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City of Newport Beach
Fiscal Year Ended June 30, 2010
E�i emc4y
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2010
Prepared by the Administrative Services Department
Tracy McCraner, Director
The City of Newport Beach was incorporated September 1, 1906
The present City Seal was adopted July 22, 1957
INTRODUCTORY SECTION o
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CITY OF NEWPORT BEACH
Comprehensive Annual Financial Report
Year Ended June 30, 2010
TABLE OF CONTENTS
INTRODUCTORY SECTION
(Unaudited)
Tableof Contents ......................................................................................... ..............................1
Letterof Transmittal... .............................................. ............... ................................................. 5
GFOA Certificate of Achievement for Excellence in Financial Reporting ... .............................19
Listof City Officials ..................................................................................... .............................20
OrganizationChart ...................................................................................... .............................21
FINANCIAL SECTION
Independent Auditors' Report ............................................................... .............................25
Management's Discussion and Analysis ............................................. .............................29
(Required Supplementary Information)
Basic Financial Statements
Government -wide Financial Statements:
Statement of Net Assets .................................................................... .............................51
Statement of Activities ...................................................................... ...............................
52
Fund Financial Statements:
Governmental Funds:
BalanceSheet ................................................................................. .............................57
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets ............................................................ .............................57
Statement of Revenues, Expenditures and Changes in Fund Balances ......................
58
Reconciliation of Statement of Revenues, Expenditures and Changes
In Fund Balances of Governmental Funds to the Statement of Activities ..............60
Budgetary Comparison Statements:
GeneralFund ............................................................................ .............................61
Tide and Submerged Land Fund ............................................... .............................63
Proprietary Funds:
Statement of Net Assets ............................................................. ...............................
67
Statement of Revenues, Expenses and Changes in Fund Net Assets .....................68
Statement of Cash Flows ............................................................. .............................69
Fiduciary Funds:
Statement of Fiduciary Assets and Liabilities — Agency Funds ..... ...............................
73
Notes to the Financial Statements ..................................................... .............................77
Supplementary Schedules
Non -Major Governmental Funds:
Combining Balance Sheet .................................. ............................... ............................136
Combining Statement of Revenues, Expenditures and Changes in
FundBalances ................................................... ............................... ............................144
Budgetary Comparison Schedules:
StateGas Tax Fund ........................................... ............................... ............................151
Asset Forfeiture Fund ........................................ ............................... ............................152
OTSDUI Grant Fund ......................................... ............................... ............................153
186
JAGFund ........................................................... ............................... ............................154
Circulation and Transportation Fund .................. ............................... ............................155
Building Excise Tax Fund ................................... ............................... ............................156
Combined Transportation Fund ......................... ............................... ............................157
Community Development Block Grant Fund ...... ............................... ............................158
Air Quality Management District Fund ............... ............................... ............................159
Environmental Liability Fund ................................ ............................... ..........................160
194
Supplemental Law Enforcement Fund ............... ............................... ............................161
Traffic Congestion Relief Fund ........................... ............................... ............................162
Newport Coast Annexation Fund ........................ ............................... ...........................163
Proposition 1B Transportation Fund .................. ............................... ............................164
Contributions Fund ........................................................ ...............................
165
Internal Service Funds:
Combining Statement of Net Assets .................. ............................... ............................169
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets.......
170
Combining Statement of Cash Flows ................. ............................... ............................171
Fiduciary Funds:
Combining Statement of Fiduciary Assets and Liabilities ................. ............................175
Statement of Changes in Fiduciary Net Assets .. ............................... ............................176
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, 2010 .. ............................... ............................187
Property Tax Levies & Collections ........................... ............................... ............................188
Debt Capacity:
Ratio of Outstanding Debt by Type .......................... ............................... ............................190
Outstanding Debt Serviced by the General Fund .... ............................... ............................192
Schedule of Direct and Overlapping Debt ................. ............................... ...........................193
Computation of Legal Debt Margin ................................... ................ ..................................
194
Revenue Bond Coverage, Last Ten Fiscal Years .... ............................... ............................196
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
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CITY OF NEWPORT BEACH
ADMINISTRATIVE SERVICES
Tracy M. McCraner, Director/ Treasurer
December 22, 2010
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, 2010, 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, 2010, 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, 2010, 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.newportbeachca.us
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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.
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:
Angeles
County San
Bernardino
0 0 County
v\ Riverside
Orange County
�COaOty
NEWPORT
B(ACH
v
Sanl
Diego
County
■
0
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 86,738 which typically grows to over
100,000 during the summer months, including 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.
Costs Mesa
L,EU hM
The
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The City of Newport Beach was incorporated September 1, 1906. The current City
Charter was adopted in 1954, updated in 1974 and recently amended in November
2010. 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.
Component Unit: 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.
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
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increase the total appropriations of any fund over $10,000 must be approved by the City
Council.
LOCAL ECONOMIC MIX
From 1950 to 2009, the population of the City increased from 12,120 to 86,738. 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 91,321 residents by the year 2015.
For FY 2009 -2010, General Fund revenues approximated $147 million. The top three
individual revenue sources, Property Taxes, Sales Taxes and Sales Tax in Lieu, and
Transient Occupancy Taxes (TOT), represent 71.6% of all General Fund revenues. Tax
revenues in total, including business licenses, franchise fees and other taxes represent
nearly 77% of all General Fund revenues while only 23% is generated by other revenue
sources.
General Fund Revenues
■ Property Taxes
■ Sales Taxes
■ Sales Tax In Lieu
_ ■ Transient Occupancy Taxes
■ Other Taxes
7.8% %2 ■ All Other Sources
3.1
11.8%
Property Taxes: Property taxes account for nearly 49% of all General Fund revenues.
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. In Fiscal Year 2009 -10 the State borrowed 8 % of property tax
revenues from counties, cities and special districts, all to be repaid within three years, in
accordance with Proposition 1A (2004) approved by voters in 2004. The City's share of
the borrowing was approximately $6.2 million. The City recovered the full amount of the
borrowing in Fiscal Year 2009 -10 by participating in a securitization program through
the California Statewide Communities Development Authority.
7
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 14.9% of all General Fund revenues.
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, "New
Auto Sales" accounts for 21.1% of total sales taxes and is represented by ten
dealerships. The next largest segment, "Restaurants," accounts for 19.8% of total sales
taxes and is represented by 310 restaurants. The "Other" categorization accounts for
another 13.3% and is represented by 794 businesses.
Sales Tax by Business Segment
2.0%
3.3%
4.3
4.9% -
6.5 %-
7.2%
7.3% 10.2%
■ New Auto Sales -10
• Restaurants -310
• Leasing -58
• Apparel Stores -187
• Department Stores - 20
• Miscellaneous Retail -766
• Service Stations -16
• Food Markets - 40
• Office Equipment -78
• Light Industry -148
• Other -794
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
$11.4 million in annual TOT revenue.
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Commercial Property:
Inns, Motels and Hotels
Residential Property:
Vacation Rentals
Annual
Revenue Percent
(In Millions) of Total
$10.4 91.3%
$ 1.0 8.7%
$11.4 100%
ECONOMIC OUTLOOK & FACTORS EFFECTING FISCAL PLANNING
U.S. Economy: The National Bureau of Economic Research (NBER) determined that
the national recession that began in December 2007 and ended in June 2009 was the
longest recession since World War II and the most severe since the Great Depression.
Following the deep 1981 -82 recession, the U.S. economy bounced right back with real
Gross Domestic Product (GDP) growing 4.5% in 1983 and 7.2% in 1984. By contrast,
current data and consensus amongst economists, suggests a slower recovery than
previously expected. As illustrated below, the California Legislative Analyst Office
(LAO), projects the GDP growth will be 2.6% in 2010, 2.2 % in 2011, and no higher than
3.1% in 2012. Unemployment currently at 9.6% nationally is forecast to remain above
9% through 2012.
4.0%
3.0%
2.0%
1.0%
-2.0%
-3.0%
U.S. Real GDP Growth
2004 I 2005 1 2006 1 2007
2010 201 1 2008 1 2009 I Estimate d I Projected Projected
ItSeriesl1 3.6% 1 3.1% 1 2.9% 1 2.0% 1 0.4% 1 -2.6% 1 2.6% 1 2.2% 1 3.1% 1
Source: LAO's Economic Forecast
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State of California Economic Recovery: Though the economic outlook for the State
mirrors that of the nation as a whole, problems in the job market appear to be more
pronounced in California than the rest of the nation resulting in a much slower recovery.
While the U.S. unemployment rate has increased 5 percentage points since 2007,
unemployment in California has increased 9 percentage points and unemployment is
projected to remain at over 10% through 2012. With a large `hidden inventory' of homes
in default or facing foreclosure, tight credit and a 40% employment decline in the
construction section since 2007, recovery in the housing market is forecast to be slow.
California State Budget: The State budget is of great concern to all cities, including
Newport Beach. The State's inability to achieve meaningful on -going budget solutions
has resulted in massive lingering budget problems in the coming months and into the
foreseeable future. As depicted by the following chart, the LAO projects that absent
corrective action, the State will have a $6.1 billion deficit for 2010 -11 and a $19.2 billion
shortfall between revenues and expenditures in 2011 -12 with similar projections for the
succeeding years.
0
-5
-10
-15
-20
-25
State Budget Operating Shortfalls
(In Billions)
2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15
Source: lAO's California Fiscal Outlook
Three major budget - related measures were approved by voters at the November 2nd
general election. Proposition 25 changes the vote threshold needed to send a budget
bill to the Governor from two- thirds to a simple majority, which will help make it easier
for the Legislature to pass an on -time budget each year. The effects of voters approving
Proposition 22 and Proposition 26, which restrict the Legislature's ability to use certain
transportation special funds to help balance the budget and raise the vote threshold for
passing certain fees from a simple majority to two - thirds respectively, will reduce
General Fund solutions by nearly $800 million, as estimated by the LAO.
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Considering the projected annual shortfalls, the LAO recommends that the State
consider a multi -year approach and minimize the use of risky budgetary measures that
it believes contribute to fiscal year -end deficits.
LOCALECONOMY
Local Impact of the State's Budget Crisis — On October 8, 2010, the Governor signed
the 2010 Budget Act (the "2010 -11 State Budget Act ") to address a then - projected
$19.3 billion shortfall in revenues. The funding provisions included in the 2010 -11 State
Budget Act are expected to have minor impacts on City operations.
The City has reviewed the 2010 -11 Budget Act and reflected the reductions included
therein in its Fiscal Year 2010 -11 Adopted Budget. The primary impact to the City from
the 2010 -11 Budget Act is the delay of new Highway Users Tax Account payments.
City monthly payments for the remainder of Fiscal Year 2010 -11 will be increased and
adjusted to compensate for the deferral. Given the current state of the State's economy
and the projected imbalance in the State's budget, the City cannot fully anticipate the
impact of the State's continuing budget challenges on the revenues or expenditures of
the City. The City cannot predict the extent of any additional fiscal problems that will be
encountered in this or in any future fiscal years, and, it is not clear what measures will
be taken by the State or federal government to address the continuing economic
downturn. Future State budgets could be affected by national economic conditions and
the factors over which the City will have no control. Also, the City cannot predict what
actions will be taken in the future by the State Legislature and the Governor to address
the State's current and future budget deficits or the impact that such actions will have on
the City's finances and operations. To the extent that the State budget process results
in reduced revenues or increased expenses to the City, the City will be required to make
adjustments to its budget.
Property Taxes: Unlike many cities, property taxes, not sales taxes, are the number
one source of revenue for the City of Newport Beach, representing 46.7% 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 has been developed into affluent residential neighborhoods
and high -end commercial districts.
Despite the dramatic declines in the real estate market, sales data for the month of
October, 2010, demonstrates the relatively high density of affluence throughout the
residential communities. Median home sales prices in all areas of the City approach or
exceed $1 million.
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CITY OF NEWPORT BEACH
Median Home Sales*
Comparitive Month Ending October
Median Median Number of Number of
Newport Beach Sales Price Sales Price Home Sales Home Sales
Zip Code 2009 2010 2009 2010
92625
$
1,410,000
$
1,550,000
26
19
92660
$
907,500
$
968,250
37
39
92661
$
2,000,000
$
1,737,500
5
6
92662
n/a
$
1,645,000
0
2
92663
$
950,000
$
1,300,000
30
19
92657
$
1,840,000
$
1,135,000
19
14
All Orange County
$
400,000
$
432,000
2,177
2,528
* Source: DataQuick Information Systems
Due to a vigorous demand for coastal property, the City has enjoyed long -term growth
trends with its number one revenue source. Over a ten -year period, assessed valuation
increased an average of 8.88% per annum and 6.45% over a twenty -year period. 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, effectively insulating the tax base from
more erratic market value gyrations.
Although assessed value growth has slowed for the last several years and will likely
continue to decrease in 2010 -11, we are hopeful that assessed valuations will modestly
rebound in years thereafter.
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14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
-2.00%
20 Year Assessed P rope rty Value Growth
*The 2000 -03 datapoint was normalized to reduce the impact the Newport Coast Annexation had on the
assessed valuation growth trendline.
Although the City has normally been any able to rely on steady growth in assessed
valuation of 4% or more, it is probable the City will build the 2010 -11 budget
assumptions around a zero growth scenario with contingencies for a decline of
assessed valuation.
Sales and Transient Occupancy Revenues: Because sales tax and TOT revenues
follow consumer behavior, they are much more volatile than property taxes. The current
economic recession, falling home prices and tightening credit policies have significantly
depressed consumer spending patterns. Sales taxes were down by $0.5 million during
2009 -10 and are expected to remain flat in 2009 -10 until employment conditions
improve and consumer confidence is restored. Transient occupancy tax collections
generally follow a similar trend as sales taxes and were just a tad up in 2009 -10 due to
a full year's operation of a luxury resort. TOT revenues are currently expected remain at
2009 -10 revenue levels before modestly rebounding in 2011 -12.
15
SAS eased Value GmMh
— Trrendline (3 Yr Avemge Growth)
o
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rr �n co r
m rn rn rn
m rn rn rn rn
w m
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0
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0
0
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*The 2000 -03 datapoint was normalized to reduce the impact the Newport Coast Annexation had on the
assessed valuation growth trendline.
Although the City has normally been any able to rely on steady growth in assessed
valuation of 4% or more, it is probable the City will build the 2010 -11 budget
assumptions around a zero growth scenario with contingencies for a decline of
assessed valuation.
Sales and Transient Occupancy Revenues: Because sales tax and TOT revenues
follow consumer behavior, they are much more volatile than property taxes. The current
economic recession, falling home prices and tightening credit policies have significantly
depressed consumer spending patterns. Sales taxes were down by $0.5 million during
2009 -10 and are expected to remain flat in 2009 -10 until employment conditions
improve and consumer confidence is restored. Transient occupancy tax collections
generally follow a similar trend as sales taxes and were just a tad up in 2009 -10 due to
a full year's operation of a luxury resort. TOT revenues are currently expected remain at
2009 -10 revenue levels before modestly rebounding in 2011 -12.
15
IKCki"I;I V 4Iy1ki /_1ki [y /_1 aUA_1ZIZII�M
The City takes long -term financial planning seriously and has developed several master
replacement plans for its critical assets and infrastructure including major facilities,
street pavement, water and sewer infrastructure, and City vehicles and heavy
equipment. The City has a 30 year Facilities Replacement Plan (FFP) in place with a
long -term comprehensive view of City facilities with annual contributions to FFP not to
exceed 5 % of General Fund Operating Budget. The plan which was recognized by the
League of California Cities with the prestigious Helen Putnam Award of Excellence in
Internal Administration, had cash reserves of $27.5 million as of June 30, 2010.
The City exercises prudent Risk Management maintaining excess liability coverage and
retains actuaries to reliably predict and fund long -term liabilities including workers
compensation, general claim liabilities, pension liabilities and post employment health
care liabilities. Reserve levels and annual required funding contributions are set by
Council policy. Except for the implied subsidy component of the City's post employment
health care plan (OPEB liability), the City policy is to fund the cash subsidy of our OPEB
liability and pension liabilities at 100% of the actuarially determined annual required
contribution (ARC). Because the City pays the entire ARC each year, its net pension
and net OPEB obligation at the end of each year is $0 (except for the implied subsidy
component of OPEB which is funded on a pay -as- you -go basis).
To close a projected deficit in FY 2009 -10 General Fund, the City implemented an Early
Retirement Incentive Program (ERIP) in December 2009 by providing eligible
participating employees with a supplemental to their normal PERS retirement benefits
through an additional payment from the City. Fifty -one employees elected to participate
in the program, thus reducing the deficit by $1.8 million. The program will help reduce
annual payroll costs by $3 million in the General Fund. See footnote 11 in the notes to
the financial statements.
To mitigate the rising cost of pension plans, the City negotiated cost sharing
agreements with certain safety employee associations to contribute 3.5% of base pay to
offset the PERS member contribution. Regarding OPEB plan liabilities, the City closed
the defined benefit component of the OPEB plan to new participants in 2006. The new
plan resembles a defined contribution style plan through which once the contribution is
made the employee account, the employer has no further funding obligation to the plan.
See footnote10 and 12 of the notes to the financial statements for further information on
the funding status of the City's pension and OPEB plans.
Stewardship: The City has long taken a conservative approach to forecasting
revenues, often assuming a "worst case scenario." This fiscal conservatism has
created a stable financial base. As a result, even in a downturn, the City of Newport
Beach is able to maintain its services at a high level, while reducing expenses to
accommodate reduced revenues. The City's fiscal discipline has allowed it to prepare
balanced budgets and save, both during prosperous and difficult economic periods.
While the current recession is much deeper than expected, management and the
16
Council were able to act swiftly to trim the operating budget at the midpoint of the
2009 -10 fiscal year, averting a decline in the fund balance of the General Fund. The
General Fund ended the year with a $82.2 million fund balance, a net increase of
$2.5 million. Of this amount, $5.5 million is reserved and is not available to finance new
activities because it has already been committed to fulfill contractual obligations or 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 for
unexpected emergencies, $17.3 million for unspecified future appropriations,
$3.5 million for capital projects that were not completed during the fiscal year and
$37.0 million designated for other special purposes including $27.5 million designated
for the City's facilities replacement plan such as the new Civic Center and $5.0 million
designated to offset unexpected increases in PERS pension costs.
2010 -11 Cost Saving Measures: The City has taken various measures to reduce
budget shortfalls in 2010 -11. The City entered a second phase restructuring effort to
affect additional long -term cost savings and improved efficiencies; outsourcing their
Street Sweeping Program, saving $0.5 million a year, and in partnership with fire,
lifeguards, and police associations, negotiated for public safety to pick up $0.9 million in
annual pension expense, up from zero last year. In December 2010, the City reached
agreements with some non - safety employee bargaining units requiring employees to
pay more for their retirement cost. The City will continue to look at various additional
sharing arrangements pertaining to pension.
Major Initiative: 2010 Civic Center Certificates of Participation (COPs) Issued
In November 2010, the City entered the capital markets issuing nearly $128 million of
Certificates of Participation (COPs), made up of $20.1 million in 2010A Certificates of
Tax Exempt bonds and $106.6 million in 2010B Certificates of federally taxable direct
pay Build America Bonds (BABS). All Three rating agencies (S& P, Fitch and Moody's)
rated the City of Newport Beach as an AAA underlying City rating, making it one of only
five California cities and the first Orange County city to receive this triple award from all
three rating agencies. The City COPS were very well received by both the tax - exempt
and taxable markets. General investor sentiment cited several reasons for the strong
demand: the City's top ratings and well known name, the City's solid credit story, the
lease structure and project, as well as a long history of conservative fiscal management
and policies. A portion of the proceeds was used to refinance the City's 1998
outstanding Library COPs. Construction proceeds of $123 million will be used to make
construction progress payments so that progress already made on the Civic Center site
can continue and remain on schedule for the anticipated completion in late 2012.
17
I_\' P1_1N 11~ '1_1ki II1_191 :V1611A121010 �j14ki I &y
Awards: The City has prepared a comprehensive annual financial report for the past 18
years. The City has received 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, 2009. In order to be awarded a Certificate of Achievement, a
government unit must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted
accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our
current comprehensive annual financial report continues to conform to the Certificate of
Achievement program 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 the
Graphics and Print Services unit. 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.
David A Kiff
City Manager
18
Tr Ay McCraner
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, 2009
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.
ce,01 V
tsdio M$
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C4lPOtAtICV .�
?Hartc President
Executive Director
19
L to R: Mayor Pro Tern Michael F. Henn, Mayor Keith D. Curry, Council Members: Edward D. Selich,
Leslie J. Daigle, Nancy Gardner, Steven Rosansky and Don Webb
City Attorney
David R. Hunt
Dana M. Smith ..............................
Tracy M. McCraner .......................
Jay Elbettar ... ...............................
Steven Parker ...............................
Mark Harmon . ...............................
Terri L. Cassidy ............................
Cynthia Cowell .............................
Vacant........... ...............................
Jay Johnson .. ...............................
Steve Badum . ...............................
Laura Detweiler ............................
George Murdoch ..........................
City Manager
Dave Kiff
20
City Clerk
Leilani Brown
.......... ............................... Assistant City Manager
...........Administrative Services Director /Treasurer
..................... ............................... Building Director
........................ I .......................... Interim Fire Chief
...... ............................... General Services Director
.... ............................... Human Resources Director
............... ........................Library Services Director
............................ .......................Planning Director
............................ ............................... Police Chief
............. ............................... Public Works Director
................. Recreation & Senior Services Director
...................... ............................... Utilities Director
ELECTORATE
r DUILDINGCODE 1
BOARD OF APPEALB
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CIVIL SERVICE ROARD CITY CLERK
L- - - -- -J
r- - - - - -�
PL NNING COMMISSION
L- - - - - -J
ASSISTANT CITY MANAGER
CommunTy antl Emremic U— Idpmant
Code Enffiddi
PLANNING
Land Use and Development
Long -Range Planning
Planning Commission Support
Housing Programs
BUILDING
Adminiatrafion Plan ChecklPelmit Services
Public Counter Inspections
Use and Occupancy Residential Building Records
FIRE
Fire Suppression (Operations) Ocean Lifeguards
Training and Educetion Hazardous Materials
Fire Prevention Junior Lifeguard! Program
Administration Emergency Medical Services
POLICE
Patrol Suppod Services
Traffic Chief of Police
Detective
MAYOR
a
COUNCIL
II CITYATTORNEY I
CITY MANAGER
ADMINISTRATIVE SERVICES
AccountinglReportinglBudgeting
Treasury Management
Billing &Receivables
PayrolllACmuma Payable
I
Cashiering
Geographic Information Systems
Revenue
Information Technology
Purchasing& Warehousing
Printing &Postal Services
O
ELECTED OFFICIALS
Fiscal Year 2009 -2010
r — — — — — — i
BOARD OF LIBRARY TRUSTEES
L- - - - - -J
r— PARKS, —B BEACHES& 1
RECREATION COMMISSION
CITYARTB COMMISSION
L- - - - - -J
r- - - - - -�
HARBOR COMMISSION
L— - - - - -J
ASSISTANTCITYMANAGER
Madder Re—
Fuelk lMOrnnaeon
Envlrmmental Enfomemnrt
UTILITIES
Water sedvice Wastewater Dollars.
Electrical Services Oil & Gas Production
Administration Street Lights
GENERAL SERVICES
Parks and Trees
Operations Support
Field Maintenance
Toms, Signs &Markings
Building Maintenance
denied Collection
Equipment Maintenance
Recycling
PUBLIC WORKS
Engineering CIP Design & Construction
Infrastructure Master Planning Development Services
Traffic Planning & Engineering Public Right Way Permitting
LIBRARY SERVICES
Central Libary, & Branches
Information & Reference Services
Adult &Yacht Programs
Arts &Culturel Services
Literacy Services
Board of Library Tmsteea Sudden
City Arts Commiss'Ion Support
Sister City Associatdn Suppon
RECREATION & SENIOR SERVICES
ouch &Aduti Spuds Progr'ama Senior Programa & Services
IaygmundrPark Development Special Events
mility ManagementlRese nations PEP R Commiscion Suppod
HUMAN RESOURCES
Recruitment
General Liability
EmployieASbor Relall
Benefits Administration
Classiddiicumcom's,mudion
Workers COmpensafion
Citywide Training
Retiree Counseling &Benefits
Civil Service Spend Support
Griavande" Discipiinea
r - - -- i
L
COUNCIL APPOINTED BOARDS & COMMISSIONS COUNCIL APPOINTED POSITIONS CITY DEPARTMENTS
21
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22
FINANCIAL SECTION
INDEPENDENT Z
AUDITORS' REPORT O
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Mayer Hoffman McCann P.C.
An Independent CPA Firm
2301 Dupont Drive, Suite 200
Irvine, California 92612
949 - 474 -2020 ph
949- 263 -5520 fx
www.mhm - pc.com
City Council
City of Newport Beach
Newport Beach, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying basic 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, 2010, 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
basic 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 basic 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, 2010, and the respective changes in financial position and cash flows,
where applicable, of the City of Newport Beach, California and the respective budgetary
comparison information for the general fund and major special revenue funds of the City for the
year then ended in conformity with accounting principles generally accepted in the United States
of America.
The information identified in the accompanying table of contents as management's discussion
and analysis 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 fiind financial statements, schedules and statistical
tables are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The combining and individual nonmajor fund financial statements and
schedules have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole. The introductory section and statistical tables have
not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
In accordance with Government Auditing Standards, we have also issued a report dated
December 23, 2010 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 Avditin;
Standards and should be considered in assessing the results of our audit.
Irvine, California
December 23, 2010
26
FINANCIAL SECTION
MANAGEMENTS Z
DISCUSSION AND ANALYSIS O
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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, 2010. 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 $2.324 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 $2.193 billion, while the remaining
balance of net assets totaled $130.5 million. Of this amount, $96.1 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 $1.8 million (0.08 %) to $2.324 billion as a
result of current year activities. The increase is attributable to a half - year's savings
in payroll due to the implementation of an Early Retirement Incentive Program and
stronger tightening by the City Manager for all General Fund expenditures.
• The City's total liabilities increased by $1.2 million, from $50.6 million to $51.8
million, during the current fiscal year. The increase is the net result of regular debt
service payments of $3.4 million offset by a net increase in our estimate of our
OPEB liability of $2.0 million, an addition of $4.4 million for an Early Retirement
Incentive Program and $1.5 million to Purchase Agreement Payable as well as an
increase of $5.7 million in various internal service fund liabilities.
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.
29
• At the close of the current fiscal year, the City's Governmental Funds reported a
combined ending fund balance of $110.2 million, a decrease of $10.9 million.
Approximately $95.4 million is unreserved fund balance available to fund current
obligations at the City Council's discretion. Of the $95.4 million unreserved fund
balance, City Council has designated $18.9 million for contingencies in unexpected
financial emergencies, $17.3 million for unspecified future appropriations, $4.3
million for capital projects that were not completed during the fiscal year, and $37.0
million designated for other special purposes including $27.5 million for facilities
identified for replacement in the City's facilities replacement plan. The remaining
$17.5 million is made up of smaller amounts designated across various funds.
• The General Fund reported an increase of $2.5 million in fund balance after
transferring $20.7 million to other funds. Of this transfer, $20.1 million represented
a routine transfer to subsidize the operations of the Tide and Submerged Land
Fund and a $0.5 million transfer to the Debt Service Fund.
• At the end of the current fiscal year, unreserved fund balance for the General Fund
was $76.7 million, or 52.3% of total General Fund expenditures and Tidelands
subsidy. Although unreserved and available to fund current obligations, 100% of
this balance is designated for contingencies, capital projects, appropriations, and
other special purposes.
COI94:01NVAW01aI off 1:8ylki /_1ki [d /_1 W-'3 IF_A121 JI;I IN &I
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.
BASIC FINANCIAL STATEMENTS
Government -wide Financial Statements — The Government -wide Financial
Statements are intended to provide a "Big Picture" view of the City as a whole using
accounting methods similar to those used by private sector companies. The statement
of net assets includes all of the City's assets (including non - spendable assets like
streets, roads, and land rights) and liabilities (including long -term liabilities that may be
paid over twenty or so more years). All of the current year revenues and expenses are
accounted for in the statement of activities regardless of when cash is received or paid.
The two Government -wide Financial Statements report the City's net assets and how
they have changed. Net assets — the difference between the City's assets and liabilities
— is one way to measure the City's financial health, or position. Over time, increases or
30
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
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
31
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,
retiree insurance, 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 as a useful indicator of a government's overall
financial condition over time. The City's combined net assets for the year ended June
30, 2010, as shown in Table 1, were $2.324 billion, increasing $1.8 million over the prior
year due to the implementation of an Early Retirement Incentive Program and stronger
fiscal constraints mandated by the City Manager for all General Fund Departmental
expenditures.
32
Current and other assets
Capital assets
Total assets
Other liabilities
Long -term liabilities outstanding
Total liabilities
Net assets
Invested in capital assets, net of debt
Restricted
Unrestricted
Total net assets
Table 1
Net Assets
(in thousands)
Governmental Activities
2009 2010
$ 182,934 $ 175,006
2,084,794 2,101,052
2,267,728 2,276,058
16,594 19,094
49,009 51,766
65,603 70,860
2,061,636 2,084,912
44,213 34,237
96,276 86,049
$ 2,202,125 $ 2,205,198
Business -Type Activities
2009
2010
2010
$ 15,234
$ 12,257
108,642
108,450
123,876
120,707
2,346
2,084
1,585
50,594
3,931
2,084
108,510
108,450
11,435
10,174
$119,945
$ 118,624
Total
2009
2010
$ 198,168
$ 187,263
2,193,436
2,209,502
2,391,604
2,396,765
18,940
21,178
50,594
51,766
69,534
72,944
2,170,146
2,193,362
44,213
34,237
107,711
96,223
$ 2,322,070
$ 2,323,822
Invested in Capital Assets - By far the largest component of net assets, $2.193 billion
(94.4 %), reflects the City's investment in capital assets (e.g., land, buildings,
infrastructure, and equipment) less accumulated depreciation and any related
outstanding debt used to 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, $34.2 million (1.5%),
represents resources that are subject to external restrictions on how they may be used.
Unrestricted Assets - The remaining balance of unrestricted net assets, $96.2 million
(4.1 %), may be used to meet the City's ongoing obligations to citizens and creditors.
• Overall, the City's net assets increased $1.8 million in the current fiscal year. Total
net assets increased $1.8 million (0.08%) to $2.324 billion as a result of current
year activities. The increase is attributable to a half - year's savings in payroll due to
the implementation of an Early Retirement Incentive Program. Other key financial
activity for the year ended June 30, 2010, is shown in Table 2.
33
Table 2
Changes in Net Assets
(in thousands)
Governmental Activities Business -Type Activities
2009 2010 2009 2010
Revenues:
Program Revenues:
Charges for services $ 36,739 $
Operating grants and capital contributions 13,404
Capital grants and contributions 24,634
General Revenues:
Taxes:
Property taxes
Sales tax
Sales tax in -lieu
Transient occupancy taxes
Other taxes
Intergovernmental (Unrestricted):
Motor Vehicle License Tax
Investment related income
Miscellaneous
Total revenues
Expenses:
General government
Public safety
Public works
Community development
Community services
Interest
Water
Wastewater
Total expenses
Increases in net assets
Net asset at beginning of year
Net assets at end of year
Total
2009 2010
37,789 $ 20,446 $ 20,781 $ 57,185 $ 58,570
15,678 - - 13,404 15,678
12,350 - - 24,634 12,350
70,127
72,000
-
-
70,127
72,000
17,926
17,441
-
-
17,926
17,441
7,503
4,540
-
-
7,503
4,540
11,171
11,401
-
-
11,171
11,401
8,465
7,943
-
-
8,465
7,943
356
315
-
-
356
315
2,862
1,414
511
229
3,373
1,643
1,863
1,820
-
-
1,863
1,820
195,050
182,691
20,957
21,010
216,007
203,701
16,431
17,083
-
-
16,431
17,083
79,301
79,403
-
-
79,301
79,403
45,600
55,445
-
-
45,600
55,445
10,284
10,082
-
-
10,284
10,082
20,589
17,232
-
-
20,589
17,232
437
373
-
-
437
373
-
-
18,211
18,733
18,211
18,733
3,753
3,599
3,753
3,599
172,642
179,618
21,964
22,332
194,606
201,950
22,408
3,073
(1,007)
(1,322)
21,401
1,751
2,179,717
2,202,125
120,953
119,946
2,300,670
2,322,071
$2,202,125 $
2,205,198
$119,946 $
118,624
$2,322,071
$2,323,822
Governmental Activities - The cost of all governmental activities in the current fiscal
year was $179.6 million. As shown in the statement of activities, $37.8 million of the
cost was paid by those who directly benefited from the programs, $28 million was
financed by contributions and grants received from other governmental organizations,
developers, and property owners for both capital and operating activities, and
$113.8 million was subsidized through general City revenues.
Net assets for governmental activities of the City at the beginning of the year were $2.2
billion, and increased by $3.1 million by the end of the year. The increase is attributable
to a half - year's savings in salaries and benefits due to the implementation of an Early
Retirement Incentive Program and City Manager mandated cost reduction across all
General Fund departments.
34
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)
2009
Total Cost
Net Cost
of Service
of Service
$ 16,431
$ (13,773)
79,301
(62,513)
45,600
(14,666)
10,284
(5,431)
20,589
(1,045)
437
(437)
$ 172,642 $ (97,865)
2010
Total Cost
Net Cost
of Service
of Service
$ 17,083
$ (14,078)
79,403
(61,456)
55,445
(27,170)
10,082
(5,276)
17,232
(5,449)
373
(373)
$ 179,618 $ (113,801)
Table 4
Program Expenses and Revenue - Governmental Activities
Year Ended June 30, 2010
(in millions)
General Public Safety Public Works Community Community Interest
Government Development Services
■ Total Expenses ■ Program Revenues ■ Program Revenues
Of the $113.8 million net cost, general revenues were used to finance the following
governmental activities, $61.5 million was utilized for public safety, $27.2 million was
utilized for public works, $14.0 million was utilized for general government, $5.4 million
was utilized for community services, $5.3 million was utilized for community
development and $0.4 million was utilized for interest on long -term debt.
The net cost of funding Public Works activities increased dramatically over 2009 by
$12.5 million. This was primarily attributed to the following factors: $7.0 million in one-
time contributions from community fund raising was received during FY 2009 for the
36
OASIS Senior Center, which opened in September 2010; due to timing differences in
revenue collections and expenses for the Assessment Districts, 2009 revenues were
greater than expenses causing net cost to be lower compared to FY 2010; and finally,
there was a one -time transfer to the Newport Mesa Unified School District (NMUSD)
from the Bonita Canyon Development Fund of $1.0 million which was used to finance
school district construction related projects.
Table 5
Governmental Activities
Year Ended June 30, 2010
Sources of Revenue
2%
21%
i Charges for Services
Contributions
15% Taxes
62
Other
37
Functional Expenses
10% 9%
6%
■ General Government
■ Public Safety
❑ Public Works
0
31% 44% ■ Community Development
❑ Community Services
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 $182.7 million.
Of this amount, 36.0% represents
program generated
revenue (20.7%
charges for
services and 15.3% capital grants
and contributions),
while the
remaining 64.0%
represents general revenue sources
(62.2% taxes and
1.8% from other sources).
• The City reported capital contributions of $10.6 million in public works program
revenues and $1.8 million in community services program revenues for a total of
$12.4 million in capital contributions. The majority of these contributions are related to
the property owner contributions associated with the new assessment district, the
funding from OC RDA for the utility underground project in the West Santa Ana
Heights and donations related to the construction of the OASIS Senior Center.
• The $3.4 million decrease in General Revenues over the prior year is a combination
of a few key factors:
o In spite of the poor economy, the City, unlike most other cities, has
enjoyed long -term stability in its number one revenue source at $72.0
million, due to a constant demand for coastal property. Over the past
ten years, assessed values have increased an average of 8.88% per
year. Assessed property values increased only 1.76% in the current
38
year versus 5.91% in the prior year. Property tax collections, in total,
including unsecured property and prior year collections, increased $1.9
million or 2.7% in the current year. Sales tax in -lieu however, decreased
$2.9 million, or 39.5% due to a $1.2 million correction from the State for
an over advance in 2009, as well as a result of reduced consumer
spending.
o At nearly $17.4 million and $11.4 million respectively, sales taxes and
transient occupancy taxes represent the number two and three top
individual revenue sources for the City. Due to the depressed economic
activity, sales taxes decreased $0.5 million, or 2.7% from the prior year
while transient occupancy taxes increased just slightly by $0.2 million or
2.1% from the prior year, due to a full year's operations of a luxury
resort which opened in FY 2009.
o Investment income decreased $1.4 million or 50.6% from the prior year
due to lower interest rates offset by an increase in fair value of
investments in the current year. An increase in the fair value of
investments usually occurs in a falling interest rate environment when
the stated rate of return exceeds the current market rate.
Expenses:
• In the current year, expenses for all governmental activities totaled $179.6 million.
Overall, an increase of $7.0 million, 4.0 %, over the prior year, this is primarily
attributable to the following factors:
• Public Works expenses increased $9.8 million, 22 %, when compared
to prior year primarily due to utility undergrounding activities in both the
West Santa Ana Heights community and in Assessment District. Also,
there was a one -time transfer to the Newport Mesa Unified School
District (NMUSD) from the Bonita Canyon Development Fund of $1.0
million which was used to finance school district capital improvements.
• Community Services expenses decreased $3.4 million, 16 %, due to a
decrease in maintenance costs for libraries and community recreation
and senior centers in the current year.
Business -type Activities — Business -type activities are financed primarily by fees
charged to external parties for goods and services. The City's two business -type
activities, water and wastewater utilities, produced a $1.3 million decrease in net assets.
The decrease in net assets was comprised of an operating loss of $1.5 million primarily
due to an increase in cost of purchase of water offset by a decrease in sale of water due
to water conservation measures placed by the City, non - operating revenues of
$224,502, and an off - setting ($22,199) consolidation adjustment related to internal
service fund activities.
39
Table 6
Program Expense & Revenue - Business -type Activities
Year Ended June 30, 2010
(in millions)
20.000
18.000
16.000
14.000
12.000
10.000
8.000
6.000
4.000
2.000
Water W astewate r
■Total Expenses ■ Program Revenues
Major Business -type Activities in the current fiscal year included the following:
Water
Of the $18.7 million in water related expenses, $8.2 million (43.9°/x) is for the purchase
of water, $3.8 million (20.4 %) covers employee related costs , $3.2 million (17.3 %) is for
maintenance, supplies, and depreciation of the water system, $1.7 million (9.2 %) is for
professional services, and the remaining $1.8 million (9.2 %) is collectively attributable to
other miscellaneous expenses.
Wastewater
Of the $3.6 million in wastewater related expenses, $1.5 million (42.0 %) is for
maintenance, supplies, and depreciation of the wastewater system, $1.5 million (41.8 %)
is for employee related costs, and the remaining $582,297 (16.2 %) is attributable to
professional services and other miscellaneous expenses.
40
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 $110.2 million, a decrease of
$10.9 million from the prior year. The General Fund represented $82.2 million or
74.6% of the combined fund balances of the Governmental Funds.
Reserved Fund Balance — The City has $14.8 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
approximating $6.3 million, 2) for permanent endowment approximating $4.6
million, 3) as a reserve for affordable housing approximating $1.6 million, and 4)
for a variety of other restrictions that make these resources unavailable for
spending approximating $2.3 million.
Unreserved Fund Balance — The remaining $95.4 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 $95.4 million
unreserved fund balance, City Council has designated $18.9 million for
contingencies for unexpected financial emergencies, $17.3 million for unspecified
future appropriations as approved by Council, $4.3 million for capital projects that
were not completed during the fiscal year, and $37.0 million designated for other
special purposes including $27.5 million for facilities identified for replacement in
the City's facilities replacement plan. The remaining $17.5 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:
• The General Fund ended the year with a $82.2 million fund balance, a net
increase of $2.5 million after transferring $20.7 million to other funds ($20.1
million represented a routine transfer to subsidize the operations of the Tide and
Submerged Land Fund and $0.6 million represented various nonrecurring
transfers to other funds). The net increase in fund balance of $2.5 million was
higher than last year's net change in fund balance of $0.6 million due to the
implementation of the Early Retirement Incentive Program (ERIP) resulting in
41
cost savings to the City of $1.4 million, a reduction in annual pension costs of
$167 thousand related to employee contribution, and stronger tightening by the
City Manager for all General Fund expenditures.
• 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
($20.1 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 $2.4 million in fund balance.
• The Civic Center commenced with grading and excavation costs contributing to
expenditures of $10.5 million in the City Hall Improvement Fund.
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:
• Despite a $0.4 million increase in charges for services in the Water Fund, net
assets decreased $1.1 million due to increase in cost of purchase of water offset
by a decrease in sale of water due to water conservation measures placed by the
City in the sale of water. Net assets in Wastewater Fund decreased by $0.2
million. Unrestricted net assets at year end were $6.5 million for the Water Fund,
and $3.8 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 decreased $2.1 million in the current
year. The decrease was primarily due to the implementation of ERIP and the
recognition of the liability in the current year.
42
GENERAL FUND BUDGETARY HIGHLIGHTS
Changes to Original Budget
Final budgeted revenues for the General Fund increased $0.7 million from the original
budget during the year ended June 30, 2010. Significant factors contributing to this
fluctuation are highlighted as follows:
• Final budgeted intergovernmental revenues increased $0.24 million from the original
budget, $0.25 million in charges for services and $0.21 million in unexpected other
revenues due to increase in public safety grants and staff service charges related to
these grants, and higher than expected other revenues.
Final budgeted expenditures for the General Fund decreased $28.3 million from the
original budget during the year ended June 30, 2010. Significant factors contributing to
this fluctuation are highlighted as follows:
• Budgeted expenditures for general government decreased $0.8 million due to a
combination of salary savings from the implementation of ERIP, City Manager
mandated budget reductions and a routine allocation of expenditures from General
Fund cost centers to the Tideland Fund for code enforcement services utilized in
support of tidelands operations.
• Public safety and public works functions were decreased by $21.0 million and
$4.0 million respectively. This budget reduction was primarily due to a routine
allocation of expenditures from General Fund cost centers to the Tideland Fund for
police, fire and beach maintenance services utilized in support of tidelands
operations. Other factors contributing were City Manager mandated budget
reductions in both functions and salary savings from the implementation of ERIP in
the public works function.
• Budgeted expenditures for community development decreased $0.2 million due to
City Manager mandated budget reductions.
• Final budgeted capital outlays from the General Fund decreased $2.4 million from
the original budget during the year ended June 30, 2010 due to Council approved
reductions of $0.4 million and budgetary reductions to reflect project timing
differences which are re- budgeted in the following fiscal year for 1) Prop 50 Buck
Gully Stabilization, 2) Streetlight Conversion Program, 3) Ocean Front Alley
Replacement, 4) China Cove Slope and Drainage Improvements, 5) Newport Coast
Community Center Air Conditioner Replacement, as well as 6) various smaller
budgetary decreases.
• During the current year, final transfers out budgeted for the General Fund varied
from the original budget by approximately $17.4 million primarily due to the
expenditure allocation to the Tidelands Fund.
43
Variance with Final Budget
Actual revenues were $4.2 million below final budgeted revenues for the year ended
June 30, 2010, due to the continued economic recession. Significant factors contributing
to this negative variance are summarized as follows:
• A $0.8 million positive variance was realized due to higher than expected
property tax revenues. Newport Beach has not been as significantly impacted
with housing troubles.
• Lower than expected sales and sales in -lieu tax due to the lower economy as
well as a $1.2 million State correction for a 2009 advance approximated $5.4
million reduction compared to the original budget
• Transient Occupancy tax revenues were lower than expected by $1.6 million due
to the recession as travelers are staying home
• A $1.0 million positive variance in other revenue was realized due to a one -time
recognition of revenues allowed in customer deposits for a reduction in related
liability.
Actual General Fund expenditures of $126.7 million were significantly less than final
budgetary estimates of $132.4 million. Significant factors contributing to the $5.7 million
positive variances are summarized as follows:
• A $0.6 million negative variance was realized from capital improvement projects
due to higher maintenance costs.
• A total of $6.3 million in positive variances was realized in Public Safety, Public
Works, Community Services, Community Development and General Government
due to implementation of ERIP, managerial action to reduce operating
expenditures, temporary vacancies and under - filling of positions to ensure
budgetary control for lower anticipated revenues.
In spite of the $4.2 million lower than expected revenues, conservative budgeting,
implementation of ERIP, managerial action, increased fiscal discipline, timing of
expenditures, strong fiscal policies and continued streamlining contributed to the $2.5
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, 2010, amounts to $2.21 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
44
deletions) of $16.1 million represents a 0.7% increase over last year. The $16.1 million
net increase is the result of additions of $24.8 million, and deletions of $8.7 million.
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 $24.8 million in capital assets in the current year. Of the
$24.8 million, $17.5 million net was paid for through current year expenses and
the remaining $7.3 million represents additions from work in progress started in
previous years.
• Of the $24.3 million capitalized as governmental assets in the current year,
$6.6 million represents additions from work in progress started in previous years.
The $0.5 million capitalized in the current year as business -type assets represented
additions for infrastructure consisting of major repairs and upgrades to the water mains
and water wells.
Additional information on the City's capital assets can be found in Note (5) of the Notes
to the Financial Statements.
45
Governmental Activities
Business -Type Activities
Total
2009
2010
2009
2010
2009
2010
Land
$ 1,815,781
$ 1,819,673
$ 2,016
$ 2,016
$ 1,817,797 $
1,821,689
Structures
54,515
54,663
89
83
54,604
54,746
Equipment
8,365
7,836
107
83
8,472
7,919
Infrastructure
192,966
191,656
105,515
105,585
298,481
297,241
Work in progress
13,167
27,224
915
683
14,082
27,907
Totals
$ 2,084,794
$ 2,101,052
$ 108,642
$ 108,450
$ 2,193,436 $
2,209,502
Major capital asset events during the current fiscal year included the following:
• The City capitalized $24.8 million in capital assets in the current year. Of the
$24.8 million, $17.5 million net was paid for through current year expenses and
the remaining $7.3 million represents additions from work in progress started in
previous years.
• Of the $24.3 million capitalized as governmental assets in the current year,
$6.6 million represents additions from work in progress started in previous years.
The $0.5 million capitalized in the current year as business -type assets represented
additions for infrastructure consisting of major repairs and upgrades to the water mains
and water wells.
Additional information on the City's capital assets can be found in Note (5) of the Notes
to the Financial Statements.
45
Long -term Debt
At the end of the current fiscal year, the City had total long -term debt outstanding of
$16.7 million for all governmental and business -type activities.
Table 8
Outstanding Debt at Year -End
(in thousands)
The City's total debt decreased $1.9 million during the current fiscal year. The
cumulative decrease is the result of expected debt service payments and the addition of
$1.5 million to Purchase Agreement Payable for the two adjacent parcels of land
located at 608 East Balboa Boulevard and 209 Washington Street which the City
intends to convert to a parking lot. Additional information on the City's long -term debt
obligation can be found in Note (6) of the Notes to the Financial Statements.
FACTORS AFFECTING NEXT YEAR'S BUDGET
• Each January, the City Council establishes priorities for the coming year(s). The
financial implications of these priorities are considered when the budget is
developed. The 2010 priorities include an array of goals including minimizing the
adverse impacts of John Wayne Airport, implementing group home regulations,
adopting a 15 -point Fiscal Sustainability Plan, enhancing public safety services,
updating the City's harbor fees, updating the City Charter, breaking ground on the
Civic Center Project, including the park, starting construction of the Sunset Ridge
Park and the Marina Park, achieving the highest bond rating, dredging the Lower
Bay and the Rhine Channel and initiating a results -based budgeting system.
• After the date of this report's balance sheet but prior to the issuance of this report,
the City issued nearly $128 million of Certificates of Participation (COPs) in Tax
Exempt Bonds and Build America Bonds (BABS). See Note (17) in the Notes to
financial statements. All three rating agencies (S &P, Fitch and Moody's) rated the
City of Newport Beach as an AAA underlying City rating, making it one of only five
California cities to receive this triple award.
46
Governmental
Business -Type
Total
Activities
Activities
2009 2010
2009 2010
2009
2010
Certificates of participation
$ 4,335 $ 3,990
$ - $ -
$ 4,335 $
3,990
Note payable
1,120 933
- -
1,120
933
Pre - annexation agreement
9,600 8,400
- -
9,600
8,400
CDBG Loan
1,972 1,883
- -
1,972
1,883
Purchase Installment Agreement
- 1,500
- -
-
1,500
Revenue bonds
- -
1,585 -
1,585
-
Totals
$ 17,027 $ 16,706
$ 1,585 $ -
18,612 $
16,706
The City's total debt decreased $1.9 million during the current fiscal year. The
cumulative decrease is the result of expected debt service payments and the addition of
$1.5 million to Purchase Agreement Payable for the two adjacent parcels of land
located at 608 East Balboa Boulevard and 209 Washington Street which the City
intends to convert to a parking lot. Additional information on the City's long -term debt
obligation can be found in Note (6) of the Notes to the Financial Statements.
FACTORS AFFECTING NEXT YEAR'S BUDGET
• Each January, the City Council establishes priorities for the coming year(s). The
financial implications of these priorities are considered when the budget is
developed. The 2010 priorities include an array of goals including minimizing the
adverse impacts of John Wayne Airport, implementing group home regulations,
adopting a 15 -point Fiscal Sustainability Plan, enhancing public safety services,
updating the City's harbor fees, updating the City Charter, breaking ground on the
Civic Center Project, including the park, starting construction of the Sunset Ridge
Park and the Marina Park, achieving the highest bond rating, dredging the Lower
Bay and the Rhine Channel and initiating a results -based budgeting system.
• After the date of this report's balance sheet but prior to the issuance of this report,
the City issued nearly $128 million of Certificates of Participation (COPs) in Tax
Exempt Bonds and Build America Bonds (BABS). See Note (17) in the Notes to
financial statements. All three rating agencies (S &P, Fitch and Moody's) rated the
City of Newport Beach as an AAA underlying City rating, making it one of only five
California cities to receive this triple award.
46
• Management projects that the Fiscal Year 2010 -11 General Fund revenues will
decrease approximately $1.0 million from Fiscal Year 2009 -10 actual revenues.
Property Tax revenues are budgeted to decrease by approximately $1.4 million in
Fiscal Year 2010 -11. However, updated assessed valuation information from the
Auditor Controller's Office reflects a projected 0.16 % increase in net taxable value
in the City. Management expects sales tax revenues to remain the same as Fiscal
Year 2009 -10 at $17.4 million and transient occupancy tax revenues estimated at
$11.6 million, a slight increase of 1.4% over Fiscal Year 2009 -10 actual revenues.
• Management has also been advised by CalPERS that pension costs are likely to
increase substantially by 2011 -12 due to recent losses in the equities markets. In
order to reduce the pension costs, the City negotiated with fire, lifeguard and police
associations to pick up $0.9 million in annual pension costs and is evaluating other
measures to help reduce the annual cost to the City.
• In May, 2010, the City Council amended Resolutions 2000 -38 and 2004 -43
increasing parking meter fees and parking lot fees for an estimated increase to
projected General Fund parking revenues of approximately $2.0 million.
• In December, 2010, the City Council also approved Harbor Fee increases for
Moorings and the Balboa Yacht Basin. Rates will be effective January 2011 and
March 2011 respectively. The estimated annual increases to revenues are $400,000
and $180,000 respectively.
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 -3146. 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. NewportBeachCA .00v /financialinfo.
47
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48
FINANCIAL SECTION
G❑VERNMENT -WIDE
FINANCIAL STATEMENTS
z
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CITY OF NEWPORT BEACH
Statement of Net Assets
June 30. 2010
Net Assets:
Invested in capital assets, net of related debt
Governmental
Business -type
Restricted for:
Activities
Activities
Total
Assets:
Public works
27,051,894 -
27,051,894
Cash and investments (note 4)
$ 152,980,445
$ 7,902,104
$ 160,882,549
Receivables:
Nonexpendable
4,629,781 -
Accounts
6,069,942
4,438,984
10,508,926
Notes
471,250
-
471,250
Interest
981,924
-
981,924
Intergovernmental receivables
7,685,901
-
7,685,901
Cash with fiscal agent (note 4)
2,156,931
-
2,156,931
Internal balances
83,530
(83,530)
-
Investment in joint venture (note 15)
2,778,443
2,778,443
Prepaid items
1,303,478
1,303,478
Inventory
493,704
-
493,704
Capital assets, (note 5):
Non - depreciable
1,846,897,368
2,699,137
1,849,596,505
Depreciable
408,164,533
158,641,076
566,805,609
Accumulated depreciation
(154,009,401)
(52,890,366)
(206,899,767)
Total assets
2,276,058,048
120,707,405
2,396,765,453
Liabilities:
Accounts payable
8,462,700
1,869,627
10,332,327
Accrued salaries and benefits
4,281,432
150,738
4,432,170
Accrued interest payable
99,804
-
99,804
Deposits payable
2,587,984
63,281
2,651,265
Unearned revenue
3,661,845
-
3,661,845
Noncurrent liabilities (note 6):
Due within one year
9,360,999
9,360,999
Due in more than one year
42,404,642
-
42,404,642
Total liabilities
70,859,406
2,083,646
72,943,052
Net Assets:
Invested in capital assets, net of related debt
2,084,912,221 108,449,847
2,193,362,068
Restricted for:
Public safety
694,675 -
694,675
Public works
27,051,894 -
27,051,894
Debt Service
565,655 -
565,655
Permanent Funds:
Nonexpendable
4,629,781 -
4,629,781
Expendable
1,294,924 -
1,294,924
Unrestricted
86,049,492 10,173,912
96,223,404
Total net assets
$ 2,205,198,642 $ 118,623,759
$ 2,323,822,401
See accompanying notes to basic financial statements
51
Functions /Programs
Primary government:
Governmental activities:
General government
Public safety
Public works
Community development
Community services
Interest on long -term debt
Total governmental activities
Business -type activities:
Water
Wastewater
Total business -type activities
Total primary government
CITY OF NEWPORT BEACH
Statement of Activities
Year Ended June 30, 2010
18,732,351 17,412,634
3,599,034 3,368,327
22,331,385 20,780,961
- 17,412,634
3,368,327
- 20,780,961
$ 201,949,330 $ 58,570,252 $ 15,677,617 $ 12,350,100 $ 86,597,969
See accompanying notes to basic financial statements
52
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
Net assets at end of year
Program Revenues
Operating
Capital
Total
Charges for
Grants and
Grants and
Program
Expenses
services
Contributions
Contributions
Revenues
$ 17,082,705
$ 2,909,603
$ 95,091
$ -
$ 3,004,694
79,402,600
15,006,601
2,939,996
-
17,946,597
55,445,327
6,392,877
11,306,707
10,575,912
28,275,496
10,082,454
4,806,745
-
-
45806,745
17,232,357
8,673,465
1,335,823
1,774,188
11,783,476
372,502
-
-
-
179,617,945
37,789,291
15,677,617
12,350,100
65,817,008
18,732,351 17,412,634
3,599,034 3,368,327
22,331,385 20,780,961
- 17,412,634
3,368,327
- 20,780,961
$ 201,949,330 $ 58,570,252 $ 15,677,617 $ 12,350,100 $ 86,597,969
See accompanying notes to basic financial statements
52
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
Net assets at end of year
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental
Business -type
Activities
Activities
Total
$ (14,078,011)
$ -
$ (14,078,011)
(61,456,003)
-
(61,456,003)
(27,169,831)
-
(27,169,831)
(5,275,709)
-
(5,275,709)
(5,448,881)
-
(5,448,881)
(372,502)
-
(372,502)
(113,800,937)
-
(113,800,937)
-
(1,319,717)
(1,319,717)
(230,707)
(230,707)
-
(1,550,424)
(1,550,424)
$ (113,800,937)
$ (1,550,424)
$ (115,351,361)
71,999,680
-
71,999,680
17,440,736
-
17,440,736
4,539,946
-
4,539,946
11,400,710
-
11,400,710
4,026,614
-
4,026,614
3,715,946
-
3,715,946
201,893
-
201,893
314,957
314,957
706,855
128,399
835,254
707,200
100,117
807,317
1,820,272
1,820,272
116,874,809
228,516
117,103,325
3,073,872
(1,321,908)
1,751,964
2,202,124,770
119,945,667
2,322,070,437
$ 2,205,198,642
$ 118,623,759
$ 2,323,822,401
See accompanying notes to basic financial statements
53
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54
FINANCIAL SECTION
FUND
FINANCIAL STATEMENTS
GOVERNMENTAL FUNDS
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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 City Hall Improvement Fund is used to account for the design and
construction of a new Civic Center Complex.
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
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2010
See accompanying notes to basic financial statements
57
Tide and
Other
Submerged
City Hall
Governmental
Assets
General
Land
Improvements
Funds
Totals
Cash and investments
$
69,651,676
$
3,049,169
$ -
$ 39,535,506
$ 112,236,351
Receivables:
Accounts
4,138,979
438,280
-
597,277
5,174,536
Notes
471,250
-
471,250
Interest
981,924
-
-
-
981,924
Intergovernmental receivables
4,948,641
-
-
2,737,260
7,685,901
Cash with fiscal agent
-
-
-
2,156,931
2,156,931
Due from other funds (note13)
12,760,751
-
-
-
12,760,751
Prepaid items
932,148
-
-
-
932,148
Inventory
238,274
-
-
-
238,274
Total assets
$
94,123,643
$
3,487,449
$
$ 45,026,974
$ 142,638,066
Liabilities and Fund Balances
Liabilities:
Accounts payable
$
3,403,362
$
860,640
$ 2,427,210
$ 1,484,759
$ 8,175,971
Accrued payroll
4,204,908
32,615
-
-
4,237,523
Deposits payable
2,427,955
160,029
-
-
2,587,984
Unearned revenue
1,904,552
-
-
1,757,293
3,661,845
Unavailable revenue
25,000
-
-
1,790,674
1,815,674
Due to other funds (note 13)
8,100,127
3,840,229
11,940,356
Total liabilities
11,965,777
1,053,284
10,527,337
8,872,955
32,419,353
Fund balances:
Reserved for encumbrances
2,273,036
1,187,264
-
2,843,245
6,303,545
Reserved for debt service
-
-
-
565,655
565,655
Reserved for permanent endowment
-
-
-
4,629,781
4,629,781
Reserved for affordable housing
1,557,773
-
-
-
1,557,773
Reserved for prepaid items
932,148
-
-
137,728
1,069,876
Reserved for inventories
238,274
-
-
-
238,274
Reserved for long -term receivable
471,250
-
-
-
471,250
Unreserved:
Designated for special purposes
37,001,474
404,361
-
-
37,405,835
Designated, reported in:
Special revenue funds
-
-
-
26,770,037
26,770,037
Capital projects funds
-
-
-
5,279,056
5,279,056
Permanent funds
-
-
-
1,294,924
1,294,924
Designated for contingencies
18,695,125
-
-
-
18,895,125
Designated for capital projects
3,495,487
842,540
-
-
4,338,027
Designated for appropriations
17,293,299
-
-
-
17,293,299
Undesignated, reported in:
Special Revenue Funds
-
-
-
(43,410)
(43,410)
Capital projects funds
(10,527,337)
(5,322,997)
(15,850,334)
Total fund balances
82,157,866
2,434,165
(10,527,337)
36,154,019
110,218,713
Total liabilities and
and fund balances
$
94,123,643
$
3,487,449
$
$ 45,026,974
$ 142,638,066
See accompanying notes to basic financial statements
57
CITY OF NEWPORT BEACH
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
June 30, 2010
Fund balances of governmental funds $ 110,218,713
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. 2,094,702,395
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
(3,990,000)
Note payable
(932,934)
Pre - annexation agreement
(8,400,000)
CDBG loan
(1,883,000)
Purchase Agreement Payable
(1,500,000)
Accrued interest payable for the current portion of interest due on long -term debt
has not been reported in the governmental funds. (99,804)
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. 1,815,674
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. 12,405,625
Investment in joint ventures is not a current financial resource and therefore not reported
in the governmental funds. 2,778,443
Internal balance created by the consolidation of internal service fund activities
related to enterprise funds is not reported in the governmental funds. 83,530
Net assets of governmental activities $ 2,205,198,642
See accompanying notes to basic financial statements
58
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
Year Ended June 30, 2010
See accompanying notes to basic financial statements
59
Tide and
Other
Submerged
City Hall
Governmental
General
Land
Improvements
Funds
Totals
Revenues
Taxes and assessments:
Property tax
$ 71,999,679
$ -
$ -
$ -
$ 71,999,679
Sales tax
17,440,736
-
-
-
17,440,736
Sales tax in -lieu
4,539,946
-
-
-
4,539,946
Transient occupancy tax
11,400,710
-
-
-
11,400,710
Othertaxes
7,976,309
-
-
452,063
8,428,372
Intergovernmental
2,693,785
-
-
12,685,913
15,379,698
Licenses and permits
2,603,618
1,272,402
-
74,947
3,950,967
Charges for services
15,210,962
82,400
-
-
15,293,362
Fines and forfeitures
3,739,303
242
-
366,087
4,105,632
Investment income
706,855
37,846
-
545,189
1,289,890
Net increase in fair value of investments
707,200
38,947
-
409,216
1,155,363
Property income
6,080,577
8,544,346
-
-
14,624,923
Donations
124,703
-
-
5,372,937
5,497,640
Other
1,690,499
-
5,955,775
7,646,274
Total revenues
146,914,882
9,976,183
-
25,862,127
182,753,192
Expenditures
Current:
General government
15,086,125
83,421
-
-
15,169,546
Public safety
56,108,046
20,654,193
-
440,206
77,202,445
Public works
25,681,411
3,995,923
-
10,245,072
39,922,406
Community development
8,097,847
338,125
-
1,120,094
9,556,066
Community services
13,109,514
1,806,716
-
-
14,916,230
Capital outlay
8,627,010
1,197,037
8,776,524
18,196,082
36,796,653
Debt service (note 6):
Principal
-
186,679
-
1,634,000
1,820,679
Interest and fiscal charges
-
50,383
-
332,914
383,297
Total expenditures
126,709,953
28,312,477
8,776,524
31,968,368
195,767,322
Excess (deficiency) of revenues
over expenditures
20,204,929
(18,336,294)
(8,776,524)
(6,106,241)
(13,014,130)
Other financing sources (uses)
Transfers in (note 14)
1,519,725
20,130,495
-
730,301
22,380,521
Transfers out (note 14)
(20,677,752)
-
-
(1,102,769)
(21,780,521)
Issuance of debt
1,500,000
1,500,000
Total other financing sources
(uses)
(17,658,027)
20,130,495
(372,468)
2,100,000
Net change in fund balances
2,546,902
1,794,201
(8;776,524)
(6,478,709)
(10,914,130)
Fund balances, beginning
79,610,964
639,964
(1,750,813)
42,632,728
121,132,843
Fund balances, ending
$ 82,157,866
$ 2,434,165
$ (10,527,337)
$ 36,154,019
$ 110,218,713
See accompanying notes to basic financial statements
59
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, 2010
Net change in fund balances - total governmental funds
$ (10,914,130)
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.
16,716,517
Payment of debt service principal is an expenditure in the governmental funds, but the
repayment reduces long -term liabilities in the statement of net assets.
1,820,679
Issuance of debt
(1,500,000)
Accrued Interest for debt service. This is the net change in accrued interest for the current period.
10,795
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
period.
(1,063,460)
Internal service funds are used by management to charge the costs of certain
activities, such as self- insurance, workers' compensation, compensated absences,
retiree insurance and fleet management, to individual funds. The net revenue of the internal
service funds is reported in the statement of activities.
(2,113,119)
Investment in joint ventures creates an explicit, measurable equity interest reported only
in the statement of activities.
94,391
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. 22,199
Change in net assets of governmental activities $ 3,073,872
See accompanying notes to basic financial statements
RE
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2010
61
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Taxes and assessments:
Property
$ 71,119,504
$ 71,119,504
$ 71,999,679
$ 880,175
Sales
19,656,428
19,656,428
17,440,736
(2,215,692)
Sales tax in -lieu
7,690,691
7,690,691
4,539,946
(3,150,745)
Transient occupancy
13,000,000
13,000,000
11,400,710
(1,599,290)
Othertaxes
7,634,000
7,634,000
7,976,309
342,309
Intergovernmental
2,258,512
2,503,190
2,693,785
190,595
Licenses and permits
2,947,790
2,947,790
2,603,618
(344,172)
Charges for services
14,445,353
14,697,021
15,210,962
513,941
Fines and forfeitures
3,645,000
3,645,000
3,739,303
94,303
Investment income
1,400,000
1,400,000
706,855
(693,145)
Net increase in fair value of investments
-
-
707,200
707,200
Property income
6,018,404
6,018,404
6,080,577
62,173
Donations
100,000
131,926
124,703
(7,223)
Other
495,600
710,618
1,690,499
979,881
Total revenues
150,411,282
151,154,572
146,914,882
(4,239,690)
Expenditures
General government:
City council
1,279,249
1,167,130
1,163,486
3,644
City clerk
381,140
401,466
382,393
19,073
City attorney
2,430,349
2,888,766
2,688,217
200,549
City manager
1,655,746
1,259,664
1,163,956
95,708
Administrative services
8,383,109
7,759,152
7,356,232
402,920
Human resources
2,430,349
2,301,035
2,331,841
(30,806)
Total General government
16,559,943
15,777,213
15,086,125
691,088
Public safety:
Police
45,223,429
36,761,928
35,374,156
1,387,772
Fire
34,073,227
21,530,337
20,733,890
796,447
Total Public safety
79,296,656
58,292,265
56,108,046
2,184,219
Public works:
General services
23,903,433
20,455,263
19,445,196
1,010,067
Public works
5,867,705
5,361,403
5,077,221
284,182
Utilities
1,467,754
1,372,929
1,158,994
213,935
Total Public works
31,238,891
27,189,595
25,681,411
1,508,184
61
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
(continued)
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Community development
Planning
3,584,870
3,595,785
3,126,090
469,695
Building
4,858,614
4,602,820
4,408,215
194,605
Code and Water Quality Enforcement
768,329
780,411
563,542
216,869
Total Community development
9,211,813
8,979,016
6,097,847
881,169
sources (uses)
(3,295,698)
Community services:
(17,658,027)
3,015,423
Net change in fund balance
(13,609,074)
Library Services
6,793,449
6,905,280
6,554,183
351,097
Recreation and senior services
7,246,217
7,225,823
6,555,331
670,492
Total Community services
14,039,666
14,131,103
13,109,514
1,021,589
Capital outlay
10,377,688
8,015,598
6,627,010
(611,412)
Total expenditures
132,384,790
160,724,658
126,709,953
5,674,837
Excess (deficiency) of revenues
over expenditures
(10,313,376)
18,769,782
20,204,929
1,435,147
Other financing sources (uses)
Transfers in
-
600,000
1,519,725
919,725
Transfers out
(3,295,698)
(21,273,450)
(20,677,752)
595,698
Issuance of debt
-
-
1,500,000
1,500,000
Total other financing
sources (uses)
(3,295,698)
(20,673,450)
(17,658,027)
3,015,423
Net change in fund balance
(13,609,074)
(1,903,668)
2,546,902
4,450,570
Fund balance, beginning
79,610,964
79,610,964
79,610,964
-
Fund balance, ending
$ 66,001,890
$ 77,707,296
$ 82,157,866
$ 4,450,570
62
Revenues
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property income
Total revenues
Expenditures
General government
Public safety
Public works
Community services
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
CITY OF NEWPORT BEACH
Tide and Submerged Land
Budgetary Comparison Statement
For the Year Ended June 30, 2010
Excess (deficiency) of revenues
over expenditures 937,586 (20,210,701) (18,336,294) 1,874,407
Other financing sources (uses)
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balance
Fund balance, beginning
19,984,366 20,130,495 146,129
(5,346,685)
(5,346,685) 19,984,366 20,130,495 146,129
(4,409,099) (226,335) 1,794,201 2,020,536
639,964 639,964 639,964
Fund balance, ending $ (3,769,135) $ 413,629 $ 2,434,165 $ 2,020,536
63
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
1,309,600
1,309,600
1,272,402
(37,198)
41,000
41,000
82,400
41,400
1,000
1,000
242
(758)
75,000
75,000
37,846
(37,154)
38,947
38,947
8,109,110
8,109,110
8,544,346
435,236
9,535,710
9,535,710
9,976,183
440,473
-
83,421
83,421
-
-
20,654,193
20,654,193
-
793,720
4,056,131
3,995,923
60,208
1,924,804
2,305,708
1,806,716
498,992
-
396,565
338,125
58,440
5,642,538
2,013,331
1,197,037
816,294
186,679
186,679
186,679
-
50,383
50,383
50,383
8,598,124
29,746,411
28,312,477
1,433,934
Excess (deficiency) of revenues
over expenditures 937,586 (20,210,701) (18,336,294) 1,874,407
Other financing sources (uses)
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balance
Fund balance, beginning
19,984,366 20,130,495 146,129
(5,346,685)
(5,346,685) 19,984,366 20,130,495 146,129
(4,409,099) (226,335) 1,794,201 2,020,536
639,964 639,964 639,964
Fund balance, ending $ (3,769,135) $ 413,629 $ 2,434,165 $ 2,020,536
63
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64
FINANCIAL SECTION
FUND
9 FINANCIAL STATEMENTS
PROPRIETARY FUNDS
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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.
MA
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Net Assets
June 30, 2010
Assets
Current assets:
Cash and investments
Receivables:
Accounts
Inventories
Prepaid items
Total current assets
Non - current assets:
Capital assets (note 5):
Land
Structures
Equipment
Infrastructure
Work in progress
Less accumulated depreciation
Total capital assets (net of accumulated depreciation)
Total noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Accrued payroll
Deposits payable
Due to General fund
Workers' compensation - current
General liability - current
Compensated absences - current
Early retirement incentive program - current
Total current liabilities
Non - current liabilities (note 6):
Workers' compensation
General liability
Compensated absences
Early retirement incentive program
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
Enterprise Funds
2,016,450
-
2,016,450
Governmental
205,793
-
Total
Activities
291,888
-
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 4,579,953
$ 3,322,151
$ 7,902,104
$ 40,744,094
3,778,832
660,152
4,438,984
895,406
-
-
-
255,430
-
-
-
371,330
8,358,785
3,982,303
12,341,088
42,266,260
2,016,450
-
2,016,450
-
205,793
-
205,793
-
291,888
-
291,888
23,022,523
115,518,007
42,625,388
158,143,395
-
454,696
227,991
682,687
-
(39,242,601)
(13,647,765)
(52,890,366)
(16,672,418)
79,244,233
29,205,614
108,449,847
6,350,105
79,244,233
29,205,614
108,449,847
6,350,105
87,603,018
33,187,917
120,790,935
48,616,365
1,716,159
153,468
1,869,627
286,729
111,860
38,878
150,738
43,909
63,257
24
63,281
-
-
-
-
820,395
-
-
-
3,080,500
-
-
-
1,260,729
-
-
-
1,557,331
938,520
1,891,276
192,370
2,083,646
7,988,113
-
-
-
9,241,500
-
-
-
2,559,662
-
-
-
7,438,548
-
-
-
2,510,917
-
-
-
6,472,000
28,222,627
1,891,276
192,370
2,083,646
36,210,740
79,244,233
29,205,614
108,449,847
6,350,105
6,467,509
3,789,933
10,257,442
6,055,520
$ 85,711,742
$32,995,547
118,707,289 $
12,405,625
(83,530)
$ 118,623,759
See accompanying notes to basic financial statements
67
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Revenues,
Expenses and Changes in Fund Net Assets
For the Year Ended June 30, 2010
Enterprise Funds
Operating revenues:
Charges for sales and services:
Water sales
Charges for services
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
(Lass) on removal of capital assets
Other fiscal charges
Total nonoperating revenues
Income (loss) before transfers
Transfers in (note 14)
Transfers out (note 14)
Change in net assets
Net assets, beginning of year
Net assets, end of year
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds
Change in net assets of business -type activities
Governmental
Total Activities
Enterprise Internal Service
Water Wastewater Funds Funds
$ 17,269,587 $ - $ 17,269,587
3,363,459
143,047 4,868
17,412,634 3,368,327
16,298,899
3,363,459 -
- 1,119,262
- 329,234
147,915 217,901
20,780,961 17,965,296
8,221,667
-
8,221,667
-
3,824,526
1,506,063
5,330,589
1,459,423
1,540,875
566,182
2,107,057
1,814,442
1,727,920
334,666
2,062,586
51,431
1,585,478
646,030
2,231,508
813,819
121,900
298,462
420,362
452,466
-
-
-
3,530,130
-
-
-
201,308
-
-
-
2,022,943
-
-
-
4,409,833
-
-
-
2,016,000
-
-
-
2,477,000
1,686,515
244,888
1,931,403
1,115,115
18,708,881
3,596,291
22,305,172
20,363,910
(1,296,247) (227,964) (1,524,211) (2,398,614)
93,511
34,888
64,215
35,902
(2,764)
-
(1,250)
-
153,712
70,790
(1,142,535)
(157,174)
(1,142,535) (157,174)
86,854,277 33,152,721
$ 85,711,742 $ 32,995,547
See accompanying notes to basic financial statements
R0
128,399
444,227
100,117
457,145
(2,764)
(15,877)
(1,250)
-
224,502
885,495
(1,299,709)
(1,513,119)
- (600,000)
(1,299,709) (2,113,119)
(22,199)
$ (1,321,908)
14,518,744
$ 12,405,625
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Cash Flows
For the Year ended June 30, 2010
See accompanying notes to basic financial statements
M0
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
Cash Flows from operating activities:
Cash received from customers or user departments
$ 17,317,363
$ 3,459,786
$ 20,777,149
$ 17,593,471
Cash payments to employees for services
(3,827,292)
(1,512,077)
(5,339,369)
(8,331,566)
Cash payments to suppliers for goods and services
(11,944,684)
(1,218,015)
(13,162,699)
(7,838,657)
Cash received (payments made) for other operating activities
(1,543,468)
(240,020)
(1,783,488)
547,135
Net cash provided by operating activities
1,919
489,674
491,593
1,970,383
Cash Flows from noncapital financing activities:
Cash received from other funds
-
-
-
358,208
Cash paid to other funds
(600,000)
Net cash provided by noncapital financing activities
(241,792)
Cash Flows from capital related financing activities:
Acquisition of capital assets
(1,716,744)
(200,831)
(1;917,575)
(1,478,229)
Proceeds from sale of capital assets
-
-
-
105,934
Principal payments on long -term liabilities
(1,585,000)
-
(1,585,000)
-
Otherfiscalcharges
(1,250)
(1,250)
Net cash (used) for capital related financing activities
(3,302,994)
(200,831)
(3,503,825)
(1,372,295)
Cash Flows from investing activities:
Interest on investments
157,726
70,790
228,516
901,372
Net cash provided by investing activities
157,726
70,790
226,516
901,372
Net increase (decrease) in cash and
cash equivalents
(3,143,349)
359,633
(2,783,716)
1,257,668
Cash and cash equivalents, beginning
7,723,302
2,962,518
10,685,820
39,486,426
Cash and cash equivalents, ending
$ 4,579,953
$ 3,322,151
$ 7,902,104
$ 40,744,094
Reconciliation of cash equivalents to the statement of net assets
Cash and investments reported on statement of net assets
$ 4,579,953
$ 3,322,151
$ 7,902,104
40,744,094
Cash and cash equivalents
$ 4,579,953
$ 3,322,151
$ 7,902,104
$ 40,744,094
Reconciliation of operating income to net cash
used for operating activities:
Operating income (loss)
$ (1,296,247)
$ (227,964)
$ (1,524,211)
$ (2,398,614)
Adjustments to reconcile operating income
to net cash used for operating activities:
Depreciation
1,540,875
566,182
2,107,057
1,814,442
(Increase) decrease in accounts receivable
49,889
96,327
146,216
(5,359)
Decrease in inventories
-
-
-
4,301
(Increase) decrease in prepaid items
25,000
-
25,000
(209,751)
Increase (decrease) in accounts payable and accrued payroll
(279,822)
55,129
(224,693)
(311,521)
(Decrease) in accrued interest payable
(35,663)
-
(35,663)
-
(Decrease) in deposits payable
(2,113)
-
(2,113)
-
Increase in workers' compensation
-
-
-
429,000
(Decrease) in general liability
-
-
-
(2,077,346)
(Decrease) in compensated absences
-
-
-
(788,206)
Increase in early retirement incentive program
-
-
-
3,449,437
Increase in net OPEB obligation
2,064,000
Total adjustments
1,298,166
717,638
2,015,804
4,368,997
Net cash used for operating activities
$ 1,919
$ 489,674
$ 491,593
$ 1,970,383
Non -cash investing, capital and fnancina activities:
Net increase in fair value of investments
$ 64,215
$ 35,903
$ 100,117
$ 457,145
(Loss) on disposal of capital assets
(2,764)
(2,764)
$ (15,877)
Total of non-cash activities
$ 61,451
$ 35,903
$ 97,353
$ 441,268
See accompanying notes to basic financial statements
M0
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70
FINANCIAL SECTION
FUND
FINANCIAL STATEMENTS
FIDUCIARY FUNDS
z
0
U
W
Ul
J
a_
U
z
Q
z
It
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.
72
CITY OF NEWPORT BEACH
Agency Funds
Statement of Fiduciary Assets and Liabilities
June 30, 2010
Assets Totals
Cash and investments (note 4)
$ 4,370,075
Cash with fiscal agent (note 4)
4,618,481
Prepaid items
75,085
Intergovernmental receivable
88,344
Total assets
$ 9,151,985
Liabilities
Due to bondholders
$ 7,301,247
Due to others
304,031
Due to ILJAOC
1,546,707
Total liabilities
$ 9,151,985
See accompanying notes to basic financial statements
73
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74
FINANCIAL SECTION
z
0
U
W
Cn
J
Q_
U
NOTES TO THE z
Q
FINANCIAL STATEMENTS z
lz
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
(1) Summary of Significant Accounting Policies
The basic financial statements of the City of Newport Beach (the "City ") have been
prepared in conformity with generally accepted accounting principles ( "GAAP ") as
applicable to government units. The Governmental Accounting Standards Board
( "GASB ") is the accepted standard - setting body for establishing governmental
accounting and financial reporting principles.
a. Reporting Entity
The City of Newport Beach was incorporated on September 1, 1906. The current
City Charter was adopted in 1954. Since adoption, the Charter has been
amended several times. The most recent Charter amendment was approved by
the voters on November 2, 2010, see Subsequent Events note for additional
disclosure. 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
77
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
library and most recently the new civic center project. The Corporation is
governed by a Board of Directors which is comprised of the seven City
Councilmembers of the City of Newport Beach. The Corporation's financial data
and transactions are included in the debt service fund. Separate financial
statements are not prepared for the Corporation. The debt service fund is used
solely to account for the activities of the Corporation and contains no other City
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
78
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
program expenses in the statement of activities to present the net cost of each
program.
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 for all revenues except Sales Taxes.
The fiscal year sales tax clean up payment is received in September, beyond our
traditional 60 day availability criteria. However, this payment is significant to this
revenue category in that it adjusts the fiscal years amounts to reflect the
economic climate for the year. In an effort to be more consistent with our
analytical comparisons and benchmarking we have modified our availability
criteria to 90 days for sales tax revenues only.
Property taxes, sales 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
79
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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
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
80
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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.
Permanent Funds, also referred to as Endowment Funds, are governmental
funds used to report resources that are legally restricted to the extent that only
earnings, and not principal, may be used for purposes that support City
programs. The amount of investment earnings available for expenditure is
reported as Designated Fund Balance in the fund level financial statements. The
endowment principal is reported as Restricted for Permanent Endowments in the
Statement of Net Assets. The State law governing the spending of endowment
funds investment earnings is California Probate Code Section 18504.
Proprietary & 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.
81
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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.
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.
City Hall Improvements Fund
The City Hall Improvements Fund is used to account for the design and
construction of a new Civic Center Complex.
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.
82
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
d. Cash and Investments
For purposes of the statement of cash flows, cash and cash equivalents are
defined to be cash on hand, demand deposits and highly liquid investments with
a maturity of three months or less from the date of purchase. For financial
statement presentation purposes, cash and cash equivalents are shown as cash
and investments and restricted cash and investments in the proprietary funds.
Investments
Investments are generally stated at fair value.
Cash and investments are pooled to maximize investment yields. The net change
in fair value and interest earned on the investments is allocated to the respective
funds based on each fund's average monthly cash and investments balance.
The City's investment in LAIF is $2,723,956 at June 30, 2010. 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. Notes Receivable
This is a promissory note between the City of Newport Beach and the City
Manager. The City Manager and the City of Newport Beach entered into an
employment agreement on August 18, 2009. This agreement provided
incentives to the City Manager, in the form of an equity contribution, to allow him
to re- locate within the incorporated boundaries of Newport Beach. The
promissory note documents the terms and conditions by which the City Manager
will repay the City when the property is sold, or he retires /terminates, whichever
occurs first.
83
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
f. 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, 2010, the balance of this account was
$7,685,901.
g. 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.
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
84
1•
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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
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
k. Compensated Absences
March 1
July 1
November 1 — 1 t installment
March 1 — 2nd installment
December 10 — 1st 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.
85
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
Deposits Payable
In the government -wide and fund level financial statements, deposits payable
represent monies collected for developer deposits, demolition deposits, planning
deposits and others, for services which have not yet been performed. These
unspent portions are reported as liabilities on the financial statements.
M. Unearned Revenue /Unavailable (Deferred) Revenue
In the government -wide and the fund level financial statements, unearned
revenues are those where asset recognition (availability criteria) has been met,
but the revenue recognition criteria have not been met.
In the governmental funds financial statements, unavailable revenue represents
revenues which have been earned but have not yet met the availability criteria for
revenue recognition based on the modified accrual basis of accounting.
Reserved and Desianated 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 year end.
Reserved for debt service
This account sets aside a portion of fund balance to meet the annual debt service
requirements.
Reserved for permanent endowment
This account reflects a permanent endowment established for the maintenance
and dredging of Upper Newport Bay.
86
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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.
Designated for Special Revenue Funds
This account reflects unspent appropriations committed to special revenue funds
in the prior year.
Designated for Permanent Funds
This account reflects both the spendable amount of investment earnings
available as well as the non - spendable amount of endowment principal.
87
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
(2) 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 $110,218,713 differs
from "net assets' of governmental activities $2,205,198,642 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
$2,232,039,378
Accumulated depreciation
(137,336,983)
Total capital assets, net*
$2,094,702,395
*Amount excludes net capital assets of $6,350,105 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, 2010 were:
Certificates of participation $ 3,990,000
Note payable 932,934
Pre - annexation agreement 8,400,000
CDBG Loan 1,883,000
Purchase Agreement Payable 1,500.000
Total $16.705.934
88
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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 J99 804
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 $2.778.443
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 $1.815.674
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 $12.405.625
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.
89
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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
Total Capital
Governmental Related
Funds Items
112,236,351 $
5,174,536
471,250
981,924
7,685,901
2,156,931
12,760,751
932,148
238,274
- 2,232,039,378
F
Long -term
Accumulated Debt
Depreciation Transactions
(137,336,983)
S -
$ 142,638,066 $ 2,232,039,378 $ (137,336,983) $ -
Liabilities:
Accounts payable
8,175,971
Accrued payroll
4,237,523 - - -
Accrued interest payable
-
Deposits payable
2,587,984
Claims payable
- - - -
Workers' compensation payable
- - - -
Compensated absences payable
- - - -
Early retirement incentive program
- - - -
Unearned revenue
3,661,845 - - -
Unavailable revenue
1,815,674 - - -
Due to other funds
11,940,356 - - -
Long -term liabilities
- - - 16,705,934
Total liabilities
32,419,353 16,705,934
Fund balances /net assets
110,218,713 2,232,039,378 (137,336,983) (16,705,934)
Total liabilities and
and fund balances / net assets $ 142,638,066 $ 2,232,039,378 _L_(13 $ -
90
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
Investment
Internal
Reclassifications
-
Interest in Joint
Unavailable Service
and
Statement of
Payable Venture
Revenue Funds
Eliminations
Net Assets
$ $
$ $ 40,744,094
$ -
$ 152,980,445
895,406
-
6,069,942
-
-
471,250
1,260,729
-
-
981,924
-
-
-
7,685,901
1,557,331
-
-
2,156,931
-
(12,677,221)
83,530
2,778,443
-
-
2,778,443
-
371,330
-
1,303,478
-
255,430
-
493,704
820,395
23,022,523
-
2,255,061,901
(16,672,418)
-
(154,009,401)
$ $ 2,778,443
$ $ 48,616,365
$ (12,677,221)
$ 2,276,058,048
$
$ 286,729
-
$ 8,462,700
-
43,909
-
4,281,432
99,804
-
-
99,804
-
-
-
2,587,984
1,260,729
-
1,260,729
3,080,500
-
3,080,500
1,557,331
-
1,557,331
938,520
-
938,520
-
-
3,661,845
(1,815,674)
-
-
-
820,395
(12,760,751)
-
28,222,627
44,928,561
99,804
(1,815,674)
36,210,740
(12,760,751)
70,859,406
(99,804)
2,778,443 1,815,674
12,405,625
83,530
2,205,198,642
$ -
$ 2,778.443 $ -
$ 48,616,365 $
(12,677,221)
$ 2,276,058,048
91
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
b. Explanation of Differences between Enterprise Funds and Government -
wide Statement of Net Assets
Total net assets of the City's Enterprise Funds of $118,707,289 differs from net
assets of the business -type activities of $118,623,759 reported in the
government -wide statement of net assets. The difference, ($83,530), 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
92
Total
Internal
Government wide
Enterprise
Service
Statement of
Assets
Funds
Funds
Net Assets
Cash and investments
$
7,902,104
$
$
7,902,104
Receivables:
Accounts
4,438,984
4,438,984
Interfund balances
-
(83,530)
(83,530)
Capital assets, net
108,449,847
108,449,847
Total assets
$
120,790,935
$ (83,530)
$
120,707,405
Liabilities and Fund Balances I Net Assets
Liabilities:
Accounts payable
$
1,869,627
$ -
$
1,869,627
Accrued payroll
150,738
-
150,738
Deposits payable
63,281
-
63,281
Total liabilities
2,083,646
-
2,083,646
Net Assets
Invested in capital assets, net of related debt
$
108,449,847
-
$
108,449,847
Unrestricted
10,257,442
(83,530)
10,173,912
$
118,707,289
$ (83,530)
$
118,623,759
92
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
C. Explanation of Differences between Governmental Fund Operating
Statements and the Statement of Activities
The "net change in fund balances" for governmental funds ($10,914,130) differs
from the "change in net assets' for governmental activities $3,073,872 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
$ 34,329,714
Transfers out of WIP
(6,634,505)
Capital Outlays expended
27,695,209
Internal Service funds - asset additions
(1,478,229)
Governmental funds - asset additions
(3,279,632)
Net change in capital related items
$ 22,937,348
Depreciation expense
($10,002,880)
Deletions in IS accumulated depreciation
1,814,442
Deletions in Governmental funds accumulated depreciation
1,967,607
Net change in accumulated depreciation
$ (6,220,831)
93
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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
$ 345,000
Note payable
186,679
Pre - annexation agreement
1,200,000
CDBG loan
89,000
Purchase Agreement Payable
(1,500,000)
Total principal payments made
$ 320,679
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 10 795
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 94 391
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 $1.063.460
94
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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 $2A1 3 .11 9
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. 2010
Explanation of Differences between Governmental Fund
Operating Statements and the Statement of Activities
Revenues:
Taxes and assessments
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property income
Share of joint venture net gain
Donations
Loss on sale of capital assets
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Total expenses
Other financing sources (uses):
Transfers in
Transfers out
Issuance of debt
Total other financing sources
(uses)
Net change in fund balances /
net assets
Total Capital
Governmental Related
Funds Items
$ 113,809,443 $
15,379,698
3,950,967
15,293,362
4,105,632
1,289,890
1,155,363
14,624,923
Accumulated
Depreciation
Long -term
Debt
Transactions
5,497,640 - - -
7,646,274
182,753,192
15,169,546
307,422 -
77,202,445
1,478,229
(592,357) -
39,922,406
3,152,068
5,213,292 -
9,556,066
-
105,731 -
14,916,230
127,564
1,186,743 -
36,796,653
(27,695,209)
- -
1,820,679
-
- (1,820,679)
383,297
-
- -
195,767,322
(22,937,348)
6,220,831 (1,820,679)
22,380,521 - - -
(21,780,521) - - -
1,500,000 - - (1,500,000)
2,100,000 - (1,500,000)
(10,914,130) 22,937,348 (6,220,831) 320,679
Fund balances /net assets beginning of year 121,132,843 2,209,102,030 (131,116,152) (17,026,613)
Fund balances /net assets end of year $ 110,218,713 $ 2,232,039,378 $ (137,336,983) $ (16,705,934)
96
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
- - - - (22,380,521) -
(600,000) 22,380,521 -
(600,000)
10,795 94,391 (1,063,460) (2,113,119) 22,199
3,073,872
(110,599)
Investment
2,879,134
Internal
Reclassifications
2,202,124,770
Accrued
in Joint
Unavailable
Service
and
Statement of
Interest
Venture
Revenue
Fund
Eliminations
Activities
$ -
$ -
$ -
$ 113,809,443
-
-
(1,063,460)
-
-
14,316,238
-
-
-
-
-
3,950,967
-
-
-
-
22,199
15,315,561
-
-
-
-
-
4,105,632
-
-
-
444,227
-
1,734,117
-
-
-
457,145
-
1,612,508
-
-
-
-
-
14,624,923
-
94,391
-
-
-
94,391
-
-
-
-
-
5,497,640
-
-
-
(15,877)
-
(15,877)
7,646,274
94,391
(1,063,460)
885,495
22,199
182,691,817
-
-
-
609,478
996,259
17,082,705
-
-
-
1,200,755
113,528
79,402,600
-
-
-
(231,501)
7,389,062
55,445,327
-
-
-
407,392
13,265
10,082,454
-
-
-
412,490
589,330
17,232,357
-
-
-
-
(9,101,444)
-
(10,795)
-
-
-
-
372,502
(10,795)
-
-
2,398,614
-
179,617,945
- - - - (22,380,521) -
(600,000) 22,380,521 -
(600,000)
10,795 94,391 (1,063,460) (2,113,119) 22,199
3,073,872
(110,599)
2,684,052
2,879,134
14,518,744
61,331
2,202,124,770
$ (99;804) $
2,778,443
$ 1,815,674
$ 12,405,625 $
83,530 $
2,205,198,642
97
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
d. Explanation of Differences between Enterprise Funds Operating Statement
and the Statement of Activities
The change in net assets for the City's enterprise funds ($1,299,709) differs from
the change in net assets of the business -type activities ($1,321,908) reported in
the government -wide statement of activities. The difference, ($22,199), 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
Total Internal Business -type activities
Enterprise Service Statement of
Funds Fund Activities
Operating revenues:
Charges for sales and services:
Water sales $ 17,269,587 $ - $ 17,269,587
Sewer service and connection fees 3,363,459 - 3,363,459
Other 147,915 - 147,915
Total operating revenues 20,780,961 - 20,780,961
Operating expenses
Purchase of Water
8,221,667
-
8,221,667
Salaries and wages
5,330,589
-
5,330,589
Depreciation
2,107,057
-
2,107,057
Professional Services
2,062,586
-
2,062,586
Maintenance and supplies
2,231,508
22,199
2,253,707
System maintenance
420,362
-
420,362
Other
1,931,403
1,931,403
Total operating expenses
22,305,172
22,199
22,327,371
Operating income
(1,524,211)
(22,199)
(1,546,410)
Nonoperating revenues (expenses):
Investment income
128,399
-
128,399
Net decrease in fair value of investments
100,117
-
100,117
Loss on removal of capital assets
(2,764)
-
(2,764)
Other
(1,250)
-
(1,250)
Total nonoperating revenues (expenses)
224,502
-
224,502
Change in net assets
(1,299,709)
(22,199)
(1,321,908)
Net assets, beginning of year
120,006,998
(61,331)
119,945,667
Net assets, end of year $
118,707,289
$ (83,530) $
118,623,759
98
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
(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.
m
(4)
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
Expenditures exceeded appropriations in the following governmental funds.
Justice Assistance Grant
Contributions
Appropriations Expenditures
$ 67,197 $ 67,957
$ - $ 1,648,609
The following funds reported deficit fund balances:
Special Revenue Funds
OTS DUI Grant $ 39,952
Community Development Block Grant $ 3,458
Capital Proiects
City Hall Improvements
$
10,527,337
Marine Science Center
$
125,421
OASIS Senior Center
$
2,598,614
Misc SAH Projects
$
367,847
Marina Park
$
1,178,259
Sunset Ridge Park
$
903,158
Police Facility
$
2,175
Lifeguard Headquarters
$
30,179
Internal Service Funds
Compensated Absences $ 10,593,629
Retiree Insurance $ 6,249,249
Variance
$ (760)
$ (1,648,609)
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, 2010 are classified in the accompanying financial
statements as follows:
Statement of net assets:
Cash and investments
Cash with fiscal agent
Fiduciary funds:
Cash and investments
Cash with fiscal agent
Total cash and investments
m
$ 160,882,549
2,156,931
4,370,075
4,618,481
$ 172,028,036
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
Cash and investments as of June 30, 2010 consist of the following:
Cash on hand $ 52,244
Deposits with financial institutions 6,542,589
Investments 165,433,203
Total cash and investments $ 172,028,036
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. 2010
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee (i.e. fiscal agent) are governed by
provisions of the debt agreements, rather than the general provisions of the California
Government Code or the City's investment policy. The table below identifies the
investment types that are authorized for investments held by bond trustee. The table
also identifies certain provisions of these debt agreements that address interest rate risk,
credit risk, and concentration of credit risk.
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an investment. Generally, the longer the maturity of an investment, the
greater the sensitivity of its fair value to changes in market interest rates. One of the
ways that the City manages its exposure to interest rate risk is by purchasing a
combination of shorter term and longer term investments and by timing cash flows from
maturities so that a portion of the portfolio is maturing or coming close to maturity evenly
over time as necessary to provide the cash flow and liquidity needed for operations.
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
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.
102
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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
Certificate of Deposit
Commercial Paper
LAIF
Foreign Bonds
Mortgage - backed Securities
Cash with Fiscal Agent:
Money Market Funds
Investment Agreements
Total
Investment Maturities In Years
' Fair Value Less than 1 1 1 to 3 r 3 to 5 1 More than 5 Total
$ 2,088,513 $
2,088,513 $
- $ - $
- $ 2,088,513
25,215,191
5,953,444
16,895,968 2,365,779
- 25,215,191
82,172,015
17,637,490
55,208,089 9,326,436
82,172,015
36,017,254
11,059,122
24,958,132 -
- 36,017,254
1,600,032
1,600,032
- -
- 1,600,032
6,548,099
6,548,099
- -
- 6,548,099
2,723,956
2,723,956
- -
- 2,723,956
2,021,480
1,402,352
619,128 -
- 2,021,480
271,251
271,251
- -
- 271,251
5,594,836 5,594,836 - - - 5,594,836
1,180,576 1,180,576 1,180,576
$ 165,433,203 $ 54,879,095 $ 97,681,317 $ 11,692,215 $ 1,180,576 $ 165,433,203
Investment agreements are recorded at cost (not fair value) because these agreements represent
nonparticipating contracts that are nonnegotiable and whose redemption terms do not consider market rates.
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations
As of June 30, 2010 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. 2010
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.
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
Minimum
Exempt
Federal agency securities
$
10,758,239
FHLB
Federal agency securities
$
19,869,601
FHLMC
Federal agency securities
$
28,401,497
Legal
From
$
22,109,216
Not
Fair Value
Rating
Dish
PAA
AA, AA
Nl-
A+_
A
A-
Ay1+
A_t
Rated
Investment Type
Money Market Funds
2,086,513
AAA
$ -
$ 1,916,831
$ - $ -
$ -
$ -
$ -
$ -
$ -
$ -
$ 171,682
U.S. Treasury Notes
25,215,191
NIA
12,673,157
6,35,337
- -
-
-
-
6,191,697
US. Agencies
82,172,015
NIA
-
64,709,287
- -
-
-
-
-
1,124,716
-
16,338,012
Corporate Notes
36,017,254
A
-
8,705,684
6.D86,149 3,318,427
5,351,738
4,977,454
5,668,550
1,709,252
-
-
-
CertlficateotDeposit
1600,032
A -1
-
-
- -
799,784
-
-
800,248
-
-
Commercial Paper
6,548,099
A -1
-
1,000,000
- -
-
-
-
-
449,828
5,098,270
-
Logel Agency Investment FuM
2,723,956
NIA
-
-
- -
-
-
-
-
-
-
2,723,956
Foreign Bonds
2,021,480
NIA
-
619,128
- 595,448
606,904
-
-
-
-
-
-
Mortgage- backed Securities
271,251
AAA
-
271,251
- -
-
-
-
-
-
-
-
Cash with Fiscal Agent:
Money Mallet Funtls
5,594,836
AAA
-
5,594,836
- -
-
-
-
-
-
-
Investment Agreements
1,180,576
NIA
-
-
- 1,180,576
-
-
-
-
-
-
-
$ 165,433,203
$ 12,673,19
$ 89,167,354
$ 6,086,149 $ 5,094,451
$ 6,958,426
$ Q977p54
$ 5,868,550
$ 2,509,500
$ 1,574,544
$ 508,270
$ 25,425,346
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
$
10,758,239
FHLB
Federal agency securities
$
19,869,601
FHLMC
Federal agency securities
$
28,401,497
FNMA
Federal agency securities
$
22,109,216
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. 2010
California Government Code requires that a financial institution secure deposits made by
state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental
unit). The fair value of the pledged securities in the collateral pool must equal at least
110% 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, 2010, 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, 2010, 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 Tvoe Reoorted Amount
Money Market Funds
$ 1,822,947
U.S. Treasury Notes
10,384,282
U.S. Agencies
21,324,599
Certificate of Deposit
1,600,032
Corporate Notes
13,885,608
Mortgage backed Securities
271,251
Foreign Bonds
2,021,480
Commercial Paper
6,548,099
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. 2010
(5) Capital Assets
Capital asset activity for the year ended June 30, 2010 was as follows:
Governmental Activities:
Non - depreciable:
Land and rights of way
Work in progress
Depreciable:
Structures
Equipment
Infrastructure
Less accumulated
depreciation for:
Structures
Equipment
Infrastructure
Net Capital Assets
Beginning Balance
Balance Additions Deletions June 30, 2010
$ 1,815,781,269
13,167,176
68,279,097
27,760,801
306,805,139
2,231,793,482
(13,764,261)
(19,396,158)
(113,839,057)
(146,999,476)
$ 3,891,844 $
20,691,584 (6,634,505)
1,530,756
1,760,332
6,455,198
34,329,714
(1,370,077)
(2,167,125)
(6,465,678)
(10,002,880)
(127,564)
(1,147,158)
(3,152,068)
(11,061,295)
115,052
1,025,347
1,852,556
2,992,955
$ 1,819,673,113
27,224,255
69,682,289
28,373,975
310,108,269
2,255,061,901
(15,019,286)
(20,537,936)
(118,452,179)
(154,009,401)
$ 2,084,794,006 $ 24,326,834 _L( $ 2,101,052,500
Governmental Activites capital assets net of accumulated depreciation at June 30, 2010
are comprised of the following:
General Capital Assets, net $ 2,094,702,395
Internal Service Fund Capital Assets, net 6,350,105
$ 2,101,052,500
lim
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
Business -type Activities:
Less accumulated depreciation for
Structures
Beginning
(5,145)
(122,465)
Balance
(184,944)
Balance
Additions
Deletions
June 30, 2010
Non - depreciable:
(52,558,647)
Public works
(50,789,321)
(2,107,057) 6,012
Land
$ 2,016,450
$ -
$ -
$ 2,016,450
Work in progress
915,153
479,687
(712,153)
682,687
Depreciable:
566,182
$ 10,002,880
$ 2,107,057
Structures
205,793
-
205,793
Equipment
291,888
-
291,888
Infrastructure
156,002,130
2,150,041
(8,776)
158,143,395
159,431,414
2,629,728
(720,929)
161,340,213
Less accumulated depreciation for
Structures
(117,320)
(5,145)
(122,465)
Equipment
(184,944)
(24,310) -
(209,254)
Infrastructure
(50,487,057)
(2,077,602) 6,012
(52,558,647)
Public works
(50,789,321)
(2,107,057) 6,012
(52,890,366)
105,731
Net
$ 108,642,093
522,671 _L _L14,917
$ 108,449,847
Depreciation expense was charged in the following functions in the Statement of Activities:
'Internal Service Fund depreciation of $1,814,442 is
allocated to governmental functions above.
107
Governmental
Business -type
Activities"
Activities
General government
$ 307,422
$ -
Public safety
1,222,084
-
Public works
7,065,848
-
Community development
105,731
-
Community service
1,301,795
-
Water
-
1,540,875
Wastewater
-
566,182
$ 10,002,880
$ 2,107,057
'Internal Service Fund depreciation of $1,814,442 is
allocated to governmental functions above.
107
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
(6) Lonq -Term Debt
Changes in Long -Term Liabilities
Long -term liability for the year ended June 30, 2010, was as follows:
Governmental activities:
Certificates of participation
payable
Note payable
Pre - annexation agreement
CDBG Loan
Purchase Agreement
Payable
Workers' compensations
payable
Claims and judgements
payable
Compensated absences
Early Retirement Incentive
Program (see note 11)
Net OPEB obligation
Total governmental
activities
Business -type activities:
Water Revenue Bonds
payable
11,893,000 3,530,130 (3,101,130) 12,322,000 3,080,500
5,897,737 201,308 (2,278,654) 3,820,391 1,260,729
9,784,085 2,022,943 (2,811,149) 8,995,879 1,557,331
- 4,409,833 (960,396) 3,449,437 862,359
4,408,000 4,493,000 (2,429,000) 6,472,000 -
49,009,435 16,157,214 (13,401,008) 51,765,641 9,360,999
1,585,000 - (1,585,000)
Total $ 50,594,435 $16,157,214 $ (14,986,008) $ 51,765,641 $ 9,360,999
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
Amounts
Beginning
Ending
Due Within
Balance
Additions Deletions
Balance
One Year
$ 4,335,000
$ - $ (345,000) $
3,990,000
$ 360,000
1,119,613
- (186,679)
932,934
195,080
9,600,000
- (1,200,000)
8,400,000
1,200,000
1,972,000
- (89,000)
1,883,000
95,000
-
1,500,000 -
1,500,000
750,000
11,893,000 3,530,130 (3,101,130) 12,322,000 3,080,500
5,897,737 201,308 (2,278,654) 3,820,391 1,260,729
9,784,085 2,022,943 (2,811,149) 8,995,879 1,557,331
- 4,409,833 (960,396) 3,449,437 862,359
4,408,000 4,493,000 (2,429,000) 6,472,000 -
49,009,435 16,157,214 (13,401,008) 51,765,641 9,360,999
1,585,000 - (1,585,000)
Total $ 50,594,435 $16,157,214 $ (14,986,008) $ 51,765,641 $ 9,360,999
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. 2010
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 $360,000 to $535,000 through June 1, 2019. Principal payments are
payable annually on June 1 of each year. At June 30, 2010, the City has a required
cash reserve balance for debt service of $565,778, which is recorded as a restricted
asset and reservation of fund balance in the Debt Service Fund. The outstanding
balance at June 30, 2010, amounted to $3,990,000.
The annual amortization requirements of the Certificates of Participation are as
follows:
Year Ending
June 30
Principal
Interest
Total
2011
360,000
203,025
563,025
2012
380,000
184,845
564,845
2013
400,000
165,655
565,655
2014
420,000
145,455
565,455
2015
440,000
175,258
615,258
2016 -2019
1,990,000
211,177
2,201,177
$ 3,990,000
$ 1,085,415
$ 5,075,415
• 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. 2010
beginning August 1, 1987. The outstanding balance at June 30, 2010, amounted to
$932,934.
The annual amortization requirements for the Note Payable are as follows:
Year Ending
Principal
Interest
Total
June 30
Principal
Interest
Total
2011
195,080
41,982
237,062
2012
203,859
33,203
237,062
2013
213,032
24,030
237,062
2014
222,609
14,443
237,052
2015
48,095
4,426
52,521
2016
50,259
2,262
52,521
$ 932,934
$ 120,346
$ 1,053,280
• Newport Coast Pre - Annexation Agreement Payable
In conjunction with the January 1, 2002, annexation of Newport Coast, the City
entered into an agreement payable with the Newport Coast Committee for a total of
$18,000,000 to reduce property owner assessments used to finance certain road
and street improvements. The principal -only agreement which began in the 2003
fiscal year, is payable over a period of fifteen years in equal installments of
$1,200,000. The outstanding balance at June 30, 2010, amounted to $8,400,000.
• 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 $95,000 to
$208,000 through June 30, 2023. The outstanding balance at June 30, 2010,
amounted to $1,883,000.
The annual amortization requirements for the CDBG Loan are as follows:
Year Ending
June 30
Principal
Interest
Total
2011
95,000
104,345
199,345
2012
102,000
99,653
201,653
2013
108,000
94,485
202,485
2014
116,000
88,722
204,722
2015
123,000
82,315
205,315
2016 -2019
583,000
252,565
835,565
20202023
756,000
95,595
851,595
$ 1,883,000
$ 817,680
$ 2,700,680
110
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
• Purchase Agreement Payable
In Fiscal Year 2010, the City entered into an agreement with a private property
owner for the purchase of two adjacent parcels of land located at 608 East Balboa
Boulevard and 209 Washington Street. The purchase price was $3.5 million. The
City paid $2 million by the close of escrow with the remaining $1.5 million to be paid
in two annual installments with a 2% interest. The outstanding balance at June 30,
2010 amounted to $1,500,000. The annual amortization requirements for the
Purchase Agreement are as follows:
Year Ending
June 30
2011
2012
• Claims and Judgments
Principal Interest Total
750,000 30,000 780,000
750,000 30,000 780,000
$ 1,500,000 $ 60,000 $ 1,560,000
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, 2010, 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, 2010, for general liability
amounted to $3,820,391 and for workers' compensation was $12,322,000.
• 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,
2010, is $8,995,879.
• Early Retirement Incentive Program (ERIP)
In Fiscal year 2009 -10, the City approved and implemented and Early Retirement
Incentive Program (ERIP) to 166 eligible employees to help mitigate declining
General Fund revenues and institute long -term structural changes to avert future
budget shortfalls. A total of 51 people participated and the estimated liability at June
30, 2010 is $3,449,437. See Note (11) in the notes to financial statements.
ill
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
• 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
$2,016,000 of the ARC. As for the implied subsidy $4,408,000, the City has elected
to fund it on a pay -as- you -go basis, thus resulting in net OPEB obligation of
$6,472,000.
Business -type activities
• Water Revenue Bonds
In Fiscal Year 1998 -99, the City issued $14,225,000 of Refunding Water Revenue
Bonds to refund the 1994 Water Revenue Bonds used to finance the construction
and acquisition of water storage and transmission facilities. The refunding was
undertaken to reduce total debt service payments over a ten -year period by
$481,153 and resulted in an economic gain of $418,469. The bonds are secured by
a pledge of net revenues of the water fund. The 1998 Serial Bonds bear interest
ranging from 3.6% to 4.5 %. The bonds have been paid off and there is no
outstanding balance at June 30, 2010.
(7) Limited Obligation Bonds
Special Assessment Districts Bonds
The City has issued certain Assessment District and Community Facilities District
Bonds. Although the City collects and disburses funds for these districts, the City has no
obligation or duty to pay any delinquency out of 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, 2010,
for each district under the Bond Acts of 1911 and 1915, and other special assessments,
are as follows:
112
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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, 2010, are as follows:
Series 2008C
Series 2008D
Series 2008E
Series 2008F
Series 2009A
Series 2009B
Series 2009C
Series 2009D
Series 2009E
$70,095,000
$80,000,000
$80,000,000
$90,000,000
$66,835,000
$36,605,000
$36,605,000
$35,490,000
$35,490,000
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 2008 Series bonds commence on December 1, 2012, and
113
Bonds Outstanding
Assessment District
Original Issue
June 30, 2010
No.
68
Newport Shores
3,813,562
2,610,000
No.
69
West Newport
4,978,498
3,350,000
No.
70
Bay Shores
1,380,996
880,000
No.
71
Balboa Boulevard
796,942
105,000
No.
74
Island Avenue
222,629
115,000
No.
75
Balboa Business
821,204
570,000
No.
78
Little Balboa Island
1,348,196
395,000
No.
79
Beacon Bay
1,215,134
575,000
No.
82
Corona del Mar
274,967
115,000
No.
86
Balboa Peninsula
300,174
160,000
No.
92
Coast Highway
1,425,000
1,375,000
No.
99 -2
Ocean Front
1,953,952
1,928,952
No.
101
Central Balboa
2,467,597
2,290,000
No.
103
Peninsula Point
3,295,700
3,250,700
No.
95 -1
CIOSA Refunding Series A
15,495,000
7,380,000
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, 2010, are as follows:
Series 2008C
Series 2008D
Series 2008E
Series 2008F
Series 2009A
Series 2009B
Series 2009C
Series 2009D
Series 2009E
$70,095,000
$80,000,000
$80,000,000
$90,000,000
$66,835,000
$36,605,000
$36,605,000
$35,490,000
$35,490,000
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 2008 Series bonds commence on December 1, 2012, and
113
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
are required to be made through December 1, 2028. For the 2009 Series bonds, varying
redemption payments commence on December 1, 2014, and are required to be made
through December 1, 2038.
(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.
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
$16,142,391 which represents the discounted present value at June 30, 2010; the
claims were discounted using an interest rate of five percent.
114
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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 $62,439,165 at June 30, 2010.
(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.
115
General Liability
Workers' Compensation
June 30, 2009
June 30, 2010
June 30, 2009
June 30, 2010
Unpaid claims, beginning of
fiscal year
$ 5,613,525
$ 5,897,737
$ 11,334,000
$ 11,893,000
Incurred claims (including
IBNR)
3,589,622
201,308
3,216,337
3,530,130
Claim payments
(3,305,410)
(2,278,654)
(2,657,337)
(3,101,130)
Unpaid claims, end of fiscal
year
$ 5,897,737
$ 3,820,391
$ 11,893,000
$ 12,322,000
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 $62,439,165 at June 30, 2010.
(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.
115
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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,
2009 to June 30, 2010 has been determined by an actuarial valuation of the plan as of
June 30, 2005. The contribution rate indicated for the period is 9.055% for non - safety
employees and 29.67% for safety employees of annual covered payroll. Without the cost
sharing agreement with non - safety employees, the contribution rate would be 11.475%
for non - safety employees. In order to calculate the dollar value of the ARC for inclusion
in financial statements prepared as of June 30, 2010, the contribution rate is multiplied
by the payroll of covered employees that were paid during the period from July 1, 2009
to June 30, 2010.
Annual Pension Cost
For 2010, the City's annual pension cost of $17,821,702 for PIERS 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:
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%
116
Safety Plan
June 30, 2007
Entry Age Actuarial Cost
Method
Level Percent of Payroll
31 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%
Miscellaneous Plan
Valuation Date
June 30, 2007
Actuarial Cost Method
Entry Age Actuarial Cost
Method
Amortization Method
Level Percent of Payroll
Average Remaining
24 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%
116
Safety Plan
June 30, 2007
Entry Age Actuarial Cost
Method
Level Percent of Payroll
31 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%
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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 losses each year. If the plan's accrued liability
exceeds the actuarial value of plan assets, then the amortization payment on the total
unfunded liability may not be lower than the payment calculated over a 30 -year
amortization period.
THREE -YEAR TREND INFORMATION FOR PERS ($ Amount in Thousands)
Fiscal
Annual Pension
Year
Cost (APQ
6/30108
$16,454
6/30/09 $18,405
6/30/10 $17,822
Percentage of Net Pension
APC Contributed Obligation
100% $0
100% $0
100% $0
The Schedule of Funding Progress, below, shows the recent history of the actuarial
value of assets, actuarial accrued liability, their relationship, and the relationship of the
unfunded actuarial accrued liability to payroll. The Schedule of Funding Progress,
below, presents multiyear trend information about whether the actuarial value of the plan
assets is increasing or decreasing overtime, relative to the actuarial accrued liability for
benefits.
117
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
SCHEDULE OF FUNDING PROGRESS FOR PERS ($ Amount in Thousands)
More current information regarding actuarial data is not yet available from PERS.
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, pursuant to the
requirements of Section 11332 of the Social Security Act. The City Council has the
authority for establishing and amending the plan's provisions per the Resolution. 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, 2010, the City's covered payroll for employees participating
in the plan was $2,963,110. Employees made contributions of $111,117 (3.75% of
current covered payroll), which was matched by the employer in the same amount.
Assets of the plan totaled $1,615,399 at June 30, 2010.
118
Entry Age
Unfunded
Normal
Actuarial
Liability
Annual
Valuation
Accrued
Value of
(Excess
Covered
UAAL as a
Date
Liability
Assets
Assets)
Funded
Status
Payroll
% of Payroll
AVA
Market
(A)
(B)
(A - B)
(B /A)
Value
(C)
[(A -B) / C]
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%
06/30/2008
Misc.
$
217,378
$195,954
$ 21,424
90.1%
95.2%
$ 41,148
52.066%
Safety
336,061
264,634
71,427
78.7%
86.9%
28,056
254.587%
Total
$
553,439
$460,588
$ 92,851
83.2%
90.2%
$ 69,204
134.170%
06/30/2009
Misc.
$
249,666
$207,818
$ 41,848
83.2%
61.1%
$ 42,893
97.564%
Safety
366,918
274,649
92,269
74.9%
54.8%
30,253
304.991%
Total
$
616,584
$482,467
$134,117
78.2%
57.4%
$ 73,146
183.355%
More current information regarding actuarial data is not yet available from PERS.
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, pursuant to the
requirements of Section 11332 of the Social Security Act. The City Council has the
authority for establishing and amending the plan's provisions per the Resolution. 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, 2010, the City's covered payroll for employees participating
in the plan was $2,963,110. Employees made contributions of $111,117 (3.75% of
current covered payroll), which was matched by the employer in the same amount.
Assets of the plan totaled $1,615,399 at June 30, 2010.
118
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
(11) Early Retirement Incentive Program (ERIP)
In October, 2009, the City Council approved Resolution 2009 -73 authorizing an Early
Retirement Incentive Program (ERIP) to eligible employees, under the condition the
program would meet the immediate and future fiscal, managerial and operational goals
of the City to help mitigate declining General Fund revenues and institute long -term
structural changes to avert future budget shortfalls and ensure that the City remains
financially sound. There were 166 employees who met the following eligibility
requirements:
• Full -time, miscellaneous (non- safety) employee
• 50 years of age or older as of January 31, 2010
• Eligible to retire from PIERS with at least five years of service
• Have at least three years of service with the City as of January 31, 2010
• Would actually retire from the PERS system
• Not the City Manager, City Clerk, or the City Attorney
A total of 51 people participated and were approved by the Council for the Early
Retirement Incentive Program through the Public Agency Retirement Systems ( "PARS ")
Supplemental Retirement Program ( "SRP "). The Supplemental Retirement Plan offered
through PARS allowed the City to set the payment, eligibility, and refilling based on the
City's needs, as well as allowing the expense to be known and quantifiable. The benefit
to the participating employee is paid via a 15 -year annuity of 7% of Final Pay up to
$75,000 and 6% of amount of Final Pay over $75,000, and it complements and is in
addition to an employee's CalPERS retirement benefit. The City is funding the cost of
this annuity in annual installments over a five year period.
The total estimated cost to fund the ERIP benefit approximates $950,000 for the first five
years. After considering the costs of implementing the ERIP plan and the estimated
reduction to the City payroll, the net savings are expected to reach nearly $3.1 million
annually. In accordance with GASB 47, a liability for the recognition of the accrual cost
for this benefit has been recognized in the amount of $4.4 million. This cost excludes a
consideration of discounting the cash flows associated with the five year funding of the
program due to the immateriality of such consideration.
(12) 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, the single
119
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
employer of the plan and 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,
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.
Total participants involved in the plan were 1,181 as of June 30, 2010, consisting of 462
miscellaneous employees, 271 safety employees, and 448 retirees and their
beneficiaries. Copies of PERS' annual financial report may be obtained from their
executive office: 400 P Street, Sacramento, CA 95814.
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.
120
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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.
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
121
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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, 2008
Actuarial Cost Method: Entry Age Normal Cost Method (same as CaIPERS)
Amortization Method: Level percent of payroll over fixed 20 years
Amortization Period: Level contribution amount over fixed 20 years
Projected Salary Increases: 3.25% per year
Discount Rate: 7.75 % for cash subsidy, pre- funding through CaIPERS
OPEB Trust
5% for implied subsidy, no pre- funding, benefits paid from
the City's General fund
Health Care Cost Trend Rate: 9.3% grading down to 4.5%
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, and
significant uncertainty exists whether additional cash flows will occur in the future as a
result of the implied subsidy.
122
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
Three -Year Annual Required Contribution (ARC) Trend
The 2009 -10 Annual Required Contribution (ARC) includes the Normal Cost plus a
20 -year amortization of the Unfunded AAL (in 000's):
2009/10
Cash Subsidy $ - $ 2,016 $ 2,016 $ 2,016 $ -
100%
$ 73,308
2.8% $ -
Implied Subsidy 4,408 2,603 2,477 413 2,190
15.9%
73,308
3.6% 6,472
Current Year
52.6%
Annual
ARC As
' ACC is equal to the ARC adjusted for interest and amortization of the NOO.
Beginning
Actual
OPEB
Percentage
Covered
a %of
Ending
Fiscal Year
Balance
ARC'
AOC
Contribution
Obligation
Contributed
Payroll
Payroll
Balance
2007/08
Cash Subsidy
$ -
$
2,629
$
2,629
$
2,629
$ -
100%
$ 54,748
4.8%
$ -
Implied Subsidy
-
2,646
427
427
2,221
16.1%
54,748
4.8%
2,221
Net OPEB Obligation
$
$
5,277
$
3,056
$
3,056
$ 2,221
57.9%
$ 54,748
9.6%
$ 2,221
2008/09
Cash Subsidy
$ -
$
2,720
$
2,720
$
2,720
$ -
100%
$ 56,527
4.8%
$ -
Implied Subsidy
2,221
2,734
2,703
516
2,218
18.9%
56,527
4.8%
4,408
Net OPEB Obligation
$ 2,221
$
5,454
$
5,423
$
3,236
$ 2,218
59.3%
$ 56,527
9.6%
$ 4,408
2009/10
Cash Subsidy $ - $ 2,016 $ 2,016 $ 2,016 $ -
100%
$ 73,308
2.8% $ -
Implied Subsidy 4,408 2,603 2,477 413 2,190
15.9%
73,308
3.6% 6,472
Net OPEB Obligation $ 4,408 $ 4,619 $ 4.493 $ 2,429 $ 2,190
52.6%
$ 73,308
6.3% $ Q472
' ACC is equal to the ARC adjusted for interest and amortization of the NOO.
123
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
Three -Year Net OPEB Oblioation (N00) Trend
The NOO is the historical difference between the ARC and actual contributions. If the
City always contributes the
entire ARC, then the NOO
would
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.
The June 30, 2010, NOO is determined as follows (in 000's):
Prefunding
Contributions
& Benefit
Fiscal Year July 1, NOO
AOC Payments
June 30, NOO
2007/08
Cash Subsidy $ 6,200 '
$ 2,629 $ (8,829) z
$
-
Implied Subsidy
2,648 (427) 3
2,221
Total $ 6,200
$ 5,277
$ (9,256)
$
2,221
2008/09
Cash Subsidy $ -
$ 2,720 $ (2,720)
$
-
Implied Subsidy 2,221
2,703 (516) °
4,408
Total $ 2,221
$ 5,423 $ (3,236)
$
4,408
2009/10
Cash Subsidy $ -
$ 2,016 $ (2,016)
$
-
Implied Subsidy 4,408
2,477 (413) s
6,472
Total $ 4,408
$ 4,493 $ (2,429)
$
6,472
1 - Based on a prior period adjustment to the cash subsidy component of the NOO
2 - 2007 -2008 AOC and $6.2 million payment on retroactive NOO
3 - 2007 -2008 estimated implied subsidy
4 - 2008 -2009 estimated implied subsidy
5 - 2009 -2010 estimated implied subsidy
124
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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 2009 -10
ACC is determined as follows (in 000's):
Two -Year Funding Status Trend
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.
Actuarial
Actuarial
Unfunded
AOC as
UAAL as
Valuation
Interest
Amortization
AAL
% of
Covered
ARC
on NOO
of NOO
Total AOC
Payroll
Cash Subsidy
$2,016
Payroll
06/30/2006
$ 2,016
3.6%
Implied Subsidy
2,603
220
(346)
2,477
4.4%
Total
$4,619
$ 220
$ (346)
$ 4,493
7.9%
Two -Year Funding Status Trend
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.
125
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%
06/30/2008
Cash Subsidy
$28,842
$ 8,785
$20,057
30.5%
$56,527
35.5%
Implied Subsidy
20,173
-
20,173
0.0%
$56,527
35.7%
Total
$49,015
$8,785
$40,230
0.0%
$56,527
71.2%
125
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
(13) Interfund Receivables and Payables
At June 30, 2010, interund receivables and payable were as follows:
Due from
Due to
General Fund $12,760,751
$ -
Internal Service Funds
820,395
Nonmajor Funds
3,840,229
City Hall Improvements (Major fund)
8,100,127
Total $12,760,751
12,760,751
The above balances are primarily due to reclassification of negative cash balance in the
city wide cash pool.
(14) Interfund Transfers
Interfund transfers at June 30, 2010, consisted of the following:
Transfers In
Tide and
Submerged Non -Major
General Fund Land Funds Total
General Fund $ - $ 20,130,495 547,257 $ 20,677,752
O= Contributions 160,000 - - 160,000
m a Fund
v Internal Service
F 600,000 600,000
Fund
Non -Major Funds 759,725 183,044 942,769
Total $ 1,519,725 $ 20,130,495 $ 730,301 $ 22,380,521
The City typically uses transfers to fund ongoing subsidies. The general fund transferred
$20,130,495 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 $201,059 in the Newport Coast Annexation fund, is due to and was
subsequently transferred to the General Fund.
126
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
(15) Joint Venture Agreements
Bonita Canvon Public Facilities Financina Authorit
The Bonita Canyon Public Facilities Financing Authority (Authority) is a joint venture
formed by the City of Newport Beach, Irvine Unified School District, and Newport-Mesa
Unified School District. The Authority's Board is comprised of two members appointed by
each of the member agencies. The Authority created Community Facilities
District 98 -1 to finance public facilities that will benefit the properties within their
boundaries. The Authority issued $45,000,000 of special tax bonds that will be repaid by
special assessments; the City is not obligated in any manner to repay the bonds. The
Authority paid the City $30,577,712 (81.7 %) to pay for the costs of acquiring and
constructing public facilities including parks and road improvements. At June 30, 2010,
the contributions from property owners are held in trust as cash with fiscal agent totaling
$100,000. 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 $86,929 for fiscal year 2009-
10. The City's 50% interest in the net equity of this joint venture at June 30, 2010,
amounts to $2,626,770. 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.
127
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
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 $536,500. The City's 10.61% interest in the net equity of this joint
venture at June 30, 2010, amounts to $151,673. Complete separate financial statements
can be obtained at the Metro Cities Fire Authority offices at 201 S. Anaheim Boulevard,
Suite 302, Anaheim, California.
Integrated Law and Justice Agency of Orange County
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, 2010, 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
.�7 , rF1I"�- TiGIRR:. rCTTTii�
Numerous claims and suits have been filed against the City in the normal course of
business. The estimated liability under such claims, based upon information received
from the City Attorney, contracted attorneys and the Risk Manager, has been estimated
and recorded as accrued claims and judgments payable (See Note 6).
Circulation Improvement and Open Space Agreement
The City entered into a Circulation Improvement and Open Space Agreement (CIOSA)
with a developer whereby the City 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, 2010, the City received $366,087 of Fair Share
Fees, and $183,044 was paid to the CIOSA Construction capital projects fund. Through
June 30, 2010, $4,158,408 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.
128
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
Newport Coast Pre - Annexation Aareement
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.
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.
Operating Agreements
The City of Newport Beach first entered into an agreement with Visit Newport Beach Inc.
(VNB), a legally separate non - profit marketing organization, in 1987. The primary
responsibility of the VNB is to attract additional visitor business by promoting the City as
the premier tourist and business destination in Orange County. The VNB is governed by
an Executive Committee comprised of seven individuals not appointed by the City
Council of the City of Newport Beach. The current agreement was entered into on May
12, 2004 and subsequently amended on March 10, 2009 extending the agreement
through June 30, 2014. The City pays VNB 18% of the Total Transient Occupancy Tax
collected during the fiscal year. For the Fiscal Year ending June 30, 2010, the City paid
VNB $2,661,176.
Contractual commitments
Construction and contractual commitments for major construction projects are as
follows:
Civic Center
OASIS Senior Center
Sewer Pump Station Master Plan Improvements
Traffic Signal Modernization Phases 4 & 7
Lido Isle Street Rehabilitation
129
Total
Project
Project
To Date
Unexpended
Budget
Expenditures
Commitments
$28,949,982
$8,776,524
$20,298,251
$13,440,285
$9,654,411
$3,866,721
$2,507,640
$343,494
$2,168,473
$1,201,000
$376,959
$823,203
$750,000
$98,797
$595,263
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30. 2010
(17) Subsequent Events
2010 Civic Center Certificates of Participation (COPs)
Subsequent to year end, the City issued nearly $128 million of Certificates of
Participation (COPs), made up of $20.1 million in 2010A Certificates of Tax Exempt
bonds and $106.6 million in 2010B Certificates of federally taxable direct pay Build
America Bonds (BABS). A portion of the proceeds was used to refinance the City's 1998
$3.9 million outstanding Library COPs and pay $1.3 million cost of issuance of the
Bonds. The rest of the proceeds will be used to make construction progress payments
so that progress already made on the Civic Center site can continue and remain on
schedule for the anticipated completion in late 2012.
Charter Amendments
On November 2, 2010, Voters approved Measure V amending 14 different parts of the
Newport Beach city charter. The Newport Beach city charter was originally adopted in
1955 and was updated in 1974. The most specific changes to the city charter are
summaries, rather than the full text of new ordinances to be published to meet the city's
publication requirements; sales of city -owned waterfront land would no longer be listed in
the city's charter and would continue to be subject to a public vote; a committee
considering whether the city's voting districts needed to be redrawn to meet every 4
years instead of every 10 years; the current requirement that the city manager live in the
city to be deleted among others. The full amendment can be viewed on the city's
website.
Fiscal Year 2010 -11 State Budget
The City receives a significant portion of its funding from the State. Changes in the
revenues received by the State can affect the amount of funding, if any, to be received
from the State by the City and other counties in the State. The City has reviewed the
State's 2010 -11 Budget Act and reflected the reductions included therein in its Fiscal
Year 20100 -11 Adopted Budget. The primary impact to the City from the 2010 -11
Budget Act, is the delay of new Highway Users Tax Account payments.
130
FINANCIAL SECTION
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SUPPLEMENTARY 1.1-
INFORMATION
NON-MAJOR GOVERNMENTALFIJNOS
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 Community Development Block Grant Fund is used to account for revenues and
expenditures relating to the City's Community Development Block Grant program. These funds
are received from the Federal Department of Housing and Urban Development and must be
expended exclusively on programs for low or moderate income individuals /families.
The Air Quality Management District Fund is used to account for revenues received from the
South Coast Air Quality Management District restricted for the use of reducing air pollution.
The Environmental Liability Fund is used to account for solid waste fees restricted for
mitigation of future environmental liability relating to the handling of solid waste.
The Supplemental Law Enforcement Services Fund (SLESF) is used to account for revenues
received from the county to be used exclusively for front line law enforcement services.
The Traffic Congestion Relief Fund is used to account for all revenues received from the State
Treasury related to Assembly Bill 2928. State law requires that these funds be used exclusively
for maintenance or reconstruction costs on public streets and roads.
132
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.
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 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 Mariners Library Fund is a Special Revenue Fund used to account for revenues and
expenditures of funds for the Mariners Library Capital Project.
The Oasis Senior Center Fund is used to account for revenues and expenditures associated
with the development and construction of the Oasis Senior Center.
133
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.
The Sunset Ridge Park Fund is used to account for the design and construction of the Sunset
Ridge Park.
The Police Facility Fund is used to account for expenditures for the future space needs
expected of the existing facility buildings, including detailed facility planning and budgetary
guidelines for possible building rehabilitation and /or expansion projects.
The Lifeguard Headquarters Fund is used to account for expenditures for the future space
needs expected of the existing headquarters buildings, including detailed facility planning and
budgetary guidelines for possible building rehabilitation and /or expansion projects.
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.
134
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135
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Cash with fiscal agent
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, 2010
Special Revenue
Circulation
State Asset OTS and
Gas Tax Forfeiture DUI Grant JAG Transportation
$ 3,585,591 $ 526,531 $ - $ - $ 5,361,656
- 12,834 - 16,654 -
$ 3,585,591 $ 539,365 $ - $ 16,654 $ 5,361,656
$ - $ 157,005
- 39,952 16,654 -
- - 39,952 16,654 157,005
1,124,312 - -
2,461,279 539,365 -
- - (39,952)
3,585,591 539,365 (39,952)
$ 3,585,591 $ 539,365 $ -
136
737,890
4,466,761
5,204,651
$ 16,654 $ 5,361,656
Special Revenue
Building
Community
Air Quality
Excise
Combined
Development
Management
Environmental
Tax
Transportation
Block Grant
District
Liability
$ 287,899
$ 3,370,938
$ -
$ 402,526
$ 3,512,295
-
173,213
-
-
12,355
-
298,412
38,585
-
-
$ 287,899
$ 3,842,563
$ 38,585
$ 402,526
$ 3,524,650
H
$ 21,288 $ 17,723 $
108,290 -
- 107,363 3,458
- 20,862
- 236,941 42,043
$ 16,483
16,483
4,600 385,877 - - 21,016
- - - - 137,728
283,299 3,219,745 - 402,526 3,349,423
- - (3,458) - -
287,899 3,605,622 (3,458) 402,526 3,508,167
$ 287,899 $ 3,842,563 $ 38,585 $ 402,526 $ 3,524,650
(continued)
137
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Cash with fiscal agent
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, 2010
(continued)
31,231
31,231
539,149
539,149
$ 31,231 $ 539,149 $
138
8,400,000
8,400,000
8,400,000 $
103,193
103,193
6,730
375,546
382,276
485,469
Special Revenue
Supplemental
Traffic
Newport
Law
Congestion
Coast
Prop 1B
Enforcement
Relief
Annexation
Transportation
$ - $
321,930
$ 8,400,000
$ 485,469
31,231
217,219
-
-
$ 31,231 $
539,149
$ 8,400,000
$ 485,469
31,231
31,231
539,149
539,149
$ 31,231 $ 539,149 $
138
8,400,000
8,400,000
8,400,000 $
103,193
103,193
6,730
375,546
382,276
485,469
$ 50,000 $ - $ 5,991 $ -
380,027 - - -
1,312,559 - -
1,742,586 - 5,991 -
250,494 - 194,982
- 565,655 - -
2,732,944 - 4,675,239 450,330
2,983,438 565,655 4,870,221 450,330
100,000
100,000
$ 4,726,024 $ 565,655 $ 4,876,212 $ 450,330 $ 100,000
(continued)
139
Debt Service
Capital Projects
Library
Assessment
CIOSA
Bonita Canyon
Contributions
COP
District
Construction
Development
$ 2,559,284
$ -
$ 3,384,936
$ 450,330
$ -
44,415
-
-
-
-
2,122,325
-
-
-
-
565,655
1,491,276
-
100,000
$ 4,726,024
$ 565,655
$ 4,876,212
$ 450,330
$ 100,000
$ 50,000 $ - $ 5,991 $ -
380,027 - - -
1,312,559 - -
1,742,586 - 5,991 -
250,494 - 194,982
- 565,655 - -
2,732,944 - 4,675,239 450,330
2,983,438 565,655 4,870,221 450,330
100,000
100,000
$ 4,726,024 $ 565,655 $ 4,876,212 $ 450,330 $ 100,000
(continued)
139
Assets
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2010
(continued)
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Cash with fiscal agent
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
Capital Projects
Marine Mariners Oasis
Fire Station 7 Science Center Library Senior Center
$ 53,487 $ - $ - $ -
$ 53,487
B11
53,487
53,487
$ 53,487 $
140
$ 1,058,294
125,421 - 1,540,320
125,421 - 2,598,614
(125,421) - (2,598,614)
Capital Projects
Misc Marina Sunset Police Lifeguard
SAH Projects Park Ridge Park Facility Headquarters
$ 907,929 $ - $ - $ - $ -
367,294 - - - -
$ 1,275,223
$ 6,800 $ 42,877 $ 5,105 $ - $ -
1,268,976 - - - -
367,294 - - - -
- 1,135,382 898,053 2,175 30,179
1,643,070 1,178,259 903,158 2,175 30,179
117,344 - - -
(367,847) (1,295,603) (903,158) (2,175) (30,179)
$ 1,275,223 $ - $ - $ - $ -
(continued)
141
Assets
Cash and investments
Receivables:
Accounts
Intergovernmental receivables
Cash with fiscal agent
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, 2010
(continued)
Permanent Fund
Total
Other
Ackerman Governmental
Bay Dredging Donation Funds
$ 4,762,727 $ 1,161,978 $ 39,535,506
- - 597,277
- - 2,737,260
- - 2,156,931
$ 4,762,727 $ 1,161,978 $ 45,026,974
$ - $ 1,484,759
- 1,757,293
1,790,674
3,840,229
- 8,872,955
3,857,000
905,727
4,762,727
$ 4,762,727 $
142
2,843,245
565,655
772,781
4,629,781
-
137,728
389,197
33,344,017
-
(5,366,407)
1,161,978
36,154,019
1,161,978
$ 45,026,974
This page left blank intentionally.
143
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
Community services
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances (deficit), beginning
Fund balances (deficit), ending
CITY OF NEWPORT BEACH
Non -Major Governmental Fund Types
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year ended June 30, 2010
Special Revenue
State Asset OTS
Gas Tax Forfeiture DUI Grant JAG
1,384,963 316,650 183,537 67,672
33,195 3,700 - 285
34,160 3,808 - -
1,452,318 324,158 183,537 67,957
71,789 180,640 67,957
471,280 - - -
471,280 71,789 180,640 67,957
981,038 252,369 2,897
(160,000) -
(160,000) -
821,038 252,369 2,897 -
2,764,553 286,996 (42,849) -
$ 3,585,591 $ 539,365 $ (39,952) $ -
144
Special Revenue
Circulation
Building
Community
Air Quality
and
Excise
Combined
Development
Management
Environmental
Transportation
Tax
Transportation
Block Grant
District
Liability
S -
$ -
$ -
$ -
$ -
$ 452,063
-
-
1,797,798
470,499
97,868
-
-
74,947
-
-
-
-
366,087
-
-
-
-
-
45,761
3,188
38,710
-
5,238
36,172
47,092
3,281
39,836
-
5,389
37,224
3,675,000
-
-
-
-
-
4,133,940 81,416 1,876,344 470,499 108,495 525,459
- 14,342 108,537
134,720 - -
684,073 56,052 2,087,816 141,702 154,000 -
- - - 89,000 - -
- - - 108,535 - -
684,073 56,052 2,087,816 473,957 168,342 108,537
3,449,867 25,364 (211,472) (3,458) (59,847) 416,922
(263,044) - - - -
(263,044) - - - -
3,186,823 25,364 (211,472) (3,458) (59,847) 416,922
2,017,828 262,535 3,817,094 - 462,373 3,091,245
$ 5,204.651 $ 287,899 $ 3,605,622 $ (3,458) $ 402,526 $ 3,508,167
(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, 2010
(continued)
Expenditures:
Current:
Public safety 119,820 - - -
Public works - - - -
Community development - - - -
Community services - - - -
Capital outlay - 638,840 - 945,210
Debt service:
Principal - - 1,200,000 -
Interest and fiscal charges - - - -
Total expenditures 119,820 638,840 1,200,000 945,210
Excess (deficiency) of revenues
over expenditures - 145,678 (998,941) (921,101)
Other financing sources (uses):
Transfers in - - - -
Transfers out - - (201,059) -
Total other financing sources (uses) - - (201,059) -
Net change in fund balances
- 145,678
(1,200,000)
Special Revenue
Fund balances, beginning
- 393,471
9,600,000
1,303,377
Supplemental
Traff ic
Newport
382,276
Law
Congestion
Coast
Prop 1B
Enforcement
Relief
Annexation
Transportation
Revenues:
Other taxes
S -
$ -
$ -
$ -
Intergovernmental
119,072
781,202
-
-
Licenses, permits and fees
-
-
-
-
Fines and forfeitures
-
-
-
Investment income
748
1,634
99,089
11,882
Net increase in fair value of investments
-
1,682
101,970
12,227
Donations
-
-
-
-
Other
-
-
Total revenues
119,820
784,518
201,059
24,109
Expenditures:
Current:
Public safety 119,820 - - -
Public works - - - -
Community development - - - -
Community services - - - -
Capital outlay - 638,840 - 945,210
Debt service:
Principal - - 1,200,000 -
Interest and fiscal charges - - - -
Total expenditures 119,820 638,840 1,200,000 945,210
Excess (deficiency) of revenues
over expenditures - 145,678 (998,941) (921,101)
Other financing sources (uses):
Transfers in - - - -
Transfers out - - (201,059) -
Total other financing sources (uses) - - (201,059) -
Net change in fund balances
- 145,678
(1,200,000)
(921,101)
Fund balances, beginning
- 393,471
9,600,000
1,303,377
Fund balances (deficit), ending $
- $ 539,149 $
8,400,000 $
382,276
146
Debt Service Capital Projects
4,195,274 - 1,031,884 -
1,648,609 - - 1,708,817 - -
- 345,000 - - - -
- 224,379 - - - -
1,648,609 569,379 4,195,274 1,708,817 1,031,884 -
524,705 (547,380) 1,659,516 (1,668,532) (877,962) 1,169
547,257
(160,000)
(160,000) 547,257
364,705 (123)
183,044
183,044
1,659,516 (1,485,488) (877,962)
1,169
2,618,733 565,778 3,210,705 1,935,818 977,962 52,318
$ 2,983,438 $ 565,655 $ 4,870,221 $ 450,330 $ 100,000 $ 53,487
(continued)
147
Library
Assessment
CIOSA
Bonita Canyon
Contributions
COP
District
Construction
Development
Fire Station 7
$ -
S -
S -
S -
$ -
S -
1,903,669
-
-
-
-
-
47,127
21,999
26,063
19,854
51
576
48,498
-
26,823
20,431
-
593
174,020
-
-
-
-
-
-
-
5,801,904
-
153,871
-
2,173,314
21,999
5,854,790
40,285
153,922
1,169
4,195,274 - 1,031,884 -
1,648,609 - - 1,708,817 - -
- 345,000 - - - -
- 224,379 - - - -
1,648,609 569,379 4,195,274 1,708,817 1,031,884 -
524,705 (547,380) 1,659,516 (1,668,532) (877,962) 1,169
547,257
(160,000)
(160,000) 547,257
364,705 (123)
183,044
183,044
1,659,516 (1,485,488) (877,962)
1,169
2,618,733 565,778 3,210,705 1,935,818 977,962 52,318
$ 2,983,438 $ 565,655 $ 4,870,221 $ 450,330 $ 100,000 $ 53,487
(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, 2010
(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
Community services
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning
Fund balances (deficit), ending
Marine
Mariners
Oasis
Misc
Science Center
Library
Senior Center
SAH Projects
$ -
$
S
$
300,000
318,074
-
4,944,909
-
592
45,962
-
-
-
1,523,917
-
300,000
318,666
1,569,879
4,944,909
5,273 - 9,654,410
5,273
4,895,035
9,654,410 4,895,035
294,727 318,666 (8,084,531) 49,874
(318,666) -
(318,666) -
294,727 - (8,084,531) 49,874
(420,148) - 5,485,917 (417,721)
$ (125,421) $ - $ (2,598,614) $ (367,847)
148
Capital Projects
Marina Sunset Police Lifequard
Park Ridge Park Facility Headquarters
S $ $ S
320,867 659,857 -
320,867 659,857 -
(320,867) (659,857) -
(320,867) (659,857) -
(857,392) (243,301) (2,175) (30,179)
S (1,178,259) $ 903,158) $ 2,175) $ (30,179)
(continued)
149
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, 2010
(continued)
Revenues:
Othertaxes
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
Community services
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Permanent Funds
440,206
- 10,245,072
4,650 1,120,094
- 18,196,082
1,634,000
- 332,914
4,650 31,968,368
Excess (deficiency) of revenues
over expenditures 104,074 20,841 (6,106,241)
Other financing sources (uses):
Transfers in - - 730,301
Transfers out - - (1,102,769)
Total other financing sources (uses) - - (372,468)
Net change in fund balances
104,074
Total
(6,478,709)
Fund balances, beginning
Other
1,141,137
Ackerman
Governmental
Bay Dredging
Donation
Funds
S -
$ -
$ 452,063
-
-
12,685,913
-
74,947
-
366,087
51,291
12,573
505,690
52,783
12,918
448,715
-
-
5,372,937
-
-
5,955,775
104,074
25,491
25,862,127
440,206
- 10,245,072
4,650 1,120,094
- 18,196,082
1,634,000
- 332,914
4,650 31,968,368
Excess (deficiency) of revenues
over expenditures 104,074 20,841 (6,106,241)
Other financing sources (uses):
Transfers in - - 730,301
Transfers out - - (1,102,769)
Total other financing sources (uses) - - (372,468)
Net change in fund balances
104,074
20,841
(6,478,709)
Fund balances, beginning
4,658,653
1,141,137
42,632,728
Fund balances (deficit), ending
$ 4,762,727
$ 1,161,978 $
36,154,019
150
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2010
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental $ 1,361,251 $ 1,361,251 $ 1,384,963 $ 23,712
Investment income 40,000 40,000 33,195 (6,805)
Net increase in fair value of investments - - 34,160 34,160
Total revenues 1,401,251 1,401,251 1,452,318 51,067
Expenditures:
Capital outlay
Total Expenditures
Excess (deficiency) of revenues
over expenditures
Other financing uses:
Transfers out
Net change in fund balance
Fund balance, beginning
Fund balance (deficit), ending
2,982,087 689,337 471,280 218,057
2,982,087 689,337 471,280 (218,057)
(1,580,836) 711,914 981,038 269,124
(160,000) (160,000) (160,000)
(1,740,836) 551,914 821,038 269,124
2,764,553 2,764,553 2,764,553 --
S 1,023,717 $ 3,316,467 3,585,591 $ 269,124
151
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2010
Expenditures
Public safety
106,072
106,072
Variance
Net change in fund balance
(63,072)
(63,072)
with Final
Fund balance, beginning
286,996
286,996
Budget
Fund balance, ending
Budget Amounts
$ 223,924
Positive
Original Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 40,000 $ 40,000
$ 316,650
$ 276,650
Investment income
3,000 3,000
3,700
700
Net increase in fair value of investments
- -
3,808
3,808
Total revenues
43,000 43,000
324,158
281,158
Expenditures
Public safety
106,072
106,072
71,789 34,283
Net change in fund balance
(63,072)
(63,072)
252,369 315,441
Fund balance, beginning
286,996
286,996
286,996 -
Fund balance, ending
$ 223,924
$ 223,924
$ 539,365 $ 315,441
152
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
OTS DUI Grant Special Revenue Fund
For the Year Ended June 30, 2010
Variance
with Final
Budget
Budget Amounts Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental $ 105,643 S 297,643 $ 183,537 $ (114,106)
Total revenues 105,643 297,643 183,537 (114,106)
Expenditures
Public safety
$ 64,167
$ 256,167
$ 180,640 75,527
Net change in fund balance
41,476
41,476
2,897 (38,579)
Fund balance (deficit), beginning
(42,849)
(42,849)
(42,849) -
Fund balance (deficit), ending
$ (1,373)
$ (1,373)
$ (39,952) $ (38,579)
153
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
JAG Special Revenue Fund
For the Year Ended June 30, 2010
154
Variance
with Final
Budget
Budget Amounts
Positive
Original Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 67,197 $ 67,197
$ 67,672 $
475
Investment income
- -
285
285
Total revenues
67,197 67,197
67,957
760
Expenditures
Public safety
67,197 67,197
67,957
(760)
Net change in fund balance
- -
-
-
Fund balance (deficit), beginning
- -
-
-
Fund balance (deficit), ending
$ - $ -
$ - $
-
154
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Circulation and Transportation Special Revenue Fund
For the Year Ended June 30, 2010
155
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ 615,000
$ 615,000
$ 366,087
$ (248,913)
Investment income
36,500
36,500
45,761
9,261
Net increase in fair value of investments
-
-
47,092
47,092
Donations
-
-
3,675,000
3,675,000
Total revenues
651,500
651,500
4,133,940
3,482,440
Expenditures:
Capital outlay
2,105,201
1,541,311
684,073
857,238
Excess (deficiency) of revenues
over expenditures
(1,453,701)
(889,811)
3,449,867
4,339,678
Other financing uses:
Transfers out
(80,000)
(80,000)
(263,044)
(183,044)
Net change in fund balance
(1,533,701)
(969,811)
3,186,823
4,156,634
Fund balance, beginning
2,017,828
2,017,828
2,017,828
-
Fund balance, ending
$ 484,127
$ 1,048,017
$ 5,204,651
$ 4,156,634
155
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Building Excise Tax Special Revenue Fund
For the Year Ended June 30, 2010
156
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ 100,000
$ 100,000
$ 74,947
$ (25,053)
Investment income
500
500
3,188
2,688
Net increase in fair value of investments
-
-
3,281
3,281
Total revenues
100,500
100,500
81,416
(19,084)
Expenditures:
Capital outlay
90,200
69,800
56,052
13,748
Net change in fund balance
10,300
30,700
25,364
(5,336)
Fund balance, beginning
262,535
262,535
262,535
-
Fund balance, ending
$ 272,835
$ 293,235
$ 287,899
$ (5,336)
156
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Combined Transportation Special Revenue Fund
For the Year Ended June 30, 2010
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
(3,618,655) (1,172,302) (211,472)
3,817,094 3,817,094 3,817,094
$ 198,439 $ 2,644,792 $ 3,605,622
157
960,830
$ 960,830
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 2,757,977
$ 2,757,977
$ 1,797,798
$ (960,179)
70,000
70,000
38,710
(31,290)
-
-
39,836
39,836
2,827,977
2,827,977
1,876,344
(951,633)
6,446,632
4 000 279
2,087 816
1,912,463
(3,618,655) (1,172,302) (211,472)
3,817,094 3,817,094 3,817,094
$ 198,439 $ 2,644,792 $ 3,605,622
157
960,830
$ 960,830
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2010
Revenues:
Intergovernmental
Total revenues
Expenditures:
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Net change in fund balance
Fund balance (deficit), beginning
Fund balance (deficit), ending
$ - $ (20,000) $ (3,458) $ 16,542
158
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 473,957
$ 453,957
$ 470,499
$ 16,542
473,957
453,957
470,499
16,542
134,720
134,720
134,720
-
141,702
141,702
141,702
-
89,000
89,000
89,000
-
108,535
108,535
108,535
-
473,957
473,957
473,957
-
-
(20,000)
(3,458)
16,542
$ - $ (20,000) $ (3,458) $ 16,542
158
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2010
Expenditures
Public works
26,415
26,415
14,342
Variance
Capital outlay
-
154,000
154,000
with Final
Total expenditures
26,415
180,415
168,342
Budget
Net change in fund balance
Budgeted
Amounts
(59,847)
Positive
Fund balance, beginning
Original
Final
Actual
(Negative)
Revenues:
$ 541,958
$ 387,958
$402,526
$ 14,568
Intergovernmental
$ 100,000
$ 100,000
$ 97,868
$ (2,132)
Investment income
6,000
6,000
5,238
(762)
Net increase in fair value of investments
-
-
5,389
5,389
Total revenues
106,000
106,000
108,495
2,495
Expenditures
Public works
26,415
26,415
14,342
12,073
Capital outlay
-
154,000
154,000
-
Total expenditures
26,415
180,415
168,342
12,073
Net change in fund balance
79,585
(74,415)
(59,847)
14,568
Fund balance, beginning
462,373
462,373
462,373
-
Fund balance, ending
$ 541,958
$ 387,958
$402,526
$ 14,568
159
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Environmental Liability Special Revenue Fund
For the Year Ended June 30, 2010
Expenditures
Public works
$ 152,473
$ 152,473
$ 108,537
Variance
Total expenditures
152,473
152,473
108,537
with Final
Net change in fund balance
352,527
352,527
416,922
Budget
Fund balance, beginning
Budgeted
Amounts
3,091,245
Positive
Fund balance, ending
Original
Final
Actual
(Negative)
Revenues:
Taxes
$ 420,000
$ 420,000
$ 452,063
$ 32,063
Investment income
45,000
45,000
36,172
(8,828)
Net increase in fair value of investments
-
-
37,224
37,224
Other Revenue
40,000
40,000
(40,000)
Total revenues
505,000
505,000
525,459
20,459
Expenditures
Public works
$ 152,473
$ 152,473
$ 108,537
$ 43,936
Total expenditures
152,473
152,473
108,537
43,936
Net change in fund balance
352,527
352,527
416,922
64,395
Fund balance, beginning
3,091,245
3,091,245
3,091,245
-
Fund balance, ending
$ 3,443,772
$ 3,443,772
$ 3,508,167
$ 64,395
160
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Supplemental Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2010
Revenues:
Intergovernmental
Investment income
Total revenues
Expenditures:
Public safety
Net change in fund balance
Fund balance, beginning
Fund balance, ending
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
$ 160,000 $ 160,000 $ 119,072 $ (40,928)
750 750 748 (2)
160,750 160,750 119,820 (40,930)
160,750 160,750 119,820 40,930
161
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Traffic Congestion Special Revenue Fund
For the Year Ended June 30, 2010
162
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 803,268
$ 1,000,612
$ 781,202
$ (219,410)
Investment income
4,000
4,000
1,634
(2,366)
Net increase in fair value of investments
-
-
1,682
1,682
Total revenues
807,268
1,004,612
784,518
(220,094)
Expenditures:
Capital outlay
1,342,058
1,342,058
638,840
703,218
Net change in fund balance
(534,790)
(337,446)
145,678
483,124
Fund balance, beginning
393,471
393,471
393,471
-
Fund balance, ending
$ (141,319)
$ 56,025
$ 539,149
$ 483,124
162
CITY OF NEWPORT BEACH
Newport Coast Annexation
Budgetary Comparison Statement
For the Year Ended June 30, 2010
163
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Investment income
$ 250,000
$ 250,000
$ 99,089
$ (150,911)
Net increase in fair value of investments
-
-
101,970
101,970
Total revenues
250,000
250,000
201,059
(48,941)
Expenditures
Debt service:
Principal
1,200,000
1,200,000
1,200,000
-
Total expenditures
1,200,000
1,200,000
1,200,000
-
Excess (deficiency) of revenues
over expenditures
(950,000)
(950,000)
(998,941)
(48,941)
Other financing uses
Transfers in
-
-
-
-
Transfers out
(1,400,000)
(200,000)
(201,059)
(1,059)
Total other financing (uses)
(1,400,000)
(200,000)
(201,059)
(1,059)
Net change in fund balance
(2,350,000)
(1,150,000)
(1,200,000)
(50,000)
Fund balance, beginning
9,600,000
9,600,000
9,600,000
-
Fund balance, ending
$ 7,250,000
$ 8,450,000
$ 8,400,000
$ (50,000)
163
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Proposition 1B Transportation Special Revenue Fund
For the Year Ended June 30, 2010
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, ending
164
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 27,000
$ 27,000
$ 11,882
$ (15,118)
-
-
12,227
12,227
27,000
27,000
24,109
(2,891)
-
1,252,014
943,845
308,169
27,000
(1,225,014)
(919,736)
305,278
1,303,377
1,303,377
1,303,377
-
$ 1,330,377
$ 78,363
$ 383,641
8 305,278
164
CITY OF NEWPORT BEACH
Contributions Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2010
Expenditures:
Capital outlay 4,136,227 - 1,648,609 (1,648,609)
Excess (deficiency) of revenues
over expenditures (2,165,603) 3,678,081 524,705 (3,153,376)
Other financing sources (uses):
Transfers in - - - -
Transfers out - (160,000) (160,000)
Net change in fund balance (2,165,603) 3,678,081 364,705 (3,313,376)
Fund balance, beginning 2,618,733 2,618,733 2,618,733 -
Fund balance, ending $ 453,130 $ 6,296,814 $ 2,983,438 $ (3,313,376)
165
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 1,774,624
$ 3,479,294
$ 1,903,669
$ (1,575,625)
Investment income
75,000
75,000
47,127
(27,873)
Net increase in fair value of investments
-
-
48,498
48,498
Donations
121,000
123,787
174,020
50,233
Total revenues
1,970,624
3,678,081
2,173,314
(1,504,767)
Expenditures:
Capital outlay 4,136,227 - 1,648,609 (1,648,609)
Excess (deficiency) of revenues
over expenditures (2,165,603) 3,678,081 524,705 (3,153,376)
Other financing sources (uses):
Transfers in - - - -
Transfers out - (160,000) (160,000)
Net change in fund balance (2,165,603) 3,678,081 364,705 (3,313,376)
Fund balance, beginning 2,618,733 2,618,733 2,618,733 -
Fund balance, ending $ 453,130 $ 6,296,814 $ 2,983,438 $ (3,313,376)
165
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Im
FINANCIAL SECTION
SUPPLEMENTARY
INFORMATION
INTERNAL SERVICE FUNDS
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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.
M
CITY OF NEWPORT BEACH
All Internal Service Funds
Combining Statement of Net Assets
June 30, 2010
Liabilities
Current liabilities
Accounts payable and accrued liabilities
$ 168,001
$ 1,463
$ -
$ 117,265
Total
Accrued payroll
Insurance
Compensated
Retiree
Equipment
Internal
Assets
Reserve
Absence
Insurance
Maintenance
Service Funds
Current assets:
3,080,500
-
-
-
3,080,500
Cash and investments
$ 21,834,597
$ 1,841,034
$ -
$ 17,068,463
$ 40,744,094
Receivables:
-
1,557,331
-
-
1,557,331
Accounts
130,059
12,116
749,816
3,415
895,406
Inventories
-
-
-
255,430
255,430
Prepaid items
78,000
293,330
371,330
Total current assets
22,042,656
1,853,150
1,043,146
17,327,308
42,266,260
Non - current assets:
2,559,662
-
-
-
2,559,662
Capital assets:
-
7,438,548
-
-
7,438,548
Equipment
-
-
-
23,022,523
23,022,523
Less accumulated depreciation
6,472,000
(16,672,418)
(16,672,418)
Total capital assets (net of
11,801,162
9,949,465
6,472,000
-
28,222,627
accumulated depreciation)
-
-
-
6,350,105
6,350,105
Total assets
22,042,656
1,853,150
1,043,146
23,677,413
48,616,365
Liabilities
Current liabilities
Accounts payable and accrued liabilities
$ 168,001
$ 1,463
$ -
$ 117,265
$ 286,729
Accrued payroll
-
-
-
43,909
43,909
Due to general fund
-
-
820,395
-
820,395
Workers' compensation - current
3,080,500
-
-
-
3,080,500
General liability - current
1,260,729
-
-
-
1,260,729
Compensated absences - current
-
1,557,331
-
-
1,557,331
Early retirement incentive program - current
-
938,520
-
-
938,520
Total current liabilities
4,509,230
2,497,314
820,395
161,174
7,988,113
Non - current liabilities:
Workers' compensation
9,241,500
-
-
-
9,241,500
General liability
2,559,662
-
-
-
2,559,662
Compensated absences
-
7,438,548
-
-
7,438,548
Early retirement incentive program - current
2,510,917
2,510,917
Net OPEB obligation
6,472,000
6,472,000
Total Noncurrent liabilities
11,801,162
9,949,465
6,472,000
-
28,222,627
Total liabilities
16,310,392
12,446,779
7,292,395
161,174
36,210;740
Net Assets
Invested in capital assets, net of related debt
-
-
-
6,350,105
6,350,105
Unrestricted
5,732,264
(10,593,629)
(6,249,249)
17,166,134
6,055,520
Total net assets
$ 5,732,264
$ (10,593,629)
$ (6,249,249)
$ 23,516,239
$ 12,405,625
169
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Revenues, Expenses
and Changes in Fund Net Assets
For the Year Ended June 30, 2010
170
Total
Insurance
Compensated
Retiree
Equipment
Internal
Reserve
Absence
Insurance
Maintenance
Service Funds
Operating revenues:
Charges for services
$ 5,909,794
$ 2,383,307
$ 2,016,000
$ 5,989,798
$ 16,298,899
Retiree reimbursements
-
-
1,119,262
-
1,119,262
Employee contributions
-
-
329,234
-
329,234
Other
158,499
12,116
47,286
217,901
Total operating revenues
6,068,293
2,395,423
3,511,782
5,989,798
17,965,296
Operating expenses:
Salaries and wages
-
-
-
1,459,423
1,459,423
Depreciation
-
-
-
1,814,442
1,814,442
Professional services
-
-
-
51,431
51,431
Maintenance and supplies
-
-
-
813,819
813,819
Fleet parts and supplies
-
-
-
452,466
452,466
Workers'compensation
3,530,130
-
-
-
3,530,130
Claims and judgments
201,308
-
-
-
201,308
Compensated absences
-
2,022,943
-
-
2,022,943
Early Retirement Incentive Program
-
4,409,833
-
-
4,409,833
OPEB ARC- Cash subsidy
-
-
2,016,000
-
2,016,000
OPEB ARC- Implied subsidy
-
-
2,477,000
-
2,477,000
Other
1,115,115
1,115,115
Total operating expenses
3,731,438
6,432,776
5,608,115
4,591,581
20,363,910
Operating income (loss)
2,336,855
(4,037,353)
(2,096,333)
1,398,217
(2,398,614)
Nonoperating revenues (expenses):
Investment income
235,672
24,673
-
183,682
444,227
Net Increase in fair value of investments
242,731
25,390
-
189,024
457,145
(Loss) on sale of capital assets
-
-
-
(15,877)
(15,877)
Total nonoperating revenues
478,603
50,063
-
356,829
885,495
Income (loss) before transfers
2,815,458
(3,987,290)
(2,096,333)
1,755,046
(1,513,119)
Transfers in
-
-
-
-
Transfer out
(600,000)
(600,000)
Change in net assets
2,815,458
(3,987,290)
(2,096,333)
1,155,046
(2,113,119)
Net assets (accumulated
deficit), beginning
2,916,806
(6,606,339)
(4,152,916)
22,361,193
14,518,744
Net assets, (accumulated
deficit), ending
$ 5,732,264
$ (10,593,629)
$ (6,249,249)
$ 23,516,239
$ 12,405,625
170
CITY OF NEWPORT BEACH
Combining Statement of Cash Flows - Internal Service Funds
For the Year Ended June 30, 2010
Total
Insurance Compensated Retiree Equipment Internal
Reserve Absences Insurance Maintenance Service Funds
Cash flows from operating activities
Receipts from user departments
$ 6,087,377
$ 2,371,191
$ 3,135,262
$ 5,999,641
$ 17,593,471
Payments to employees
(3,101,130)
(3,771,545)
-
(1,458,891)
(8,331,566)
Payments to suppliers
(2,671,115)
1,463
(3,869,990)
(1,299,015)
(7,838,657)
Other operating cash receipts
158,499
12,116
376,520
1,814,442
547,135
Net cash provided (used) for operating activities
473,631
(1,386,775)
(358,208)
3,241,735
1,970,383
Cash flows from noncapital financing activities:
177,583
(12,116)
(180,669)
9,843
(5,359)
Cash received from other funds
-
-
358,208
-
358,208
Cash paid to other funds
-
-
-
(600,000)
(600,000)
Net cash provided (used)by noncapital financing
358 208
(600.000)
(241.792)
Cash flows from capital and related
financing activities:
Acquisition of capital assets
Proceeds from sale of capital assets
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
478,603 50,063
478,603 50,063
(1,478,229) (1,478,229)
105,934 105,934
(1,372,295) (1,372,295)
372,706 901,372
372,706 901,372
952,234
(1,336,712)
- 1,642,146
1,257,668
20,882,363
3,177,746
15,426,317
39,486,426
$ 21,834,597
$ 1,841,034 $
$ 17,068,463
$ 40,744,094
Operating income (loss)
$ 2,336,855
$ (4,037,353)
$ (2,096,333)
$ 1,398,217
$ (2,398,614)
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities:
Depreciation
-
-
-
1,814,442
1,814,442
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
177,583
(12,116)
(180,669)
9,843
(5,359)
Decrease in inventories
-
-
-
4,301
4,301
(increase) in prepaid items
(78,000)
-
(131,751)
-
(209,751)
Increase (decrease) in accounts payable and
accrued payroll
(314,461)
1,463
(13,455)
14,932
(311,521)
Increase in workers' compensation
429,000
-
-
-
429,000
(Decrease) in general liability
(2,077,346)
-
-
-
(2,077,346)
(Decrease) in compensated absences
-
(788,206)
-
-
(788,206)
Increase in early retirement incentive program
-
3,449,437
-
-
3,449,437
Increase in net OPEB obligation
2,064,000
2,064,000
Total adjustments
(1,863,224)
2,650,578
1,738,125
1,843,518
4,368,997
Net cash provided (used) by operating activities
$ 473.631
$ (1.386.7751
$ (358.2081
$ 3.241.735
$ 1.970.383
Non -cash investing, capital, and financing activities:
Net increase in fair value of investments
242,731
25,390
-
189,024
457,145
(Loss) on sale of capital assets
(15,877)
(15,877)
Total of non -cash activities
$ 242,731
$ 25,390
$
$ 173,147
$ 441,268
171
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172
FINANCIAL SECTION
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SUPPLEMENTARY
INFORMATION
FIDUCIARY FUNDS
FIDUCIARY FUNDS
Fiduciary Funds are used to account for assets held by the City in a trustee
capacity, or as an agent for other government entities, private organizations, or
individuals.
The City of Newport Beach Fiduciary Funds are listed below:
The Special Assessment 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.
174
CITY OF NEWPORT BEACH
Agency Funds
Combining Statement of Fiduciary Assets and Liabilities
June 30, 2010
Liabilities
Due to bondholders $ 7,301,247 $ - $ - $ 7,301,247
Due to others - 198,047 105,984 304,031
Due to ILJAOC - - 1,546,707 1,546,707
Total liabilities $ 7,301,247 $ 198,047 $ 1,652,691 $ 9,151,985
175
Special
Business
Assessment District
Improvement
ILJAOC
Assets
Fund
Fund
Fund
Totals
Cash and investments
$ 2,682,766
$ 198,047
$ 1,489,262
$ 4,370,075
Cash with fiscal agent
4,618,481
-
-
4,618,481
Prepaid items
-
75,085
75,085
Intergovernmental receivable
-
-
88,344
88,344
Total assets
$ 7,301,247
$ 198,047
$ 1,652,691
$ 9,151,985
Liabilities
Due to bondholders $ 7,301,247 $ - $ - $ 7,301,247
Due to others - 198,047 105,984 304,031
Due to ILJAOC - - 1,546,707 1,546,707
Total liabilities $ 7,301,247 $ 198,047 $ 1,652,691 $ 9,151,985
175
CITY OF NEWPORT BEACH
Statement of Changes in Fiduciary Net Assets
All Agency Funds
For the Year Ended June 30, 2010
Business Improvement District:
Assets
Cash and investments $ 229,398 $ 527,231 $ (558,582) $ 198,047
Liabilities
Due to others $ 229,398 $ 527,231 $ (558,582) $ 198,047
ILJAOC:
Balance
$ 6,690,646
$ (6,149,206)
Balance
Due to others
June 30, 2009
Additions
Deductions
June 30, 2010
Special Assessment:
1,037,964
508,743
1,546,707
Assets
Cash and investments
$
985,979
$
Cash and investments
$ 2,658,042
$ 4,190,694
$ (4,165,970)
$ 2,682,766
Cash with fiscal agent
4,101,765
2,499,952
(1,983,236)
4,618,481
Total Assets
$ 6,759,807
$ 6,690,646
_L±,149,2061
$ 7,301,247
Liabilities
8,344
88,344
Due to bondholders
$ 6,759,807
$ 6,690,646
$ (6,149,206)
$ 7,301,247
Business Improvement District:
Assets
Cash and investments $ 229,398 $ 527,231 $ (558,582) $ 198,047
Liabilities
Due to others $ 229,398 $ 527,231 $ (558,582) $ 198,047
ILJAOC:
$ 6,759,807
$ 6,690,646
$ (6,149,206)
$ 7,301,247
Due to others
259,607
603,006
Assets
304,031
Due to ILJAOC
1,037,964
508,743
1,546,707
Total Liabilities
Cash and investments
$
985,979
$
503,283
$
$
1,489,262
Prepaid items
2,194
75,085
(2,194)
75,085
Intergovernmental receivable
80,000
8,344
88,344
Total Assets
$
1,068,173
$
586,712
$ (2,194)
$
1,652,691
Liabilities
Due to others
$
30,209
$
75,775
$
$
105,984
Due to ILJAOC
1,037,964
508,743
1,546,707
Total Liabilitites
$
1,068,173
$
584,518
$
$
1,652,691
Totals - All Agency Funds:
Assets
Cash and investments
$
3,873,419
$
5,221,208
$ (4,724,552)
$
4,370,075
Cash with fiscal agent
4,101,765
2,499,952
(1,983,236)
4,618,481
Prepaid items
2,194
75,085
(2,194)
75,085
Intergovernmental receivable
80,000
8,344
88,344
Total Assets
$
8,057,378
$
7,804,589
_L±,709,9821
$
9,151,985
Liabilities
Due to bondholders
$ 6,759,807
$ 6,690,646
$ (6,149,206)
$ 7,301,247
Due to others
259,607
603,006
(558,582)
304,031
Due to ILJAOC
1,037,964
508,743
1,546,707
Total Liabilities
$ 8,057,378
$ 7,802,395
$ (6,707,788)
$ 9,151,985
176
STATISTICAL SECTION
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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.
178
CITY OF NEWPORT BEACH
Net Assets by Component
Last Nine Fiscal Years
(accrual basis of accounting
Fiscal Year
2002 2003 2004 2005' 2006 2007 2008 2009 2010
Govemmenlal activities:
nvested In Capital assets,
net of related debt $13916]]813 $1,4123]2465 61$12651096 $ 1,915346863 $ 2D05,643661 $ 2,02701 $ 2,050,925,370 $ 2,061635842 S 2,065012,025
Restricted 38,689,956 37,650,692 45,494,082 54,285,743 51,901,103 35,017.831 40,988,923 44,212.]4] 34236,929
Uniessal 41,095,786 49,322,283 46,]]2,913 61,894,956 56,662,229 75,989,169 87,802,996 96,276,361 85,949,688
Trial governmental activities $14]1463555 $1 499 345 440 $1 804 918 091 $ 2 031 529 562 $ 2 114 208 983 $ 2 138 033 053 $ 21]9 ]1]289 $ 2202124]70 $ _2205198642
Business -type activities:
Invested In capipl assets,
not of related debt S 87,470,314 $ 91,912,205 $ 94,206,704 $ 99,641,411 S 104602,266 $ 107,231,308 $ 1O,313,603 $ 105510,361 $ 108,449,847
Restricted - - - - - - - - -
Unrestricted 25123500 24,22],5]9 21,493,528 10665,535 16.907367 15608,357 13,63002] 11,435,306 10,173912
Total businoss-rype activities $ 113.593.814 S 116.139.]84 _L115 ]00.232 _L112 .306.946 _L121 509 633 _LIP 039 665 _L120 952 630 _L_119 M 661 _L--M 623 759
Pri mary govomment
I averred In capital assets,
net of related debt $16]9,140,12] $ 1504284670 $ 1,606,857,800 $ 2,014 anti $ 2,110245,917 5 2,134257,361 S 2,151 $ 2.170.148,003 S 2,193p61872
Restricted 38,689,956 37,650,692 45,494,082 54285 .743 51901,103 35.017 ,831 40,988,923 44,212.]4] 34.236,929
Unrestricted 67,219,286 73,549,862 0.266,441 81,560.491 73,569:596 91,797,526 101,442,023 10,]11,68] 96,123,600
Total primary government 81,585,057,369 $ 1,615,465224 $ 1,720,618,323 $ 2,150836,528 S 2,235,716,816 $ 2,261,072,718 S 2300,669,919 $ 2,3220]0,437 3 2323822,401
' 2005 data varies form trend because of increased capital assets related to PCH Relinquishment
The Cily efNetvpad Beach Implemented CASE 34 far the fiscal year ended June 30 2002.
Inkrmation Prior the implementation of GASB 34 is not available.
179
CITY OF NEWPORT BEACH
Changes In Net Assets
Last Mae Fiscal Years
(accrual basis of accounting)
Pmgram revenues:
Fiscal Year
Govemmental activities:
20M
2003
2004
2005
2006
2007
2008
2009
2010
Fxpensxs
Govemmental services:
2,270,082
3,006162
2,109,141
2,412769
2,623,472
2,9441100
3,055982
2,543680
2,909603
General government 3
12,792,860
$ 10,799,630 3
11,428,379 $
11,378,69
$ 14,509.827
$ 14,166,168
$ 15;556,657 $
16.430,529 $
17,082,705
Public safety
47,188918
56,521,871
58178633
63214,291
67 ,789,121
89795,3M
75821,082
79,301800
79,402800
Public vmrka
30,34,516
32,089038
38,127,832
46,359,871
33,870,3a9
39,179,844
42,631,401
45,600,429
55,445,327
Community development
4,471,397
5,782,215
6,229]85
6,437,006
6.157,925
9,020,868
10,052,671
10,283,526
10,082454
Community urvices
11,044,086
10,404286
14,741$04
13,073,215
13.803,755
23304,053
1% %41
20,581
17,232357
Iharman on fungi debt
517,102
673,994
542,126
5081869
479,529
523,401
533,569
437,207
372,502
Tota190vommentill activities
expenses
106,314,879
116,270,983
129248,259
140,971,861
138,610518
155911
IMi741,168
172642,387
178,617,945
ausirmica eravines:.
Water
14,606,514
14,540,036
17,185,034
14,467,233
16,228,213
17,399.900
20,14$517
18.210.789
18 ,732,351
Wastewater
2588833
3,115,136
3,363954
2,740,508
3.143,629
3,259,837
342:1,592
3,753,042
3,598031
Total busineea{ypt activities
expenses
17,395,347
17,655,172
20,548,988
17,208,141
19;371,842
20,659,737
23,5n 109
21.91
22331,385
Total primary government
2,945,84
2,768,941
2862793
2950,92
3,311,509
3,535.050
355$780
3;479,565
3,368,327
expenses
123,710228
133,926,155
149,797,247
158,1 In 502
19,982,358
178,649,457
187,313,277
194,605,218
201,949,330
Pmgram revenues:
Govemmental activities:
Cbargea for aarvions:
General government
2,270,082
3,006162
2,109,141
2,412769
2,623,472
2,9441100
3,055982
2,543680
2,909603
Public safety
10.549,410
11,603564
15,739912
16,250,493
13,669,509
15,756327
18,649400
14,]5],266
15008801
Public narks
5,436,948
Soon own
5,401 Me
6,031,248
5,133,728
5,482,19
5,616,118
5.532,871
6,394,817
Cammuniry bevelopment
3,236,483
4,022904
5,196,276
Sin Sib
5,6501
5682636
5,59],309
4,852.534
4,806,745
Community varvices
2,538899
6,039226
3,848666
3952862
% 433 ,278
9,054$04
9,2M 513
9,052,330
8673,465
Gpe an, Grants and
Contrlbuticns:
7,891,059
8,750,565
10681,329
17,460,834
12,72,599
16.172,023
15,778,851
13,404.286
15.64,617
Capital Grants and
Canlnbutiane:
1,562458
4,146,728
674,815
20,205,848 '
69473,891 °
5904,716
31,037,915 °
24,633,716
12,350,100
Total governmental activism,
program revenues
331780,339
42,508217
43,729,603
71,478,012.
118,773,566
61,9981773
88,939068
74,78883
65,817,008
Bus cal activities:
Charge, fm services:
Water
16,611
16,489284
18,430,500
17S73 196
17,923,523
17,918968
17,270511
18,968,821
17,412834
Wastewater
2,945,84
2,768,941
2862793
2950,92
3,311,509
3,535.050
355$780
3;479,565
3,368,327
Total mammal advised
program revenues
19,611,528
19,258,225
21312.793
20,473,858
21234,612
21051018
20,82{291
20446,186
20780961
Total primary gavernment
program revenues
53,091,67
61,838,M2
65,042 296
91,951,880
140,0O8.178
83450491
107,762,379
95,223069
86,597,969
Net revended no,ansem:
Govemmentel activism.
(7283 4540)
(73,611766)
(85518,756)
(69,493,49)
(19,836,950)
(93,993,247)
(76,BIY2 00)
(97,1165504)
(113,800,937)
6usinessrype activities
2,216,181
1,63053
763,805
3,265727
1,862,70
794,281
(2,748,818)
(1,517,645)
(l,550424)
Total net revenuen napensem
$ (70,618,359) $
(72,087,713) $
(84,754951) $
(66,228,122) S
(17,974,180) $
(93,198,966)
$ (79,550,998) $
(99388149)
$ (115 351,361)
2005 data varies from trend because of',humma t capital assets relatetl ro PGH Relinquishment.
206 data varies from trend accounts of increasnd capital assets relatetl most to Bristol St. Rafe guar ment, Noopen Coast Community Center. and Fire Station N 7.
2008 data vanes from trend because an Increased capital assets related to Santa Ana Heights Annexation.
The Cin, of Newport Beach Implemented GASB 34 ]or, the fiscal year coded June 30 2002.
so- --Imi pnorN the implamenlecan of GASB 34 is oral available.
180
Cl OF NEWPORT BEACH
Changes In Net Aaeeb
Last Nine Fiscal Years
(accrual basis of accounting)
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$x0,000,000
$20,000,000
$10,000,000
Primary Revenue Sources
2002 2003 2004 2005 2006 2007 2008 2009 2010
nhwMi
wuc Tarim
oirznua,tOxuj¢ncy Torte
181
Fiscal Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
General revenues and other oranges in net assets:
Govemmental activists:
Taxes:
Properly farces
3 33,503,659
$ 39,4]4,864
$ 43,631,829
$ 46,3D3 NO S
57.888.545
$ 63003,057
$ 6],388,838
$ 70.126.680
$ 71,99$680
Sales sax
16,]96,5]1
20,133598
21,843880
18,97 Ka
21465,55]
21088,118
21,855,242
17,925,956
17,440236
Sales tax In -lieu
-
-
-
5,339,827
5,720,028
],346,253
8,017,539
7,503,113
4,53$946
Transient occupancy taxes
7,690655
8,055,266
8,045,132
9,215,362
9.832.]29
12,059.006
12,]51,518
11.170,956
11,400,710
Business license
2,4]0,85]
2,030845
2,63012]
3,458, 165
3,846,381
3,70,172
4,119,108
4,213,8,12
4,026614
Franchise taxes
2235,641
2,4&5,504
22&5,519
3,02$4]6
3,162,508
4,613,932
3,853,119
3,961,634
3,715,946
Motor vehicle license fees
4,380,0]0
3;970,103
3,624,917
6,395 NO
300,751
391,559
304,920
355,237
314,957
Mato, vehicle fine.
]11,693
]42,95]
-
-
-
-
-
-
-
Otherbuse
34L820
314,725
266,642
240,534
508,331
515,126
3]3,350
230,115
201,893
nmormani Nwme
2,1]1,4]4
2,111,451
584,415
12!19,0]4
1,939,941
3,175,582
3,655314
1]64,82]
708855
Na lnaease m fair value of
Investments
1,093,913
318,686
(360586)
(258,125)
(715,615)
(545533)
508485
1,096,048
]0]200
Gain on sale of assets
180,238
130950
-
Other
12,570
1,294,628
214,536
]61,111
76,90]
2,232,0]0
1,858,883
1,06$9]]
1,820,72
Properly Income
3,]]1.556
-
-
-
-
-
-
-
-
Fred of joins venture net
2,120532
389,418
146819
ISO, 325
(513,791)
253207
Capital conitlhuliore
835290,102
9,638,]92
102,713421
213,779 NO
Sale of au lca n9MS
25,OCO,NO
-
-
-
-
-
-
-
-
Tmnsfers
33,27
5],]83
40.00
Toml governmental activities
941,241,399
90,3M 148
185364438
30$552363
131,254,352
117,904553
124,686316
120,272,985
118,874809
Bushes a-type activities:
Investment income
888,]]9
505,619
203,041
424,157
549.012
792,936
Still
374,893
128,399
Net increase in fair value of
mestmen.
428,199
440,697
(87,078)
(81,921)
(161
(9,185)
72,913
135,789
lOC1 17
Prcpetty income
21,100
29,600
29,280
26910
-
-
-
-
Capital contributions
-
-
215,331
-
-
-
-
-
-
Transfers
(M Z77)
(5]]83)
-
(40,000)
-
Tealbusioess-typeactivities
1,344,078
942,919
302,]91
363,2(16
339.917
]35,]51
661,]83
510,682
228,516
Total primary government
942,591,4]]
100,246,06]
18068],229
308,915569
104,594,269
118,640,301
125341 O F
120,]83,68]
111,103325
Changes in net assets
Governmental activities
868 ,412,859
25,612,382
100,845 682
239,058,514
84.417.402
23911,306
47,864;236
22.407,481
3,0]3,0]2
Business -type activities
3,560259
2,545,9]2
1,066596
3,620,933
2,202.60]
1.530,032
(2,08],035)
(1,006,963)
(1.321,908)
Total primary government
$ 8]1,9]3,116
5 28,158,354
5 101 912278
5 242,68],44] 3
86.620,OB9
$ 25441,338
$ 45,791,201
S 21,400,518
$ 1,751,964
$80,000,000
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$x0,000,000
$20,000,000
$10,000,000
Primary Revenue Sources
2002 2003 2004 2005 2006 2007 2008 2009 2010
nhwMi
wuc Tarim
oirznua,tOxuj¢ncy Torte
181
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds
Last Nine Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
2002 2003 2004 2005 2006 2007 2008 2009 2010
General fund:
Reserved $ 3,165,787 $ 4,393,418 $ 6,678,579 $ 4,673,198 $ 9,374,722 IS 7,233,703 $ 6,807,094 $ 5,907,205 $ 5,472,481
Unreserved 25,171,551 31,929,366 37,765,801 49,814,197 45.212,339 62,679,499 72,252.045 73,703,759 76,685,385
Total general fund $28,337,338 $36,322,784 $44,444,380 $54,487,395 $54,587.061 $69,913,202 $79,059,139 $ 79,610,964 It 82,157.866
Tide and submerged land fund:
Reserved $ 294,876 $ 457,717 $ 340,208 $ 552,713 $ 538,965 $ 642,985 $ 1,415,088 $ 351,012 $ 1,187,264
Unreserved 238,822 356,075 120,328 194,174 27,633 143,946 259,701 288,952 1,246,901
Total tide and submerged land fund $ 533,698 $ 813,852 $ 460,536 $ 746,887 $ 566,598 $ 786,931 $ 1,674,789 $ 639,964 $ 2,434,165
Mariners library fund:
Reserved $ - $ 382,900 $ 142,016 $ 1,029,047 $ - $ - $ - $ - $ -
Unreserved 596,800 824,438 (1,750,160) (2,061,268)
Total Manners library fund $ $ 979,700 It 966,454 It 1,029,047 $(1,750,160) $(2,061,268) $ $ $
Contributions fund
Reserved $ 7,501 $ - $ - $ 1,155,638 $ 3,223,047 $ 1,656,459 $ 856,506 $ 641,469 $ -
Unreserved (457,464) (956,689) 1,042,147 794,249 1,9n.264
Total Contributions fund 8 7,501 S(45_7,464( S (956.689) S 2.197185 S 1223 047 S 1.656459 5 1.650 755 S 2.618,733 5
City hall improvements fund:
Reserved S - 5 - $ - $ - $ - 5 - 5 - 5 - $ -
Unreserved (10,527,337)
Total City hall improvements fund $ $ $ $ $ $ $ $ $ (10,527,337)
All other governmental funds:
Reserved
$ 4,669,957
$ 4,693,197
$ 3,973,823
$12230,132
$18,157,202
11 8,958,652
$ 9,788,771
$ 7,838,748
$ 8,176,409
Unreserved, reported in:
Spepal revenue funds
11,057,395
18,789,098
16,895,613
10,099,453
7,506,021
18,684,221
20,617,006
21,582,975
26,726,627
Capital projects funds
7,120,032
-
-
6,076,969
2,077,124
(1,196,933)
3,271,954
7,671,450
(43.941)
Permanent funds
15
285,506
404,771
660,029
934,648
1,170,009
1,294,924
Total all other governmental funds
$22,847,399
$23,482,295
$20,869,436
528,692,060
$28,145,118
527.105,969
S34.612
379
$ 38,263,182
$ 36,154,019
$90.000,000
$80.000,000
$70,000000
360,000.000
$501000,000
540,000,009
$3co0goo0
$29,000,009
$10,000.000
$-
Fund Balances
3002 2003 2004 2005 2006 2907 2009 2009 2010
anlal Gaiaral r,od
.Trial all. G-adal FUMs
The City o /Newport Beach ❑a9 elected to show only nine years o /data for Nis scM1edule.
182
CITY OF NEWPORT BEACH
Changes in Fund Balances of Governmental Funds
Last Nine Fiscal Years
(modified accrual basis of accounting)
' Arnaud to include Property Tax -In lieu of VLF which was previously national a. intargav indina tal revenue
The Cify of Nawporf Beach has amned to show only nine years of for this schetlula.
183
Fiscal Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
Revenues:
Taxes
$ 65,878,471
$ 72,864,836
$ 79,874,751
5 91,606,863 '
$ 102,737,810
$ 112,230,054
$118,758,201
$115,711,574
$ 113,809,443
ludetgovemmenfal
25227,740
10,379,792
15108,023
19,513,589
14,842,994
18,866,929
21,005,429
11,434885
15,379,698
Ummas and permits
3,350,958
4,397,520
5,429,632
4.968234
5,708,965
4.574,659
6.474.789
5,883,515
3,950.967
Charges for services
10,338,569
11,155294
11516,782
13,104,478
13,135,366
14,452,723
15,073,178
14,498.120
15,293,362
Fines and forfeitures
3,384,164
3,44$826
3,605,963
3422,735
3,841843
4.126,351
4,662,442
4,572,611
4,105,632
IMestment income
2,758557
1,941,046
887,513
2,356,747
3,847,982
5,431,137
5463,066
3,245677
1,289,890
Net increase decrease) in fair
value of Investments
1,268,972
1,468,682
(360,586)
(493,879)
(1,325211)
(625881)
720,488
1,472,335
1,155,363
Preperty income
10,130,165
10,947,021
11,857,671
12,337,339
13,625,142
13,965,815
15,217,803
14,032,342
14,624,923
Denafons
746,774
11819,159
2,704,367
1087,826
883,405
1,379,461
2,159,637
6,760,140
5,497,640
(bumobutions from pmpmly
owners
-
-
-
14,779,013
-
-
-
-
-
Oil
1.782,60
2,590,504
478,200
98Q446
1,0.12,882
1,967,465
4,205,095
8,501,014
7,646,274
Total revenues
125,867,066
121,013.680
132,102,316
163663,391
158,341,178
176,36],713
193.740,128
186,112,213
182,753,192
Expenditures
Current.
General govemmand
12292008
9,689,275
11024,256
10,920,667
12,531200
13,706,061
14,508,103
15,567,654
15,169,546
Public safety
47,841,176
53,035.377
56,84%718
59.482134
65262.069
68,843.947
73,486,413
78,554,344
77,202,445
Public welds
19,418,067
21,259,782
22,780,896
24,365,996
26,430)51
28,352,293
30,108,941
30,619,405
39,922,406
Commumbcsid etopment
4,586,192
5,457,498
5,723,031
6.14,917
7,900,503
7,753,035
8.703,841
9,971,536
91556,066
Commuoityservices
9,418,041
9,382,608
10,827,346
10,351;414
12,730,727
13,988,589
14,478,146
17,485,605
14,916,230
capital oufay
38,613,906
14,684,897
15,188,550
33,486,048
24,811,237
45,615,169
20,524,638
26,002,338
36,796,653
Principal retirement
1,291,099
1,822,913
1,668,350
1,688,801
1,715,542
3,736,587
3,263,948
3;292,841
1,820,679
Interest and fiscal charges
466,974
529,808
520,228
499,077
480,909
458,035
577,299
482,908
383,297
Total expendiwres
133,927,463
115,862,158
124,582,375
146,93%054
151,862,938
182,453,716
165,651,329
181,976,431
195,767,322
Eismas (di fc cut of revenues
over (under) expenditures
(8,060,397)
5,151,522
7,519,941
16.724,337
6,478,240
(6,086.003)
28.088,799
4,135,782
(13,014.130)
Mar financing scurr¢s (uses):
Transfers in
10,927,460
14,376,167
16,553,395
20,601957
25,194,920
20,271,396
27,583,922
23,354,366
22,380.521
Treosters out
(11,669,089)
(14,342,890)
(18,495,612)
(20,612,176)
(31,177,725)
(22521,396)
(36,076,952)
(23,354,366)
(21,780,521)
Proceeds from issuance of debt
18,000100
2,630,736
51004000
1,500,000
Total Poor firencing sources
(uses)
17,258371
2,664013
(1,942.217)
(10,219)
(5,982,805)
2756000
(8,493.030)
0
2100.000
Net mange in fund balances
$ 9,197,974
$ 7,815,535
$ 5,577,724
$ 16,714,118
$ 495,435
$ (3,336,003)
$ 19,595,769
$ 4,135,782
$ (10,914,130)
Debt service as a percentage of
noncapitalexpenditures
1.8%
22%
18%
17%
17%
28%
25%
23%
13%
' Arnaud to include Property Tax -In lieu of VLF which was previously national a. intargav indina tal revenue
The Cify of Nawporf Beach has amned to show only nine years of for this schetlula.
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
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%
2009
699,230
36,436,106,070
1,538,539,482
37,974,645,552
1.000%
2010
699,230
37,078,595,810
1,564,808,312
38,643,404,122
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
Overlapping Rates
Water Districts
2001
2002
2003 2004
2005 2006
2007 2008
2009 2010
City Direct Rates:
0.004
0.004
0.004
School Districts
0.0000
0.0069
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
0.008
0.007
0.006
0.005
0.005
0.005
0.004
0.004
0.004
School Districts
0.0000
0.0069
0.0067
0.0122
0.0343
0.0349
0.0315
0.0308
0.0302
0.0340
Total Overlapping Rate
0.009
0.015
0.013
0.018
0.040
0.040
0.036
0.035
0.034
0.038
Total Direct & Overlapping Rate
$ 1.009
$ 1.015
$ 1.013
$ 1.018
$ 1.040
$ 1.040
$ 1.036
$ 1.035
$ 1.034
$1.038
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
2010
Source: HdL, Caren and Cone Co.
187
rrr
Percent of Total
Percent of Total
Taxable Assessed
City Taxable
Taxpayer
Value
Rank
Assessed Value
The Irvine Company
$ 1,845,922,190
1
4.78%
Rockwell Semiconductor
145,017,612
2
0.38%
Newport Bluffs LLC
138,143,707
3
0.36%
Balboa Bay Club Inc.
128,568,741
4
0.33%
100 Bayview, LLC
124,169,842
5
0.32%
UDR Newport Beach North LP
117,788,896
6
0.30%
Coronado South Apartments LP
114,618,841
7
0.30%
Newport Healthcare Center
103,942,105
8
0.27%
Jazz Semiconductor Inc
103,174,333
9
0.27%
HHR Newport Beach LLC
86,937,291
10
0.22%
$ 2,908,283,558
7.53%
Source: HdL, Caren and Cone Co.
187
rrr
Percent of Total
Taxable Assessed
City Taxable
Value
Assessed Value
Rank
$ 850,168,670
1
5.31%
503,723,684
2
3.15%
N/A
0.00%
N/A
0.00%
N/A
0.00%
63,233,000
6
0.40%
N/A
0.00%
N/A
0.00%
N/A
0.00%
N/A
0.00%
$ 1,417,125,354
8.86%
Fiscal Year Taxes Levied for
Ended June the Fiscal Year
30
2002
2003
2004
2005
2006
2007
2008
2009
2010
31,298,541
37,092,528
42,469,238
45,111,328
47,286,816
70,194,492
69,315,117
71,006,357
68,412,731
CITY OF NEWPORT BEACH
Property Tax Levies and Collections
Last Nine Fiscal Years
Collected within the Fiscal
Year of Levv
Total Collections to Date
Percent of
Collections in
Levy
Percent of
Subsequent
Amount
Levy
Years
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
70,879,909
99.82%
(294,366)
62,858,260
91.88%
(1,227,109)
Total Collections to Date
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
The City of Newport Beach has elected to show only nine years of data for this schedule due to the fact that
previous years data could not be verified.
188
Percent of
Amount
Levy
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%
70,585,543
99.41%
61,631,151
90.09%
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
The City of Newport Beach has elected to show only nine years of data for this schedule due to the fact that
previous years data could not be verified.
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
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
CITY OF NEWPORT BEACH
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Governmental Activities
Fiscal
Year
Pre-
Purchase
Ended
Certificates of
Annexation
Agreement
June 30
Participation
Note Payable
Agreement
CDBG Loan Capital Leases
Payable
2001
6,610,000
2,350,930
N/A
N/A
914,830
N/A
2002
6,365,000
2,219,660
18,000,000
N/A
1,150,927
N/A
2003
6,110,000
2,082,483
16,800,000
2,400,000
1,293,586
N/A
2004
5,845,000
1,939,133
15,600,000
2,340,000
862,975
N/A
2005
5,570,000
1,789,332
14,400,000
2,276,000
420,773
N/A
2006
5,280,000
1,632,789
13,200,000
2,207,000
166,056
N/A
2007
4,980,000
1,469,202
12,000,000
2,134,000
49,490
3,000,000
2008
4,665,000
1,298,254
10,800,000
2,056,000
-
1,500,000
2009
4,335,000
1,119,613
9,600,000
1,972,000
-
N/A
2010
3,990,000
932,934
8,400,000
1,883,000
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
Total
Governmental
Activities
Business -type Activities
Water Revenue Total Business-
Bonds type Activities
Total Primary
Government
Percentage of
Persona
Income ' I
Debt Per
Capita '
9,875,760
12,095,000
12,095,000
21,970,760
0.47%
297
27,735,587
10,950,000
10,950,000
38,685,587
0.88%
552
28,686,069
9,765,000
9,765,000
38,451,069
0.79%
508
26,587,108
8,535,000
8,535,000
35,122,108
0.66%
442
24,456,105
7,255,000
7,255,000
31,711,105
0.58%
392
22,485,845
5,925,000
5,925,000
28,410,845
0.50%
342
23,632,692
4,540,000
4,540,000
28,172,692
0.44%
338
20,319,254
3,095,000
3,095,000
23,414,254
0.36%
278
17,026,613
1,585,000
1,585,000
18,611,613
0.28%
215
16,705,934
-
-
16,705,934
0.25%
193
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
2001
6,845
N/A
6,845
0.05%
93
2002
6,610
N/A
6,610
0.04%
94
2003
6,365
N/A
6,365
0.04%
84
2004
6,110
N/A
6,110
0.03%
77
2005
5,845
N/A
5,845
0.02%
72
2006
5,570
N/A
5,570
0.02%
67
2007
5,280
3,000
8,280
0.03%
99
2008
4,980
1,500
6,480
0.02%
77
2009
4,335
N/A
4,335
0.01%
50
2010
3,990
1,500
5,490
0.01%
63
Assessed value was used because the actual value of taxable property is not
readily available in the State of California.
192
CITY OF NEWPORT BEACH
Direct and Overlapping Debt
June 30, 2010
City Assessed Valuation:
Redevelopment Agency Incremental Valuation:
Adjusted Assessed Valuation:
OVERLAPPING TAX AND ASSESSMENT DEBT:
Metropolitan Water District
Coast Community College District
Rancho Santiago Community College District
Laguna Beach Unified School District
Laguna Beach U.S.D. Community Facilities District No. 98 -1
Newport Mesa Unified School District
Newport Mesa U.S.O. Community Facilities District No. 90 -1
Santa Ana Unified School District
Irvine Ranch Water District Improvement Districts
Bonita Canyon Public Facilities Financing Authority Community Facilities District No.
98 -1
City of Newport Beach Special Improvement District No. 95 -1
City of Newport Beach 1915 Act Bonds
Orange County Assessment District No. 88 -1
Orange County Reassessment District No. 99 -1 R
Orange County Assessment District No. 01 -1
Orange County Reassessment District No. 01 -1 R
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
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)
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT
GROSS COMBINED TOTAL DEBT (2)
NET COMBINED TOTAL DEBT
Percentage
Applicable r
2.086%
35.120%
3.908%
15.236%
100.000%
71.997%
100.000%
9.117%
16.895 % -
100.000%
$ 38,643,404,122
894,901,662
$ 37,748,502,460
Outstanding Debt
6/30/10
264,219,990
326,768,867
313,655,757
32,800,000
9,680,000
160,553,480
13,390,000
265,093,737
60,167,278
100.000% 41,275,000
100.000%
339,457,004
7,380,000
100.000%
10.080%
17,719,652
100.000%
14,120,003
34,718,296
100.000%
9.117%
13,835,000
100.000%
85,144,998
53,769,000
100.000%
6,505,000
1,621,531,057
10.080% $
339,457,004
10.080%
56,834,147
10.080%
19,230,000
11.918%
14,120,003
3.105%
17,375,008
9.117%
53,953,746
11.436%
85,144,998
100.000%
3,990,000
590,104,906
Estimated Share of
Overlapping Debt
5,511,629
114,761,226
12,257,667
4,997,408
9,680,000
115,593,689
13,390,000
24,168,596
47,315,471
41,275,000
7,380,000
17,719,652
34,718,296
13,835,000
53,769,000
6,505,000
522,877,634
$ 34,217,266
5,728,882
1,938,384
1,682,822
539,494
4,918,963
9,737,182
3,990,000
62,752,993
(1,682,822)
$ 61,070,171
586,965,657
585,282,805
1 The percentage of overlapping agency's assessed valuation located within boundaries of the city.
2
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and nonbonded capital lease obligations.
Ratios to 2009 -10 Assessed Valuation:
Total Overlapping Tax and Assessment Debt
1.360%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($3,990,000)
0.010%
Gross Combined Total Debt
1.550%
Net Combined Total Debt
1.550%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/10:
$0
Source : California Municipal Statistics, Inc.
193
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
2001 2002 2003 2004
Assessed valuation
$ 16,002,999,637
$ 17,428,874,715
$ 22,425,221,565
$ 24,591,599,249
Conversion percentage
25%
25%
25%
25%
Adjusted assessed valuation
4,000,749,909
4,357,218,679
5,606,305,391
6,147,899,812
Debt limit percentage
15%
15%
15%
15%
Debt limit
600,112,486
653,582,802
840,945,809
922,184,972
Total net debt applicable to limit:
General obligation bonds
Legal debt margin $ 600,112,486 S 653,582.802 $ 840,945.809 S 922.184.972
Total debt applicable to the limit
as a percentage of debt limit 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
Source: City Administrative Servic
194
Fiscal
Year
2005
2006
2007
2008
2009
2010
$ 26,677,681,287
$ 30,050,714,559 $
32,993,340,291
$ 35,856,583,925
$ 37,974,645,552
$ 38,643,404,122
25%
25%
25%
25%
25%
25%
6,669,420,322
7,512,678,640
8,248,335,073
8,964,145,981
9,493,661,388
9,660,851,031
15%
15%
15%
15%
15%
15%
1,000,413,048
1,126,901,796
1,237,250,261
1,344,621,897
1,424,049,208
1,449,127,655
$ 1,000,413,048 $ 1,126,901,796 $ 1,237 250261 S 1,344,621,897 $ 1,424.049,208 8 1,449,127,655
0.0% 0.0% 00% 0.0% 0.0% 0.0%
195
CITY OF NEWPORT BEACH
Pledged- Revenue Coverage
Last Ten Fiscal Years
' Gross revenues includes operating revenues, interest, property, and intergovernmental revenues
in the Water Fund.
2 Total Water Fund operating expenses do not include interest or depreciation expenses.
196
Water Revenue Bonds
Debt Service
Fiscal
Year
Less Operating
Net Available
Ended
Water Revenue
Expenses'
Revenue
June 30
Principal
Interest
Coverage
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
16,709,021
17,518,263
(809,242)
1,445,000
137,765
(0.51)
2009
17,259,977
16,437,227
822,750
1,510,000
71,325
0.52
2010
17,567,596
17,168,006
399,590
1,585,000
-
0.25
' 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
CITY OF NEWPORT BEACH
Demographic and Economic Statistics
Last Ten Fiscal Years
Fiscal Year
Population(l)
Personal Income
Per Capita
Unemployment
3
(in thousands)
Income
Rate
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%
2009
86,252
7,468,216
86,586
6.1%
2010
86,738
6,676,484
76,973
6.0%
�1� Population estimates are as of January 1 of the year shown and do not reflect revised estimates
made available after the date the information was collected for the City's Comprehensive Annual
Financial Report.
Sources:
t1� California State Department of Finance, E -4 Population Estimates for Cities, Counties and
State 2001 -2010
(z) U.S. Census Bureau - American Community Survey
lal State of California, Employment Development Department
198
CITY OF NEWPORT BEACH
Principal Employers'
Current Year and 5 years ago
' Figures reflect number of employees of employeer at the time the information was collected
2 Information for nine years ago is not available.
3 The Island Hotel was formerly the Four Seasons Hotel.
Source:InfoGroup
199
2010
20052
Number of
Percent of Total
Number of
Percent of Total
Employer
Employees
Rank
Employment
Employees
Rank
Employment
Hoag Memorial Hospital
4,001
1
4.91%
3,640
1
N/A
Conexant Systems Inc
1,650
2
2.02%
650
6
N/A
Pacific Life Insurance
1,513
3
1.86%
2,788
2
N/A
Glidewell Dental
1,400
4
1.72%
N/A
-
N/A
City of Newport Beach
940
5
1.15%
788
4
N/A
US Bank
883
6
1.08%
N/A
-
N/A
B. Alan Whitson Company
750
7
0.92%
N/A
-
N/A
Newport-Mesa Unified School District
545
8
0.67%
N/A
-
N/A
Marriott- Newport Beach
510
9
0.63%
475
9
N/A
The Island Hotel
500
10
0.61%
525 3
8
N/A
Fletcher Jones Motor Cars Inc.
500
10
0.61%
N/A
-
N/A
Balboa Bay Club and Resort
500
10
0.61%
N/A
-
N/A
PIMCO Advisors
500
10
0.61%
530
7
N/A
' Figures reflect number of employees of employeer at the time the information was collected
2 Information for nine years ago is not available.
3 The Island Hotel was formerly the Four Seasons Hotel.
Source:InfoGroup
199
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.
?
CITY OF NEWPORT BEACH
Full -time City Employees by Function
Last Ten Fiscal Years
Function
2001
2002
Full -Time Employees as of June 30, 2010
2003 2004 2005 2006 2007
2008
2009
2010
General government
75
77
77
84
86
90
93
93
99
92
Public safety
358
384
384
385
385
388
393
397
397
394
Community development
42
44
46
46
47
48
52
56
57
53
Public works
155
163
164
162
162
163
163
165
160
147
Community services
53
57
58
57
60
65
66
68
71
69
Balboa yacht basin
1
1
1
1
1
-
-
-
-
-
Water
34
33
33
33
34
34
34
35
35
36
Wastewater
10
12
12
13
13
13
13
13
13
14
Total 728 771 775 781 788 801 814 827 832 805
Source: City Administrative Services Department
201
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
Police:
Adult Arrests
Parking Citations Issued
Fire:
Fire Responses
Fire Inspections
General Services:
Street Patching (tons of mix)
Sidewalk Repair (square feet)
Recreation & Senior Services:
Co- Sponsored Youth Organizations
Senior Transportation Services
Water:
New connections
Average daily consumption (hundred cubic ft.)
Sewer:
New connections
Miles of Pipe Cleaned
Library Services:
Library Circulation of Materials
Source: City of Newport Beach
Fiscal Year
2001
2002
2003
2004
3,494
3,684
3,485
3,201
74,068
73,191
68,907
71,076
365
359
442
423
6,173
6,400
4,460
4,500
5,000
5,500
5,500
5,000
50,000
50,000
55,000
50,000
165,464
188,689
200,077
185,627
11,000
10,917
12,094
12,041
154
118
99
53
17
17
17
17
N/A
N/A
50
25
N/A
202
262
293
1,250,713 1,263,200 1,347,583 1,392,346
202
Fiscal Year
2005
2006
2007
2008
2009
2010
3,079
2,999
3,289
3,196
3,245
2,931
72,665
74,780
67,170
70,150
65,176
62,845
228
214
175
393
371
338
4,550
6,470
7,136
7,250
6,912
7,000
4,500
4,600
4,980
4,644
3,882
3,467
50,000
55,000
59,459
58,000
49,644
49,540
194,749
194,722
201,258
258,635
318,779
321,200
11,936
12,628
14,728
15,279
15,984
15,306
55
52
95
60
26
19
17
17
17
17
17
17.25
24
24
45
45
12
9
205
335
226
212
209
305
1,475,025 1,443,078 1,622,573 1,701,476 1,575,518 1,818,709
203
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
2001 2002 2003 2004
Police:
Stations
1
1
1
1
Fire:
Fire stations
6
7
7
7
Lifeguard Headquarters
1
1
1
1
Public works:
Streets (miles)
315
325
333
333
Streetlights
N/A
7,277
7,277
7,277
Traffic signals
121
130
131
131
Recreation & Senior Services:
Parks
45
47
47
47
Community centers
10
11
11
11
Aquatic Center
1
1
1
1
Water:
Water mains (miles)
282.35
294.81
294.81
294.81
Maximum daily capacity (thousands of gallons)
20,959
20,796
21,291
20,092
Wastewater:
Sanitary sewers (miles)
200.02
176.90
178.40
179.15
Storm sewers (miles)
103.08
51.40
53.50
57.60
Library Services:
Libraries
4
4
4
4
Source: City of Newport Beach
204
Fiscal Year
2005 2006 2007 2008 2009 2010
1
1
1
1
1
1
8
8
8
8
8
8
1
1
1
1
1
1
333
333
395
395
395
395
7,277
7,277
7,278
7,278
7,278
7,278
144
147
147
148
148
148
47
47
47
48
49
49
11
11
12
13
13
13
1
1
1
1
1
1
298.42
299.88
300.35
300.17
300.31
303.27
20,633
19,369
20,392
20,365
19,707
19,341
179.15
179.15
202.80
202.80
202.80
202.80
57.60
57.60
95.50
95.50
95.50
95.50
4
4
4
4
4
4
205
Source: City Utilities Department
RM
CITY OF NEWPORT BEACH
Water Sold by Type of Customer
Last Ten Fiscal Years
(in hundred cubic feet)
Fiscal Year
2001
2002
2003
2004 2005 2006
2007
2008
2009
2010
Type of Customer:
Residential
4,227,699
4,459,302
4,430,485
4,362,402 4,289,629 4,190,791
4,492,489
4,046,969
3,989,816
4,251,996
Commercial
1,487,538
1,552,366
1,604,931
1,659,565 1,568,462 1,440,377
1,302,578
1,184,904
1,188,553
1,165,128
Government
678,594
480,809
597,395
486,051 487,189 607,650
601,659
361,457
420,697
349,334
Total
6,393,831
6,492,477
6,632,811
6,508,018 6,345,280 6,238,818
6,396,726
5,593,330
5,599,066
5,766,458
Total direct rate
per 100 cubic ft.
2.00
2.00
2.00
2.00 2.00 2.08
2.08
2.08
2.08
2.20
Source: City Utilities Department
RM
MllvL *]a:IAIA90]39- ]=F_C9:I
Water Rates
Last Ten Fiscal Years
Fiscal Year
Ended June Monthly Rate per
30 Base Rate 100 cubic ft
2001
9.90
2.25
2002
9.90
2.25
2003
10.00
2.25
2004
10.20
2.25
2005
10.35
2.25
2006
12.37
2.43
2007
12.37
2.43
2008
12.37
2.43
2009
12.37
2.43
2010
14.59
2.55
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 Nine Years Ago
2010 9nni'
$ 1,188,799 6.77% $ 787,478 4.42%
I Information for fiscal years ended prior to 2001, is not available.
Source: City Revenue Division
KIN
Percent of Total
Percent of Total
Water Customer
Water Charges
Rank
Water Revenues
Water Charges
Rank
Water Revenues
Hoag Memorial Hospital
$ 198,395
1
1.13%
$ 101,436
6
0.57%
Irvine Apartment Management
167,800
2
0.96%
N/A
0.00%
Big Canyon Country Club
147,818
3
0.84%
169,900
2
0.95%
The Irvine Company
129,008
4
0.73%
267,688
1
1.50%
Newport Beach Country Club
109,492
5
0.62%
152,362
3
0.86%
Park Newport Ltd
86,428
6
0.49%
150,062
4
0.84%
Bluffs Homeowners Association
84,605
7
0.48%
N/A
0.00%
UDR Newport Beach
79,293
8
0.45%
N/A
0.00%
East Bluff Village
75,722
9
0.43%
N/A
0.00%
Newport-Mesa USD
72,176
10
0.41%
N/A
0.00%
Pacific View - Pierce Bros.
54,650
11
0.31%
47,466
11
0.27%
Spyglass Hill Community Assoc.
49,440
12
0.28%
N/A
0.00%
IOICIPMS Engineerting Department
48,632
13
0.28%
N/A
0.00%
Newport Dunes Resort
42,618
14
0.24%
N/A
0.00%
Balboa Village Community Association
41,117
15
0.23%
N/A
0.00%
$ 1,188,799 6.77% $ 787,478 4.42%
I Information for fiscal years ended prior to 2001, is not available.
Source: City Revenue Division
KIN
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
(949) 644 -3123
www.newportbeachca.gov /financial info