13,248,111
Investment in joint ventures is not a current financial resource and therefore not reported 2,595,599
in the governmental funds.
Internal balance created by the consolidation of internal service fund activities (53,060)
related to enterprise funds is not reported in the governmental funds.
Net assets of governmental activities $ 2,179,717,289
See accompanying notes to basic financial statements
59
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
Year Ended June 30, 2008
Other financing sources (uses)
Transfers in (note 13)
5,521,342
Tide and
- 4,663,645
Other
Transfers out (note 13)
(29,039,614)
(88,707)
Submerged
(36,076,952)
Governmental
General
Land
Contributions
Funds
Totals
Revenues
(8,493,030)
Net change in fund balances
9,145,937
887,858
(5,704) 9,567,678
Taxes and assessments:
Fund balances, beginning
69,913,202
786,931
1,656,459 25,044,701
97,401,293
Property tax
$ 67,388,838
$ -
$ -
$ -
$ 67,388,838
Sales tax
21,855,242
-
-
-
21,855,242
Sales tax in -lieu
8,017,539
-
-
-
8,017,539
Transient occupancy tax
12,751,518
-
-
-
12,751,518
Othertaxes
8,288,855
-
-
456,209
8,745,064
Intergovernmental
3,083,152
-
2,232,264
15,690,013
21,005,429
Licenses and permits
4,994,304
1,310,621
-
169,864
6,474,789
Charges for services
14,935,333
137,845
-
-
15,073,178
Fines and forfeitures
3,957,864
-
-
704,578
4,662,442
Investment income
3,655,314
199,829
187,378
1,420,545
5,463,066
Net increase in fair value of investments
508,485
-
26,100
185,903
720,488
Property income
6,603,973
8,613,830
-
-
15,217,803
Donations
1,202,474
-
47,242
909,921
2,159,637
Other
1,458,770
28,084
2,718,241
4,205,095
Total revenues
158,701,661
10,290,209
2,492,984
22,255,274
193,740,128
Expenditures
Current:
General government
14,425,553
82,550
-
-
14,508,103
Public safety
53,650,324
19,353,724
-
482,365
73,486,413
Public works
25,454,281
3,953,555
-
701,105
30,108,941
Community development
7,769,980
393,083
-
540,778
8,703,841
Community services
12,639,243
1,838,903
-
-
14,478,146
Capital outlay
10,455,571
853,702
2,498,688
6,716,677
20,524,638
Debt service (note 6):
Principal
1,500,000
170,948
-
1,593,000
3,263,948
Interest and fiscal charges
142,500
66,114
-
368,685
577,299
Total expenditures
126,037,452
26,712,579
2,498,688
10,402,610
165,651,329
Excess (deficiency) of revenues
over expenditures
32,664,209
(16,422,370)
(5,704)
11,852,664
28,088,799
Other financing sources (uses)
Transfers in (note 13)
5,521,342
17,398,935
- 4,663,645
27,583,922
Transfers out (note 13)
(29,039,614)
(88,707)
(6,948,631)
(36,076,952)
Total other financing sources
(uses)
(23,518,272)
17,310,228
(2,284,986)
(8,493,030)
Net change in fund balances
9,145,937
887,858
(5,704) 9,567,678
19,595,769
Fund balances, beginning
69,913,202
786,931
1,656,459 25,044,701
97,401,293
Fund balances, ending
$ 79,059,139
$ 1,674,789
$ 1,650,755 $ 34,612,379
$ 116,997,062
See accompanying notes to basic financial statements
RUS
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, 2008
Net change in fund balances - total governmental funds $ 19,595,769
Amounts reported for governmental activities in the statement of activities differ
from the amounts reported in the statement of activities because:
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. 20,869,467
Payment of debt service principal is an expenditure in the governmental funds, but the 3,263,948
repayment reduces long -term liabilities in the statement of net assets.
Accrued Interest for debt service. This is the net change in accrued interest forth e current period. 45,060
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.This is the net change in unearned revenue for the current (3,469,898)
period.
Internal service funds are used by management to charge the costs of certain
activities, such as self- insurance, workers' compensation, compensated absences,
retiree insurance and fleet management, to individual funds. The net revenue of the internal
service funds is reported in the statement of activities. 7,605,614
Investment in joint ventures creates an explicit, measurable equity interest reported only
in the statement of activities. 99,039
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. (124,763)
Change in net assets of governmental activities $ 47,884,236
See accompanying notes to basic financial statements
61
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2008
62
Variance with
Final Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Taxes and assessments:
Property
$ 65,514,837
$ 67,114,837
$ 67,388,838
$ 274,001
Sales
22,877,127
22,877,127
21,855,242
(1,021,885)
Sales tax in -lieu
7,568,701
7,568,701
8,017,539
448,838
Transient occupancy
11,275,932
12,365,932
12,751,518
385,586
Othertaxes
7,218,461
8,218,461
8,288,855
70,394
Intergovernmental
2,183,026
2,351,022
3,083,152
732,130
Licenses and permits
3,876,320
4,829,679
4,994,304
164,625
Charges for services
13,701,298
14,092,377
14,935,333
842,956
Fines and forfeitures
3,593,500
3,593,500
3,957,864
364,364
I nvestment income
2,189,695
2,189,695
3,655,314
1,465,619
Net increase in fair value of investments
-
-
508,485
508,485
Property income
6,300,171
6,300,171
6,603,973
303,802
Donations
306,000
1,370,330
1,202,474
(167,856)
Other
209,800
815,200
1,458,770
643,570
Total revenues
146,814,868
153,687,032
158,701,661
5,014,629
Expenditures
General government:
City council
1,306,696
1,311,099
1,531,705
(220,606)
City clerk
382,780
557,733
563,092
(5,359)
City attorney
1,112,509
1,297,813
1,636,695
(338,882)
City manager
1,436,789
1,578,545
1,426,985
151,560
Administrative services
7,599,761
7,855,022
7,274,379
580,643
Human resources
1,891,692
2,024,012
1,992,697
31,315
Total General government
13,730,227
14,624,224
14,425,553
198,671
Public safety:
Police
41,905,549
34,816,449
34,848,703
(32,254)
Fire
30,219,517
18,950,909
18,801,621
149,288
Total Public safety
72,125,066
53,767,358
53,650,324
117,034
Public works:
General services
22,690,451
20,517,086
19,422,193
1,094,893
Public works
5,203,225
4,796,196
4,641,478
154,718
Utilities
1,238,214
1,253,165
1,390,610
(137,445)
Total Public works
29,131,890
26,566,447
25,454,281
1,112,166
62
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
(continued)
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Community development
Planning
3,519,274
4,267,900
3,119,517
1,148,383
Building
3,774,923
4,082,078
4,388,407
(306,329)
Code and Water Quality Enforcement
713,325
348,587
262,056
86,531
Total Community development
8,007,522
8,698,565
7,769,980
928,585
Community services:
Net change in fund balance
(12,117,601)
770,587
9,145,937
Library Services
6,186,385
7,051,393
6,415,157
636,236
Recreation and senior services
6,141,976
6,444,252
6,224,086
220,166
Total Community services
12,328,361
13,495,645
12,639,243
856,402
Capital outlay
14,504,954
13,371,330
10,455,571
2,915,759
Debt service:
Principal
1,500,000
1,500,000
1,500,000
-
Interest and Fiscal Charges
142,500
142,500
142,500
-
TotalDebtService
1,642,500
1,642,500
1,642,500
-
Total expenditures
151,470,520
132,166,069
126,037,452
6,128,617
Excess (deficiency) of revenues
over expenditures
(4,655,652)
21,520,963
32,664,209
11,143,246
Other financing sources (uses)
Transfers in
-
8,302,815
5,521,342
(2,781,473)
Transfers out
(7,461,949)
(29,053,191)
(29,039,614)
13,577
Total other financing
sources (uses)
(7,461,949)
(20,750,376)
(23,518,272)
(2,767,896)
Net change in fund balance
(12,117,601)
770,587
9,145,937
8,375,350
Fund balance, beginning
69,913,202
69,913,202
69,913,202
-
Fund balance, ending
$ 57,795,601
$ 70,683,789
$ 79,059,139
$ 8,375,350
63
CITY OF NEWPORT BEACH
Tide and Submerged Land
Budgetary Comparison Statement
For the Year Ended June 30, 2008
Expenditures
General government
Public safety
Public works
Community services
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
82,550
- 19,353,724
601,259 3,834,712
1,930,168 2,039,139
- 393,083
2,934,750 2,133,312
82,550
19,353,724 -
3,953,555 (118,843)
1,838,903 200,236
393,083 -
853,702 1,279,610
170,948 170,948 170,948 -
66,114 66,114 66,114 -
Total expenditures
5,703,239
28,073,582
26,712,579
Variance with
Excess (deficiency) of revenues
Final Budget
Budgeted Amounts
over expenditures
Positive
(17,162,619)
Original
Final
Actual
(Negative)
Revenues
Transfers in
137,206
Licenses and permits
1,291,525
1,291,525
1,310,621
19,096
Charges for services
40,000
40,000
137,845
97,845
Fines and forfeitures
1,200
1,200
-
(1,200)
Investment income
84,000
84,000
199,829
115,829
Property income
8,074,238
9,494,238
8,613,830
(880,408)
Other
-
-
28,084
28,084
Total revenues
9,490,963
10,910,963
10,290,209
(620,754)
Expenditures
General government
Public safety
Public works
Community services
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
82,550
- 19,353,724
601,259 3,834,712
1,930,168 2,039,139
- 393,083
2,934,750 2,133,312
82,550
19,353,724 -
3,953,555 (118,843)
1,838,903 200,236
393,083 -
853,702 1,279,610
170,948 170,948 170,948 -
66,114 66,114 66,114 -
Total expenditures
5,703,239
28,073,582
26,712,579
1,361,003
Excess (deficiency) of revenues
over expenditures
3,787,724
(17,162,619)
(16,422,370)
740,249
Other financing sources (uses)
Transfers in
137,206
17,398,935
17,398,935
-
Transfers out
(5,622,474)
(3,021,256)
(88,707)
2,932,549
Total other financing
sources (uses)
(5,485,268)
14,377,679
17,310,228
2,932,549
Net change in fund balance
(1,697,544)
(2,784,940)
887,858
3,672,798
Fund balance, beginning
786,931
786,931
786,931
Fund balance (deficit), ending
$ (910,613) $
(1,998,009)
$ 1,674,789 $
3,672,798
64
CITY OF NEWPORT BEACH
Contributions Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2008
Revenues:
Intergovernmental
Investment income
Net increase in fair value of investments
Donations
Total revenues
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
65
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
$ 468,066
$ 2,668,976
$ 2,232,264
$ (436,712)
95,000
95,000
187,378
92,378
-
-
26,100
26,100
580,000
588,333
47,242
(541,091)
1,143,066
3,352,309
2,492,984
(859,325)
6,506,182
4,875,993
2,498,688
2,377,305
(5,363,116)
(1,523,684)
(5,704)
1,517,980
1,656,459
1,656,459
1,656,459
-
$ (3,706,657)
$ 132,775
$ 1,650,755
$ 1,517,980
65
This page left blank intentionally.
66
Proprietary Funds
/l t
a �-. �„ t.. � � i� i •yaps_
( y' ♦i
fiy i
�p+ R`"! M ' F , • �4� � rT4 ' r Vii'..
j• r�`� r,} fl idly..
�- • 4 •u it Vf r"1•••y_
q ! d
7•
• •` :t to ,
y
67
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.
LIM
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Net Assets
June 30, 2008
Assets
Current assets:
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Inventories
Prepaid items
Total current assets
Non - current assets:
Cash with fiscal agent
Capital assets (note 5):
Land
Structures
Equipment
Infrastructure
Work in progress
Less accumulated depreciation
Total capital assets (net of accumulated depreciation)
Total noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Accrued payroll
Deposits payable
Accrued interest payable
Bonds payable (note 6)
Capital leases - current
Workers compensation - current
General liability - current
Compensated absences - current
Total current liabilities
Non - current liabilities (note 6):
Bonds payable
Workers' compensation
General liability
Compensated absences
Net OPEB obligation
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
53,060
$ 120,952,630
See accompanying notes to basic financial statements
69
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 9,758,520
$ 2,595,295
$ 12,353,815
$ 33,525,696
3,677,682
724,112
4,401,794
1,680,980
-
-
-
349,598
25,000
25,000
167,132
13,461,202
3,319,407
16,780,609
35,723,406
1,454,305
-
1,454,305
-
2,016,450
-
2,016,450
-
205,793
-
205,793
-
185,521
-
185,521
22,317,426
112,380,885
42,594,169
154,975,054
-
312,949
-
312,949
-
(36,226,102)
(12,515,367)
(48,741,469)
(14,692,130)
78,875,496
30,078,802
108,954,298
7,625,296
80,329,801
30,078,802
110,408,603
7,625,296
93,791,003
33,398,209
127,189,212
43,348,702
2,821,888
95,712
2,917,600
495,399
100,371
35,325
135,696
35,678
72,439
24
72,463
-
68,883
-
68,883
-
1,510,000
-
1,510,000
-
-
-
-
1,287,694
-
-
-
2,812,315
-
-
-
1,824,926
,654,973
4,573,581
131,061
4,704,642
8,111,185
1,585,000
-
1,585,000
-
-
-
-
8,521,685
-
-
-
3,788,599
-
-
-
7,458,122
2,221,000
1,585,000
1,585,000
21,989,406
6,158,581
131,061
6,289,642
30,100,591
77,234,801
30,078,802
107,313,603
7,625,295
10,397,621
3,188,346
13,585,967
5,622,816
$ 87,632,422
$33,267,148
120,899,570
$ 13,248,111
53,060
$ 120,952,630
See accompanying notes to basic financial statements
69
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Revenues,
Expenses and Changes in Fund Net Assets
For the Year Ended June 30, 2008
Enterprise Funds
Operating revenues:
Charges for sales and services:
Water sales
Sewer service and connection fees
Retiree Reimbursements
Employee Contributions
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
OPEB ARC- Cash subsidy
OPEB ARC- Implied subsidy
Other
Total operating expenses
Operating income (loss)
Nonoperating revenues (expenses):
Investment income
Net increase in fair value of investments
Gain (loss) on removal of capital assets
Interest expense
Other fiscal charges
Total nonoperating revenues (expenses)
Income (loss) before transfers
Transfers in (note 13)
Transfers out (note 13)
Change in net assets
$ 17,166,497 $ -
- 3,544,722
104,014 8,058
17,270,511 3,552,780
Governmental
Total Activities
Enterprise Internal Service
Funds Funds
$ 17,166,497 $
3,544,722
1,050,640
- 401,436
112,072 14,689,030
20, 823, 291 16,141,106
6,603,152
-
6,603,152
-
3,939,442
1,375,691
5,315,133
1,443,079
1,486,553
562,037
2,048,590
2,064,397
1,682,477
367,546
2,050,023
62,378
1,143,055
533,036
1,676,091
338,478
1,779,714
238,462
2,018,176
-
-
-
-
460,693
-
-
-
2,339,836
-
-
-
3,371,513
-
-
-
1,807,046
-
-
-
2,629,000
-
-
-
2,648,000
2,370,423
376,787
2,747,210
1,551,500
19,004,816
3,453,559
22,458,375
18,715,920
(1,734,305)
99,221
(1,635,084)
(2,574,814)
479,357
109,513
588,870
1,358,669
57,659
15,254
72,913
172,324
(1,098,506)
-
(1,098,506)
156,735
(137,765)
-
(137,765)
(330)
(2,226)
-
(2,226)
-
(701,481)
124,767
(576,714)
1,687,398
(2,435,786)
223,988
(2,211,798)
(887,416)
-
-
-
8,618,030
-
-
-
(125,000)
(2,435,786)
223,988
(2,211,798)
7,605,614
Net assets, beginning of year, as restated (note17) 90,068,208 33,043,160
Net assets, end of year $ 87,632,422 $ 33,267,148
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
Change in net assets of business -type activities
124,763
$ (2,087,035)
See accompanying notes to basic financial statements
70
5,642,497
$ 13,248,111
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Cash Flows
For the Year ended June 30, 2008
Cash Flows from operating activities:
Cash received from customers or user departments
Cash payments to employees for services
Cash payments to suppliers for goods and services
Cash received (payments made) for other operating activities
Net cash provided by operating activities
Cash Flows from noncepital financing activities:
Cash received from other funds
Cash paid to other funds
Net cash provided by noncapital financing activities
Cash Flows from capital related financing activities:
Acquisition of capital assets
Proceeds from sale of capital assets
Principal payments on long -term liabilities
Interest paid on long -term liabili0es
Other fiscal charges
Net cash (used) for capital related financing activities
Cash Flows from investing activities:
Interest on investments
Net cash provided by investing activities
Net increase (decrease) in cash and
cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation of cash equivalents to the statement of net assets
Cash and investments reported on statement of net assets
Cash and investments with fiscal agent reported on statement of net assets
Cash and cash equivalents
Reconciliation of operating income to net cash
used for operating activities:
Operating income (loss)
Adjustments to reconcile operating income
to net cash used for operating activities:
Depreciation
(Increase) decrease in accounts receivable
(Increase) in inventories
Increase in prepaid items
Increase (decrease) in accounts payable and accrued payroll
(Decrease) in accrued interest payable
Increase in deposits payable
Decrease in workers' compensation
Increase in general liability
Increase in compensated absences
Decrease in net OPEB obligation
Total adjustments
Net cash used for operating activities
Non -cash investing, capital and financing activities:
Net increase in fair value of investments
Loss on disposal of capital assets
Total of non-cash activities
9,905,924
(125,000)
9,780,924
(1,544,116)
Enterprise Funds
(272,087)
(1,816,203)
(1,944,639)
-
Governmental
-
365,056
Total
Activities
-
(1,445,000)
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 17,370,125
$ 3,567,702
$ 20,937,827
$ 14,432,178
(3,913,663)
(1,366,997)
(5,280,660)
(5,493,882)
(11,509,876)
(1,233,443)
(12,743,319)
(15,534,641)
(2,266,409)
(368,729)
(2,635,138)
1,502,129
(319,823)
598,533
278,710
(5,094,216)
9,905,924
(125,000)
9,780,924
(1,544,116)
(272,087)
(1,816,203)
(1,944,639)
-
-
-
365,056
(1;445,000)
-
(1,445,000)
(49,490)
(137,765)
-
(137,765)
(330)
(2,226)
(2,226)
(3,129,107)
(272,087)
(3,401,194)
(1,629,403)
537,016
124,767
661,783
1,530,993
537,016
124,767
661,783
1,530,993
(2,911,914)
451,213
(2,460,701)
4,588,298
14,124,739
2,144,082
16,268,821
28,937,398
$ 11,212,825
$
2,595,295
$ 13,808,120
$ 33,525,696
$ 9,758,520
$
2,595,295
$ 12,353,815
33,525,696
1,454,305
1,454,305
$ 11,212,825
$
2,595295
$ 13,808,120
$ 33,525,696
$ (1,734,305)
$
99,221
$ (1,635,084)
$ (2,574,814)
1,486,553
562,037
2,048,590
2,064,397
209,604
22,980
232,584
(1,456,853)
-
-
-
(143,460)
(25,000)
-
(25,000)
(144,870)
(219,632)
(85,705)
(305,337)
275,698
(31,067)
-
(31,067)
-
(5,976)
-
(5,976)
-
-
-
-
(108,000)
-
-
-
776,477
-
-
-
196,209
(3,979,000)
1,414,482
499,312
1,913,794
(2,519,402)
$ (319,823)
$
598,533
$ 278,710
$ (5,094,216)
$ 57,659
$
15,254
$ 72,913
$ 354,546
(1,098,506)
(1,098,506)
$ (1,040,847)
$
15,254
$ (1,025.593)
$ 354,546
See accompanying notes to basic financial statements
71
This page left blank intentionally.
72
Fiduciary Funds
73
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.
74
CITY OF NEWPORT BEACH
Agency Funds
Statement of Fiduciary Assets and Liabilities
June 30, 2008
Assets Totals
Cash and investments (note 4)
$ 2,543,686
Cash with fiscal agent (note 4)
4,337,777
Intergovernmental receivable
124,363
Total assets
$ 7,005,826
Liabilities
Due to bondholders $ 6,336,441
Due to ILJAOC 448,933
Due to others 220,452
Total liabilities $ 7,005,826
See accompanying notes to basic financial statements
75
This page left blank intentionally.
76
Notes to the
Financial Statements z
N
O
�i
77
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
(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 Ent!ty
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
79
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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.
ON
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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
81
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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.
82
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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.
83
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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.
Contributions Fund
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.
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.
84
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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 respective
funds based on each fund's average monthly cash and investments balance.
The City's investment in LAIF is $7,222,723 at June 30, 2008. 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, 2008, the balance of this account was
$9,621,652.
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 15th 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
payments to reduce the principal shall not be subject to any pre - payment penalty.
85
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
The entire unpaid balance of the loan is due March 26, 2012, or at the City
Manager's separation from City employment.
h. Capital Assets
Capital assets, which include land, structures, equipment, and infrastructure
assets, are reported in the applicable governmental or business -type activities
columns in the Government -wide Financial Statements. Capital assets are
recorded at cost where historical records are available and at an estimated
original cost where no historical records exist. Equipment purchased in excess of
$5,000 is capitalized if it has an expected useful life of three years or more.
Building, infrastructure, and improvements are capitalized if cost is in excess of
$30,000. The cost of normal maintenance and repairs that do not add to the
value of the asset's lives are not capitalized. The City chose to value and report
on infrastructure assets in their entirety (e.g. Prior to 1980).
Major capital outlay for capital assets and improvements are capitalized as
projects are constructed. For debt - financed capital assets, interest incurred
during the construction phase is reflected in the capitalization value of the asset
constructed, net of interest earned on the invested proceeds over the same
period. Capital assets acquired through lease obligations are valued at the
present value of future lease payments at the date acquired. Contributed capital
assets are valued at their estimated fair market value at the date of contribution.
Capital assets used in operations are depreciated over their estimated useful
lives using the straight -line method in the government -wide financial statements
and in the fund financial statements of the proprietary funds. Depreciation is
charged as an expense against operations and accumulated depreciation is
reported on the respective balance sheet. The range of lives used for
depreciation purposes for each capital asset class as follows:
Structures
30 -75 years
Equipment
3 -15 years
Infrastructure
20 -75 years
L Claims and Judgments
The City accounts for material claims and judgments and associated legal and
administrative costs when it is probable that the liability claim has been incurred
and the amount of the loss can be reasonably estimated. The City records the
estimated loss liabilities in the Internal Service Fund. Included therein are claims
incurred but not reported, which consists of (a) known loss events expected to be
presented as claims later, (b) unknown loss events that are expected to become
claims, and (c) expected future development on claims already reported. This is
based upon historical actual results that have established a reliable pattern
1•
k.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
supplemented by specific information about current matters. Small dollar claims
and judgments are recorded as expenditures when paid.
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
Levy date
Due dates
Collection dates
Compensated Absences
March 1
July 1
November 1 — 1"installment
March 1 — 2nd installment
December 10 —1" installment
April 10 — 2nd installment
It is the City's policy to permit employees to accumulate earned but unused
vacation and limited amounts of earned but unused sick leave benefits, which will
be paid to employees upon separation from City service. Beginning in fiscal year
1990, the City adopted a general leave plan to replace the traditional vacation
and sick leave plan. The City uses a general leave plan which permits a
maximum of three years' accrual for every employee, above which the excess is
paid out as current compensation. All employees hired prior to January 1, 1990,
were given the option of remaining in the traditional vacation and sick leave plan
or enrolling in the general leave plan. All employees hired on or after January 1,
1990, are automatically enrolled in the general leave plan. Compensated
absences are accrued in the Compensated Absence Internal Service Fund when
employee services have been rendered and when it becomes probable that the
City will compensate the employees for benefits through paid time off or cash
payments at termination or retirement. Benefits that have been earned but are
not yet available for use because employees have not met certain conditions are
accrued to the extent it is probable that the employees will meet the conditions
for compensation in the future.
Unearned Revenue
Unearned revenues are those where asset recognition has been met, but the
revenue recognition criteria have not been met.
87
(2)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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 $116,997,062 differs
from "net assets" of governmental activities $2,179,263,434 reported in the
statement of net assets. This difference primarily results from the long -term
economic focus of the statement of net assets versus the current financial
resources focus of the governmental fund balance sheets.
Capital Related Items
When capital assets (property, plant, and equipment) that are to be used in
governmental activities are purchased or constructed, the cost of those assets
are reported as expenditures in governmental funds. However, the statement of
net assets includes those capital assets among the assets of the City as a whole.
Cost of capital assets
$2,187,587,447
Accumulated depreciation
(124,377,808)
Total capital assets, net"
$2.063,209.639
'Amount excludes net capital assets of $7,625,296 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, 2008 were:
Certificates of participation $ 4,665,000
Note payable 1,298,254
Pre - annexation agreement 10,800,000
CDBG Loan 2,056,000
Purchase agreement 1,500,000
Total $20.319.254
[ii
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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 156 300
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 $2.595.599
Unavailable Revenue
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.
Unavailable revenue $4.195.492
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 $13.248.111
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.
M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Explanation of Differences betweeen Government Funds
Balance Sheet and the Statement of Net Assets
Assets
Cash and investments
Receivables:
Accounts
Notes
Interest
Intergovernmental receivables
Cash with fiscal agent
Interfund balances
Investment in joint venture
Prepaid items
Inventory
Capital assets
Accumulated depreciation
Total assets
Liabilities and Fund Balances / Net Assets
Liabilities:
Accounts payable
Accrued payroll
Accrued interest payable
Deposits payable
Claims payable
Workers' compensation payable
Compensated absences payable
Unearned revenue
Unavailable revenue
Due to other funds
Long -term liabilities
Total liabilities
Fund balances / net assets
Total liabilities and
and fund balances / net assets
Total Capital
Governmental Related
Funds Items
$ 111,460,163 $
10,258,319
50,000
1,827,739
9,621,652
3,030,912
3,297,073
265,564
229,546
Long -term
Accumulated Debt
Depreciation Transactions
2,187,587,447 - -
- - (124,377,808) -
$ 140,040,968 $ 2,187,587,447 $ (124,377,808) $ -
$ 6,803,144 $ - $ - $
3,720,317 - -
3,071,059
3,244,715
- - -
4,195,492
- - -
2,009,179
- - -
-
- - 20,319,254
23,043,906
- 20,319,254
116,997,062
2,187,587,447 (124,377,808) (20,319,254)
$ 140,040,968 $ 2,187,587,447 $ (124,377,808) $ -
nil
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Investment
Internal
Reclassifications
-
Interest in Joint
Unavailable Service
and
Statement of
Payable Venture
Revenue Funds
Eliminations
Net Assets
$ - $ -
$ - $ 33,525,696
$ -
$ 144,985,859
- -
- 1,680,980
-
11,939,299
- -
- -
-
50,000
- -
- -
-
1,827,739
- -
- -
-
9,621,652
- -
- -
-
3,030,912
- -
- -
(3,350,133)
(53,060)
- 2,595,599
-
-
2,595,599
- -
- 167,132
-
432,696
- -
- 349,598
-
579,144
- -
- 22,317,426
-
2,209,904,873
- -
- (14,692,130)
-
(139,069,938)
$ - $ 2,595,599
$ - $ 43,348,702
$ (3,350,133)
$ 2,245,844,775
$ -
$ - $ -
$ 495,399 $
-
$ 7,298,543
-
- -
35,678
-
3,755,995
156,300
- -
-
-
156,300
-
- -
-
-
3,071,059
-
- -
1,824,926
-
1,824,926
-
- -
2,812,315
-
2,812,315
-
- -
1,654,973
-
1,654,973
-
-
-
3,244,715
-
- (4,195,492)
-
-
-
-
- -
1,287,894
(3,297,073)
-
-
- -
21,989,406
-
42,308,660
156,300
- (4,195,492)
30,100,591
(3,297,073)
66,127,486
(156,300)
2,595,599 4,195,492
13,248,111
(53,060)
2,179,717,289
$ -
$ 2,595,599 $ -
$ 43,348,702 $
(3,350,133)
$ 2,245,844,775
91
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
b. Explanation of Differences between Enterprise Funds and Government -
wide Statement of Net Assets
Total net assets of the City's Enterprise Funds of $120,899,570 differs from net
assets of the business -type activities of $120,952,630 reported in the
government -wide statement of net assets. The difference, $53,060, results from
the consolidation of internal service fund activities related to the enterprise funds.
Explanation of Differences between Enterprise Funds
and Government -wide Statement of Net Assets
Total Internal Government wide
Enterprise Service Statement of
Assets Funds Funds Net Assets
Cash and investments
Receivables:
Accounts
Cash with fiscal agent
Interfund balances
Prepaid items
Capital assets, net
Total assets
Liabilities and Fund Balances / Net Assets
Liabilities:
Accounts payable
Accrued payroll
Accrued interest payable
Liabilities from restricted assets
Noncurrent liabilities:
Due within one year
Due in more than one year
Total liabilities
Net Assets
Invested in capital assets, net of related debt
Unrestricted
$ 12,353,815 $ $ 12,353,815
4,401, 794 4,401, 794
1,454,305 - 1,454,305
- 53,060 53,060
25,000 25,000
108,954,298 - 108,954,298
$ 127,189,212 $ 53,060 $ 127,242,272
$ 2,917,600 $ $
2,917,600
135,696
135,696
68,883
68,883
72,463
72,463
1,510,000
1,510,000
1,585,000
1,585,000
6,289,642
6,289,642
$ 107,313,603 $
107,313,603
13,585,967 53,060
13,639,027
$ 120,899,570 $ 53,060 $
120,952,630
92
C.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Explanation of Differences between Governmental Fund Operating
Statements and the Statement of Activities
The "net change in fund balances" for governmental funds $19,595,769 differs
from the "change in net assets' for governmental activities $47,430,381 reported
in the statement of activities. The differences arise primarily from the long -term
economic focus of the statement of activities versus the current financial
resources focus of the governmental funds. The effect of the difference is
illustrated below.
Capital Related Items
When capital assets that are to be used in governmental activities are purchased
or constructed, the resources expended for those assets are reported as
expenditures in governmental funds. However, in the statement of activities, the
cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense. In governmental funds, significant maintenance projects
are reclassified as functional expenses in the statement of net assets. Also,
contributed capital is not recorded in governmental funds; therefore it is added for
the statement of net assets.
Capital outlay
Net change to Internal Service Fund capital
assets
Capital Contribution
Net change in capital related items
Depreciation expense
Deletions to accumulated depreciation
Net change in accumulated depreciation
93
$11,557,744
(3,832,221)
19.693.170
S27 418.693
($7,609,816)
1.060.590
f $6.549.2261
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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 $ 315,000
Note payable 170,948
Pre - annexation agreement 1,200,000
CDBG loan 78,000
Purchase agreement 1,500,000
Total principal payments made $3 263 948
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 45 060
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 99 039
Unavailable Revenue
Some of the revenue will be collected after year -end, but is not available soon
enough to pay for current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds.
Net change in unavailable revenue $3.469.898
94
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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 57.178 614
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.
95
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Explanation of Differences between Governmental Fund
Operating Statements and the Statement of Activities
Total Capital
Contributed capital
Gain on sale of capital assets
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenses
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources
(uses)
Net change in fund balances I
net assets
19,693,170
4,205,095
193, 740,128 19, 693,170
Long -term
Debt
Transactions
14,508,103
Governmental Related Accumulated
326,089 -
Funds Items Depreciation
Revenues:
(843,107) -
Taxes and assessments
$ 118,758,201 $ - $
Intergovernmental
21,005,429 -
Licenses and permits
6,474,789 -
Chargesforservices
15,073,178 -
Fines and forfeitures
4,662,442 -
Investment income
5,463,066
Net Increase in fair value of investments
720,488 -
Property income
15,217,803 -
Shareofjointventurenetgain
- -
Donations
2,159,637 -
Contributed capital
Gain on sale of capital assets
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenses
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources
(uses)
Net change in fund balances I
net assets
19,693,170
4,205,095
193, 740,128 19, 693,170
Long -term
Debt
Transactions
14,508,103
-
326,089 -
73,486,413
1,944,638
(843,107) -
30,108,941
1,887,583
5,941,770 -
8,703,841
-
107,342 -
14,478,146
-
1,017,132 -
20,524,638
(11,557,744)
- -
3,263,948
-
- (3,263,948)
577,299
165,651,329
(7,725,523)
6,549,226 (3,263,948)
27,583,922 - - -
(36,076,952)
(8,493,030)
19,595,769 27,418,693 (6,549,226) 3,263,948
Fund balances / net assets beginning of year
as restated 97,401,293 2,160,168,754 (117,828,582) (23,583,202)
Fund balances / net assets end of year $ 116,997,062 $ 2,187,587,447 $ (124,377,808) $ (20,319,254)
96
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
- - - 8,618,030
Investment
(125,000)
Internal
Reclassifications
Accrued
in Joint
Unavailable
Service
and
Statement of
Interest
Venture
Revenue
Fund
Eliminations
Activities
$ -
$ -
S -
S -
$ -
$ 118,758,201
-
-
(3,469,898)
-
-
17,535,531
-
-
-
-
-
6,474,789
-
-
-
-
(124,763)
14,948,415
-
-
-
-
-
4,662,442
-
-
-
-
-
5,463,066
-
-
-
1,358,669
-
2,079,157
-
-
-
172,324
-
15,390,127
-
99,039
-
-
-
99,039
-
-
-
-
-
2,159,637
-
-
-
-
-
19,693,170
-
-
-
156,735
-
156,735
4,205,095
99,039
(3,469,898)
1,687,728
(124,763)
211,625,404
-
-
-
618,134
104,331
15,556,657
-
-
-
900,429
332,709
75,821,082
-
-
-
468,459
4,224,648
42,631,401
-
-
-
280,851
960,837
10,052,871
-
-
-
306,941
3,344,369
19,146,588
-
-
-
-
(8,966,894)
-
(45,060)
330
532,569
(45,060)
2,575,144
163,741,168
- - - 8,618,030
(36,201,952) -
(125,000)
36,201,952
8,493,030
45,060 99,039 (3,469,898) 7,605,614 (124,763) 47,884,236
(201,360) 2,496,560 7,665,390 5,642,497 71,703 2,131,833,053
$ (156,300) $ 2,595,599 $ 4,195,492 $ 13,248,111 $ (53,060) $ 2,179,717,289
97
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Explanation of Differences between Enterprise Funds Operating Statement
and the Statement of Activities
The change in net assets for the City's enterprise funds ($2,211,798) differs from
the change in net assets of the business -type activities ($2,087,035) reported in
the government -wide statement of activities. The difference $53,060 results from
the consolidation of internal service fund activities related to the enterprise funds.
Explanation of Differences between Enterprise Funds
Operating Statement and the Statement of Activities
Nonoperating revenues (expenses)
Investment income
Total
Internal
Business -type activities
72,913 -
Enterprise
Service
Statement of
(1,098,506)
Funds
Fund
Activities
Operating revenues:
(2,226) -
(2,226)
Total nonoperating revenues (expenses)
Charges for sales and services:
(576,714)
Water sales
$ 17,166,497
$ -
$ 17,166,497
Intergovernmental
-
-
-
Sewer service and connection fees
3,544,722
-
3,544,722
Other
112,072
-
112,072
Total operating revenues
20,823,291
-
20,823,291
Operating expenses:
Purchase of Water
6,603,152
-
6,603,152
Salaries and wages
5,315,133
5,315,133
Depreciation
2,048,590
-
2,048,590
Professional Services
2,050,023
-
2,050,023
Maintenance and supplies
1,676,091
(124,763)
1,551,328
System maintenance
2,018,176
-
2,018,176
Other
2,747,210
-
2,747,210
Total operating expenses
22,458,375
(124,763)
22,333,612
Operating income
(1,635,084)
124,763
(1,510,321)
Nonoperating revenues (expenses)
Investment income
588,870 -
588,870
Net decrease in fair value of investments
72,913 -
72,913
Loss on removal of capital assets
(1,098,506) -
(1,098,506)
Interest expense
(137,765) -
(137,765)
Other
(2,226) -
(2,226)
Total nonoperating revenues (expenses)
(576,714) -
(576,714)
Change in net assets
Net assets, beginning of year
(2,211,798) 124,763
(2,087,035)
123,111,368 (71,703) 123,039,665
Net assets, end of year $ 120,899,570 $ 53,060 $ 120,952,630
no
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
(3) Budgetary Control and Compliance
The City adheres to the following general procedures in establishing the budgetary data
reflected in the financial statements:
• During April, the City Manager submits to the City Council a proposed operating
budget for the fiscal year commencing the following July 1. The operating budget
includes proposed expenditures and the means of financing them. Public
hearings are conducted at City Council meetings to obtain taxpayer comments.
Prior to July 1, the budget is legally adopted through passage of an appropriation
resolution.
• Budgets are adopted on an annual basis consistent with generally accepted
accounting principles for General and Special Revenue Funds.
• The City of Newport Beach does not present budget information on Capital
Projects Funds since the City approved project - length budgets. These project -
length budgets authorize total expenditures over the duration of a construction
project rather than year -by -year budgeting.
• The City of Newport Beach does not present budget information on Debt Service
and Permanent Funds since the City is not required to and does not adopt an
annual budget.
• The budget is formally integrated into the accounting system and employed as a
management control device during the year.
• The legal level of budgetary control is at the fund level. The City Manager is
authorized to transfer budgeted amounts between departments within any fund;
however, any revisions which alter the total appropriations of any fund must be
approved by City Council.
• At fiscal year -end, budget appropriations lapse. Budget appropriations for
incomplete capital projects are re- budgeted in the following fiscal year by Council
action and are included in the revisions noted above. Projects that are not started
during the budget year are reevaluated in the following year.
• Encumbrances represent commitments related to unperformed contracts for
goods and services. The City utilizes an encumbrance system as a management
control technique to assist in controlling expenditures. Under this system,
encumbrance accounting for the expenditure of funds is recorded in order to
indicate outstanding commitments and is employed in the governmental fund
types. Encumbrances outstanding at year -end are reported as reservations of
fund balances since they do not constitute expenditures or liabilities.
Encumbrances and their related budgets are honored in the subsequent year to
fulfill these commitments and are presented in the original adopted budget.
99
(4)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Expenditures exceeded appropriations in the following non -major governmental funds.
Appropriations Expenditures
Justice Assistance Grant $ - $ 7,422
The following funds reported deficit fund balances:
Special Revenue Funds
OTS DUI Grant $ 117,233
Justice Assistance Grant $ 7,422
Arterial Highway Rehabilitation $ 350,599
Community Development Block Grant $ 75,529
Capital Projects
Marine Science Center
$
724,825
City Hall Improvements
$
56,397
Misc SAH Projects
$
282,006
Marina Park
$
139,834
Internal Service Funds
Compensated Absences
Retiree Insurance
$ 6,838,051
$ 1,956,131
Variance
$ (7,422)
The City's intentions are to eliminate deficit fund balances through future grant funding,
other future revenue sources, or interfund transfers.
Cash and Investments
Cash and investments as of June 30, 2008 are classified in the accompanying financial
statements as follows:
Statement of net assets
Cash and investments
$ 157,339,674
Cash with fiscal agent
4,485,217
Fiduciary funds:
Cash and investments
2,543,686
Cash with fiscal agent
4,337,777
Total cash and investments
$ 168,706,354
100
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Cash and investments as of June 30, 2008 consist of the following:
Cash on hand $ 28,332
Deposits with financial institutions 1,167,806
Investments 167,510,216
Total cash and investments $ 168,706,354
Investments Authorized by the California Government Code and the Entity's Investment
Policy
The table below identifies the investment types that are authorized for the City by the
California Government Code (or the City's investment policy, where more restrictive).
The table also identifies certain provisions of the California Government Code (or the
City's investment policy, where more restrictive) that address interest rate risk and
concentration of credit risk. This table does not address investments of debt proceeds
held by bond trustee that are governed by the provisions of debt agreements of the City,
rather than the general provisions of the California Government Code or the City's
investment policy.
101
Maximum
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maturity
of Portfolio*
in One Issuer
Local Agency Bonds
5 years
15%
None
U.S. Treasury Obligations
5 years
None
None
U.S. Agency Securities
5 years
None
None
Banker's Acceptances
180 days
30%
10%
Commercial Paper
270 days
25%
10%
Negotiable Certificates of Deposit
1 year
30%
10%
Repurchase Agreements
30 days
None
None
Reverse Repurchase Agreements
30 days
10% of base value
None
Medium -Term Notes
4 years
30%
None
Mutual Funds
N/A
20%
10%
Money Market Mutual Funds
N/A
20%
10%
Mortgage Pass- Through Securities
5 years
20%
None
County Pooled Investment Funds
N/A
5%
None
Local Agency Investment Fund (LAIF)
N/A
None
None
JPA Pools (other investment pools)
N/A
None
None
Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
101
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee (i.e. fiscal agent) are governed by
provisions of the debt agreements, rather than the general provisions of the California
Government Code or the City's investment policy. The table below identifies the
investment types that are authorized for investments held by bond trustee. The table
also identifies certain provisions of these debt agreements that address interest rate risk,
credit risk, and concentration of credit risk.
102
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maximum Maturity
Allowed
in One Issuer
U.S. Treasury Obligations
None
None
None
U.S. Agency Securities
None
None
None
Banker's Acceptances
30 days - 360 days
None
None
Commercial Paper
180 days - 270 days
None
10%
Money Market Mutual Funds
N/A
None
None
Investment Agreements
None
None
None
Certificates of Deposit
None
None
None
Demand Deposits
30 days - 360 days
None
None
Time Deposits
30 days - 360 days
None
None
Local Agency Bonds
None
None
None
Forward Delivery Agreement
None
None
None
Forward Purchase and Sale Agreement
None
None
None
Corporate Notes
None
None
None
Repurchase Agreements
None
None
None
Local Agency Investment Fund
N/A
None
None
Municipal Obligations
None
None
None
County Pooled Investment Funds
N/A
None
None
102
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an investment. Generally, the longer the maturity of an investment, the
greater the sensitivity of its fair value to changes in market interest rates. One of the
ways that the City manages its exposure to interest rate risk is by purchasing a
combination of shorter term and longer term investments and by timing cash flows from
maturities so that a portion of the portfolio is maturing or coming close to maturity evenly
over time as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City's investments (including
investments held by bond trustee) to market interest rate fluctuations is provided by the
following table that shows the distribution of the City's investments by maturity:
Investment Type
Money Market Funds
U.S. Treasury Notes
U.S. Agencies
Corporate Notes
Municipal Bond
Commercial Paper
LAIF
Repurchase Agreements
Asset - backed Securites
Mortgage - backed Securities
Cash with Fiscal Agent:
Money Market Funds
Investment Agreements
Total
$ 9,521,672 $
8,436,797 $
1,084,875 $ - $
- $ 9,521,672
13,212,051
5,680,586
4,715,038 2,816,427
- 13,212,051
85,271,671
11,922,828
57,183,726 16,165,117
85,271,671
28,252,931
18,360,738
9,892,193 -
- 28,252,931
1,810,164
-
1,810,184 -
- 1,810,184
3,225,204
3,225,204
- -
- 3,225,204
7,222,723
7,222,723
- -
- 7,222,723
6,761,000
6,761,000
- -
- 6,761,000
2,534,380
2,534,380
- -
- 2,534,380
875,406
-
- 875,406
- 875,406
7,642,418 7,642,418 - 7,642,418
1,180,576 1,180,576 1,180,576
$ 167,510,216 $ 71,786,674 $ 74,686,016 $ 19,856,950 $ 1,180,576 $ 167,510,216
Investment agreements are recorded at cost (not fair value) because these agreements represent
nonparticipating contracts that are nonnegotiable and whose redemption terms do not consider market rates.
Investments with Fair Values Hiahly Sensitive to Interest Rate Fluctuations
As of June 30, 2008 the City did not have any investments (including investments held
by fiscal agent) whose fair values were highly sensitive to interest rate fluctuations.
103
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation
to the holder of the investment. This is measured by the assignment of a rating by a
nationally recognized statistical rating organization. Presented below is the minimum
rating required by (where applicable) the California Government Code, the City's
investment policy, or debt agreements, and the actual rating as of year end for each
investment type.
Investment Tyne
Money Market Funds
U.S. Treasury Notes
U.S. Agencies
Corporate Notes
Municipal Bond
Commercial Paper
Loral Agency l uvesiment Fund
Repurchase Agreements
Assaf- backed Securities
Modgage- backed Securities
Cash Am Fiscal Agent:
Money Market Funds
Investment Agreements
Minimum Exempt
Legal Frcm Not
Fair Value RaBno Oiwlosure AAA AA. AA AA- A+ A A -1+ A_t Rated
9,521,672 A $ 1,424,046 $ 106,192 $ - $
13,212,051 NIA 5,416,626 1,152,159 -
85,271,671 NIA - 65,743,197 -
28,252,931 A - 7,636,452 3,739,656
1,818184 AA - - -
3,225,204 A -1 - - -
7,222,723 NIA - - -
6,761,000 NIA - - -
2,534,380 AAA - 2,534,380 -
875,406 AAA - 875,406 -
$ $ - $ - $
- 1.048.440 - -
4,004,288 8,211115 1.058,571 3.600,849
1,011,560 - 798,624 -
550,000 - - -
8 - $ 7991,434
6,643,266
421.878 - 18,058,156
1,930,000 745,204 -
- 7,222,723
- 6,761,000
7,642,418 A - 7,642,418 - - - - - - - -
1,180576 NIA - - - 1,180,576 - - - - - -
$ 167,510,216 $ 6.840,672 $ 85,690,204 $ 3.739,656 $ 61 $ 9,261,555 $ 1,857,195 $ 3,600,049 $ 2,351,878 $ 745,204 $ 46,676,579
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be
invested in any one issuer beyond that stipulated by the California Government Code.
Investments in any one issuer that represent 5% or more of total City's investments are
as follows:
Issuer
Investment Type
Reported Amount
FFCB
Federal agency securities
$ 9,970,727
FHLB
Federal agency securities
$18,996,837
FHLMC
Federal agency securities
$27,375,815
FNMA
Federal agency securities
$28,402,801
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository
financial institution, a government will not be able to recover its deposits or will not be
able to recover collateral securities that are in the possession of an outside party. The
custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty (e.g., broker - dealer) to a transaction, a government will not be able to
recover the value of its investment or collateral securities that are in the possession of
another party. The California Government Code and the City's investment policy do not
contain legal or policy requirements that would limit the exposure to custodial credit risk
for deposits or investments, other than the following provision for deposits: The
104
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
California Government Code requires that a financial institution secure deposits made by
state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental
unit). The market value of the pledged securities in the collateral pool must equal at least
110% of the total amount deposited by the public agencies. California law also allows
financial institutions to secure City deposits by pledging first trust deed mortgage notes
having a value of 150% of the secured public deposits. As of June 30, 2008, none of the
City's deposits with financial institutions in excess of federal depository amounts were
held in uncol lateral ized accounts. As of June 30, 2008, City investments in the following
investment types were held by the same broker - dealer (counterparty) that was used by
the City to buy the securities:
Investment TvDe Reoorted Amount
Money Market Funds
$ 7,939,199
U.S. Treasury Notes
888,199
U.S. Agencies
34,831,776
Corporate Notes
5,834,462
Mortgage backed Securities
875,406
Repurchase Agreements
6,761,000
Commercial Paper
745,204
Asset - Backed Securities
2,534,380
For investments identified herein as restricted cash with fiscal agent, the fiscal agent
selects the investment under the terms of the applicable trust agreement, acquires the
investment, and holds the investment on behalf of the reporting government.
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is
regulated by the California Government Code under the oversight of the Treasurer of the
State of California. The fair value of the City's investment in this pool is reported in the
accompanying financial statements at amounts based upon the City's pro -rata share of
the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized
cost of that portfolio). The balance available for withdrawal is based on the accounting
records maintained by LAIF, which are recorded on an amortized cost basis. LAIF is not
rated.
105
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
(5) Capital Assets
Capital asset activity for the year ended June 30, 2008 was as follows:
Governmental Activities:
M
Beginning
Balance
Balance
Additions
Deletions
June 30, 2008
Non - depreciable:
Land and rights of way
$ 1,785,698,769
$ 21,682,500
$ -
$ 1,807,381,269
Work in progress
25,299,436
2,621,199
(22,613,302)
5,307,333
Depreciable:
Structures
47,443,410
19,615,831
67,059,241
Equipment
25,651,361
2,560,919
(1,351,964)
26,860,316
Infrastructure
297,775,937
7,408,360
(1,887,583)
303,296,714
2,181,868,913
53,888,809
(25,852,849)
2,209,904,873
Less accumulated
depreciation for:
Structures
(11,596,739)
(821,904)
-
(12,418,643)
Equipment
(16,578,623)
(2,379,907)
1,062,508
(17,896,022)
Infrastructure
(103,400,005)
(6,472,402)
1,117,134
(108,755,273)
(131,575,367)
(9,674,213)
2,179,642
(139,069,938)
Net Capital Assets
$ 2,050,293,546
$ 44,214,596
$ (23,673,207)
$ 2,070,834,935
M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Business -type Activities:
Non - depreciable:
Land
Work in progress
Depreciable:
Structures
Equipment
Infrastructure
Less accumulated depreciation for:
Structures
Equipment
Infrastructure
Net
Beginning
Governmental
Business -type
Balance
Balance
Additions
Deletions
June 30, 2008
$ -
Public safety
1,164,746
$ 2,016,450
$ -
$ -
$ 2,016,450
2,162,006
278,757
(2,127,814)
312,949
205,793
-
Water
205,793
148,191
37,330
-
185,521
152,732,484
3,627,930
(1,385,360)
154,975,054
157,264,924
3,944,017
(3,513,174)
157,695,767
(107,030) (5,145) (112,175)
(141,813) (15,632) - (157,445)
(46,730,890) (2,027,813) 286,854 (48,471,849)
(46,979,733) (2,048,590) 286,854 (48,741,469)
$ 110,285,191 1,895,427 _L(3 $ 108,954,298
Depreciation expense was charged in the following functions in the Statement of Activities:
107
Governmental
Business -type
Activities
Activities
General government
$ 326,089
$ -
Public safety
1,164,746
-
Public works
7,058,904
-
Community development
107,342
-
Community service
1,017,132
-
Water
-
1,486, 553
Wastewater
-
562,037
$ 9,674,213
$ 2,048,590
107
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
(6) Lonq -Term Debt
Changes in Long-Term Liabilities
Long -term liability for the year ended June 30, 2008, was as follows:
Amounts
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Governmental activities:
Certificates of participation
payable $
4,980,000 $
- $
(315,000) $
4,665,000 $
330,000
Note payable
1,469,202
-
(170,948)
1,298,254
178,641
Pre - annexation agreement
12,000,000
-
(1,200,000)
10,800,000
1,200,000
CDBG Loan
2,134,000
-
(78,000)
2,056,000
84,000
Purchase Agreement
Payable
3,000,000
-
(1,500,000)
1,500,000
1,500,000
Capital leases payable
49,490
-
(49,490)
-
-
Workers' compensations
payable
11,442,000
2,329,754
(2,437,754)
11,334,000
2,812,315
Claims and judgements
payable
4,837,048
3,007,023
(2,230,546)
5,613,525
1,824,926
Compensated absences
8,916,886
2,003,255
(1,807,046)
9,113,095
1,699,973
Net OPEB obligation
6,200,000
5,277,000
(9,256,000)
2,221,000
-
Total governmental
activities
55,028,626
12,617,032
(19,044,784)
48,600,874
9,629,855
Business -type activities:
Water Revenue Bonds
payable
Total
4,540,000 - (1,445,000) 3,095,000 1,510,000
$ 59,568,626 $ 12,617,032 $ (20,489,784) $ 51,695,874 $ 11,139,855
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,
compensated absences, and net OPEB obligation are typically liquidated from the
Internal Service funds through resources collected from individual funds.
108
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Governmental Activities
• Certificates of Participation
In Fiscal Year 1998 -99, the Newport Beach Public Facilities Corporation issued
$7,330,000 of Refunding Certificates of Participation to advance refund the 1992
Certificates of Participation used to finance the construction of the Central Library.
The refunding was undertaken to reduce total debt service payments over the next
twenty years by $690,228 and resulted in an economic gain of $495,745. The
Refunded Certificates were executed and delivered pursuant to the Prior Trust
Agreement. The City has previously entered into a project lease with the Newport
Beach Public Facilities Corporation to lease certain property, facilities,
improvements, and equipment.
The lease payments made by the City are held by a trustee who makes semi - annual
payments on the Certificates of Participation. The lease payments began May 15,
1994, and are in amounts sufficient to cover the payment of principal and interest of
the Certificates. The 1998 Certificates consist of $2,995,000 of Serial Certificates
with interest rates from 3.6% to 4.55% and $4,335,000 of Term Certificates with
interest rates from 5.05% to 5.15 %. Interest on the Certificates is payable
semiannually on June 1 and December 1 of each year. Future principal payments
range from $300,000 to $535,000 through June 1, 2019. Principal payments are
payable annually on June 1 of each year. At June 30, 2008, the City has a required
cash reserve balance for debt service of $565,589, which is recorded as a restricted
asset and reservation of fund balance in the Debt Service Fund. The outstanding
balance at June 30, 2008, amounted to $4,665,000.
The annual amortization requirements of the Certificates of Participation are as
follows:
Year Ending
June 30
Principal
Interest
Total
2009
330,000
235,463
565,463
2010
345,000
220,448
565,448
2011
360,000
203,025
563,025
2012
380,000
184,845
564,845
2013
400,000
165,655
565,655
2014 -2018
2,315,000
504,337
2,819,337
2019
535,000
27,553
562,553
$ 4,665,000
$ 1,541,326
$ 6,206,326
• 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
109
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
beginning August 1, 1987. The outstanding balance at June 30, 2008, amounted to
$1,298,254.
The annual amortization requirements for the Note Payable are as follows:
Year Ending
June 30
2009
2010
2011
2012
2013
2014 -2016
Principal
178,641
186,679
195,080
203,859
213,032
320,963
$ 1,298,254
Interest
58,421
50,383
41,982
33,203
24,030
21,131
$ 229,150
• Newport Coast Pre - Annexation Agreement Payable
Total
237,062
237,062
237,062
237,062
237,062
342,094
$ 1,527,404
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, 2008, amounted to $10,800,000.
• 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 $84,000 to
$208,000 through June 30, 2023. The outstanding balance at June 30, 2008,
amounted to $2,056,000.
The annual amortization requirements for the CDBG Loan are as follows:
Year Ending
June 30
Principal
Interest
Total
2009
84,000
112,253
196,253
2010
89,000
108,535
197,535
2011
95,000
104,345
199,345
2012
102,000
99,653
201,653
2013
108,000
94,485
202,485
2014 -2017
512,000
313,982
825,982
2018 -2021
663,000
180,203
843,203
2022 -2023
403,000
25,013
428,013
$ 2,056,000
$ 1,038,469
$ 3,094,469
110
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
• Purchase Agreement Payable
In Fiscal Year 2007, the City entered into an agreement with the California
Department of Transportation (CalTrans) for the purchase of a 15.05 -acre parcel of
land at the corner of Superior Avenue and Coast Highway. The purchase price was
$5 million, to be paid in three installments with a 4.75% interest. The outstanding
balance at June 30, 2008, amounted to $1,500,000. The principal balance together
with interest of $71,250 is due on December 31,2009.
• 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, 2008, 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, 2008, for general liability
amounted to $5,613,525 and for workers' compensation was $11,334,000.
• Compensated Absences
The City's policies relating to compensated absences are described in Note (1). This
liability, to be paid in future years from available and future resources, at June 30,
2008, is $9,113,095.
Net OPEB Obligation (NOO)
The net OPEB obligation is the difference between the ARC and the actual
contributions made. The City has elected to fund the cash subsidy portion
$2,629 million of the ARC. As for the implied subsidy $ 2.221 million, the City has
elected to fund it on a pay -as- you -go basis, thus resulting in net OPEB obligation of
$2.221 million.
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, 2008, the City has a required cash reserve
ill
(7)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
balance of $1,454,305 which is recorded as cash with fiscal agent. Ten annual
principal payments are payable on August 1, and semiannual interest payments are
payable on February 1 and August 1. At June 30, 2008, the outstanding principal
balance was $3,095,000, and accrued interest payable was $68,883.
The annual amortization requirements for the Water Revenue Bonds are as follows:
Year Ending
June 30 Principal Interest Total
2009 1,510,000 71,325 1,581,325
2010 1,585,000 - 1,585,000
$ 3,095,000 $ 71,325 $ 3,166,325
Limited Obligation Bonds
Special Assessment Districts Bonds
The City has issued certain Assessment District and Community Facilities District
Bonds. Although the City collects and disburses funds for these districts, the City has no
obligation or duty to pay any delinquency out of any available funds of the City. Neither
the faith and credit nor the taxing power of the City is pledged to the payment of the
bonds, and therefore the bonded indebtedness is not shown in the financial statements
of the City. The City holds reserve funds on behalf of bondholders; the assets are
recorded in the Special Assessment Agency Fund. Bonds outstanding at June 30, 2008,
for each district under the Bond Acts of 1911 and 1915, and other special assessments,
are as follows:
Bonds Outstanding
Assessment District
Original Issue
June 30, 2008
No.
64
Channel Road
180,794
36,000
No.
68
Newport Shores
3,813,562
3,080,000
No.
69
West Newport
4,978,498
3,935,000
No.
70
Bay Shores
1,380,996
1,030,000
No.
71
Balboa Boulevard
796,942
315,000
No.
74
Island Avenue
222,629
145,000
No.
75
Balboa Business
821,204
660,000
No.
78
Little Balboa Island
1,348,196
830,000
No.
79
Beacon Bay
1,215,134
780,000
No.
82
Corona del Mar
274,967
185,000
No.
86
Balboa Peninsula
300,174
185,000
No.
92
Coast Highway
1,425,000
1,425,000
No.
95 -1
CIOSA Refunding Series A
15,495,000
10,040,000
112
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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, 2008, are as follows:
Series 2007D $ 86,475,000
Series 2007E $ 86,475,000
Series 2008A $ 66,800,000
Series 2008B $ 65,185,000
Series 2008C $ 70,095,000
Series 2008D $ 80,000,000
Series 2008E $ 80,000,000
Series 2008F $ 90,000,000
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 2007 Series bonds commence on December 1, 2012, and
are required to be made through December 1, 2026. For the 2008 Series bonds, varying
redemption payments commence on December 1, 2012, and are required to be made
through December 1, 2028.
(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 $26 million per occurrence with a self- insured
retention (SIR) of $500,000 per occurrence.
For workers' compensation and employer's liability insurance, the City has excess
insurance coverage of $1,000,000 per occurrence with a $1,000,000 SIR. This coverage
provides for work - related accidents and diseases.
113
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
The Insurance Reserve fund was established to account for costs associated with
general liability and workers' compensation. 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 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
$16,947,525 which represents the discounted present value at June 30, 2008; the
claims were discounted using an interest rate of five percent.
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 $61,249,768 at June 30, 2008.
114
General Liability
Workers' Compensation
June 30, 2007
June 30, 2008
June 30, 2007
June 30, 2008
Unpaid claims, beginning of
fiscal year
$ 4,812,002
$ 4,837,048
$ 11,160,000
$ 11,442,000
Incurred claims (including
IBNR)
2,284,546
3,371,513
3,005,597
2,339,836
Claim payments
(2,259,500)
(2,595,036)
(2,723,597)
(2,447,836)
Unpaid claims, end of fiscal
year
$ 4,837,048
$ 5,613,525
$ 11,442,000
$ 11,334,000
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 $61,249,768 at June 30, 2008.
114
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
(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. Copies
of PERS' annual financial report may be obtained from their executive office:
400 P Street, Sacramento, CA 95814.
Funding Policy
Participants are required to contribute 8% (9% for safety employees) of their annual
covered salary. The City makes the contribution required of City safety employees on
their behalf and for their account. In January 2008, non - safety employees modified their
PERS benefits and agreed to contribute 1% of the required 8% of annual salary for the
participant contribution and 2.42% of the City's employer contribution which is discussed
below. Benefit provisions and all other requirements are established by State statues
and City contract with employee bargaining groups.
Under GASB 27, an employer reports an annual pension cost (APC) equal to the annual
required contribution (ARC) plus an adjustment for the cumulative difference between
the APC and the employer's actual plan contributions for the year. The cumulative
difference is called the net pension obligation (NPO). The ARC for the period July 1,
2007 to June 30, 2008 has been determined by an actuarial valuation of the plan as of
June 30, 2005. The contribution rate indicated for the period is 8.691% for non - safety
employees and 26.098% for safety employees of annual covered payroll. Without the
cost sharing agreement with non - safety employees, the contribution rate would be
11.111% for non- safety employees. In order to calculate the dollar value of the ARC for
inclusion in financial statements prepared as of June 30, 2008, the contribution rate is
multiplied by the payroll of covered employees that were paid during the period from July
1, 2007 to June 30, 2008.
115
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Annual Pension Cost
For 2008, the City's annual pension cost of $16,453,906 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:
Safety Plan
June 30, 2005
Entry Age Actuarial Cost
Method
Level Percent of Payroll
32 Years as of the Valuation
Date
15 -Year Smoothed Market
7.75% (net of administrative
expenses)
3.25% to 13.15% depending
on age, service, and type of
employment
3.00%
3.25%
A merit scale varying by
duration of employment
coupled with an assumed
annual inflation growth of
3.0% and an annual
production growth of 0.25%
Initial unfunded liabilities are amortized over a closed period that depends on the plan's
date of entry into PERS. Subsequent plan amendments are amortized as a level percent
of pay over a closed 20 -year period. Gains and losses that occur in the operation of the
plan are amortized over a 30 -year rolling period, which results in an amortization of
about 6% 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.
116
Miscellaneous Plan
Valuation Date
June 30, 2005
Actuarial Cost Method
Entry Age Actuarial Cost
Method
Amortization Method
Level Percent of Payroll
Average Remaining
32 Years as of the Valuation
Period
Date
Asset Valuation Method
15 -Year Smoothed Market
Actuarial Assumptions
Investment Rate of
7.75% (net of administrative
Return
expenses)
Projected Salary
3.25% to 14.45% depending
Increases
on age, service, and type of
employment
Inflation Rate
3.00%
Payroll Growth
3.25%
Individual Salary
A merit scale varying by
Growth
duration of employment
coupled with an assumed
annual inflation growth of 3.0%
and an annual production
growth of 0.25%
Safety Plan
June 30, 2005
Entry Age Actuarial Cost
Method
Level Percent of Payroll
32 Years as of the Valuation
Date
15 -Year Smoothed Market
7.75% (net of administrative
expenses)
3.25% to 13.15% depending
on age, service, and type of
employment
3.00%
3.25%
A merit scale varying by
duration of employment
coupled with an assumed
annual inflation growth of
3.0% and an annual
production growth of 0.25%
Initial unfunded liabilities are amortized over a closed period that depends on the plan's
date of entry into PERS. Subsequent plan amendments are amortized as a level percent
of pay over a closed 20 -year period. Gains and losses that occur in the operation of the
plan are amortized over a 30 -year rolling period, which results in an amortization of
about 6% 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.
116
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
THREE -YEAR TREND INFORMATION FOR PERS ($ Amount in Thousands)
Fiscal
Annual Pension
Percentage of
Net Pension
Year
Cost (APC)
APC Contributed
Obligation
6/30/06
$15,064
100%
$0
6/30/07
$16,207
100%
$0
6/30/08
$16,454
100%
$0
The Schedule of Funding Progress, below, shows the recent history of the actuarial
value of assets, actuarial accrued liability, their relationship, and the relationship of the
unfunded actuarial accrued liability to payroll. The Schedule of Funding Progress,
below, presents multiyear trend information about whether the actuarial value of the plan
assets is increasing or decreasing overtime, relative to the actuarial accrued liability for
benefits.
SCHEDULE OF FUNDING PROGRESS FOR PERS ($ Amount in Thousands)
Entry Age
$
Unfunded
$150,730
Normal
Actuarial
Liability
Annual
Valuation Accrued
Value of
(Excess
Covered UAAL as a
Date Liability
Assets
Assets )
Funded Status Payroll % of Payroll
80.8%
83.2%
24,303
AVA Market
(A)
(B)
(A - B)
(B /A) Value (C) [(A -B) / CI
06/30/2005
Misc.
$
161,371
$150,730
$
10,641
93.4%
96.1%
$ 34,218
31.098%
Safety
267,192
215,965
51,227
80.8%
83.2%
24,303
210.785%
Total
$
428,563
$366,695
$
61,868
85.6%
88.1%
$ 58,521
105.719%
06/30/2006
Misc.
$
183,637
$163,158
$
20,479
88.8%
94.2%
$ 37,224
55.016%
Safety
296,420
231,701
64,719
78.2%
83.1%
26,053
248.413%
Total
$
480,057
$394,859
$
85,198
82.3%
87.4%
$ 63,277
134.643%
06/30/2007
Misc.
$
192,178
$178,524
$
13,654
92.9%
107.7%
$ 36,795
37.108%
Safety
308,552
250,062
58,490
81.0%
94.7%
25,035
233.633%
Total
$
500,730
$428,586
$
72,144
85.6%
99.7%
$ 61,830
116.681%
More current information regarding actuarial data is not yet available from PERS.
117
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Plan Description - Defined Contribution Plan
Pursuant to City Council Resolution No. 91 -106, the City entered into a defined
contribution plan administrated by the private administrator known as 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, 2008, the City's covered payroll for employees participating
in the plan was $2,878,082. Employees made contributions of $107,928 (3.75% of
current covered payroll), which was matched by the employer in the same amount.
Assets of the plan totaled $1,595,781 at June 30, 2008.
(11) Post Employment Health Care Benefits (OPEB)
The following description of the City of Newport Beach Medical Expense Reimbursement
Plan (the "Plan ") provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
Plan Description
Effective January 2006, the City and employee associations agreed to major changes in
the Post Employment Healthcare Plan. All employees and eligible retirees will
participate in a Health Reimbursement Arrangement ( "HRA ") sponsored by the City, held
in trust and managed by ING (Trustee), under IRS Revenue Ruling 2002 -41
(June 26, 2002) and IRS Notice 2002 -45 (June 26, 2002).
All employees hired after January 1, 2006, and certain employees hired prior to this
date, as well as employees who elected to fully convert (Fully Converted) to a defined
contribution formula, participate in a program that requires mandatory employee and
employer contributions. However, once these contributions have been made to the
employee's account, the City has no further funding obligation to the Plan on their
behalf.
Certain employees hired prior to January 1, 2006, had the option to retain a hybrid of the
former defined benefit Plan, or to fully convert to the new Plan. Employees electing to
retain a hybrid of the former defined benefit formula (Hybrid) participate in a program
requiring mandatory defined contributions by employees and employer, as well as a
defined benefit consisting of an ongoing contribution, from the City to the participant's
HRA account, each month after retirement. Additionally, these employees are eligible to
receive health care benefits under the City's group health care plans. However, in order
to receive these benefits these employees are required to pay the City $100 per month,
118
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
up until their retirement, to offset the unfunded portion of post employment health
benefits existing at the inception of the Plan.
Employees who retired prior to January 1, 2006, continue to receive an ongoing defined
benefit consisting of a contribution made by the City to the participant's HRA account
each month. The defined benefit portion of the plan is closed to new participants.
The City of Newport Beach is the sole employer for the Plan. Total participants involved
in the plan were 1,211 as of June 30, 2008, consisting of 535 miscellaneous employees,
276 safety employees, and 400 retirees and their beneficiaries.
Benefits Provided
The City provides post - employment medical, dental and vision benefits to its retirees, the
same benefits as those afforded to active employees, with the general exception that
once a retiree becomes eligible for Medicare (that is, reaches age 65), he or she must
join a Medicare HMO or a Medicare Supplement plan, with Medicare becoming the
primary payor. Employees become eligible to retire and receive City -paid healthcare
benefits upon attaining age 50 (safety) or age 55 (miscellaneous) and 5 years of covered
PERS service or upon disability before age 50. The payment of benefits, for the purpose
of reimbursing eligible health care expenses, cease upon the earliest of the following:
(1) the date of the participant's, their spouse's, or qualified dependant's death; (2) the
date the balance of any fully converted participant account reaches zero, if no further
contributions will be made to said account; or (3) the date of termination of the Plan.
Plan Contributions
Contributions to the Plan are based on the participant's status as "Fully Converted" or
"Hybrid" as described above. All employees contribute 1% of their annual salary. Fully
Converted employees also receive a contribution from the City of $1.50 per month for
each year of service and age, after five years of employment. Additionally, Fully
Converted employees who previously participated in the defined benefit program receive
a one -time contribution from the City upon retirement. This contribution consists of $100
per month for every month paid into the defined benefit program, up to a maximum of
180 months. Further, the City contributes a percentage of any flexible leave bank
conversions. The percentage contributed to the HRA account is based on the
bargaining unit each employee is associated with.
Hybrid employees receive a one -time contribution of $75 per month for every month paid
into the defined benefit program, up to a maximum of 180 months. For Hybrid
employees, the City also contributes a percentage of any flexible leave bank
conversions. The percentage contributed to the HRA account is based on the
bargaining unit each employee is associated with. Upon retirement, Hybrid employees
receive a defined benefit consisting of a monthly contribution, made by the City, to the
participant's HRA account of approximately $400.
119
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Employees who retired prior to January 1, 2006, continue to receive a defined benefit
consisting of a monthly contribution, made by the City, to the participant's HRA account
each month of approximately $400 (approximately $425 for certain retired Police
employees). The defined benefit component of the plan is closed to new participants;
however, an actuarial valuation is utilized to determine the accrued liability and funding
requirements associated with this component of the plan.
Actuarial Valuation, Assumptions and Methods
Actuarial valuations of an ongoing plan involve estimates of the value of reported
amounts and assumptions about the probability of occurrence of events far into the
future. Examples include assumptions about future employment, mortality, and the
healthcare cost trend. Amounts determined regarding the funded status of the plan and
the annual required contributions of the employer are subject to continual revision as
actual results are compared with past expectations and new estimates are made about
the future. The schedule of funding progress, presented as required supplementary
information following the notes to the financial statements, presents multi -year trend
information about whether the actuarial value of plan assets is increasing or decreasing
over time relative to the actuarial accrued liabilities for the benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between employer and plan members to that point. The actuarial methods
and assumptions used include techniques that are designed to reduce the effects of
short-term volatility in actuarial accrued liabilities and the actuarial assets, consistent
with the long -term perspective of the calculations.
Valuation Date: June 30, 2006
Roll forward valuation from June 30, 2006 to June 30,
2007 to determine the 2007/2008 plan cost
Actuarial Cost Method: Entry Age Normal (EAN) Cost Method
Amortization Method: Level percent of payroll for next 20 years
Amortization Period: Level contribution amount for next 20 years
Projected Salary Increases: 3.25% per year
Discount Rate: 7.75 % for cash subsidy, full pre- funding through CalPERS
OPEB Trust
5% for implied subsidy, no pre- funding, benefits paid from
the City's General fund
120
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Implied Subsidy
Because one of the two health plans offered by the City is a non- community -rated plan
and retirees are offered the same premium rates as active employees, GASB 45
requires that an implied subsidy (the difference between expected claims and premiums
paid for retirees) be valued for the life of the retiree and accrued as a cost of the retiree
health care plan. The City has elected to fund the implied subsidy on a pay -as- you -go
basis since employer contributions to active and retiree medical plans are fixed,
irrespective of the calculated implied subsidy, and significant uncertainty exists whether
additional cash flows will occur in the future as a result of the implied subsidy.
Annual Required Contribution (ARC)
The 2007 -08 Annual Required Contribution (ARC) includes the Normal Cost plus a
20 -year amortization of the Unfunded AAL (in 000's):
Date ARC
06/30/2008
Cash Subsidy $ 2,629
Implied Subsidy 2,648
Total $ 5,277
Annual ARC as
Actual
Percentage
Net OPEB
Covered
a % of
Contribution
Contributed
Obligation
Payroll
Payroll
$ 2,629
100.0%
$ -
$ 54,748
4.8%
427
16.1%
2,221
$54,748
4.8%
$ 3,056
57.9%
$ 2,221
$54,748
9.6%
121
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Net OPEB Obligation (NOO)
The NOO is the historical difference between the ARC and actual contributions. If the
City always contributes the ARC, then the NOO will equal zero. Benefit payments are
considered contributions. Contributions in excess of benefit payments must be
segregated in a trust for the sole purpose of paying Plan benefits in order to be
considered Plan Assets for the purpose of GASB 45.
Consistent with paragraph 37 of GASB 45, the City has elected to compute the cash
subsidy component of the NOO at transition retroactively. The calculation period used to
compute the cash subsidy component of the NOO at transition is 9 years. This
calculation resulted in a $6.2 million July 1, 2007, cash subsidy component of the NOO.
The NOO for the implied subsidy at transition is set at zero. The June 30, 2008, NOO is
(in 000's):
July 1, 2007 2007/2008
NOO AOC
Prefunding
Contributions
& Benefit June 30, 2008
Payments NOO
Cash Subsidy $ 6,200 ' $ 2,629 $ (8,829)2 $ -
Implied Subsidy - 2,648 (427) 3 2,221
Total $ 6,200 $ 5,277 $ (9,256) $ 2,221
1 - Based on a prior period adjustment to the cash subsidy component of the NOO
2 - 2007 -08 AOC and $6.2 million payment on retroactive NOO
3 - 2007 -08 estimated implied subsidy
Annual OPEB Cost (AOC)
The AOC is equal to the ARC, except when the City has a Net OPEB Obligation (NOO)
at the beginning of the year. In that case, the AOC will equal the ARC adjusted for
expected interest on the NOO and reduced by an amortization of the NOO. The
2007/2008 AOC is determined as follows (in 000's):
ARC
Cash Subsidy $ 2,629
Implied Subsidy 2,648
Total $ 5,277
Interest
Amortization
on NOO
of NOO
$ 481
$ (481)
$ 481
$ (481)
122
AOC as
% of
Total AOC
Payroll
$ 2,629
4.8%
2,648
4.8%
$ 5,277
9.6%
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Benefit Obligation and Funding Status
The schedule below shows the actuarial accrued liability (AAL), actuarial value of
assets, funded status, and the relationship of the unfunded actuarial accrued liability
(UAAL) to payroll as of the most recent valuation date. The unfunded actuarial accrued
liability at June 30, 2007, was based on an actuarial roll - forward of the June 30, 2006,
valuation results assuming no demographic and contribution gains /losses.
(12) Interfund Receivables and Pavables
At June 30, 2008, interfund receivables and payable were as follows:
General Fund
Internal Service Funds
Nonmajor Funds
Total
Due from
$ 3,297,073
$ 3,297,073
Due to
1,287,894
2,009,179
$ 3,297,073
The above balances are primarily due to reclassification of negative cash balance in the
city wide cash pool.
123
Actuarial
Actuarial
Unfunded
Annual
UAAL as
Valuation
Accrued
Value of
AAL
Funded
Covered
a % of
Date
Liability
Assets
(UAAL)
Status
Payroll
Payroll
06/30/2006
Cash Subsidy
$29,639
$ -
$29,639
0.0%
$54,748
54.1%
Implied Subsidy
26,409
-
26,409
0.0%
54,748
48.2%
Total
$56,048
$ -
$56,048
0.0%
$54,748
102.4%
(12) Interfund Receivables and Pavables
At June 30, 2008, interfund receivables and payable were as follows:
General Fund
Internal Service Funds
Nonmajor Funds
Total
Due from
$ 3,297,073
$ 3,297,073
Due to
1,287,894
2,009,179
$ 3,297,073
The above balances are primarily due to reclassification of negative cash balance in the
city wide cash pool.
123
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
(13) Interfund Transfers
Interfund transfers at June 30, 2008, consisted of the following:
Transfers In
Tide and
Submerged
Internal
Non -Major
General Fund
Land
Service Fund
Funds
Total
General Fund
$ -
$ 17,398,935
$ 8,618,030
3,022,649
$ 29,039,614
p'
Tide and
E2
Submerged Land
_
-
-
88,707
88,707
c
Internal Service
Fund
125,000
-
-
-
125,000
Non -Major Funds
$5,396,342
-
-
1,552,289
6,948,631
Total
$5,521,342
$ 17,398,935
$8,618,030
$4,663,645
$ 36,201,952
The City typically uses transfers to fund ongoing subsidies. The general fund transferred
$17,398,935 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 $506,355 in the Newport Coast Annexation fund, is due to and was
subsequently transferred to the General Fund.
(14) Reserved and Designated Fund Balances
The City has set up `reserves" of fund equity to segregate fund balances which are not
appropriable for expenditure in future periods, or which are legally set aside for a
specific future use. Fund "designations" also may be established to indicate tentative
plans for financial resource utilization in a future period.
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.
124
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Reserved for permanent endowment
This account reflects a permanent endowment established for the maintenance and
dredging of Upper Newport Bay.
Reserved for affordable housing
This account reflects amounts collected from developers to build affordable housing to
all income levels in compliance with State planning laws.
Reserved for prepaid items
This account reflects prepaid items which are not available, spendable resources.
Reserved for inventories
This account reflects the value of inventories purchased by the City but not yet issued to
the operating departments.
Reserved for long -term receivable
This account reflects the value of the note receivable which is not an available and
spendable resource.
Designated for special purposes
This account reflects funds that have been designated for special projects which vary in
nature.
Designated for contingencies
Contingency designations represent funds for unexpected emergencies.
Designated for capital projects
This account reflects unspent appropriations committed to capital projects in the prior
year.
Designation for appropriations
This account reflects unspent appropriations that may be utilized to augment the
operating budget.
(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
125
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
constructing public facilities including parks and road improvements. At June 30, 2008,
the contributions from property owners are held in trust as cash with fiscal agent totaling
$811,743. The City does not make any annual contributions to this joint venture. The
City does not include the Authority as a component unit, as the City is not financially
accountable for the Authority's activities and the Authority is not fiscally dependent on
the City. The City's equity interest in this joint venture is not readily determinable.
Complete separate financial statements can be obtained at the Newport Mesa Unified
School District, 2985 Bear Street, Suite 8M, Costa Mesa, California.
Air Borne Law Enforcement
The City is a participant in a joint venture agreement with the City of Costa Mesa for the
operation of the Air Borne Law Enforcement program (ABLE). The oversight Board
consists of the Chiefs of Police of Costa Mesa and Newport Beach and one appointee
for each Member Agency for a total of four Board Members. The cities have a 50%
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 $1,000,000. 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 $54,718 for fiscal year 2007-
08. The City's 50% interest in the net equity of this joint venture at June 30, 2008,
amounts to $2,469,463. Complete separate financial statements can be obtained at the
City of Costa Mesa at 77 Fair Drive, Costa Mesa, California.
Metro Cities Fire Authority
The City of Newport Beach is a Member of a joint venture agreement with the Cities of
Anaheim, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, and Orange for
the operation of a communication network to provide fire suppression, emergency
medical assistance, and rescue services. The oversight board consists of one voting
member and one alternate appointed by the governing body of each member agency.
The City of Newport Beach's costs are based each fiscal year upon the number of
recorded incidents attributable to the City divided by the recorded incidents attributable
to all members during the year and, are recorded in the General Fund as an expenditure
for service. Upon termination of the agreement, the proceeds from the sale of the
property and assets of the joint venture will be paid to each member agency pursuant to
their fair share percentage. Annually, the amounts paid by the City to this joint venture
are approximately $440,385. The City's 10.25% interest in the net equity of this joint
venture at June 30, 2008, amounts to $126,136. Complete separate financial statements
can be obtained at the Metro Cities Fire Authority offices at 201 S. Anaheim Boulevard,
Suite 302, Anaheim, California.
126
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
Intearated Law and Justice Aaencv of Oranae Count
The City is a participant in a joint venture agreement with the several other public
agencies of Orange County for the operation of the Integrated Law and Justice Agency
of Orange County ( ILJAOC). The Integrated Law and Justice Agency of Orange County
went into effect fiscal year 2007. The ILJAOC consists of 23 member agencies with an
oversight board consisting of 12 members from the participating member agencies. The
City acts as a treasurer for the ILJAOC and as such the activities of the ILJAOC are
recorded in an Agency Fund. Annually, each member agency pays a percentage of the
operating and replacement costs for the ILJAOC. The City's annual contribution and
interest in the net equity of this joint venture at June 30, 2008, was immaterial. Complete
separate financial statements can be obtained at the City of Newport Beach.,
3300 Newport Boulevard, Newport Beach, California.
(16) Commitments and Contingencies
Claims and Judaments
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 Aareement
The City entered into a Circulation Improvement and Open Space Agreement (CIOSA)
with a developer whereby the City received a loan of $14,395,572 to be used only for
certain transportation and circulation improvements. 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, 2008, the City received $704,578 of Fair Share
Fees, and $352,289 was paid to the CIOSA Construction capital projects fund. Through
June 30, 2008, $3,545,454 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.
127
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
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 was used in locating, planning,
and constructing a Community Center within the annexed area.
Contractual commitments
Construction and contractual commitments for major construction projects are as
follows:
Water Transmission Main Master Plan Improvement
Oasis Senior Center
Eastbluff Drive Street Rehabilitation
Signal System Improvement
Marina Park
Birch Street Rehabilitation
Mariners Park Restroom /Storage Building
(17) Net Asset Restatements
Total
Project
Project
To Date
Unexpended
Budget
Expenditures
Commitments
2,232,282
1,775,332
457,762
1,617,440
531,158
1,082,592
1,180,000
68,519
1,111,785
981,200
243,382
755,051
833,327
139,834
693,534
721,600
194
682,748
672,800
151,325
534,550
Beginning Net Assets have been restated by ($6,200,000) to accrue Net OPEB
obligation in the retiree Insurance fund due to retroactive implementation of GASB 45 for
nine prior fiscal years for the cash subsidy component of the NOD.
Net Assets
Government -type Activities:
Net assets at July 1, 2007, as previously reported $ 2,138,033,053
Adjustment to accrue Net OPEB obligation (6,200,000)
Net assets at July 1, 2007, as restated $ 2,131,833,053
Total Internal Service Fund - Retiree Insurance Fund
Net assets at July 1, 2007, as previously reported 11,842,497
Adjustment to accrue Net OPEB obligation (6,200,000)
Net assets at July 1, 2007, as restated $ 5,642,497
128
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2008
(18) Subsequent Events
Limited Obligation Bond Issues
Subsequent to year end the City has issued certain limited obligation, 1915 Act
assessment district improvement bonds listed as follows:
District Name Par Value Issue Date
Assessment District 101 Central Balboa District $2,467,597 September, 1, 2008
Assessment District 99 -2 Balboa Peninsula Ocean $1,978,487 December 1, 2008
Front District
The bonds are issued in serial maturities over fifteen years ranging from 2.7% to 5.4 %.
The proceeds of these bonds, together with certain investment earnings, and certain
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 levied in
the two districts exceeds $191 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.
Financial Markets
A number of financial institutions have reported financial difficulties as an indirect result
of delinquencies associated with home mortgages. The full ramifications of this are not
determinable at this time and it's not possible to determine with certainty all of the
institutions that might be impacted by current market conditions.
129
This page left blank intentionally.
130
Supplementary
Information
131
o�
•
cot
1O •.
SVK
} {
j
r
x
Non -major Special Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific revenue sources
which are legally restricted to expenditures for specified purposes. The City of Newport
Beach Special Revenue Funds are as follows:
The State Gas Tax Fund accounts for all State Gas Tax related revenues and expenditures,
including street repair, construction, and maintenance. State law requires that these funds be
used exclusively for maintenance of the street and highway system.
The Asset Forfeiture Fund was established to account for all revenues resulting from the
seizure of assets in conjunction with criminal cases (primarily drug trafficking). It is the City's
policy that all such funds shall be used for enhancement of law enforcement programs.
The Office of the Traffic Safety DUI Grant Fund (OTS) is used to account for federal funding of
the Selective Traffic Enforcement Program (STEP). These funds are used exclusively for DUI
enforcement.
The Justice Assistance Grant Fund (JAG) is used to account for federal support of law
enforcement activities.
The Circulation and Transportation Fund is used to account for fair share revenues collected
from developers and restricted for capital improvement projects meeting the circulation element of
the City's General Plan.
The Building Excise Tax Fund is used to account for revenues received from builders or
developers on building or remodeling projects within the City. Expenditures from this fund are
used exclusively for public safety, libraries, parks, beaches, or recreational activities.
The Combined Transportation Fund is used to account for the revenues and expenditures of
funds received from the Orange County Combined Transportation Funding Program.
Expenditures from this fund are used exclusively for transportation related purposes.
The Arterial Highway Rehabilitation Fund is used to account for federal funds available
through the Federal Highway Administration Arterial Highway Rehabilitation Program to share the
cost of rehabilitating certain arterial roadways in the City.
The Community Development Block Grant Fund is used to account for revenues and
expenditures relating to the City's Community Development Block Grant program. These funds
are received from the Federal Department of Housing and Urban Development and must be
expended exclusively on programs for low or moderate income individuals /families.
The Air Quality Management District Fund is used to account for revenues received from the
South Coast Air Quality Management District restricted for the use of reducing air pollution.
The Environmental Liability Fund is used to account for solid waste fees restricted for
mitigation of future environmental liability relating to the handling of solid waste.
The Supplemental Law Enforcement Services Fund (SLESF) is used to account for revenues
received from the county to be used exclusively for front line law enforcement services.
134
The Traffic Congestion Relief Fund is used to account for all revenues received from the State
Treasury related to Assembly Bill 2928. State law requires that these funds be used exclusively
for maintenance or reconstruction costs on public streets and roads.
The Newport Coast Annexation Fund is used to account for revenues and expenditures related
to the Newport Coast Annexation Agreement.
The Prop f B Fund is used to account for all revenues and expenditures related to the Prop 1 B
fund. State law requires that these funds be used exclusively for all transportation related
projects, including state highway safety and rehabilitation projects, local street and road
improvements, congestion relief, traffic reduction and traffic safety.
Non -major Debt Service Funds
Debt Service Funds are used to account for debt service transactions including revenue
collections and payments of principal and interest on long -term obligations of the City.
The City of Newport Beach Debt Service Fund is as follows:
The Library COP Fund is used to account for the debt service transactions related to the
Certificates of Participation used to finance the construction of the Central Library.
Non -major Capital Projects Funds
Capital Projects Funds are used to account for resources used for the acquisition and
construction of capital facilities by the City, except those financed by Enterprise Funds.
The City of Newport Beach Capital Projects Funds are as follows:
The Assessment District Fund is used to account for the receipt and expenditure of funds
received from 1911 Act and 1915 Act Assessment Districts for capital improvement projects.
The CIOSA Construction Fund is used to account for the receipt and expenditure of funds for
the Circulation Improvement and Open Space Agreement (CIOSA). The improvements include
street and frontage improvements.
The Bonita Canyon Development Fund is used to account for the receipt and expenditure of
funds for the Bonita Canyon Public Facilities Agreement. The improvements include certain public
parks and recreation facilities, and street improvements and facilities.
The Oil Spill Remediation Fund is used to account for the receipt of the settlement proceeds
from the American Trader Company. These funds must be used on projects affecting the areas
damaged by the spill.
The Fire Station 7 Fund is used to account for the property acquisition, design and construction
of a new fire station which will replace a temporary fire station that provides service in the
northern part of the city.
The Marine Science Center Fund is used to account for the design and construction of a new
Marine Science Center.
The City Hall Improvement Fund is used to account for the design and construction of a new
Civic Center Complex.
135
The Oasis Senior Center Fund is used to account for revenues and expenditures associated
with the development and construction of the Oasis Senior Center.
The Misc. Santa Ana Heights Projects Fund is used to account for various grants and projects
associated with providing public works, parks and recreation opportunities within the part of the
City known as Santa Ana Heights.
The Marina Park Fund is used to account for the design and construction of the Marina Park.
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 investment proceeds will be used for the purchase of High Tech
Library Equipment while the remaining 25% will be used for Scholarships for needy students.
136
This page left blank intentionally.
137
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Cash with fiscal agent
Prepaid items
Total Assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Unearned revenue
Unavailable revenue
Due to other funds
Total Liabilities
Fund balances:
Reserved for encumbrances
Reserved for debt service
Reserved for permanent endowment
Reserved for prepaid items
Unreserved:
Designated for special purposes
Undesignated
Total fund balances
Total liabilities and
fund balances
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2008
Special Revenue
$ 68,948 $ -
$ 19,486
$ - $
Circulation
State
Asset
OTS
and
Gas Tax
Forfeiture
DUI Grant
JAG Transportation
$ 3,006,891
$ 199,196
$ -
$ - $ 2,227,197
5,000
-
52
- -
350,059
-
117,492
7,422 -
$ 3,361,950
$ 199,196
$ 117,544
$ 7,422 $ 2,227,197
$ 68,948 $ -
$ 19,486
$ - $
77,240
- -
311
7,422
-
350,059 -
117,233
-
-
- -
97,747
7,422
-
419,007 -
234,777
14,844
77,240
1,833,703 -
-
-
602,023
1,109,240 199,196
-
-
1,547,934
- -
(117,233)
(7,422)
-
2,942,943 199,196
(117,233)
(7,422)
2,149,957
$ 3,361,950 $ 199,196
$ 117,544
$ 7,422 $
2,227,197
138
Special Revenue
Building
$ 53,788
Arterial
Community
Air Quality
38,356
Excise
Combined
Highway
Development
Management
Environmental
Tax
Transportation
Rehabilitation
Block Grant
District
Liability
-
-
260,763
91,761
-
-
$ 339,239
$ 3,444,574
$ -
$ -
$ 366,654
$ 2,467,593
-
450,000
-
-
-
5,826
-
237,180
361,258
116,008
-
-
-
-
-
-
-
90,861
-
-
-
-
-
137,728
259,228
$ 339,239
$ 4,131,754
$ 361,258
$ 116,008
$ 366,654
$ 2,702,008
$ 80,011
$ 53,788
$ 36,126
$ 33,602 $
4,090 $
38,356
-
448,301
53,710
-
-
-
-
2,105
361,258
66,174
-
-
-
-
260,763
91,761
-
-
80,011
504,194
711,857
191,537
4,090
38,356
64,721
529,980
-
-
-
27,780
-
-
-
-
-
137,728
194,507
3,097,580
-
-
362,564
2,498,144
-
-
(350,599)
(75,529)
-
-
259,228
3,627,560
(350,599)
(75,529)
362,564
2,663,652
$ 339,239
$ 4,131,754
$ 361,258
$ 116,008 $
366,654 $
2,702,008
(continued)
139
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2008
(continued)
Special Revenue
Supplemental Traffic Newport
Law Congestion Coast Prop 1B
Enforcement Relief Annexation Transportation
Assets
Cash and investments $ - $ 4,035 $ 10,800,000 $ -
Receivables:
Accounts - - - -
Intergovernmental receivables - - - 1,354,589
Cash with fiscal agent - - - -
Prepaid items - - - -
Total Assets $ - $ 4,035 $ 10,800,000 $ 1,354,589
Liabilities and Fund Balances
Liabilities:
Accounts payable
-
Unearned revenue
- -
-
-
Unavailable revenue
- -
-
-
Due to other funds
- -
-
-
Total Liabilities
- -
-
-
Fund balances:
Reserved for encumbrances
- -
-
-
Reserved for debt service
- -
-
-
Reserved for permanent endowment
- -
-
-
Reserved for prepaid items
- -
-
-
Unreserved:
Designated for special purposes
- 4,035
10,800,000
1,354,589
Undesignated
- -
-
-
Total fund balances
- 4,035
10,800,000
1,354,589
Total liabilities and
fund balances $
- $ 4,035
$ 10,800,000
$ 1,354,589
140
Debt Service
Capital Projects
Library
Assessment
CIOSA
Bonita Canyon
Oil Spill
COP
District
Construction
Development
Remediation
Fire Station 7
$ -
$
-
$
2,666,713
$ -
$
21,501
$
77,620
565,989
1,562,319
-
811,743
-
-
$ 565,989
$
1,562,319
$
2,666,713
$ 811,743
$
21,501
$
77,620
$ -
$
19,333
$
-
$ -
$
-
$
-
-
476,671
-
27,603
-
-
-
496,004
-
27,603
-
-
-
219,092
-
-
5,362
27,620
565,989
-
-
-
-
-
-
847,223
2,666,713
784,140
16,139
50,000
565,989
1,066,315
2,666,713
784,140
21,501
77,620
$ 565,989
$
1,562,319
$
2,666,713
$ 811,743
$
21,501
$
77,620
(continued)
141
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2008
(continued)
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ 1,740 $
Capital Projects
- $ 169,777
Unearned revenue
Marine
City Hall Mariners
Oasis
Unavailable revenue
Science Center
Improvements Library
Senior Center
Assets
700,772
42,496
- -
Cash and investments
$ -
$ - $ -
$ 1,425,570
Receivables:
Accounts
450,000
- -
-
Intergovernmental receivables
-
- -
-
Cash with fiscal agent
-
- -
-
Prepaid items
-
- -
-
Total Assets
$ 450,000
$ - $ -
$ 1,425,570
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ 1,740 $
13,901 $
- $ 169,777
Unearned revenue
22,313
-
- -
Unavailable revenue
450,000
-
- -
Due to other funds
700,772
42,496
- -
Total Liabilities
1,174,825
56,397
- 169,777
Fund balances:
Reserved for encumbrances
-
-
- 1,144,992
Reserved for debt service
-
-
- -
Reserved for permanent endowment
-
-
- -
Reserved for prepaid items
-
-
- -
Unreserved:
Designated for special purposes
-
-
- 110,801
Undesignated
(724,825)
(56,397)
- -
Total fund balances
(724,825)
(56,397)
- 1,255,793
Total liabilities and
fund balances
$ 450,000 $
- $
- $ 1,425,570
142
Permanent FUnd
Total
Other
Misc Marina Ackerman Governmental
SAH Projects Park Bay Dredging Donation Funds
$ - $ - $ 4,454,507 $ 1,109,922 $ 32,611,212
- - - - 910,878
261,116 - - - 2,805,124
- - - - 3,030,912
- - - - 137,728
$ 261,116 $ - $ 4,454,507 $ 1,109,922 $ 39,495,854
$ 22,939 $ 94,957
261,116 -
259,067 44,877
(282,006) (139,834)
b Zb], Il6 D -
$ - $ 734,294
532,057
1,607,945
2,009,179
4,883,475
-
-
4,455,273
-
-
565,989
3,857,000
772,781
4,629,781
-
-
137,728
597,507
337,141
26,577,453
-
-
(1,753,845)
4,454,507
1,109,922
34,612,379
$ 4,454,507 $
1,109,922
$ 39,495,854
143
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, 2008
Special Revenue
Expenditures:
Current:
Public safety - 77,680 233,845 7,422
Public works - - - -
Community development - - - -
Capital outlay 1,362,030 - - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 1,362,030 77,680 233,845 7,422
Excess (deficiency) of revenues
over expenditures (58,990) 88,727 (117,233) (7,422)
Other financing sources (uses):
Transfers in - -
Transfers out (160,000) -
Total other financing sources (uses) (160,000) -
Net change in fund balances (218,990) 88,727 (117,233) (7,422)
Fund balances (deficit), beginning 3,161,933 110,469 - -
Fund balances (deficit), ending $ 2,942,943 $ 199.196 $ (117,233) S (7,422)
144
State
Asset
OTS
Gas Tax
Forfeiture
DUI Grant JAG
Revenues:
Other taxes
$ -
$ -
$ - S -
Intergovernmental
1,131,183
160,795
116,612 -
Licenses, permits and fees
-
-
- -
Fines and forfeitures
-
-
- -
Investment income
146,457
5,112
-
Net increase in fair value of investments
20,400
500
- -
Donations
-
-
- -
Other
5,000
-
- -
Total revenues
1,303,040
166,407
116,612 -
Expenditures:
Current:
Public safety - 77,680 233,845 7,422
Public works - - - -
Community development - - - -
Capital outlay 1,362,030 - - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 1,362,030 77,680 233,845 7,422
Excess (deficiency) of revenues
over expenditures (58,990) 88,727 (117,233) (7,422)
Other financing sources (uses):
Transfers in - -
Transfers out (160,000) -
Total other financing sources (uses) (160,000) -
Net change in fund balances (218,990) 88,727 (117,233) (7,422)
Fund balances (deficit), beginning 3,161,933 110,469 - -
Fund balances (deficit), ending $ 2,942,943 $ 199.196 $ (117,233) S (7,422)
144
Special Revenue
Circulation
Building
Arterial
Community
Air Quality
and
Excise
Combined
Highway
Development
Management
Environmental
Transportation
Tax
Transportation
Rehabilitation
Block Grant
District
Liability
S -
$ -
$ -
$ -
$ -
$ -
$ 456,209
-
-
1,409,562
545,050
344,865
100,327
-
-
169,864
-
-
-
-
-
704,578
-
-
-
-
-
-
97,188
13,696
129,539
3,437
-
14,077
120,515
13,537
1,908
18,044
479
-
1,961
15,449
420,450
-
-
-
-
-
-
1,235,753 185,468 1,557,145 548,966 344,865 116,365 592,173
- 17,402 683,703
- - - - 117,878 - -
906,706 151,888 245,611 361,258 50,088 - -
- - - - 78,000 - -
- - - - 115,482 - -
906,706 151,888 245,611 361,258 361,448 17,402 683,703
329,047 33,580 1,311,534 187,708 (16,583) 98,963 (91,530)
- - 14,128 - -
(432,289) - - - -
(432,289) - - - 14,128 - -
(103,242) 33,580 1,311,534 187,708 (2,455) 98,963 (91,530)
2,253,199 225,648 2,316,026 (538,307) (73,074) 263,601 2,755,182
$ 2.149,957 $ 259,228 S 3,627,560 $ (350,599) $ (75,529) $ 362,564 S 2,663,652
(continued)
145
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, 2008
(continued)
Revenues:
Other taxes
Intergovernmental
Licenses, permits and fees
Fines and forfeitures
Investment income
Net increase in fair value of investments
Donations
Other
Expenditures:
Current:
Public safety
Public works
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning
Fund balances (deficit), ending
Special Revenue
Supplemental
Traffic Newport
Law
Congestion Coast
Prop 1B
Enforcement
Relief Annexation
Transportation
$ -
$ - $
$
161,946
- 2,000,000
1,354,589
1,472 1,724 457,091
- 240 63,670
163,418 1,964 2,520,761 1,354,589
163,418
112,846
- 1,200,000
163,418 - 1,312,846
1,964 1,207,915 1,354,589
1,200,000
- (1,959,821)
(759,821)
1,964 448,094
1,354, 589
- 2,071 10,351,906 -
S $ 4,035 $ 10,800,000 $ 1,354,589
146
Debt Service Capital Projects
Library
Assessment
CIOSA
Bonita Canyon
Oil Spill
COP
District
Construction
Development
Remediation
Fire Station 7
-
-
-
-
-
-
5,500,000
22,559
5,359
97,072
1,068
984
-
-
2,303
13,522
-
137
-
-
-
-
-
-
350,000
-
1,901,886
-
811,355
-
-
22,559
1,909,548
110,594
812,423
1,121
5,850,000
1,675,348 - - 10 424,505
315,000
253,203 -
568,203 1,675,348
10 424,505
(545,644) 234,200 110,594 812,423 1,111 5,425,495
545,074 221,189 352,289 - - -
- - (4,372,473)
545,074 221,189 352,289 - - (4,372,473)
(570) 455,389 462,883 812,423 1.111 1,053,022
566,559 610,926 2,203,830 (28,283) 20.390 (975,402)
$ 565,989 $ 1,066,315 $ 2,666.713 $ 784,140 $ 21,501 $ 77,620
(continued)
147
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, 2008
(continued)
Revenues:
Other taxes
Intergovernmental
Licenses, permits and fees
Fines and forfeitures
Investment income
Net increase in fair value of investments
Donations
Other
Total revenues
Expenditures:
Current:
Public safety
Public works
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning
Fund balances (deficit), ending
Capital Projects
Marine City Hall Mariners Oasis
Science Center Improvement Library Senior Center
$ - $ $ $
923,726 - 1,758,771 -
60,880
- - - 139.471
923,726 - 1,758,771 200,351
742,364
66,852
86,013
531,158
742,364
66,852
86,013
531,158
181,362
(66,852)
1,672,758
(330,807)
88,707
267,148
388,510
1,586,600
(24,048)
-
-
88,707
243,100
388,510
1,586,600
270,069
176,248
2,061,268
1,255,793
(994,894) (232,645) (2,061,268) -
$ (724,825) $ (56,397) $ - $ 1255.793
148
-
Permanent Funds
-
-
482,365
Total
-
-
Other
Misc Marina
Ackerman
Governmental
SAH Projects Park
Bay Dredging Donation
Funds
$ - $ -
$ - S -
$ 456,209
182,587 -
- -
15,690,013
- -
- -
169,864
- -
- -
704,578
- -
193,976 48,339
1,420,545
- -
27,020 6,733
185,903
- -
- -
909,921
- -
- -
2,718,241
182,587 -
220,996 55,072
22,255,274
-
-
-
-
482,365
-
-
-
-
701,105
281,616
139,834
-
1,450
540,778
-
-
-
-
6,716,677
-
-
-
-
1,593,000
-
-
-
-
368,685
281,616
139,834
-
1,450
10,402,610
(99,029)
(139,834)
220,996
53,622
11,852,664
-
-
-
-
4,663,645
-
(6,948,631)
-
-
-
-
(2,284,986)
(99,029)
(139,834)
220,996
53,622
9,567,678
(182,977)
-
4,233,511
1,056,300
25,044,701
$ (282,006)
$ (139,834) $
4.454.507
$ 1.109,922 $
34,612,379
149
Revenues:
Intergovernmental
Investment income
Net increase in fair value of investments
Other
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 (deficit), ending
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2008
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 1,507,500 $ 1,507,500 $ 1,131,183 $ (376,317)
147,000 147,000 146,457 (543)
- - 20,400 20,400
- - 5,000 5,000
1,654,500 1,654,500 1,303,040 (351,460)
5,081,549 3,922,949 1,362,030 2,560,919
(3,427,049) (2,268,449) (58,990) 2,209,459
(160,000) (160,000) (160,000)
(3,587,049) (2,428,449) (218,990) 2,209,459
2,041,022 2,787,206 3,161,933 374,727
$ (1,546,027) $ 358,757 2,942,943 $ 2,584,186
150
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2008
151
Variance
with Final
Budget
Budget Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 40,000
$ 40,000
$ 160,795
$ 120,795
Investment income
5,250
5,250
5,112
(138)
Net increase in fair value of investments
-
-
500
500
Total revenues
45,250
45,250
166,407
121,157
Expenditures
Public safety
100,895
100,895
77,680
23,215
Net change in fund balance
(55,645)
(55,645)
88,727
144,372
Fund balance, beginning
110,469
110,469
110,469
-
Fund balance, ending
$ 54,824
$ 54,824
$ 199,196
$ 144,372
151
Revenues:
Intergovernmental
Investment income
Net increase in fair value of investments
Total revenues
Expenditures
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
OTS DUI Grant Special Revenue Fund
For the Year Ended June 30, 2008
Variance
with Final
Budget
Budget Amounts Positive
Original Final Actual (Negative)
$ - $ 347,249 $ 116,612 $ (230,637)
347,249 116,612 (230,637)
347,249 233,845 113,404
- - (117,233) (117,233)
152
_L_11 7,233) $ (117,233)
Revenues:
Intergovernmental
Investment income
Net increase in fair value of investments
Total revenues
Expenditures
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
JAG Special Revenue Fund
For the Year Ended June 30, 2008
Budget Amounts
Original Final
Actual
Variance
with Final
Budget
Positive
(Negative)
7,422 (7,422)
(7,422) (7,422)
$ $ $ (7,422) $ (7,422)
153
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Circulation and Transportation Special Revenue Fund
For the Year Ended June 30, 2008
154
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ 300,000
$ 300,000
$ 704,578
$ 404,578
Investment income
155,400
155,400
97,188
(58,212)
Net increase in fair value of investments
-
-
13,537
13,537
Donations
-
-
420,450
420,450
Total revenues
455,400
455,400
1,235,753
780,353
Expenditures:
Capital outlay
2,724,190
1,893,950
906,706
987,244
Excess (deficiency) of revenues
over expenditures
(2,268,790)
(1,438,550)
329,047
1,767,597
Other financing uses:
Transfers out
(460,000)
(230,000)
(432,289)
(202,289)
Net change in fund balance
(2,728,790)
(1,668,550)
(103,242)
1,565,308
Fund balance, beginning
2,253,199
2,253,199
2,253,199
-
Fund balance (deficit), ending
$ (475,591)
$ 584,649
$ 2,149,957
$ 1,565,308
154
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Building Excise Tax Special Revenue Fund
For the Year Ended June 30, 2008
155
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ 150,000
$ 150,000
$ 169,864
$ 19,864
Investment income
10,500
10,500
13,696
3,196
Net increase in fair value of investments
-
-
1,908
1,908
Total revenues
160,500
160,500
185,468
24,968
Expenditures:
Capital outlay
377,009
225,809
151,888
73,922
Net change in fund balance
(216,509)
(65,309)
33,580
98,889
Fund balance, beginning
225,648
225,648
225,648
-
Fund balance, ending
$ 9,139
$ 160,339
$ 259,228
$ 98,889
155
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Combined Transportation Special Revenue Fund
For the Year Ended June 30, 2008
Revenues:
Intergovernmental
Investment income
Net increase in fair value of investments
Total revenues
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
156
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 1,700,000
$ 1,700,000
$ 1,409,562
$ (290,438)
59,774
59,774
129,539
69,765
-
-
18,044
18,044
1,759,774
1,759,774
1,557,145
(202,629)
4,084,916
2 424 961
245,611
2,179,350
(2,325,142)
(665,187)
1,311,534
1,976,721
2,316,026
2,316,026
2,316,026
-
$ (9,116)
$ 1,650,839
$ 3,627,560
$ 1,976,721
156
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Arterial Highway Rehabilitation Special Revenue Fund
For the Year Ended June 30, 2008
157
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 653,000
$ 653,000
$ 545,050
$ (107,950)
Investment Income
-
-
3,437
3,437
Net increase in fair value of investments
479
479
Total revenues
653,000
653,000
548,966
(104,034)
Expenditures:
Capital outlay
653,001
652,601
361,258
291,343
Net change in fund balance
(1)
399
187,708
187,309
Fund balance (deficit), beginning
(538,307)
(538,307)
(538,307)
-
Fund balance (deficit), ending
$ (538,308)
$ (537,908)
$ (350,599)
$ 187,309
157
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2008
Revenues:
Intergovernmental
Investment income
Total revenues
Expenditures:
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources:
Transfers In
Transfers (Out)
Total other financing (uses)
Net change in fund balance
Fund balance (deficit), beginning
Fund balance (deficit), ending
158
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 447,432
$ 525,732
$ 344,865
$ (180,867)
447,432
525,732
344,865
(180,867)
142,091
140,707
117,878
22,829
109,500
180,009
50,088
129,921
78,000
78,000
78,000
-
115,483
115,483
115,482
1
445,074
514,199
361,448
152,751
2,358
11,533
(16,583)
(28,116)
-
14,129
14,128
(1)
(30,900)
(15,450)
15,450
(30,900)
(1,321)
14,128
15,449
(28,542)
10,212
(2,455)
(12,667)
(73,074)
(73,074)
(73,074)
$ (101,616)
_L __L62,8621
$ (75,529)
$ (12,667)
158
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2008
Expenditures
Public works
26,415
26,415
Variance
Net change in fund balance
77,785
77,785
with Final
Fund balance, beginning
263,601
263,601
Budget
Fund balance, ending
Budgeted Amounts
$ 341,386
Positive
Original Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 100,000 $ 100,000
$100,327
$ 327
Investment income
4,200 4,200
14,077
9,877
Net increase in fair value of investments
- -
1,961
1,961
Total revenues
104,200 104,200
116,365
12,165
Expenditures
Public works
26,415
26,415
17,402 9,013
Net change in fund balance
77,785
77,785
98,963 21,178
Fund balance, beginning
263,601
263,601
263,601 -
Fund balance, ending
$ 341,386
$ 341,386
$362,564 $ 21,178
159
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Environmental Liability Special Revenue Fund
For the Year Ended June 30, 2008
Expenditures
Public works
$ 90,000
$ 90,000
$ 70,315
Variance
Capital outlay
-
676,530
613,388
with Final
Total expenditures
90,000
766,530
683,703
Budget
Net change in fund balance
Budgeted
Amounts
(91,530)
Positive
Fund balance, beginning
Original
Final
Actual
(Negative)
Revenues:
$ 3,136,982
$ 2,460,452
$ 2,663,652
$ 203,200
Taxes
$ 392,000
$ 392,000
$ 456,209
$ 64,209
Investment income
79,800
79,800
120,515
40,715
Net increase in fair value of investments
-
-
15,449
15,449
Total revenues
471,800
471,800
592,173
120,373
Expenditures
Public works
$ 90,000
$ 90,000
$ 70,315
$ 19,685
Capital outlay
-
676,530
613,388
63,142
Total expenditures
90,000
766,530
683,703
82,827
Net change in fund balance
381,800
(294,730)
(91,530)
37,546
Fund balance, beginning
2,755,182
2,755,182
2,755,182
-
Fund balance, ending
$ 3,136,982
$ 2,460,452
$ 2,663,652
$ 203,200
160
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Supplemental Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2008
Revenues:
Intergovernmental
Investment income
Total revenues
Expenditures:
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance, ending
22,100
$ 22,100
161
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
$ 140,000
$ 161,946
$ 161,946
$
2,100
1,472
1,472
-
142,100
163,418
163,418
-
120,000
163,418
163,418
22,100
$ 22,100
161
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Traffic Congestion Special Revenue Fund
For the Year Ended June 30, 2008
Revenues:
Investment income
Net increase in fair value of investments
Total revenues
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ 1,724 $ 1,724
- 1,964 1,964
176,000 176,000 - 176,000
(176,000) (176,000) 1,964 177,964
2,071 2,071 2,071
$ (173,929) _L__(173,929 $ 4,035 $ 177,964
162
Revenues
Intergovernmental
Investment income
Net increase in fair value of investments
Total revenues
Expenditures
Capital outlay
Debt service:
Principal
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing uses
Transfers in
Transfers out
Total other financing (uses)
Net change in fund balance
Fund balance, beginning
Fund balance, ending
CITY OF NEWPORT BEACH
Newport Coast Annexation
Budgetary Comparison Statement
For the Year Ended June 30, 2008
Budgeted Amounts
Original Final
Variance
with Final
Budget
Positive
Actual (Negative)
$ -
2,000,000
2,000,000
$ -
753,900
753,900
457,091
(296,809)
63,670
63,670
753,900
2,753,900
2,520,761
(233,139)
125,421
125,421
112,846
12,575
1,200,000
1,200,000
1,200,000
-
1,325,421
1,325,421
1,312,846
12,575
(571,521)
1,428,479
1,207,915
(220,564)
1,200,000
1,200,000
1,200,000
-
(1,909,985)
(2,216,340)
(1,959,821)
256,519
(709,985)
(1,016,340)
(759,821)
256,519
(1,281,506)
412,139
448,094
35,955
10,351,906
10,351,906
10,351,906
-
$ 9,070,400
$ 10,764,045
$ 10,800,000
$ 35,955
163
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Proposition 1B Transportation Special Revenue Fund
For the Year Ended June 30, 2008
Revenues:
Intergovernmental
Investment income
Total revenues
Expenditures:
Capital outlay
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ - $ - $ 1,354,589 $ 1,354,589
164
1,354,589 1,354,589
1,354,589 1,354,589
1,354,589 $ 1,354,589
Internal Service Funds
165
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 Absences 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.
IM.
Assets
Current assets:
Cash and investments
Receivables:
Accounts
Inventories
Prepaid items
Total current assets
Non - current assets:
Capital assets:
Equipment
Less accumulated depreciation
Total capital assets (net of
accumulated depreciation)
Total assets
Liabilities
Current liabilities:
Accounts payable and accrued liabilities
Accrued payroll
Due to general fund
Workers' compensation - current
General liability - current
Compensated absences - current
Total current liabilities
Non - current liabilities:
Workers' compensation
General liability
Compensated absences
Net OPEB obligation
Total Noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets, net of related
Unrestricted
Total net assets
CITY OF NEWPORT BEACH
All Internal Service Funds
Combining Statement of Net Assets
June 30, 2008
Total
Insurance Compensated Retiree Equipment Internal
Reserve Absence Insurance Maintenance Service Funds
$ 19,086,525 $ 2,275,044 $ - $ 12,164,127 $ 33,525,696
- - 1,430,764 250,216 1,680,980
- - - 349,598 349,598
167,132 167,132
19,086,525 2,275,044 1,597,896 12,763,941 35,723,406
22,317,426 22,317,426
(14,692,130) (14,692,130)
7,625,296 7,625,296
19,086,525 2,275,044 1,597,896 20,389,237 43,348,702
$ 155,871
$ -
$ 45,133
$ 294,395
$ 495,399
-
-
-
35,678
35,678
-
-
1,287,894
-
1,287,894
2,812,315
-
-
-
2,812,315
1,824,926
-
-
-
1,824,926
1,654,973
1,654,973
4,793,112
1,654,973
1,333,027
330,073
8,111,185
8,521,685
-
-
-
8,521,685
3,788,599
-
-
-
3,788,599
-
7,458,122
-
-
7,458,122
2,221,000
2,221,000
12,310,284
7,458,122
2,221,000
-
21,989,406
17,103,396
9,113,095
3,554,027
330,073
30,100,591
-
-
-
7,625,295
7,625,295
1,983,129
(6,838,051)
(1,956,131)
12,433,869
5,622,816
$ 1,983,129
_L__(6,,838051
$(1,956,131)
$20,059,164
$ 13,248,111
167
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Revenues, Expenses
and Changes in Fund Net Assets
For the Year Ended June 30, 2008
168
Total
Insurance
Compensated
Retiree
Equipment
Internal
Reserve
Absence
Insurance
Maintenance
Service Funds
Operating revenues:
Charges for services
5 6,528,118
S 2.139,954
$ -
$ 5,970,905
$ 14,638,977
Retiree reimbursements
-
-
1,050,640
-
1,050,640
Employee contributions
-
-
401,436
-
401,436
Other
381
43,744
5,928
50,053
Total operating revenues
6,528,499
2,139,954
1,495,820
5,976,833
16,141,106
Operating expenses:
Salaries and wages
-
-
-
1,443,079
1,443,079
Depreciation
-
-
-
2,064,397
2,064,397
Professional services
-
-
-
62,378
62,378
Maintenance and supplies
-
-
-
338,478
338,478
Fleet parts and supplies
-
-
-
460,693
460,693
Workers' compensation
2,339,836
-
-
-
2,339,836
Claims and judgments
3,371,513
-
-
-
3,371,513
Compensated absences
-
1,807,046
-
-
1,807,046
OPEB ARC- Cash subsidy
-
-
2,629,000
-
2,629,000
OPEB ARC- Implied subsidy
-
-
2,648,000
-
2,648,000
Other
1,551,500
1,551,500
Total operating expenses
5,711,349
1,807,046
6,828,500
4,369,025
18,715,920
Operating income (loss)
817,150
332,908
(5,332,680)
1,607,808
(2,574,814)
Nonoperating revenues (expenses):
Investment income
544,291
83,252
211,712
519,414
1,358,669
Net Increase in fair value of investments
75,816
11,597
29,490
55,421
172,324
Gain on sale of capital assets
-
-
-
156,735
156,735
Interest expense
(330)
(330)
Total nonoperating revenues
620,107
94,849
241,202
731,240
1,687,398
Income (loss) before transfers
1,437,257
427,757
(5,091,478)
2,339,048
(887,416)
Transfers in
5,918,030
-
2,700,000
-
8,618,030
Transfer out
(125,000)
(125,000)
Change in net assets
7,355,287
427,757
(2,391,478)
2,214,048
7,605,614
Net assets (accumulated
deficit), beginning, as restated
(5,372,158)
(7,265,808)
435,347
17,845,116
5,642,497
Net assets, (accumulated
deficit), ending
$ 1,983,129
$ (6,838,051)
$ (1,956,131)
$ 20,059,164
$ 13,248,111
168
CITY OF NEWPORT BEACH
Combining Statement of Cash Flows - Internal Service Funds
For the Year Ended June 30, 2008
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 (decrease) 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:
(Increase) in accounts receivable
(Increase) in inventories
Increase in prepaid items
Increase in accounts payable and accrued payroll
Decrease in workers' compensation
Increase in general liability
Increase in compensated absences
Decrease in net OPEB obligation
Total adjustments
Net cash provided (used) by operating activities
Non -cash investing, capital, and financing activities:
Net increase in fair value of investments
Total of non -cash activities
- (1,944,639) (1,944,639)
- 365,056 365,056
- (49,490) (49,490)
(330) (330)
(1,629,403) (1,629,403)
620,107
94,849
241,202
574,835
1,530,993
Total
94,849
Insurance
Compensated
Retiree
Equipment
Internal
- (1,250,054)
Reserve
Absences
Insurance
Maintenance
Service Funds
Cash flows from operating activities
4,588,298
10,987,709
1,651,078
6,436,147
9,862,464
Receipts from user departments
$ 6,528,118
$ 2,139,954
$ -
$ 5,764,106
$ 14,432,178
Payments to employees
(2,447,836)
(1,610.,837)
-
(1,435,209)
(5,493,882)
Payments to suppliers
(2,519,984)
-
(12,161,063)
(853,594)
(15,534,641)
Other operating cash receipts
381
196,209 (5,332,563)
1,495,820
5,928
1,502,129
Net cash provided (used) for operating activities
1,560,679
529,117
(10,665,243)
3,481,231
(5,094,216)
Cash flows from noncapital financing activities:
Cash received from other funds
5,918,030
-
3,987,894
-
9,905,924
Cash paid to other funds
-
-
-
(125,000)
(125,000)
Net cash provided (used)by noncapital financing
5.918.030
3.987.894
(125.000)
9.780.924
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 (decrease) 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:
(Increase) in accounts receivable
(Increase) in inventories
Increase in prepaid items
Increase in accounts payable and accrued payroll
Decrease in workers' compensation
Increase in general liability
Increase in compensated absences
Decrease in net OPEB obligation
Total adjustments
Net cash provided (used) by operating activities
Non -cash investing, capital, and financing activities:
Net increase in fair value of investments
Total of non -cash activities
- (1,944,639) (1,944,639)
- 365,056 365,056
- (49,490) (49,490)
(330) (330)
(1,629,403) (1,629,403)
620,107
94,849
241,202
574,835
1,530,993
620,107
94,849
241,202
574,835
1,530,993
2,064,397
-
- (1,250,054)
(206,799)
(1,456,853)
8,098,816
623,966
(6,436,147)
2,301,663
4,588,298
10,987,709
1,651,078
6,436,147
9,862,464
28,937,398
$ 19,086,525
$ 2,275,044
$
$ 12,164,127
$ 33,525,696
$ 817,150
$ 332,908 $ (5,332,680)
$ 1,607,808
$ (2,574,814)
-
- -
2,064,397
2,064,397
-
- (1,250,054)
(206,799)
(1,456,853)
-
- -
(143,460)
(143,460)
-
- (144,870)
-
(144,870)
75,052
- 41,361
159,285
275,698
(108,000)
- -
-
(108,000)
776,477
- -
-
776,477
-
196,209 -
-
196,209
(3,979,000)
(3,979,000)
743,529
196,209 (5,332,563)
1,873,423
(2,519,402)
$ 1.560.679 $ 529.117 $ (10.665.243) _L_2 481 231 $ (5.094.2161
75,816 11,597 211,712 55,421 354,546
$ 75,816 $ 11,597 $ 211,712 $ 55,421 $ 354,546
This page left blank intentionally.
170
Fiduciary Funds
171
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 District Fund is used to account for funds received from
affected property owners and payable to holders of 1911 Act, 1915 Act and other
special assessment bonds.
The Business Improvement District Fund is used to account for monies collected
from local business districts for district property improvements and business
enhancement.
The Integrated Law and Justice Agency for Orange County (ILJAOC) Fund is used
to account for monies collected from member agencies for the operation of ILJAOC.
172
Assets
CITY OF NEWPORT BEACH
Agency Funds
Combining Statement of Fiduciary Assets and Liabilities
June 30, 2008
Special Business
Assessment District Improvement ILJAOC
Fund Fund Fund Totals
Cash and investments $ 1,998,664 $ 120,869 $ 424,153 $ 2,543,686
Cash with fiscal agent 4,337,777 - - 4,337,777
Intergovernmental receivable - - 124,363 124,363
Total assets $ 6,336,441 $ 120,869 $ 548,516 $ 7,005,826
Liabilities
Due to bondholders $ 6,336,441 $ $ - $ 6,336,441
Due to ILJAOC - 448,933 448,933
Due to others - 120,869 99,583 220,452
Total liabilities $ 6,336,441 $ 120,869 $ 548,516 $ 7,005,826
173
CITY OF NEWPORT BEACH
Statement of Changes in Fiduciary Net Assets
All Agency Funds
For the Year Ended June 30, 2008
Totals - All Agency Funds:
Assets
Cash and investments $ 3,294,227
Cash with fiscal agent 3,022,209
Intergovernmental receivable 436,485
Total Assets $ 6,752,921
Liabilities
Due to bondholders
$ 6,191,382
Balance
125,054
Due to ILJAOC
-
Total Liabilities
Balance
June 30, 2007
$
Additions
Deductions
June 30, 2008
Special Assessment:
$
8,909,429
_L L,6,56,5241
$
7,005,826
$
6,689,211
Assets
$
6,336,441
479,302
(383,904)
220,452
Cash and investments
$
3,169,173
$
2,789,928
$ (3,960,437)
$
1,998,664
Cash with fiscal agent
7,005,826
3,022,209
3,899,283
(2,583,715)
4,337,777
Total Assets
$
6,191,382
$
6,689,211
_L±,544,1521
$
6,336,441
Liabilities
Due to bondholders
$
6,191,382
$
6,689,211
$ (6,544,152)
$
6,336,441
Business Improvement District:
Assets
Cash and investments
$
125,054
$
379,719
$ (383,904)
$
120,869
Liabilities
Due to others
$
125,054
$
379,719
$ (383,904)
$
120,869
ILJAOC:
Assets
Cash and investments
$
-
$
563,136
$ (138,983)
$
424,153
Intergovernmental receivable
$
436,485
$
1,277,363
$ (1,589,485)
$
124,363
Total Assets
$
436,485
$
1,840,499
$ (1,728,468)
$
548,516
Liabilities
Due to City of Newport Beach
$
436,485
$
-
(436,485)
$
-
Due to others
-
99,583
99,583
Due to ILJAOC
-
448,933
448,933
Total Liabilitites
$
436,485
$
548,516
$ (436,485)
$
548,516
Totals - All Agency Funds:
Assets
Cash and investments $ 3,294,227
Cash with fiscal agent 3,022,209
Intergovernmental receivable 436,485
Total Assets $ 6,752,921
Liabilities
Due to bondholders
$ 6,191,382
Due to others
125,054
Due to ILJAOC
-
Total Liabilities
$ 6,316,436
$
3,732,783
$ (4,483,324)
$
2,543,686
$
3,899,283
$ (2,583,715)
4,337,777
$
1,277,363
$ (1,589,485)
124,363
$
8,909,429
_L L,6,56,5241
$
7,005,826
$
6,689,211
$ (6,544,152)
$
6,336,441
479,302
(383,904)
220,452
448,933
448,933
$
7,617,446
_L±,928,0561
$
7,005,826
174
Statistical Section
e............. . ...... ...,
vi
h•
R
N .
f/r
�1•
N .
A
co
e-�
r,.
N.
O
ti
3r n
vi
h•
R
N .
f/r
�1•
N .
A
co
e-�
r,.
N.
O
ti
FINANCIAL TRENDS
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) presents detailed information as a context for understanding what
the information in the financial statements, note disclosures, and required
supplementary information says about the City's overall financial health. The
statistical information presented herein is un- audited.
The following schedules contain trend information illustrating how the City's
financial performance and well -being has changed over time:
• Net Assets by Component
• Changes in Net Assets
• Fund Balances of Governmental Funds
• Changes in Fund Balance of Governmental Funds
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive annual financial reports and underlying accounting records for the relevant year.
177
This page left blank intentionally.
178
Governmental activities:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total governmental activities
Business -type activities:
Invested in capital assets,
net of related debt
Restarted
Unrestricted
Total business -type activities
Primary government:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total primary government
CITY OF NEWPORT BEACH
Net Assets by Component
Last Seven Fiscal Years
(accrual basis of accounting)
Fiscal
2002 2003 2004 2005' 2006 2007 2008
$ 1,391,677,813 $ 1,412,372,465 $ 1,512,651,096 $ 1,915,348,883 $ 2,005,643,651 $ 2,027,026,053 $ 2,050,925,370
38,889,956 37,650,692 45,494,082 54,285,743 51,901,103 35,017,831 40,988,923
41,095,786 49,322,283 46,772,913 61,894,956 56,662,229 75,989,169 87,349,141
$ 1,471,463,555 $ 1,499,345,440 $ 1,604918,091 $ 2,031,529,582 $ 2,114206,983 $ 2,138,033,053 $ 2,179,263,434
$ 87;470,314 $ 91,912,205 $ 94206,704 $ 99,641,411 $ 104,602,266 $ 107,231,308 $ 107,313,603
26,123,500 24,227,579 21,493,528 19,665,535 16,907,367 15,808,357 13,665,882
$ 113,593,814 $ 116,139,784 $ 115,700,232 $ 119,306,946 $ 121,509,633 $ 123,039,665 $ 120,979,485
$ 1,479,148,127 $ 1,504,284,670 $ 1,606,857,800 $ 2,014,990,294 $ 2,110,245,917 $ 2,134,257,361 $ 2,158,238,973
38,689,956 37,650,692 45494,082 54,285,743 51,901,103 35,017,831 40,988,923
67,219,286 73,549,862 68,266,441 81,560,491 73,569,596 91,797,526 101,015,023
$ 1,585,057,369 $ 1,615,485,224 $ 1,720,618,323 $ 2,150,836,528 $ 2,235,716,616 $ 2,261,072,718 $ 2,300,242,919
1 2005 data varies from trend because of increased capital assets related to PCH Relinquishment
The City of Newport Beach implemented GASB 34 for the fiscal year ended June 30, 2002.
Information prior to the implementation of GASB 34 is not available.
179
CITY OF NEWPORT BEACH
Changes in Net Assets
Last Seven Fiscal Years
(accrual basis of accounting)
Fiscal Year
2002 2003 2004 2005 2006 2007 2008
Expenses:
Governmental activities:
(72,834,540)
(73,690,766)
(85,518,756)
(69,493,849)
(19,836,950)
(95,021,324)
(77,229,080)
General government
$ 12792,860
$ 10,799,630
$ 11,428,379
$ 11,378,609 $
14,509,827
$ 14,166,168
$ 15,553,314
Public safety
47,168,918
56,521,871
58,178,633
63,214,291
67,789,121
70,823,463
56,643,277
Public works
30,320,516
32,089,038
38,127,832
46,359,871
33,870,359
39,179,844
39,508,930
Community development
4,471,397
5,782,215
6,229,785
6,437,006
8,157,925
9,020,868
9,687,986
Community services
11,044,086
10,404,285
14,741,504
13,073,215
13,803,755
23,304,053
42,242,092
Interest on long -tern debt
517,102
673,944
542,126
508,869
479,529
523,401
532,569
Total governmental activities
expenses
106,314,879
116,270,983
129,248,259
140,971,861
138,610,516
157,017,797
164,168,168
Business -type activities:
Water
14,806,514
14,540,036
17,185,034
14,467,233
16,228,213
17,399,900
20,128,376
Wastewater
2,588,833
3,115,136
3,363,954
2,740,908
3,143,629
3,259,837
3,416,878
Total business -type activities
33,480,339
42,580,217
43,729,503
71,478,012
118,773,566
61,996,473
86,939,088
expenses
17,395,347
17,655,172
20,548,988
17,208,141
19,371,842
20,659,737
23,545,254
Total primary government
expenses
123,710,226
133,926,155
149,797,247
158,180,002
157,982,358
177,677,534
187,713,422
Program revenues:
Governmental activities:
(72,834,540)
(73,690,766)
(85,518,756)
(69,493,849)
(19,836,950)
(95,021,324)
(77,229,080)
Charges for services:
2,216,181
1,603,053
763,805
3,265,727
1,862,770
794,281
(2,721,963)
General government
2,270,082
3,008,162
2,109,141
2,412,769
2,623,272
2,944,100
3,055,982
Public safety
10,549,410
11,603,584
15,739,912
16,264,493
13,669,509
15,756,327
16,649,400
Public works
5,436,948
5,009,048
5,481,464
6,031,248
5,133,728
5,482,167
5,616,118
Community development
3,236,483
4,022,904
5,196,276
5,129,858
5,667,289
5,682,636
5,597,309
Community services
2,533,899
6,039,226
3,946,566
3,952,862
9,433,278
9,054,504
9,203,513
Operating Grants and
Contributions:
7,891,059
8,750,565
10,681,329
17,480,834
12,772,599
16,172,023
15,778,851
Capital Grants and
Contributions.
1,562,458
4,146,728
674,815
20,205,948
69,473,891
6,904,716
31,037,915
Total governmental activities
progranamvenues
33,480,339
42,580,217
43,729,503
71,478,012
118,773,566
61,996,473
86,939,088
Business -type activities:
Charges for services:
Water
16,665,724
16,489,284
18,430,000
17,573,196
17,923,523
17,918,968
17,270,511
Wastewater
2,945,804
2,768,941
2,882,793
2,900,672
3,311,089
3,535,050
3,552,780
Total business -type activities
program revenues
19,611,528
19,258,225
21,312,793
20,473,868
21,234,612
21,454,018
20,823,291
Total primary government
program revenues
53,091,867
61,838,442
65,042,296
91,951,880
140,008,178
83,450,491
107,762,379
Net revenues (expenses):
Governmental activities
(72,834,540)
(73,690,766)
(85,518,756)
(69,493,849)
(19,836,950)
(95,021,324)
(77,229,080)
Business -type activities
2,216,181
1,603,053
763,805
3,265,727
1,862,770
794,281
(2,721,963)
Total net revenues (expenses)
$ (70,618,359)
$ (72,087,713) $
(84,754,951)
$ (66,228,122) $
(17,974,180)
$ (94,227,043) $
(79,951,043)
2005 data vanes from trend because of increased capital assets related to PCH Relinquishment.
2006 data vanes from tend because of increased capital assets related mostly to Bristol St. Relinquishment, Newport Coast Community Center, and Fire Station If 7
e 2008 data varies from Vend because of increased capital assets related to Santa Ana Heights Annexation.
The City of Newport Beach implemented GASS 34 for the fiscal year ended June 30, 2002
Information pnpr to the implementation of CA S8 34 is not available.
180
CITY OF NEWPORT BEACH
Changes in Net Assets
Last Seven Fiscal Years
(accrual basis of accounting)
Primary Revenue Sources
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000 -
$20,000,000 -
$10,000,000 -
$-
2002 2003 2004 2005 2006 2007 2008
•Property Taxes
ElSeles Tax
GTransient Occupancy Taxes
a Sales Tax - In Lieu
181
Fiscal Year
2002
2003
2004
2005
2006
2007
2008
General revenues and other changes in
net assets:
Govemmemal activities:
Taxes:
Properlytaxes $
33,583,659
$ 39,474,864
$ 43,631,829 $
46,303,366 $
57,888,545
$ 63,003,057
$ 67,388,838
Sales tax
18,796,571
20,133,598
21,843,884
18,977,828
21,465,557
21,088,118
21,855,242
Sales tax in -lieu
-
-
-
5,339,827
5,720,028
7,348,253
8,017,539
Transient occupancy taxes
7,690,655
8,055,266
8,045,132
9215,862
9,832,729
12,059,008
12,751,518
Business license
2,470,857
2,030,845
2,830,127
3,458,165
3,848,381
3,770,172
4,119,108
Franchise taxes
2,735,641
2,465,584
2,765,519
3,029,476
3,162,588
4,613,932
3,853,119
Motor vehicle license fees
4,380,070
3,970,103
3,624,917
6,395,860
300,751
391,559
304,920
Motor vehicle fines
711,693
742,957
-
-
-
-
-
Other taxes
341,820
314,725
266,642
240,534
508,331
515,128
373,350
Investment income
2,171,474
2,111,451
584,415
1,209,074
1,939,941
3,175,582
3,655,314
Net increase in fair value of
investments
1,093,913
318,686
(360,586)
(258,125)
(715,615)
(545,533)
506,485
Gain on sale of assets
160,236
130,954
-
-
-
-
-
Other
12,570
1,294,628
214,536
761,111
776,907
2,232,070
1,832,028
Property income
3,771,556
-
-
-
-
-
-
Share of joint venture net
income
2,120,562
389,418
146,819
100,325
(513,791)
253,207
Capital contributions
836,206,102
17,836,792
102,713,421
213,779,060
-
-
-
Sale of service rights
25,000,000
-
-
-
-
-
-
Transfers
33,277
57,783
40,000
Total governmental activities
941,247,399
99,303,148
186,364,438
308,552,363
104,254,352
117,904,553
124,659,461
Business -type activities:
Investment income
888,779
505,619
203,041
424,157
549,012
792,936
588,870
Net increase in fair value of
investments
428,199
440,697
(87,078)
(87,921)
(169,095)
(57,185)
72,913
Property income
27,100
29,880
29,280
26,970
-
-
-
Capital contributions
-
-
215,331
-
-
-
-
Transfers
-
(33,277)
(57,783)
-
(40,000)
-
-
Total business -type anfvd.s
1,344,078
942,919
302,791
363,206
339,917
735,751
661,783
Total primary government
942,591,477
100,246,067
186667,229
308,915,569
104,594,269
118,640,304
125,321,244
Changes in net assets
Governmental activities
868,412,859
25,612,382
100,845,682
239,058,514
84,417,402
22,883,229
124,659,461
Business -type activities
3,560,259
2,545,972
1,066,596
3,628,933
2,202,687
1,530,032
661,783
Total primary government $
871,973;118
$ 28,158,354
$ 101,912,278 $
242,687,447 $
86,620,089
$ 24,413,261
$ 125,321,244
Primary Revenue Sources
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000 -
$20,000,000 -
$10,000,000 -
$-
2002 2003 2004 2005 2006 2007 2008
•Property Taxes
ElSeles Tax
GTransient Occupancy Taxes
a Sales Tax - In Lieu
181
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds
Last Seven Fiscal Years
(modified accrual basis of accounting)
All other governmental funds
Reserved
$ 4,669,957
$ 4,693,197 $ 3,973,823 $12,230,132
$18,157,202
Fiscal Year
$ 9,788,771
Unreserved, reported in:
2002
2003
2004
2005
2006
2007
2008
General fund:
Capital projects funds
7,120,032
- - 6,076,969
2,077,124
(1,196,933)
3,271,954
Permanent funds
15
Reserved
$ 3,165,787
$ 4,393,418
$
6,678,579
$ 4,673,198
$ 9,374,722
$ 7,233,703
$ 6,807,094
Unreserved
25,171,551
31,929,366
$28,145,118
37,765,801
49,814,197
45,212,339
62,679,499
72,252,045
Total general fund
$28,337,338
$36,322,784
$44,444,380
$54,487,395
$54,587,061
$69,913,202
$79,059,139
Tide and submerged land fund:
Reserved
$ 294,876
$ 457,777
$
340,208
$ 552,713
$ 538,965
$ 642,985
$ 1,415,088
Unreserved
238,822
356,075
120,328
194,174
27,633
143,946
259,701
Total tide and submerged land fund
$ 533,698
$ 813,852
$
460,536
$ 746,887
$ 566,598
$ 786,931
$ 1,674,789
Mariners library fund:
Reserved
$ -
$ 382,900
$
142,016
$ 1,029,047
$ -
$ -
$ -
Unreserved
-
596,800
824,438
-
(1,750,160)
(2,061,268)
-
TotalMarinerslibrary fund
$ -
$ 979,700
$
966,454
$ 1,029,047
$(1,750,160)
$(2,061,266)
$ -
Contributions fund
Reserved
$ 7,501
$ -
$
-
$ 1,155,638
$ 3,223,047
$ 1,656,459
$ 856,506
Unreserved
(457,464)
(956,689)
1,042,147
-
-
794,249
Total Contributions fund
$ 7,501
$ (457,464)
_L _L56,6891
$ 2,197,785
$ 3,223,047
$ 1,656,459
$ 1,650,755
All other governmental funds
Reserved
$ 4,669,957
$ 4,693,197 $ 3,973,823 $12,230,132
$18,157,202
$ 8,958,652
$ 9,788,771
Unreserved, reported in:
Special revenue funds
11,057,395
18,789,098 16,895,613 10,099,453
7,506,021
18,684,221
20,617,006
Capital projects funds
7,120,032
- - 6,076,969
2,077,124
(1,196,933)
3,271,954
Permanent funds
15
- 285,506
404,771
660,029
934,648
Total all other governmental funds
$22,847,399
$23,482,295 $20,869,436 $28,692,060
$28,145,118
$27,105,969
$34,612,379
Fund Balances
$90,000,000
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
fr
2002 2003 2004 2005 2006 2007 2008
■Total General Fund
■Total all other Governmental Funds
The City of Newport Beach has elected to show only seven years of data for this schedule.
182
CITY OF NEWPORT BEACH
Changes in Fund Balances of Governmental Funds
Last Seven Fiscal Years
(modified accrual basis of accounting)
Other financing sources (uses)
Transfers in
10,927,460
14,376,167
Fiscal Year
20,601,957
25,194,920
20,271,396
27,583,922
2002
2003
2004
2005
2006
2007
2008
Revenues:
Proceeds from issuance of debt
18,000,000
2,630,736
Taxes
$ 65,878,471
$ 72,864,836
$ 79,874,751
$ 86,995,139
$ 102,737,810
$ 112,230,054
$ 118,758,201
Intergovernmental
26,227,740
10,379,792
16,108,023.
24,125,313
14,842,994
18,866,929
21,005,429
Licenses and permits
3,350,958
4,397,520
5,429,632
4,968,234
5,708,965
4,574,659
6,474,789
Charges for services
10,338,569
11,156,294
11,516,782
13,104,478
13,135,366
14,452,723
15,073,178
Fines and forfeitures
3,384,164
3,448,826
3,605,963
3,422,735
3,841,843
4,126,351
4,662,442
Investment income
2,758,557
1,941,046
887,513
2,356,747
3,847,982
5,431,137
5,463,066
Net increase (decrease) in fair
value of investments
1,268,972
1,468,682
(360,586)
(493,879)
(1,325,211)
(626,881)
720,488
Property income
10,130,165
10,947,021
11,857,671
12,337,339
13,625,142
13,965,815
15,217,803
Donations
746,774
1,819,159
2,704,367
1,087,626
883,405
1,379,461
2,159,637
Contributions from property
owners
-
-
-
14,779,013
-
-
-
Other
1,782,696
2,590,504
478,200
980,446
1,042,882
1,967,465
4,205,095
Total revenues
125,867,066
121,013,680
132,102,316
163,663,391
158,341,178
176,367,713
193,740,128
Expenditures
Current:
General government
12,292,008
9,689,275
11,024,256
10,920,667
12,531,200
13,706,061
14,425,553
Public safety
47,841,176
53,035,377
56.849,718
59,482,134
65,262,069
68,843,947
54,132,689
Public works
19,418,067
21,259,782
22,780,896
24,365,996
26,430,751
28,352,293
26,876,363
Community development
4,586,192
5,457,498
5,723,031
6,144,917
7,900,503
7,753,035
8,310,758
Community services
9,418,041
9,382,608
10,827,346
10,351,414
12,730,727
13,988,589
37,540,081
Capital outlay
38,613,906
14,684,897
15,188,550
33,486,048
24,811,237
40,615,169
20,524,638
Debt service:
Principal retirement
1,291,099
1,822,913
1,668,350
1,688,801
1,715,542
3,736,587
3,263,948
Interest and fiscal charges
466,974
529,808
520,228
499,077
480,909
458,035
577,299
Total expenditures
133,927,463
115,862,158
124,582,375
146,939,054
151,862,938
177,453,716
165,651,329
Excess (deficiency) of revenues
over (under) expenditures
(8,060,397)
5,151,522
7,519,941
16,724,337
6,478,240
(1,086,003)
28,088,799
Other financing sources (uses)
Transfers in
10,927,460
14,376,167
16,553,395
20,601,957
25,194,920
20,271,396
27,583,922
Transfers out
(11,669,089)
(14,342,890)
(18,495,612)
(20,612,176)
(31,177,725)
(22,521,396)
(36,076,952)
Proceeds from issuance of debt
18,000,000
2,630,736
Total other financing sources
(uses)
17,258,371
2,664,013
(1,942,217)
(10,219)
(5,982,805)
(2,250,000)
(8,493,030)
Net change in fund balances
$ 9,197,974
$ 7,815,535 $
5,577,724
$ 16,714,118
$ 495,435 $
(3,336,003) $
19,595,769
Debt service as a percentage of
noncapital expenditures
1.6%
2.2%
1.8%
1.7%
1.7%
2.9%
2.6%
The City of Newport Beach has elected to show only seven years of data for this schedule.
183
REVENUE CAPACITY
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) presents detailed information as a context for understanding what
the information in the financial statements, note disclosures, and required
supplementary information says about the City's overall financial health. The
statistical information presented herein is un- audited.
The following schedules present factors affecting the City's ability to generate its
own revenue and its most significant local revenue source, the property tax:
• Assessed Value and Estimated Actual Value of Taxable Property
• Direct and Overlapping Property Tax Rates
• Principal Property Tax Payers
• Property Tax Levies and Collections
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive annual financial reports and underlying accounting records for the relevant year.
184
CITY OF NEWPORT BEACH
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
City
Fiscal Year
Taxable Assessed
Total Direct
Ended June
Value
Tax Rate
30
Public Utility
Secured
Unsecured
1999
354,820
12,343,526,263
1,009,975,297
13,353,856,380
1.000%
2000
324,960
13,091,299,313
1,295,776,000
14,387,400,273
1.000%
2001
2,000
15,087,602,671
915,394,966
16,002,999,637
1.000%
2002
2,000
16,515,797,641
913,075,074
17,428,874,715
1.000%
2003
16,531,505
21,339,270,499
1,085,951,066
22,425,221,565
1.000%
2004
16,531,505
23,219,166,299
1,372,432,950
24,591,599,249
1.000%
2005
53,310
25,193,662,254
1,484,019,033
26,677,681,287
1.000%
2006
53,310
28,136,607,566
1,914,106,993
30,050,714,559
1.000%
2007
53,310
31,423,473,042
1,569,867,249
32,993,340,291
1.000%
2008
53,310
34,188,568,583
1,668,015,342
35,856,583,925
1.000%
NOTE:
In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total
maximum rate of 1 % based upon the assessed value of the property being taxed. Each year, the assessed
value of property may be increased by an "inflation factor" (limited to a maximum increase of 2 %). With few
exceptions, property is only re- assessed at the time that it is sold to a new owner. At that point, the new
assessed value is reassessed at the purchase price of the property sold. The assessed valuation data
shown above represents the only data currently available with respect to the actual market value of taxable
property and is subject to the limitations described above.
Source: County of Orange Auditor - Controller's Office
185
CITY OF NEWPORT BEACH
Direct and Overlapping Property Tax Rates
(Rate per $100 of assessed value)
Last Ten Fiscal Years
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
City Direct Rates
City basic rate
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$ 1.000
$1.000
Total City Direct Rate
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
Overlapping Rates:
Water Districts
0.009
0.009
0.009
0.008
0.007
0.006
0.005
0.005
0.005
0.004
School Districts
0.0000
0.0000
0.0000
0.0069
0.0067
0.0122
0.0343
0.0349
0.0315
0.0308
Total Direct Rate
$ 1.009
$ 1.009
$ 1.009
$ 1.015
$ 1.013
$ 1.018
$ 1.040
$ 1.040
$ 1.036
$1.035
NOTE:
In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by
all taxing agencies for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged
taxes as a percentage of assessed property values for the payment of other debt obligations.
Source: Orange County Auditor Controller's Office
186
CITY OF NEWPORT BEACH
Principal Property Taxpayers
Current Year and Nine Years Ago
Source, HdL, Coren and Cone Co.
187
2008
1999
Taxable Assessed
Percent of Total
Percent Total
City Taxable
Taxable Assessed
City Taxable
Value
Assessed Value
Taxpayer
Value
Rank
Assessed Value
Rank
Irvine Company
$ 1,448,383,889
1
4.04%
$ 787,729,750
1
5.90%
4000 MacArthur Limited Partnership
153,070,961
2
0.43%
N/A
0.00%
Jau Semiconductor Inc.
148,657,479
3
0.41%
N/A
0.00%
Newport Bluffs LLC
132,779,429
4
0.37%
N/A
0.00%
Balboa Bay Club Inc.
126,342,822
5
0.35%
N/A
0.00%
UDR Newport Beach North Ltd. Partner.
113,278,316
6
0.32%
N/A
0.00%
100 Bayview LLC
119,340,000
7
0.33%
N/A
0.00%
Coronado South Apts. Ltd. Partnership
110,168,052
8
0.31%
N/A
0.00%
HHR Newport Beach LLC
83,512,395
9
0.23%
N/A
0.00%
Newport Healthcare Center LLC
81,600,000
10
0.23%
N/A
0.00%
MacArthur 4500 LLC
78,562,301
11
0.22%
N/A
0.00%
CSDV Limited Partnership
79,501,240
12
0.22%
N/A
0.00%
Rockwell Semiconductor Systems Inc.
74,048,434
13
0.21%
712,262,218
2
5.33%
Cornerstone Partners IV LLC
69,185,326
14
0.19%
N/A
0.00%
Park Newport Land Limited
69,212,296
15
0.19%
55,690,802
6
0.42%
$ 2,887,642,940
8.05%
$ 1,555,682,770
11.65%
Source, HdL, Coren and Cone Co.
187
Fiscal Year Taxes Levied for
Ended June the Fiscal Year
30
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
22,738,432
24,667,494
27,405,295
31,298,541 '
37,092,528
42,469,238
45,111,328
47,286,816
70,194,492
69,315,117
CITY OF NEWPORT BEACH
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the Fiscal
Year of Levy
Collections in
Total Collections to Date
Percent of
Amount Levy
23,198,860 102.02%
25,605,677 103.80%
27,742,716 101.23%
30,753,144 98.26%
36,881,012 99.43%
42,091,095 99.11%
54,547,755 2 120.92%
46,286,404 97.88%
69,629,167 99.19%
69,089,231 99.67%
' Includes estimated levy for Newport Coast properties that were annexed on January 1, 2002.
2 Collections include nearly $10 million of Property Tax in lieu of Sales Tax and Vehicle License Fees not included in
the levy.
Source: Orange County Auditor Controller's Office
188
Percent of
Subsequent
Amount
Levy
Years
22,084,910
97.13%
1,113,950
24,207,104
98.13%
1,398,573
26,856,091
98.00%
886,625
30,651,143
97.93%
102,001
36,351,026
98.00%
529,986
41,420,410
97.53%
670,685
54,063,951
119.85%2
483,804
45,558,039
96.34%
728,365
68,820,402
98.04%
808,765
68,242,326
98.45%
846,904
Total Collections to Date
Percent of
Amount Levy
23,198,860 102.02%
25,605,677 103.80%
27,742,716 101.23%
30,753,144 98.26%
36,881,012 99.43%
42,091,095 99.11%
54,547,755 2 120.92%
46,286,404 97.88%
69,629,167 99.19%
69,089,231 99.67%
' Includes estimated levy for Newport Coast properties that were annexed on January 1, 2002.
2 Collections include nearly $10 million of Property Tax in lieu of Sales Tax and Vehicle License Fees not included in
the levy.
Source: Orange County Auditor Controller's Office
188
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) presents detailed information as a context for understanding what
the information in the financial statements, note disclosures, and required
supplementary information says about the City's overall financial health. The
statistical information presented herein is un- audited.
The following schedules exhibit the City's levels of outstanding debt over time, to
help readers assess the affordability of the current level of outstanding debt, and
the City's ability to issue additional debt:
• Ratios of Outstanding Debt by Type
• Ratios of General Bonded Debt Outstanding
• Direct and Overlapping Debt
• Legal Debt Margin Information
• Pledged Revenue Coverage
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive annual financial reports and underlying accounting records for the relevant year.
189
Fiscal
N/A
2,657,180
Year
N/A
N/A
Ended
Certificates of
N/A
June 30
Participation
Note Payable
18,000,000
N/A
1,150,927
1999
7,070,000
2,589,255
2000
6,845,000
2,469,399
2001
6,610,000
2,350,930
2002
6,365,000
2,219,660
2003
6,110,000
2,082,483
2004
5,845,000
1,939,133
2005
5,570,000
1,789,332
2006
5,280,000
1,632,789
2007
4,980,000
1,469,202
2008
4,665,000
1,298,254
CITY OF NEWPORT BEACH
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
Pre- Purchase
Annexation Agreement
Agreement CDBG Loan Capital Leases Payable
N/A
N/A
2,657,180
N/A
N/A
N/A
1,798,655
N/A
N/A
N/A
914,830
N/A
18,000,000
N/A
1,150,927
N/A
16,800,000
2,400,000
1,293,586
N/A
15,600,000
2,340,000
862,975
N/A
14,400,000
2,276,000
420,773
N/A
13,200,000
2,207,000
166,056
N/A
12,000,000
2,134,000
49,490
3,000,000
10,800,000
2,056,000
-
1,500,000
Note: This excludes claims and judgements and employee compensated absence liabilities. Details
regarding the City's outstanding debt can be found in the notes to the financial statements.
These ratios are calculated using personal income and population for the prior calendar year.
190
Business -type Activities
Total Percentage of
Governmental Water Revenue Total Business- Total Primary Personal Debt Per
Activities Bonds type Activities Government Income' Capita '
12,316,435
14,225,000
14,225,000
26,541,435
0.62%
365
11,113,054
13,200,000
13,200,000
24,313,054
0.53%
329
9,875,760
12,095,000
12,095,000
21,970,760
0.50%
314
27,735,587
10,950,000
10,950,000
38,685,587
0.80%
511
28,686,069
9,765,000
9,765,000
38,451,069
0.72%
484
26,587,108
8,535,000
8,535,000
35,122,108
0.65%
435
24,456,105
7,255,000
7,255,000
31,711,105
0.56%
382
22,485,845
5,925,000
5,925,000
28,410,845
0.45%
341
23,632,692
4,540,000
4,540,000
28,172,692
0.43%
335
20,319,254
3,095,000
3,095,000
23,414,254
0.33%
277
191
CITY OF NEWPORT BEACH
Outstanding Debt Serviced by the General Fund
Last Ten Fiscal Years
(In Thousands, except Per Capita)
Assessed value was used because the actual value of taxable property is not
readily available in the State of California.
192
Purchase
Percent of
Fiscal Year
Certificates of
Agreement
Assessed
Ended June 30
Participation
Payable
Total
Value'
Per Capita
1999
7,070
N/A
7,070
0.05%
97
2000
6,845
N/A
6,845
0.05%
93
2001
6,610
N/A
6,610
0.04%
94
2002
6,365
N/A
6,365
0.04%
84
2003
6,110
N/A
6,110
0.03%
77
2004
5,845
N/A
5,845
0.02%
72
2005
5,570
N/A
5,570
0.02%
67
2006
5,280
N/A
5,280
0.02%
63
2007
4,980
3,000,000
3,004,980
9.11%
35,681
2008
4,665
1,500,000
1,504,665
4.20%
17,795
Assessed value was used because the actual value of taxable property is not
readily available in the State of California.
192
City Assessed Valuation:
Redevelopment Agency Incremental Valuation:
Adjusted Assessed Valuation:
OVERLAPPING TAX AND ASSESSMENT DEBT:
Orange County Teeter Plan Obligations
Metropolitan Water District
Coast Community College District
Rancho Santiago Community College District
Laguna Beach Unified School District
Laguna Beach U.S.O. Community Facilities District No. 98 -1
Newport Mesa Unified School District
Newport Mesa U.S.O. Community Facilities District No. 90 -1
Santa Ana Unified School District
Irvine Ranch Water DisMct Improvement Districts
CITY OF NEWPORT BEACH
Direct and Overlapping Debt
June 30, 2008
$ 35,856,583,925
726,249,790
$ 35,130,334,135
Percentage Outstanding Debt Estimated Share of
Applicable ' 6/30/08 Overlapping Debt
9.554%
1.989%
34.290%
3.561%
12.771%
100.000%
71.563%
100.000%
8.337%
16.115 % -
100.000%
Bonita Canyon Public Facilities Financing Authority Community Facilities District No.
98 -1
100.000%
City of Newport Beach Special Improvement District No. 95 -1
100.000%
City of Newport Beach 1915 Act Bonds
100.000%
Orange County Assessment District No. 88 -1
100.000%
Orange County Assessment District No. 99 -1 R
100.000%
Orange County Assessment District No. 01 -1
100.000%
Orange County Assessment District No. 01 -1 R
100.000%
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations
Orange County Pension Obligations
Orange County Board of Education Certificates of Participation
Municipal Water District of O.C. Water Facilities Corporation
South Orange County Community College District Certificates of Participation
Newport Mesa Unified School District Certificates of Participation
Santa Ana Unified School District Certificates of Participation
Irvine Ranch Water District Certificates of Participation
City of Newport Beach Certificates of Participation
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
Less: MWDOC Water Facilities Corporation (100 %self- supporting)
Santa Ana Unified School District OZAB (supported by scheduled deposits to trustee)
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT
GROSS COMBINED TOTAL DEBT (2)
NET COMBINED TOTAL DEBT
9.554%
9.554
9.554
11.360%
2.821%
71.563%
8.337%
11.400%
100.000%
The percentage of overlapping agency's assessed valuation located within boundaries of the city.
123,725,000
327,215,000
347,758,867
321,779,339
34,945,000
9,815,000
168,563,480
14,985,000
126,037,965
49,413,228
42,615,000
10,040,000
12,606,000
37,123,296
16,130,000
55,639,000
7,700,000
1,706,091,175
$ 532,326,000
72,729,867
19,590,000
19,295,000
34,945,000
1,020,000
64,855,968
107,745,000
4,665,000
857,171,835
11,820,687
6,508,306
119,246,515
11,458,562
4,462,826
9,815,000
120,629,083
14,985,000
10,507,785
44,622,306
42,615,000
10,040,000
12,606,000
37,123,296
16,130,000
55,639,000
7,700,000
535,909,366
$ 50,858,426
6,948,611
1,871,629
2,191,912
985,798
729,943
5,407,042
12,282,930
4,665,000
85,941,291
- 2,191,912
- 170,267
$ 83,579,112
621,850,657
619,488,478
2 Previously classified Orange County Sanitation District certificates of participation have been reclassified as district revenue supported issues and are no
longer included as direct debt in the debt statement.
3
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and nonbonded capital lease obligations.
Ratios to 2007 -08 Assessed Valuation:
Total Overlapping Tax and Assessment Debt
1.490%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($4,665,000)
0.010%
Gross Combined Total Debt
1.770%
Net Combined Total Debt
1.760%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6130/08:
$0.000
YV:($425)
Source: California Municipal Statistics, Inc
193
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
1999 2000 2001 2002 2003
Assessed valuation $ 13,353,856,380 $ 14,387,400,273 $ 16,002,999,637 $ 17,428,874,715 $ 22,425,221,565
Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 3,338,464,095 3,596,850,068 4,000,749,909 4,357,218,679 5,606,305,391
Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 500,769,614 539,527,510 600,112,486 653,582,802 840,945,809
Total net debt applicable to limit:
General obligation bonds -
Legal debt margin $ 500,769,614 $ 539,527,510 $ 600,112,486 $ 653,582,802 $ 840,945,809
Total debt applicable to the limit
as a percentage of debt limit 0.0% 0.0% 0.0% 0.0% 0.0%
NOTE:
The Government Code of the State of California provides for a legal debt limit of 15% of gross assessed valuation. However, this provision was
enacted when assessed valuation was based upon 25% of market value. Effective with the 1981 -82 fiscal year, each parcel is now assessed at 100% of
market value (as of the most recent change in ownership for that parcel). The computations shown above reflect a conversion of assessed valuation
data for each fiscal year from the current full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted
by the State of California for local governments located within the state.
Source: City Administrative Services Department
194
Fiscal Year
2004
2005
2006
2007
2008
$ 24,591,599,249
$ 26,677,681,287
$ 30,050,714,559
$ 32,993,340,291 $
35,856,583,925
25%
25%
25%
25%
25%
6,147,899,812
6,669,420,322
7,512,678,640
8,248,335,073
8,964,145,981
15%
15%
15%
15%
15%
922,184,972
1,000,413,048
1,126,901,796
1,237,250,261
1,344,621,897
$ 922,184,972 $ 1,000,413,048 $ 1,126,901,796 $ 1,237,250,261 $ 1,344,621,897
0.0% 0.0% 0.0% 0.0% 0.0%
195
CITY OF NEWPORT BEACH
Pledged- Revenue Coverage
Last Ten Fiscal Years
Water Revenue Bonds
Debt Service
Fiscal Less
Year Operating Net Available
Ended Water Revenue z Revenue
June 30 ' Expenses Principal Interest Coverage
1999
17,658,076
11,145,936
6,512,140
335,000
593,469
7.01
2000
17,770,491
11,713,223
6,057,268
1,025,000
551,668
3.84
2001
17,839,320
11,784,120
6,055,200
1,145,000
510,224
3.66
2002
17,809,919
13,257,934
4,551,985
1,105,000
465,572
2.90
2003
17,326,604
12,430,144
4,896,460
1,185,000
418,172
3.05
2004
18,321,122
15,261,360
3,059,762
1,230,000
367,742
1.92
2005
17,878,016
12,967,118
4,910,898
1,280,000
314,622
3.08
2006
18,026,750
14,190,147
3,836,603
1,330,000
258,762
2.41
2007
18,534,689
15,614,885
2,919,804
1,385,000
199,900
1.84
2008
17,807,527
17,518,263
289,264
1,445,000
137,765
0.18
Gross revenues includes operating revenues, interest, property, and intergovernmental revenues
in the Water Fund.
2 Total Water Fund operating expenses do not include interest or depreciation expenses.
196
��Ti �[iZr] 7a11'.I [ _ ► � d�P►L�] � TC�71 �17i : t7 7 ��F_� � CiP►I
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) presents detailed information as a context for understanding what
the information in the financial statements, note disclosures, and required
supplementary information says about the City's overall financial health. The
statistical information presented herein is un- audited.
The following schedules depict demographic and economic indicators to assist
the reader in understanding the socio- economic, environment in which the City's
financial activities take place:
• Demographic and Economic Statistics
• Principal Employers
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive annual financial reports and underlying accounting records for the relevant year.
197
Fiscal Year
CITY OF NEWPORT BEACH
Demographic and Economic Statistics
Last Ten Fiscal Years
Population Personal Income Per Capita Unemployment
(in thousands) Income Rate
1999
72,623
4,288,461
59,051
1.8%
2000
73,965
4,630,061
62,598
1.6%
2001
70,032
4,413,066
63,015
1.6%
2002
75,662
4,865,294
64,303
2.5%
2003
79,392
5,325,060
67,073
2.4%
2004
80,800
5,434,285
67,256
1.9%
2005
83,120
5,635,370
67,798
2.4%
2006
83,361
6,335,186
75,997
2.1%
2007
84,218
6,518,052
77,395
2.6%
2008
84,554
7,059,752
83,494
2.4%
Source: City of Newport Beach Library Services Department
lim
CITY OF NEWPORT BEACH
Principal Employers
Current Year and 3 years ago
Source: Newport Beach Chamber of Commerce
im
2008
2005'
Number of
Percent of Total
Number of
Percent of Total
Employer
Employees
Rank
Employment
Employees
Rank
Employment
Hoag Memorial Hospital
4,168
1
5.05%
3,640
1
N/A
Pacific Life Insurance
2,997
2
3.63%
2,788
2
N/A
Downey Savings & Loan
2,234
3
2.71%
1,386
3
N/A
City of Newport Beach
827
4
1.00%
788
4
N/A
Pacific Investment Management Co.
735
5
0.89%
530
7
N/A
Jazz Semi - Conductor
649
6
0.79%
730
5
N/A
The Island Hotel
520
7
0.63%
525 2
8
N/A
Newport Beach Marriott Hotel &
Tennis Club
473
8
0.57%
475
9
N/A
Conexant Systems Inc.
290
9
0.35%
650
6
N/A
Mindspeed Technology
280
10
0.34%
390
10
N/A
' Information for nine years ago is not
available.
2 The Island Hotel was formerly the Four
Seasons Hotel.
Source: Newport Beach Chamber of Commerce
im
This section of the City of Newport Beach's Comprehensive Annual Financial
Report (CAFR) presents detailed information as a context for understanding what
the information in the financial statements, note disclosures, and required
supplementary information says about the City's overall financial health. The
statistical information presented herein is un- audited.
The following schedules present information on the City's operations and
resources including service and infrastructure data to facilitate the readers
understanding of how financial statement information relates to the services the
City provides and the activities it performs:
• Full Time City Employees by Functions
• Operating Indicators by Function
• Capital Asset Statistics by Function
• Water Sold by Customer Type
• Water Rates
• Major Water Customers
Sources: Unless otherwise noted, the information in these schedules is derived from the
Comprehensive annual financial reports and underlying accounting records for the relevant year.
M
Function
General government
Public safety
Community development
Public works
Community services
Balboa yacht basin
Water
Wastewater
CITY OF NEWPORT BEACH
Full -time City Employees by Function
Last Ten Fiscal Years
Full -Time Employees as of June 30, 2008
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
63
69
75
77
77
84
86
90
93
93
342
344
358
384
384
385
385
388
393
397
37
39
42
44
46
46
47
48
52
56
154
157
155
163
164
162
162
163
163
165
49
51
53
57
58
57
60
65
66
68
1
1
1
1
1
1
1
31
31
34
33
33
33
34
34
34
35
11
11
10
12
12
13
13
13
13
13
Total 688 703 728 771 775 781 788 801 814 827
Source: City Administrative Services Department
201
Source: City of Newport Beach
202
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
Fiscal Year
1999
2000
2001
2002
2003
Police:
Adult Arrests
3,029
3,396
3,494
3,684
3,485
Parking Citations Issued
72,711
76,993
74,068
73,191
68,907
Fire:
Fire Responses
260
353
365
359
442
Fire Inspections
6,216
6,173
6,173
6,400
4,460
General Services:
Street Patching (tons of mix)
3,200
4,400
5,000
5,500
5,500
Sidewalk Repair (square feet)
59,645
65,000
50,000
50,000
55,000
Recreation & Senior Services:
Co- Sponsored Youth Organizations
132,500
141,594
165,464
188,689
200,077
Senior Transportation Services
10,260
10,260
11,000
10,917
12,094
Water:
New connections
253
163
154
118
99
Average daily consumption (hundred
cubic ft.) 17
17
17
17
17
Sewer:
New connections
N/A
N/A
N/A
N/A
50
Miles of Pipe Cleaned
N/A
N/A
N/A
202
262
Library Services:
Library Circulation of Materials
1,240,000
1,130,000
1,250,713
1,263,200
1,347,583
Source: City of Newport Beach
202
Fiscal Year
2004
2005
2006
2007
2008
3,201
3,079
2,999
3,289
3,599
71,076
72,665
74,780
67,170
67,258
423
228
214
175
247
4,500
4,550
6,470
7,136
6,682
5,000
4,500
4,600
4,980
4,644
50,000
50,000
55,000
59,459
60,222
185,627
194,749
194,722
201,258
255,424
12,041
11,936
13,000
13,493
14,500
53
55
52
95
60
17
17
17
17
17
25
24
24
45
45
293
205
335
226
241
1,392,346 1,475,025 1,443,078 1,622,573 1,622,573
203
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
1999 2000 2001 2002
Police:
Stations
1
1
1
1
Fire:
Fire stations
6
6
6
7
Lifeguard Headquarters
1
1
1
1
Public works:
Streets (miles)
234
311
315
325
Streetlights
N/A
N/A
N/A
7,277
Traffic signals
N/A
N/A
121
130
Recreation & Senior Services:
Parks
45
45
45
47
Community centers
10
10
10
11
Aquatic Center
1
1
1
1
Water:
Water mains (miles)
N/A
N/A
282.35
294.81
Maximum daily capacity (thousands of gallons)
N/A
N/A
20,959
20,796
Wastewater:
Sanitary sewers (miles)
N/A
N/A
200.02
176.90
Storm sewers (miles)
N/A
N/A
103.08
51.40
Library Services:
Libraries
4
4
4
4
Source: City of Newport Beach
204
Fiscal Year
2003 2004 2005 2006 2007 2008
1
1
1
1
1
1
7
7
8
8
8
8
1
1
1
1
1
1
333
333
333
333
399
401
7,277
7,277
7,277
7,277
7,278
7,278
131
131
144
147
145
148
47
47
47
47
47
48
11
11
11
11
12
13
1
1
1
1
1
1
294.81
294.81
298.42
299.88
297.40
297.40
21,291
20,092
20,633
19,369
20,392
20,365
178.40
179.15
179.15
179.15
202.80
202.80
53.50
57.60
57.60
57.60
95.50
95.50
4
4
4
4
4
4
205
CITY OF NEWPORT BEACH
Water Sold by Type of Customer
Last Ten Fiscal Years
(in hundred cubic feet)
Fiscal Year
Source: City Utilities Department
M.
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Type of Customer:
Residential
N/A
N/A
4,227,699
4,459,302
4,430,485
4,362,402
4,289,629
4,190,791
4,492,489
4,046,969
Commercial
N/A
N/A
1,487,538
1,552,366
1,604,931
1,659,565
1,568,462
1,440,377
1,302,578
1,184,904
Government
N/A
N/A
678,594
480,809
597,395
486,051
487,189
607,650
601,659
361,457
Total
N/A
N/A
6,393,831
6,492,477
6,632,811
6,508,018
6,345,280
6,238,818
6,396,726
5,593,330
Total direct rate
per 100 cubic ft.
2.00
2.00
2.00
2.00
2.00
2.00
2.00
2.08
2.08
2.08
Source: City Utilities Department
M.
CITY OF NEWPORT BEACH
Water Rates
Last Ten Fiscal Years
Fiscal Year
Ended June Monthly Rate per
30 Base Rate 100 cubic ft
1999
8.85
2.50
2000
8.85
2.50
2001
8.85
2.50
2002
8.85
2.50
2003
8.85
2.50
2004
8.85
2.50
2005
8.85
2.50
2006
10.75
2.73
2007
10.75
2.73
2008
10.75
2.73
Note: Rates are based on 3/4" meter, which is
the standard household meter size. The
City charges an excess -use rate above
normal demand.
207
CITY OF NEWPORT BEACH
Major Water Customers
Current Year and Seven Years Ago
' Information for fiscal years ended prior to 2001, is not available.
Source: City Revenue Division
M.
2008
2001'
Percent of Total
Percent of Total
Water Customer
Water Charges
Rank
Water Revenues
Water Charges
Rank
Water Revenues
Big Canyon Country Club
$ 206,375
1
1.16%
$ 169,900
2
0.95%
Irvine Apartment Management
132,099
2
0.74%
N/A
0.00%
Hoag Memorial Hospital
121,240
3
0.68%
101,436
6
0.57%
Newport Beach Country Club
118,389
4
0.66%
152,362
3
0.86%
Park Newport Ltd
94,305
5
0.53%
150,062
4
0.84%
UDR Newport Beach
92,155
6
0.52%
N/A
0.00%
The Irvine Company
90,384
7
0.51%
267,688
1
1.50%
Pacific View - Pierce Bros.
68,636
8
0.39%
47,466
11
0.27%
Newport-Mesa USD
66,691
9
0.37%
N/A
0.00%
Irvine Retail Properties
63,257
10
0.36%
N/A
0.00%
Spyglass Hill Community Assoc.
46,548
11
0.26%
N/A
0.00%
Eastbluff Homeowners Comm. Assoc.
45,002
12
0.25%
N/A
0.00%
Newport Dunes Resort
44,762
13
0.25%
N/A
0.00%
Villa Balboa Community Assoc.
40,779
14
0.23%
N/A
0.00%
De Anza Bayside Village
40,463
15
0.23%
63,948
8
0.36%
$ 1,271,085
7.14%
$ 952,862
5.35%
' Information for fiscal years ended prior to 2001, is not available.
Source: City Revenue Division
M.