HomeMy WebLinkAboutFiscal Year 2010-11 Financial StatementCITY OF NEWPORT BEACH
Comprehensive Anniml Fjnanriaj Report
Fiscal Year Ended June 30, 2011
!EW PO\
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2011
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
INTRODUCT ■ RY = ECT
CITY OF NEWPORT BEACH
Comprehensive Annual Financial Report
Year Ended June 30, 2011
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 .................................................................... .............................49
Statement of Activities ...................................................................... ...............................
50
Fund Financial Statements:
Governmental Funds:
BalanceSheet ................................................................................. .............................55
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets ............................................................ .............................56
Statement of Revenues, Expenditures and Changes in Fund Balances ......................
57
Reconciliation of Statement of Revenues, Expenditures and Changes
In Fund Balances of Governmental Funds to the Statement of Activities ..............58
Budgetary Comparison Statements:
GeneralFund ............................................................................ .............................59
Tide and Submerged Land Fund ............................................... .............................61
Proprietary Funds:
Statement of Net Assets ............................................................. ...............................
65
Statement of Revenues, Expenses and Changes in Fund Net Assets .....................66
Statement of Cash Flows ............................................................. .............................67
Fiduciary Funds:
Statement of Fiduciary Assets and Liabilities — Agency Funds ..... ...............................
71
Notes to the Financial Statements ..................................................... .............................75
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, 2011 .. ............................... ............................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
V
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
3
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CITY OF NEWPORT BEACH
December 22, 2011
Honorable Mayor and Members of the City Council,
and Residents of the City of Newport Beach, California
The City Charter and California state law require the City of Newport Beach to issue
annually a complete set of financial statements and that an independent firm of certified
public accountants audit these statements in conformance with generally accepted
auditing standards (GAAS). The Comprehensive Annual Financial Report (CAFR) of the
City of Newport Beach for the year ended June 30, 2011, 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 reflects 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 GAAP. 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 White Nelson
Diehl Evans LLP, a firm of licensed certified public accountants. The goal of the audit was
to provide reasonable assurance that the financial statements of the City of Newport
Beach for the fiscal year ended June 30, 2011, 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.
City Hall - 3300 Newport Boulevard - Post Office Box 1768
Newport Beach, California 92658 -8915 • www.newportbeachca.gov
5
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, 2011, 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.
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 a community of about 85,000 people located in the central
coastal 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:
C
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 85,376 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 Newport Beach; the 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.
Cwta Mesa
LICO We
Ic
Belb.
The
Crystal
I
Beech
The City of Newport Beach was incorporated September 1, 1906. The City Charter was
originally adopted in 1954 but has been updated and amended over time. 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
7
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 collection, rubbish disposal, and street light utility services. The City provides
water and sewer service to most areas within City limits (special districts provide these
services to some areas), but it does not provide gas, electrical, cable television, or other
utility service. Public elementary and secondary education to Newport Beach's residents
is provided by the Newport-Mesa Unified School District and the Laguna Beach Unified
School District, 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 elected officials continue to be
accountable 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 Note
1 a of the notes to the financial statements.
1111141'dfie]CL1900 1W1
Reflective of a mature community, vacant land has become increasingly scarce and the
City is relatively built -out. Currently at 85,376, population has been very stable as
indicated by the chart below:
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Population
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Fiscal Year
V
Indicative of an affluent community, the effective buying income and median Household
income are higher in Newport Beach than other areas of the State and the U.S. overall. As
illustrated by the table below, Newport Beach Median Household Income is nearly twice
that of the U.S. Median Household Income.
City of Newport Beach
$97,140
Orange County
70,880
California
57,708
USA
50,046
The leading industries are that of a highly educated workforce including professional,
scientific, health -care, finance, insurance, legal and other management. Consequently,
unemployment in Newport Beach has been significantly lower than elsewhere as illustrated
in the chart below:
MW 2005 2000 2007 2008 2009 2010 2011*
Calendar Year ' through Oa. 31,2011
More detailed information concerning the city's demographics and statistics are contained
within the Statistical Section of this report.
LOCALECONOMY
In an increasingly interconnected world, global events have had a profound impact on the
U.S. economy. Fiscal Year 2010 -11 was plagued by global economic instability, a natural
disaster in Japan, the European financial crisis, a sputtering US economy, debt ceiling
drama and stubbornly high jobless rates. The net result was consistent consumer
uncertainty and extraordinary volatility across all markets.
E]
While not immune to the effects of the recession, Newport Beach continued to fare
relatively well during the recession due in part to strong governance, disciplined fiscal
decisions and a strong underlying tax base. Even though revenues maintained minimal -to-
flat revenue growth rate, City management has maintained a focus on the City Council's
priorities, including adhering to a 15 -point Fiscal Sustainability Plan; strong revenue
monitoring, analysis and reporting; and responsible, yet difficult, spending decisions.
TOP THREE REVENUE SOURCES
General Fund revenues were approximately $151 million during FY 2010 -11. The top
three individual revenue sources, Property Taxes, Sales Taxes and Sales Tax in Lieu, and
Transient Occupancy Taxes (TOT), represent 72.7% of all General Fund revenues. Tax
revenues in total, including business licenses, franchise fees and other taxes represent
nearly 78.1% of all General Fund revenues while only 21.9°/x, is generated by other
revenue sources.
General Fund Revenues ir
■ Property Taxes
22.0%
■Sales Taxes
Sales Tax In Lieu
47.5%
■Transient Occupancy Taxes
■ Other Taxes
■ All Other Sources
4.2%
12.3%
Property Taxes
Property taxes are the number one source of revenue for the City of Newport Beach,
representing almost half, 47.5 %, of all General Fund revenues. Property values in
Newport Beach have remained strong due to the limited supply of scenic coastal property,
low crime rates, desirable climate, and the quality of community services and amenities in
and around Newport Beach.
Consistent and vigorous demand for coastal property has allowed the City to enjoy long-
term growth trends with its number one revenue source. Over a ten -year period, assessed
valuation increased an average of 7% per annum and 5.6 %, over a twenty -year period.
Since Californians passed Proposition 13 in 1978, assessed property value is reassessed
10
to market value only when the property changes ownership. Otherwise, the assessed
value (AV) 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.
While property tax growth rates have fallen sharply during the Great Recession, the City
has experienced positive AV growth during each of the past 15 years as demonstrated by
the chart below. This was even experienced during the recent Great Recession, many
other cities experienced large decreases in their AV during 2008 through 2011.
$45,000,000,000
$40,000,000,000
$35,000,000,000
$30,000,000,000
$25,000,000,000
$20,000,000,MO
$15,000,000,000
$10,000,000,000
$5,000,000,000
Total Assessed Property Value Growth
8.48%
11.40%
11.23%
12.64%
8.68%
m m 0 0 0 0 0 0 0 0 0 0
n' ao m a r'i m d 0
m m m o 0 0 0 0 0
m m m o 0 0 0 0 0 0 0 0 o a o
The secured property tax valuation grew by 1.27% for FY 2011 -12, reflecting a +.75% CPI
adjustment, new construction in the Fashion Island area and net reassessments from
property sales and /or assessment appeals. Unsecured property taxes (e.g. business
equipment, boats and other personal property) decreased -4.31%. The net result is that
the overall property tax levy, as of September 30, 2011, grew by +1.03 %.
While the City's FY 2011 -12 AV growth is +1.03 %, below long -term historical averages of
5 % -7 %, the City is encouraged that the housing market appears to have stabilized and
that we have weathered the housing crisis maintaining positive growth during the
recession.
Despite declines in the regional real estate market, sales data for the month of October
2011, demonstrates the relatively high property values throughout the residential
communities. Median home sales prices in all areas of the city far exceed the County wide
median sales price of $405,000.
11
Median Median Numberof Numberof
Newport Beach Sales Price Sales Price Home Sales Home Sales
Zip Code 2010 2011 2010 2011
92625
$ 1,550,000
$ 1,375,000
19
9
92660
968,250
897,250
39
36
92661
1,737,500
912,500
6
2
92662
1,645,000
1,590,000
2
3
92663
1,300,000
650,000
19
22
92657
1,135,000
1,633,500
14
18
All Orange County 432,000 405,000 2,528 2,241
Source: DataQuick Information Systems
Sales Taxes and Sales Taxes in Lieu
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
impact the revenue category in total. Sales Taxes in total represent 16.5% 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, "Restaurants," accounts for
20.4% of total sales taxes and is represented by 315 restaurants. The next largest
segment, "New Auto Sales" accounts for 20.1 % of total sales taxes and is represented by
nine premier dealerships. The "Other" categorization accounts for another 12.9% and is
represented by 911 businesses.
Sales Tax by Business Segment
• Restaurants - 315
12
• New Auto Sales - 09
2.6%
12.9%
■Leasing -55
3.7%
20.4%
•Apparel Stores -218
3.9%
`�
• Department Stores - 27
• Miscellaneous Retail - 852
5.6%
Service Stations- 16
61%
Food Markets - 47
Office Equipment - 89
71%
8.6%
•Light Industry -181
Other - 911
12
Sales Tax revenue continues to trend upward, finishing up nearly 6% over the previous
Fiscal Year. While improving, this activity is still short of the heights of the previous
economic expansion as a weak job market, economic uncertainty and high energy prices
restrain consumer spending. Restaurants regained the top sales tax producing segment by
posting a year- over -year (YOY) increase of 5.8% - barely inching out the New Auto Sales
category which grew by 1.2% (YOY). While considerably less in overall sales taxes
generated, department stores, service stations, office equipment and light industry
segments all posted impressive double digit YOY increases this Fiscal Year. The Fiscal
Year 2010 -11 budget had built in a minimal growth factor for sales taxes due to the poor
economy and high unemployment rate. However, at fiscal year -end Sales Tax revenues
exceeded budget by approximately $1 million.
Transient Occupancy Taxes (TOT)
TOT accrues to the City at a rate of 10% of room charges (with 18% of this collection going
to the local Destination Marketing Organization — Visit Newport Beach - to promote
Newport Beach as a tourist destination). 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 (20) inns, motels, hotels and
resorts and accounts for 89% of TOT revenues. The residential category is made up of
some 700 short-term vacation rentals representing only 11 % of TOT revenue. Together,
they accounted for $13.1 million in TOT revenue during FY 2010 -11.
TOT increased nearly 15% over the prior year. Even though the economy did not show
signs of marked improvement, the City's TOT revenues were up double digits throughout
the entire year. While all hotels were up, the Pelican Hill Resort in the Newport Coast
continued to outperform with its second full year of operations since opening at the height
of the recession. The Pelican Hill Resort was named the #1 Resort in the United States by
the readers of the luxury travel magazine, Conde Nast Traveler. As of the fiscal year end,
actual TOT collections exceeded budget by $1.5 million.
LONG TERM FINANCIAL PLANNING
The City Council has adopted prudent fiscal policies concerning its investments, reserves,
budget administration, revenue initiatives, competitive contracting, facility replacement
planning and the like. These fiscal policies, such as the 15 -point Fiscal Sustainability Plan
mentioned earlier, can be found on the City's website in the City Council section under City
Government at www.newportbeachca.gov.
Generally, the Fiscal Sustainability Plan and the City's Charter and other policies and
codes direct that the annual budget serves as the foundation for the City of Newport
Beach's financial planning and control. It allows the City Council to prioritize City
expenditures strategically aligned with core community values. Appropriations for
operating expenditures shall be balanced in relation to current revenue sources and will
not over -rely on one -time revenue sources or reserves. When significant uncertainty exists
concerning revenue volatility and pending obligations (such as pension costs), the City
Council and City Manager reserve the right to impose any special fiscal control measures,
including personnel hiring freezes, and other spending controls, whenever circumstances
13
warrant. The City Council may authorize the use of Contingency Reserves (set at 15% of
the General Fund Operating Budget) only during emergency situations as set forth by the
Council Reserve Policy. The City Council holds a budget hearing and adopts a budget on
or before June 30 each year, the close of the City's fiscal year.
FISCAL SUSTAINABILITY / FINANCIAL POLICIES
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.
Smarter, Faster, Smaller
The City has been proactive in restructuring itself in a phased, thoughtful way by making
strategic cuts in department operations. Our goal has been to carefully evolve into a more
modern (and smarter, faster, smaller) local government that maintains quality services
while being more efficient and effective at doing so.
As background, beginning in FY 2009 -10, General Fund revenues were trending to come
in at an approximately $8 million deficit. As its first phase of restructuring, the City
implemented an Early Retirement Incentive Program (ERIP) in December 2009 to reduce
payroll without layoffs or "bumping ". Fifty -one employees elected to participate in the
program, thus reducing the deficit by $1.8 million (half -year savings). The program has
reduced annual payroll costs by $3 million in the General Fund. [See Footnote 11 in the
notes to the financial statements.]
Continuing in FY 2010 -11, the City has taken additional measures to avoid budgetary
impacts as a result of the sputtering economy. The City entered a second phase of its
restructuring effort to affect additional long -term cost savings and improved efficiencies by
outsourcing and eliminating some less useful programs. The outsourcing included Street
Sweeping (saving $0.5 million a year), airborne law enforcement operations (saving
approximately $0.3 million /year), parking meter operations and enforcement (saving
approximately $0.5 million in salary and benefit costs and potentially increasing existing
City revenues), and some of our refuse collection and facility maintenance efforts
To mitigate the rising cost of pension plans, the City negotiated cost sharing agreements
with its miscellaneous employee associations to contribute 8.0% of base pay to offset the
PERS employee contribution. This saves the City approximately $2.7 million per year, and
in partnership with fire, lifeguards, and police associations, negotiated for public safety to
contribute another $0.8 million in annual pension expense, up from zero the year before.
This represents a total of $3.5 million in pension costs now paid by the employees.
Through a combination of an early retirement plan, attrition, outsourcing and lay -offs, the
full -time work -force has been reduced nearly 10% as depicted in the next chart.
14
840
820
800
N
C
O
L
0 780
a
w
0
760
740
720
"Still not Done"
Historical Full Time Positions
827
2006 2007 2008
832
W
Fiscal Year
2010 2011
t 758
2012
Ad o pted,
We have survived the recession, but it was not without hard choices and significant budget
reductions. We have increased General Fund Reserves in keeping with our Fiscal
Sustainability Plan, but as our City Manager has said, we continue to look forward. This
includes tackling our rising pension costs, replacing outdated I.T. infrastructure, working
with our neighbors to share services where appropriate, and looking for other opportunities
to contract out City services where it makes fiscal and service - related sense to do so. Our
City has made these hard choices with the support of our Council and we will continue to
move forward to be a smaller, faster, smarter organization.
GENERAL FUND & FACILITIES REPLACEMENT (FINANCING)
Overall General Fund revenues finished $3.8 million, or 2.6 %, higher than the prior year
while expenditures finished $5 million, or 4 %, lower than the prior year. The net result
would have produced a positive increase to the General Fund. However, the City had also
planned, and budgeted, for a one -time transfer of $31.3 million in General Fund —
Committed Fund Balance to the Facilities Replacement Fund — Committed Fund Balance.
The result of this transfer and the net of other transfers in and out, produced a decrease in
General Fund Balance of $19.4 million as illustrated in the following chart:
15
Non - spendable:
Prepaid Items
Inventories
Long -Term Loan Receivable
Restricted
uommittea:
Facilities Financing Plan'
Contingency Reserve
Recreation Reserves
Parking Reserves
Cable Franchise
Other Miscellaneous
Unassigned (Appropriations Reserve)
Fund Balance Pre FFP Transfer
FFP Transfer Out`
Ending General Fund Balance
2010 2011
$ 932,148 $ 328,851 $ (603,297)
238,274 231,641 (6,633)
471,250 471,250
1,692,533 1,681,333 (11,200)
27,500,000
31,300,000
3,800,000
18,895,125
21,841,467
2,946,342
443,522
452,448
8,926
235,506
238,876
3,370
1,356,143
1,360,385
4,242
3,399,369
3,726,726
327,357
9,700,697
11,865,835
2,165,138
17,293,299
20,570,033
3,276,734
$ 82,157,866
$ 94,068,845
11,910,979
$ -
$ (31,300,000) *
(31,300,000)
$ 82,157,866
$ 62,768,845 $
(19,389,021)
Other noteworthy events during FY 2010 -11; the City Council approved increasing the
City's General Fund Contingency Reserve to 15% from 12 %; thereby increasing this
committed fund balance reserve by almost $3 million, and the City also increased its
unassigned - appropriations reserve by more than $3 million at a time when many cities
needed to access reserves to meet annual operating expenditures and commitments.
Facilities Financing Plan (FFP) Commitment 8r Major Construction Initiatives
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.
Council Policy F -28, approved in August 2009, establishes a long -term financing plan
(FFP) for the replacement of all General Fund supported facilities (Civic Center, Fire
Stations, Police Stations and Parks).
The FFP provides a consistent, level funding plan to minimize negative impacts on the
General Fund in any given year, while also ensuring the City is able to maintain its high
quality facilities. The City has been committing (reserving prior to Fiscal Year 2011) these
funds in a Facilities Financing "Reserve" within the General Fund. With the financing of the
Civic Center Project and completion of the OASIS Senior Center, the City transferred
$31.3 million to a separate fund that will be used to accumulate resources to pre -fund debt
service or cash fund construction of projects on the Facilities Financing Plan, this will
enhance the transparency of the FFP commitments and Council's intent, while not
changing the nature of the Commitment.
iR
Beginning Balance 7/1/10
$ -
Revenues
Transfer In from General Fund
31,300,000
Interest Income
275,381
Total Revenues
31,575,381
Expenditures
2010 Civic Center COPS Debt Service
(682,754)
OASIS Construction
(5,266,983)
Total Expenditures
(5,949,737)
Ending Balance 6/30/11
25,625,644
In 2010 -11, $5 million of the FFP commitment was used to cash fund the remaining
balance of the completed OASIS Senior Center construction. After accounting for interest
earnings and net debt service payments on the 2010 Civic Center COPS, the remaining
Fiscal Year 2010 -11 Facilities Replacement fund balance was $25.6 million. The balance
of the Facilities Replacement fund has grown to more than $33.5 million after a major
developer contribution dedicated to the facilities plan was received during our current
Fiscal Year 2011 -12.
Special Note: The FFP was the winner of the prestigious "Helen Putnam Award - Internal
Administration category" from the League of California Cities in 2008.
Major Initiative: 2010 Civic Center Certificates of Participation (COPs) Issued
In November 2010, the City entered the capital markets issuing nearly $126.7 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) gave the City
of Newport Beach 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 Civic Center 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
AWARDS AND ACKNOWLEDGMENTS
Awards: The City has prepared a comprehensive annual financial report for the past 19
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 CAFR for the fiscal year ended June 30, 2010. 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
CAFR 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 Finance 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, White Nelson Diehl Evans
LLP, for their time and assistance in the preparation of the report. This report was
completely prepared and published by City employees.
a
David A. Kiff
City Manager
W,
Tr y McCraner
Finance Director
Presented to
City of Newport Beach
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2010
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.
President
Executive Director
M
Council Member
Steven J.Rosansky
Council Member
District 2
Mayor
District 1
City Attorney
David R. Hunt
City Manager
Dave Kiff
Council Member
District 5
Council Member
District 7
City Clerk
Leilani Brown
Dana M. Smith ......................................................................
............................... ......................Assistant City Manager
Tracy M. McCraner ......................................................
............................... ........................Finance Director /Treasurer
Kimberly Brandt ...........................................
............................... ......................Community Development Director
MikeMorgan ..........................................................................................................
............................... Interim Fire Chief
Terri L. Cassidy ....................................................................................
............................... Human Resources Director
Cynthia Cowell .................................................................
............................... ........................Library Services Director
Mark Harmon ...............................................................................
............................... Municipal Operations Director
JayJohnson .......................................................................................................................
............................... Police Chief
Steve Badum .................................................................................................
............................... Public Works Director
Laura Detweiler .........................................
............................... .....................Recreation & Senior Services Director
20
r BUILDING CODE 1
L BOARD OFAPPEALS— J
r-- - - - - -1
CIVIL SERVICE BOARD
L-- - - - - -J
r-- - - - - -1
PLANNING COMMISSION
L-- - - - --J
ELECTORATE
MAYOR
r BOARD OF LIBRARY 1
L
r PARKS,BEACHES& 1
r-- - - - - -1
CITY ARTS COMMISSION
r HARBORCOMMISSION 1
FIRE
Fire Suppression (Operations) Ocean Ufeguands
Training and Education Horrendous Materials
Fire Prevention Junior Lifeguard Program
Administration Emergency Medical Serviees
PUBLIC WORKS
Engineering
CITY MANAGER
restructure Master Planning
I
Ac Planning & Engineering
CITY CLERK
Harbor Resources
ACM /Operations
Civil Service Board Support
Grievances & Disciplines
CITYATTORNEY
Housing Programs
Residential Building
Economic Development
Code Enfo
Business Improvement
IT
L - - - -J
Public Informa ortnafion
COUNCILAPPOINTED POSITIONS
ADMINISTRATIVE SERVICES
MUNICIPAL OPERATIONS
AccountinglReperfnglButlgefng Treasury Management
Ad nis_a.n Operations Support
Billing & Receivables Payroll /Accounts Payable
Equipment Maintenance Fill Maintenance
Cashiering Parking Lots Administration
Water Service Oil &Gas Production
Revenue Printing & Postal Services
Parks and Street Trees Refuse Collection
Purchasing 8 Warehousing
Electrical Services Wastewater Collecti, .
FIRE
Fire Suppression (Operations) Ocean Ufeguands
Training and Education Horrendous Materials
Fire Prevention Junior Lifeguard Program
Administration Emergency Medical Serviees
PUBLIC WORKS
Engineering
CID Design & Construction
restructure Master Planning
Development Services
Ac Planning & Engineering
Public Right of Way Permitting
Harbor Resources
NPDES &Water Duality
POLICE LIBRARY SERVICES
Patrol Support Services CAl l Library & Brunches Boand of Library Trustees Suppo
Traffic Chief of Police Atlult &Youth Programs Information &Reference Service
Detective Literacy Services Sister City
ommissio0Support
ArlsB Cultural Services City Arts Commission Support
HUMAN RESOURCES
Recruitment
General Llabildy
Employeed -abor Relations
Benefits Administration
Classifcetion /Compensation
Workers'Compensation
Citywide Training
Retiree Counseling & Benefits
Civil Service Board Support
Grievances & Disciplines
O
ELECTED OFFICIALS
Fiscal Year 2010 -2011
RECREATION & SENIOR SERVICES
Youth & Adult Sports Programs Senior Programs & Services
PlaygmuddrPad, Development Special Events
sahib' M.nagem.nVR...tlons Marine Life Refuge
PB &R Commission Support
21
CITY DEPARTMENTS
COMMUNITY DEVELOPjRecords
Land Use and Development
Builtling In
Long -Range Planning
Plan ChecklPe
Planning Commission Support
Usa and O
Housing Programs
Residential Building
Economic Development
Code Enfo
r - - - -,
L - - - -J
COUNCILAPPOINTED BOARDS & COMMISSIONS
COUNCILAPPOINTED POSITIONS
21
CITY DEPARTMENTS
This page left blank intentionally.
22
I INANC
23
INDEPENDENT AUDITORS' REPORT
City Council Members
City of Newport Beach
Newport Beach, California
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the City of
Newport Beach, California, as of and for the year ended June 30, 2011, 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, California'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 Auditine
Standards issued by the Comptroller General of the United States. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the City of Newport Beach, California's
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business -type activities, each major
fund, and the aggregate remaining fund information of the City of Newport Beach, California, as of
June 30, 2011, 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 and Tide and Submerged Land major governmental funds for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
As described in Notes In and 17, the City of Newport Beach, California has implemented the
provisions of Governmental Accounting Standards Board Statement Number 54, "Fund Balance
Reporting and Governmental Fund Type Definitions ", for the year ended June 30, 2011.
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893
Officer located in Orange and San Diego Counties
25
In accordance with Government Auditing Standards, we have also issued our report dated
December 20, 2011 on our consideration of the City of Newport Beach, California's internal control
over financial reporting and our tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements and other matters. The purpose of that report is to describe the scope of
our testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
The management's discussion and analysis, as listed in the table of contents as required supplementary
information, is not a required part of the basic financial statements but is supplementary information
required by the accounting principles generally accepted in the United States of America. This
information is an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic or historical context. We have applied certain limited procedures to
the management's discussion and analysis in accordance with auditing standards generally accepted in
the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained during the
audit of the basic financial statements. We do not express an opinion or provide any assurance on the
management's discussion and analysis because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Newport Beach, California's basic financial statements as a whole.
The introductory section, supplementary information and statistical section, as listed in the table of
contents, are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The supplementary information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to prepare the
basic financial statements. The information has been subjected to the auditing procedures applied in
the audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare
the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America.
In our opinion, the supplementary information is fairly stated in all material respects in relation to the
basic financial statements taken as a whole. The introductory section and statistical section have not
been subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we express no opinion or provide any assurance on them.
W 1 N eLs- on- D mQ C v o-rL S L u"-�
December 20, 2011
Irvine, California
►z:
SUMMIT NCE
WA
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, 2011. This analysis should
be read in conjunction with the Transmittal Letter at the front of this report and the
accompanying Basic Financial Statements.
OVERVIEW OF THE FINANCIAL STATEMENTS
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 use the economic resources measurement focus and basis of accounting
which is similar to the accounting standard used by private sector companies. The
government -wide financial statements are intended to provide a "Big Picture" view of the
City. With the economic resources measurement focus and basis of accounting,
changes in net assets are recognized as soon as the event occurs regardless of the
timing of related cash flows.
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 Government -wide Financial Statements report the City's net assets and how they
have changed. Net assets, the difference between the City's assets and liabilities, is
one way to measure the City's financial health, or position. Over time, increases or
decreases in the City's net assets are an indicator of whether its financial health is
improving or deteriorating, respectively. To assess the overall health of the City, one
should also consider additional non - financial factors such as changes in the City's
property tax base and the condition of the City's roads.
The Government -wide Financial Statements of the City are divided into two categories:
Governmental Activities — This statement depicts the extent to which programs
are self - supporting and the net amount provided by property taxes and other
29
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.
Fund Financial Statements have a short-term focus measuring 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.
The City utilizes three broad categories of funds:
Governmental Funds — Unlike Government -wide Financial Statements,
Governmental Fund Financial Statements utilize the financial resources
measurement focus and thus concentrate on near -term inflows and outflows of
spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Consequently, the Governmental Fund Financial
Statements provide a detailed short-term view that helps a reader determine
whether there are more or fewer financial resources that can be spent in the near
future to finance City programs. Also included in the Governmental Funds are
Permanent Funds. These funds are used to report resources that are legally
restricted to the extent that only earnings, not principal, may be used for
purposes that support City programs.
Proprietary Funds — Services for which the City charges customers a fee are
generally reported in Proprietary Funds (Enterprise Funds and Internal Service
Funds). Like the Government -wide Financial Statements, these funds provide
both long and short-term financial information utilizing the economic resources
measurement focus. The City's Enterprise Funds (Water and Wastewater Funds)
are individual funds represented in the combined presentation of Business -type
Activities in the Government -wide Financial Statements. The individual fund
presentation provides more detailed information about each business segment,
its operating statements, and statements of cash flow. The City also uses Internal
Service Funds that are utilized to report and allocate the cost of certain centrally
managed and operated activities (e.g. fleet maintenance, risk management,
retiree insurance, etc.). Because the Internal Service Funds primarily serve the
30
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.
ANALYSIS OF GOVERNMENT -WIDE FINANCIAL STATEMENTS
Net Asset Discussion - As shown in Figure 1, Current assets and long -term liabilities
increased approximately $125 million during the year primarily due to a $126.7 million
issuance of Certificates of Participation (COPs) to fund the construction of a new Civic
Center, park and parking structure. The financing, included a $1.2 million bond
premium and approximately $4 million of refunding proceeds for the 1998 Library COPs
and is discussed further in Note (6) of the Notes to the Financial Statements.
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
Figure 1
Net Assets
(in thousands)
Governmental Activities Business -Type Activities Total
2010 2011 2010 2011 2010 2011
$ 175,006 $ 298,131 $ 12,257 $ 12,999 $ 187,263 $ 311,130
2,101,052 2,126,458 108,450 108,976 2,209,502 2,235,434
2,276,058 2,424,589 120,707 121,975 2,396,765 2,546,564
19,094 28,675
51,766 177,070
70,860 205,745
2,084 3,556
2,084 3,556
21,178 32,231
51,766 177,070
72,944 209,301
2,084,912
2,087,403
108,450 108,976 2,193,362
2,196,379
34,237
63,940
- - 34,237
63,940
86,049
67,501
10,174 9,443 96,223
76,944
$ 2,205,198
$ 2,218,844
$118,624 $ 118,419 $ 2,323,822 $
2,337,263
31
Capital assets increased $25.9 million primarily due to work -in- progress to date on the
new Civic Center project.
The City's combined net assets for the year ended June 30, 2011, were $2.337 billion,
increasing $13.4 million (0.6 %) over the prior year. Net assets can serve as an
important indicator of whether the City's overall financial condition is improving or
deteriorating over time. The increase in the current year is attributable to modest
revenue growth and various cost saving efforts including departmental restructuring,
outsourcing, pension cost sharing agreements and an early retirement incentive plan
implemented midway through the prior year.
• Invested in Capital Assets 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. At $2.196 billion,
they represent the largest component of net assets (94.0 %). The City's
investment in capital assets do not represent a financial resource and
consequently are not readily available for funding current obligations.
• Restricted Assets totaled $63.9 million and increased nearly $29.7 million
reflecting a $31.3 million transfer of unrestricted net assets to the Facilities
Replacement Fund, where the funds will be used to accumulate resources to
cash fund and or finance projects in the City's Facilities Financing Plan.
The remaining balance of net assets $76.9 million or (3.3 %) are unrestricted and
may be used to meet the City's ongoing obligations to citizens and creditors.
Unrestricted net assets decreased $18.5 million as a net result of transferring
$31.3 million from the General Fund to a Capital Projects Fund a restricted net
asset purpose.
32
Governmental Activities
Governmental activities are generally financed through taxes, intergovernmental
revenues, and other nonexchange revenues. The Statement of Activities is intended
illustrate how the cost of governmental activities are financed and determine the annual
change in net assets.
Figure 2
Changes in Net Assets
(in thousands)
33
Governmental Activities
Business -Type
Activities
Total
2010
2011
2010
2011
2010
2011
Revenues:
Program Revenues:
Charges for services
$ 37,789
$ 35,910
$ 20,781 $
23,445
$ 58,570
$ 59,355
Operating grants and capital contributions
15,678
10,710
-
-
15,678
10,710
Capital grants and contributions
12,350
11,101
-
-
12,350
11,101
General Revenues:
Taxes:
Property taxes
72,000
71,630
-
-
72,000
71,630
Sales tax
17,441
18,455
-
-
17,441
18,455
Sales tax in -lieu
4,540
6,284
-
-
4,540
6,284
Transient occupancy taxes
11,401
13,083
-
-
11,401
13,083
Other taxes
7,943
8,048
-
-
7,943
8,048
Intergovernmental (Unrestricted):
Motor Vehicle License Tax
315
403
-
-
315
403
Investment related income
1,414
735
229
112
1,643
847
Miscellaneous
1,820
2,602
-
-
1,820
2,602
Total revenues
182,691
178,961
21,010
23,557
203,701
202,518
Expenses:
General government
17,083
15,857
-
-
17,083
15,857
Public safety
79,403
78,128
-
-
79,403
78,128
Public works
55,445
40,341
-
-
55,445
40,341
Community development
10,082
8,638
-
-
10,082
8,638
Community services
17,232
17,272
-
-
17,232
17,272
Interest
373
5,079
-
-
373
5,079
Water
-
-
18,733
19,825
18,733
19,825
Wastewater
3,599
3,937
3,599
3,937
Total expenses
179,618
165,315
22,332
23,762
201,950
189,077
Increase (decrease) in net assets
3,073
13,646
(1,322)
(205)
1,751
13,441
Net asset at beginning of year
2,202,125
2,205,198
119,946
118,624
2,322,071
2,323,822
Net assets at end of year
$2,205,198
$ 2,218,844
$118,624 $
118,419
$2,323,822
$2,337,263
33
Revenue Discussion
Figure 3 illustrates how the $178.9 million in revenue was derived. As shown, $35.9
million or 20% of the revenues were recovered by those who directly benefited from the
programs as a Charge for Service. Another $21.8 million or 12% of the revenues were
generated by contributions and grants received from governmental organizations,
developers, and property owners for both capital and operating activities. The remaining
$121.2 million or 68% represented general revenues of the City including taxes,
intergovernmental transfers and other miscellaneous revenues.
Figure 3
Governmental Activities Revenue Sources
Year Ended June 30, 2011
Sources of Revenue
2°%
As illustrated in Figure 2, operating grants and capital contributions declined $5 million
due to fewer public safety grants and a one -time development impact contribution
received in the prior fiscal year.
In spite of the poor economy, property tax assessed valuation growth has remained
positive for the past fifteen years averaging in excess of 7% annually during this same
time period. However, the current trend is below average. Assessed property values
34
increased only 0.16% in the current year versus 1.76% in the prior year. In total,
property tax collections, including unsecured property and prior year collections
amounted to $71.6 million, decreasing $369,355 or 0.5% in the current year. This was a
net result of a .6% increase in secured property tax revenues and a nearly 5.2%
increase in unsecured property taxes and a 31.7% decrease in prior year collections,
penalties and interest.
At nearly $24.7 million, sales taxes, including sales tax -in -lieu, represent the second
largest individual revenue source for the City. Excluding an anomaly in the sales tax -in-
lieu, Sales taxes increased 5.6% over the prior year driven by solid improvements in the
restaurant, department store and service station sectors. Sales taxes in -lieu appeared
to increase 38% over the prior year. However, most of this increase is attributable to the
State withholding $1.2 million in FY 2009 -10 due to an overpayment in FY 2008 -09
At $13.1 million, Transient occupancy taxes increased by $1.7 million or 14.8% from the
prior year, due predominantly to a second full year operations of a new luxury resort,
Pelican Hills, that opened at the height of the recession.
Expenses Associated with Governmental Activities
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 Finance Department) 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.
35
Business Enterprise Operations are overseen by one department (Utilities) providing
water and wastewater services.
Figure 4
Government wide Functional Expenses
Year Ended June 30, 2011
3%
5%
10%
11%
Functional Expenses
Public Safety
7 Public Works
47% I J Community Services
General Government
Community Development
Interest
• As illustrated in Figure 2, the current year, expenses for all governmental activities
totaled $165.3 million.
• Overall, a decrease of $14.3 million (8.0 %) from the prior year, which can be
attributed to the following factors:
o General Government expenses decreased $1.2 million (7.2 %) when
compared to the prior year due to the City Manager's commitment to
our Fiscal Sustainability Plan by which Department Heads have
implemented structural changes through budget cuts, outsourcing,
shared services and reorganization.
o Public Safety expenses are down $1.3 million (1.6 %) in the current
year. The decrease is due to the City Manager's commitment to our
Fiscal Sustainability Plan by which Department Heads have
implemented structural changes through budget cuts, outsourcing,
shared services and reorganization
c Public Works expenses were down $15.1 million (27.2 %) when
compared to prior year. While some of this decrease is due in part to
reorganization efforts, the primary reason for the dramatic decrease is
9t
related to certain studies and periodic maintenance projects that were
expensed to public works in the prior year including certain traffic
studies, harbor dredging and undergrounding utility improvements that
didn't result in capitalized assets of the City.
o Community Development expenses decreased $1.4 million (14.3 %) in
the current year, due to the City Manager's commitment to our Fiscal
Sustainability Plan by which Department Heads have implemented
structural changes through budget cuts, outsourcing, shared services
and reorganization.
o Interest expenses increased $4.7 million (1261.7 %) when compared to
the prior year due the $126.7 million in Civic Center COPS issued in FY
2011.
As illustrated in figures 5 and 6, the total illustrates the net cost of each service. The
net cost represents the extent to which governmental activities are subsidized by taxes
and other general revenues of the City.
General government
Public safety
Public works
Community development
Community services
Interest
Figure 5
Governmental Activities
(in thousands)
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)
37
2011
Total Cost Net Cost
of Service of Service
$ 15,857
$ (13,135)
78,128
(60,650)
40,341
(20,529)
8,638
(2,994)
17,272
(5,208)
5,079
(5,079)
$ 165,315 $ (107,594)
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
25.0
20.0
15.0
10.0
5.0
0.0
Figure
Program Expenses and Revenue- Governmental Activities
Year Ended June 30, 2011
(in millions)
General Public5afety Public Works Community
Government Development
■Total Expenses ■ Program Revenues
Figure 7
Program Expense & Revenue - Business -type Activities
Year Ended June 30, 2011
(in millions)
a:
Major Business -type Activities in the current fiscal year included the following:
Water
Of the $19.8 million in water related expenses, $8.2 million (41.2°/x) is for the purchase
of water, $3.8 million (18.9 %) covers employee related costs, $4.5 million (22.6 %) is for
maintenance, supplies, and depreciation of the water system, $1.8 million (9.2 %) is for
professional services, and the remaining $1.5 million (7.5 %) is collectively attributable to
other miscellaneous expenses.
Wastewater
Of the $3.9 million in wastewater related expenses, $2.1 million (52.6 %) is for
maintenance, supplies, and depreciation of the wastewater system, $1.4 million (36.0 %)
is for employee related costs, and the remaining 456,136 (11.6 %) is attributable to
professional services and other miscellaneous expenses.
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, the City uses fund accounting to highlight available financial resources
and to ensure and demonstrate compliance with finance - related legal requirements.
Governmental Funds - Utilizing the financial resources measurement focus, the City's
Governmental Funds provide information on near -term inflows and outflows, and
balances of spendable resources. This information is useful in assessing the City's
financing requirements and 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 $223.7 million, an increase of $113.5
million from the prior year. The General Fund represented $62.8 million or 28.1 %
of the combined fund balances of the Governmental Funds.
Nonspendable Fund Balance - The City has $6.9 million in fund balance
classified as nonspendable to indicate that it cannot be readily converted to cash.
Of the $6.9 million nonspendable fund balance, $1.6 million is for prepaid items,
$231,641 is for inventories, $471,250 is for long -term loan receivable and $4.6
million is for permanent endowments.
Restricted Fund Balance - The City has $38.1 million in fund balance classified
as restricted to indicate that it has an externally imposed restriction on how the
money may be spent. Of the $38.1 million restricted fund balance, $1.5 million is
for Affordable Housing, $134,760 is for Hoag, $139,134 is for the Upper Newport
Bay restoration, $1.5 million is restricted for the Civic Center COP, $27.7 million
is restricted for various special revenue funds, $5.7 million is retricted for various
capital projects and $1.4 million of earnings are restricted for permanent funds.
39
Committed Fund Balance — The City has $143.5 million in fund balance
classified as committed to indicate that the City Council committed how the
money will be spent. Of the $143.5 million committed fund balance, $21.8 million
is committed to contingency reserves, $5.8 million is committed to the General
Fund, $360,000 is committed to the Tide and Submerged Land Fund, $25.6
million is committed to the Facilities Replacement Fund, $89.1 million is
committed to the City Hall Improvements Fund and $797,479 is committed to
Capital Project Funds.
Assigned Fund Balance — The City has $17.5 million in fund balance classified
as assigned to indicate that the City manager has an assigned purpose or intent
for how the money should be spent. Of the $17.5 million assigned fund balance,
$11.9 million is assigned in the General Fund, $5.4 million is assigned in the Tide
and Submerged Land Fund and $243,294 is assigned in Capital Project Funds.
Unassigned Fund Balance — The remaining $17.6 million in fund balance is
classified as unassigned to indicate that it is the residual balance not otherwise
restricted.
• Overall General Fund Revenues finished 2.6% higher than the prior year while
expenditures finished 4.1 % lower. The net result is General Fund income before
transfers and other financing sources and uses increased by nearly $5 million.
General Fund expenditures were reduced by almost $7 million under budget.
This was due to the City Manager's task to Department Director's to right -size
each department as it should look by FY 2012 -13. The General Fund ended the
year with a $62.8 million fund balance, a net decrease of $19.4 million after
transferring $48.8 million to other funds, $17.4 million represented a routine
transfer to subsidize the operations of the Tide and Submerged Land Fund and a
planned $31.3 million transfer from the General Fund to the Facilities
Replacement Fund.
• The activities of the Tide and Submerged Land Fund are routinely subsidized by
the General Fund. At year end, the General Fund transferred sufficient resources
($17.4 million) to subsidize for the maintenance and operation of the Tide and
Submerged Land fund. The Tide and Submerged Land Fund ended the current
year with $5.9 million in fund balance which represented project encumbrances
and commitments.
The Facilities Financing Fund Council Policy F -28, approved in August 2009,
establishes a long -term financing plan (FFP) for the replacement of all General
Fund supported facilities (Civic Center, Fire Stations, Police Stations and Parks).
The FFP provides a consistent, level funding plan to minimize negative impacts
on the General Fund in any given year, while also ensuring the City is able to
maintain its high quality facilities. The City has been committing (reserving prior
to Fiscal Year 2011) these funds in a Facilities Financing "Reserve" within the
General Fund. With the financing of the Civic Center Project and completion of
40
the OASIS Senior Center, the City transferred $31.3 million to a separate fund
that will be used to accumulate resources to pre -fund debt service or cash fund
construction of projects on the Facilities Financing Plan, this will enhance the
transparency of the FFP commitments and Council's intent, while not changing
the nature of the Commitment. In 2010 -11, $5 million was used to cash fund the
remaining balance of the completed OASIS Senior Center construction. After
accounting for interest earnings and net debt service payments on the 2010 Civic
Center COPs, the remaining Fiscal Year 2010 -11 FFP fund balance was $25.5
million.
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.
Enterprise Fund results for the year included the following:
Net Assets in the Water Fund increased $430,583. Wastewater Fund net assets
decreased by $559,711 due to increasing energy, supply and systems
maintenance costs.
Major Internal Service Fund activity in the current fiscal year included the following:
Net assets in the Internal Service Funds decreased $828,630 in the current year.
The City prefunds the cash portion of the City's OPEB obligation in a prefunding
trust. However, the primarily reason that Internal Service net assets decreased is
that an implied subsidy expense accrual is required per GASB 45 and the City
chooses to fund the implied subsidy component of the net OPEB cost on a pay -
as- you -go basis. See Note (12) in the Notes to the Financial Statements for
further information.
GENERAL FUND BUDGETARY HIGHLIGHTS
Changes to Original Budget
Final budgeted revenues for the General Fund increased $321,420 from the original
budget during the year ended June 30, 2011. Significant factors contributing to this
fluctuation are highlighted as follows:
Final budgeted intergovernmental revenues increased $301,497 from the original
budget due to increase in public safety grants.
Final budgeted expenditures for the General Fund decreased $17.7 million from the
original budget during the year ended June 30, 2011. Significant factors contributing to
this fluctuation are highlighted as follows:
41
• Public safety and public works functions were decreased by $16.1 million and $2.4
million respectively. This budget reduction was primarily due City Manager's
commitment to our Fiscal Sustainability Plan by which Department Heads have
implemented structural changes through budget cuts, outsourcing, shared services
and reorganization.
• Budgeted expenditures for community services increased $496,096 primarily due to
an increase in estimated expenditure appropriations for the acceptance of a check
from the Newport Public Library Foundation to cover operating costs.
• During the current year, final transfers out budgeted for the General Fund varied
from the original budget by approximately $21.0 million primarily due to the
expenditure allocation to the Tidelands Fund.
Variance with Final Budget
Actual revenues were $4.2 million above final budgeted revenues for the year ended
June 30, 2011 due to the continued moderate growth in the economy. Significant factors
contributing to this favorable variance are summarized as follows:
• A $1.0 million favorable variance was realized due to higher than expected
property taxes revenues.
• Higher than expected sales tax and sales tax -in -lieu of $1.0 million due to a
continued moderate growth in the economy.
• Transient Occupancy tax revenues were higher than expected by $1.5 million
due to the continued moderate growth in economy.
• Charges for services were higher than expected at a little over $0.9 million due to
plan check fees, police emergency response fees, police jail booking fees and
paramedic fees.
Actual General Fund expenditures of $121.7 million were significantly less than final
budgetary estimates of $130.9 million. Significant factors contributing to this $9.3 million
surplus are summarized as follows:
• A $1.6 million surplus was realized from capital improvement projects completed
below budget.
• A total of $7.8 million in favorable variances was realized in Public Safety, Public
Works, Community Services, Community Development and General Government
due to City Manager's commitment to our Fiscal Sustainability Plan by which
Department Heads have implemented structural changes through budget cuts,
outsourcing, shared services and reorganization
42
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City's investment in capital assets for governmental and business -type activities as
of June 30, 2011, amounts to $2.24 billion (net of accumulated depreciation). This
investment is comprised of a broad range of capital assets including land, buildings,
machinery and equipment, park facilities, road improvements, storm drains, piers, oil
wells, sound walls and bridges. The total net increase (including additions and
deletions) of $25.9 million represents a 1.2% increase over last year. The $25.9 million
net increase is the result of additions of $28.9 million, and deletions of $3.0 million.
Figure 8
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 $28.9 million in capital assets in both the Governmental and
Business Type Activities in the current year. Of the $28.9 million, $27.2 million
paid for through current year expenses was primarily for work in progress and
the remaining $1.7 million represents additions from work in progress started in
previous years.
• Of the $28.1 million capitalized as governmental assets in the current year, the
Civic Center Project contributed to the vast majority of the work in progress
additions and $1.4 million to infrastructure additions.
• The $797,294 capitalized in the current year as business -type assets
represented majority in additions to work in progress .
Additional information on the City's capital assets can be found in Note (5) of the Notes
to the Financial Statements.
43
Governmental Activities
Business -Type Activities
Total
2010
2011
2010
2011
2010
2011
Land
$ 1,819,673
$ 1,820,832
$ 2,016
$ 2,016
$ 1,821,689 $
1,822,848
Structures
54,663
53,654
83
561
54,746
54,215
Equipment
7,836
8,503
83
78
7,919
8,581
Infrastructure
191,656
188,550
105,585
103,489
297,241
292,039
Work in progress
27,224
54,919
683
2,832
27,907
57,751
Totals
$ 2,101,052
$ 2,126,458
$ 108,450
$ 108,976
$ 2,209,502 $
2,235,434
Major capital asset events during the current fiscal year included the following:
• The City capitalized $28.9 million in capital assets in both the Governmental and
Business Type Activities in the current year. Of the $28.9 million, $27.2 million
paid for through current year expenses was primarily for work in progress and
the remaining $1.7 million represents additions from work in progress started in
previous years.
• Of the $28.1 million capitalized as governmental assets in the current year, the
Civic Center Project contributed to the vast majority of the work in progress
additions and $1.4 million to infrastructure additions.
• The $797,294 capitalized in the current year as business -type assets
represented majority in additions to work in progress .
Additional information on the City's capital assets can be found in Note (5) of the Notes
to the Financial Statements.
43
Long -term Debt
At the end of the current fiscal year, the City had total long -term debt outstanding of
$138.2 million for all governmental activities.
Certificates of participation
Bond premium
Note payable
Pre - annexation agreement
CDBG Loan
Purchase Installment Agreement
Totals
Figure 9
Outstanding Debt at Year -End
(in thousands)
Governmental Business -Type Total
Activities Activities
2010 2011 2010 2011 2010 2011
$ 3,990 $ 126,660
-
1,085
933
738
8,400
7,200
1,883
1,788
1,500
750
$ 16,706
$ 138,221
$ 3,990 $ 126,660
-
1,085
933
738
8,400
7,200
1,883
1,788
1,500
750
$ 16,706
$ 138,221
The City's total debt increased $121.5 million during the current fiscal year. The
increase is primarily due to the addition of $126.7 million of Certificates of Participation,
and $1.2 million in bond premium related to the Civic Center Project. The proceeds of
the financings were used to finance the construction of a new Civic Center Complex
including, a parking structure and park. Approximately $4 million was used to refund
1998 Library COPs. 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
• The 2011 -12 secured property tax levy grew by +1.27% reflecting a +75% CPI
adjustment, due to new construction and net reassessments from property sales
and or assessment appeals. Unsecured property taxes (e.g. business equipment
and boats) decreased -4.31 %. The net result is that the overall property tax levy,
as of September 30, 2011, grew by +1.03% compared to fiscal year 2010 -11 as
follows:
Property Tax Assessed Valuation (AV)
2011 -2012 2010 -2011 Change fn AV %Change
Secured 37,550,412,836 37,080,217,275 470,195,561 1.27 %.
Unsecured 1,556,752,313 1,626,947,910 (70,195,597) -4.31%
Total AV 39,107,165,149 38,707,165,185 399,999,964 1.03%
• V,
• The City Manager's core budget principles that were utilized to construct the
2011 -12 budget include:
1. Adhere of 2010's Fiscal Sustainability Plan.
2. Use the next 18 months to thoughtfully and deliberately
change the way local governments does business.
3. Our City's long -term success depends upon our investment
in infrastructure (streets, parks, facilities).
4. There are things we should not be doing.
5. Pension costs need to be addressed comprehensively and
cooperatively.
6. Public Safety is paramount - but we need to be open to better
ways of delivery of public safety services.
• Pension Costs for both Miscellaneous and Public Safety to increase to $29
million by FY 2014, an estimated $8 million increase. However, next year's
budget will reflect successful negotiations with both groups for increased pension
cost sharing by all employees of approximately $3.5 million.
• Continued departmental restructuring and adhering to our Fiscal Sustainability
Plan. The General Fund only; All departments including Public Safety reduced
budgets for a structural decrease of approximately $8 million in the next year.
Increased investment in our infrastructure such as streets and roads. An increase
of $1 million in FY 2012 growing by $5 million in two years.
• Eliminate forty full time equivalent positions from personnel budget, resulting in a
smaller more efficient organization.
• The continued, yet modest growth in the economy resulted in a 1% estimated
growth in Property Taxes of $700K; a 5 % growth rate in Sales Taxes of almost
$1 million and a 10% growth rate in Transient Occupancy Taxes of almost $ 1.5
million.
• STATUS
OF LABOR CONTRACTS -
Safety Bargaining Unit
labor contracts
including
Police, Police Management,
Fire, Fire Management
and Lifeguard
expire on
December 31, 2011. Labor
contracts with all other
miscellaneous
45
employee bargaining units expire on June 30, 2012. The impact on the 2011 -12
and 2012 -13 budget is unknown.
• STATE BUDGET - One year ago, the state faced ongoing budget imbalances of
around $20 billion per year. By making difficult budgetary decisions, including
the trigger cuts, the State has strengthened the its fiscal condition significantly.
However, per the Legislative Analyst's Office (LAO) November 2011 forecast, the
State will still face a $3 billion shortfall in 2011 -12 and a $10 billion shortfall in
2012 -13.
Under the provisions of the budget 2011 -12 budget package, this revenue
shortfall will translate into $2 billion of trigger cuts to state programs. While the
Legislature has already cut State library funding as part of the FY 2011 -12
budget agreement, the trigger cuts will essentially eliminates all remaining state
funding for the California Library Services Act, the State Literacy program, and
the Public Library Foundation. These programs help fund services like local
library transfer fees and funding for adult literacy programs. The cuts will not only
eliminate all State funding for local library programs but also jeopardize federal
funding for the Braille and Talking Book library programs.
The net reduction in State Library funding to the City is approximately $300,000
which has already been factored into the City's 2011 -12 budget. Although it is
not currently known how the State will deal with its 2012 -13 Budget challenge,
the Governor has until January 10th to introduce the exact details.
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 Finance
Department, 3300 Newport Boulevard, Newport Beach, CA 92663 -3884, (949) 644-
3126. The City's Budgets, Comprehensive Annual Financial Reports as well as other
City financial information can be found on the City's website at:
www.NewportBeachCA.gov/financialinfo.
IZ
SUMMIT NCE
47
CITY OF NEWPORT BEACH
Statement of Net Assets
June 30. 2011
Assets:
Cash and investments (note 4)
Receivables:
Accounts
Notes
Interest
Intergovernmental receivables
Cash with fiscal agent (note 4)
Internal balances
Inventory
Investment in joint ventures (note 15)
Prepaid items
Deferred charges
Capital assets, (note 5):
Non - depreciable
Depreciable
Accumulated depreciation
Total assets
Liabilities:
Accounts payable
Accrued salaries and benefits
Accrued interest payable
Deposits payable
Unearned revenue
Noncurrent liabilities (note 6):
Due within one year
Due in more than one year
Total liabilities
Net Assets:
Invested in capital assets, net of related debt
Restricted for:
Public safety
Public works
Community services
Community Development
Permanent Funds:
Nonexpendable
Expendable
Unrestricted
Total net assets
Governmental
Business -type
Activities
Activities
Total
$ 166,718,279
$ 7,994,308
$ 174,712,587
7,668,533
5,162,958
12,831,491
471,250
-
471,250
768,757
-
768,757
7,542,209
-
7,542,209
107,696,716
-
107,696,716
158,714
(158,714)
-
536,627
-
536,627
2,528,033
-
2,528,033
2,855,042
-
2,855,042
1,187,048
-
1,187,048
1,875,750,430
4,848,408
1,880,598,838
410,393,539
159,017,345
569,410,884
(159,686,080)
(54,889,294)
(214,575,374)
2,424,589,097
121,975,011
2,546,564,108
11,905,297
3,311,178
15,216,475
4,438,845
185,230
4,624,075
4,037,373
-
4,037,373
2,110,129
59,156
2,169,285
6,183,506
-
6,183,506
11,359,316
11,359,316
165,710,430
-
165,710,430
205,744,896
3,555,564
209,300,460
2,087,403,003
1,037,903
52,955,530
3,607,847
305,948
108,976,459
2,196,379,462
1,037,903
52,955,530
3,607,847
305,948
4,629,781 4,629,781
1,403,273 - 1,403,273
67,500,916 9,442,988 76,943,904
$ 2,218,844,201 S 118,419,447 $ 2,337,263,648
See accompanying notes to basic financial statements
49
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, 2011
19,824,996 20,097,227
3,936,949 3,348,433
23,761,945 23,445,660
- 20,097,227
3,348,433
- 23,445,660
$ 189,077,451 $ 59,355,371 $ 10,710,266 $ 11,101,239 $ 81,166,876
See accompanying notes to basic financial statements
50
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
$ 15,857,397
$ 2,722,527
$ -
$ -
$ 2,722,527
78,128,006
15,686,314
1,791,929
-
17,478,243
40,341,323
2,938,315
7,641,295
9,233,015
19,812,625
8,637,525
5,599,737
43,500
-
5,643,237
17,272,374
8,962,818
1,233,542
1,868,224
12,064,584
5,078,881
-
-
-
-
165,315,506
35,909,711
10,710,266
11,101,239
57,721,216
19,824,996 20,097,227
3,936,949 3,348,433
23,761,945 23,445,660
- 20,097,227
3,348,433
- 23,445,660
$ 189,077,451 $ 59,355,371 $ 10,710,266 $ 11,101,239 $ 81,166,876
See accompanying notes to basic financial statements
50
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
$ (13,134,870)
$ -
$ (13,134,870)
(60,649,763)
-
(60,649,763)
(20,528,698)
-
(20,528,698)
(2,994,288)
-
(2,994,288)
(5,207,790)
-
(5,207,790)
(5,078,881)
-
(5,078,881)
(107,594,290)
-
(107,594,290)
-
272,231
272,231
(588,516)
(588,516)
-
(316,285)
(316,285)
$ (107,594,290)
$ (316,285)
$ (107,910,575)
71,630,345
-
71,630,345
18,455,181
-
18,455,181
6,284,266
-
6,284,266
13,082,451
-
13,082,451
4,090,634
-
4,090,634
3,730,819
-
3,730,819
226,257
-
226,257
403,042
403,042
366,081
52,996
419,077
369,235
58,977
428,212
2,601,538
2,601,538
121,239,849
111,973
121,351,822
13,645,559
(204,312)
13,441,247
2,205,198,642
118,623,759
2,323,822,401
$ 2,218,844,201
$ 118,419,447
$ 2,337,263,648
See accompanying notes to basic financial statements
51
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52
I INANC
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 Facilities Replacement Fund is used to account for the receipt and
expenditure of funds for the replacement of facilities.
The City Hall Improvement Fund is used to account for the design and
construction of a new Civic Center Complex.
The Civic Center COP Fund is used to account for debt service transactions
related to the Certificates of Participation issued to finance the construction of the
Civic Center.
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.
54
Assets
Cash and investments (note 4)
Receivables:
Accounts
Notes
Interest
Intergovernmental receivables
Cash with fiscal agent (note 4)
Due from other funds (note 13)
Prepaid items
Inventory
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Accrued payroll
Deposits payable
Unearned revenue
Unavailable revenue
Due to other funds (note 13)
Total liabilities
Fund balances:
Nonspendable:
Prepaid items
Inventories
Long -Tenn Loan Receivable
Permanent Endowment
Restricted:
Affordable housing
Hoag
Upper Newport Bay Restoration
Other
Committed:
Contingency Reserve
Other
Assigned:
Unassigned:
Total fund balances
Total liabilities and
and fund balances
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2011
Tide and Other
Submerged Facilities City Hall Civic Center Governmental
General Land Replacement Improvements COP Funds Tafals
$ 54,982,198 $ 6,328,807 $ 20,143,831 $ 75,000 $ - $ 42,757,036 $ 124,286,872
4,735,243 670,691 - - - 854,945 6,260,879
471,250 - - - - - 471,250
768,757 - - - - - 768,757
4,904,193 - - - - 2,638,016 7,542,209
- - - 99,165,945 6,971,983 1,558,788 107,696,716
9,340,106 - 5,481,813 - - - 14,821,919
328,851 - - 1,082,795 - 185,658 1,597,304
231,641 231,641
$ 75,762,239 $ 6,999,498 $ 25,625,644 $ 100,323,740 $ 6,971,983 $ 47,994,443 $ 263,677,547
$ 4,433,493
$ 930,604 $ -
$ 5,147,794
$ 1,500
$ 944,088
$ 11,457,479
4,376,329
18,912 -
-
-
-
4,395,241
1,949,545
160,584 -
-
-
-
2,110,129
1,978,327
- -
-
-
4,205,179
6,183,506
255,700
- -
-
-
2,193,350
2,449,050
4,952,930
5,481,813
2,965,678
13,400,421
12,993,394
1,110,100
10,100,724
5,483,313
10,308,295
39,995,826
328,851
- -
1,082,795
-
185,658
1,597,304
231,641
- -
-
-
-
231,641
471,250
- -
-
-
-
471,250
-
- -
-
-
4,629,781
4,629,781
1,546,573
- -
-
-
-
1,546,573
134,760
- -
-
-
-
134,760
-
139,134 -
-
-
-
139,134
-
- -
-
1,488,670
34,818,038
36,306,708
21,841,467
- -
-
-
-
21,841,467
5,778,435
360,000 25,625,644
89,140,221
-
797,479
121,701,779
11,865,835
5,390,264 -
-
-
243,294
17,499,393
20,570,033
(2;988,102)
17,581,931
62,768,845 5,889,398 25,625,644 90,223,016 1,488.670 37,686,148 223,681,721
S 75.762239 S 6.999,498 S 25,625.544 3 100.323.740 5 6.971.983 S 47.994.443 S 263,677.547
See accompanying notes to basic financial statements
55
CITY OF NEWPORT BEACH
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
June 30, 2011
Fund balances of governmental funds $ 223,681,721
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. 2,119,520,844
Bond issue costs have not been amortized and deferred in the governmental funds
and must be added to the statement of net assets. 1,187,048
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 (126,660,000)
Premium payable (1,084,977)
Note payable (737,854)
Pre - annexation agreement (7,200,000)
CDBG loan (1,788,000)
Purchase Agreement Payable (750,000)
Accrued interest payable for the current portion of interest due on long -term debt
has not been reported in the governmental funds. (4,037,373)
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. 2,449,050
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. 11,576,995
Investment in joint ventures is not a current financial resource and therefore not reported
in the governmental funds. 2,528,033
Internal balance created by the consolidation of internal service fund activities
related to enterprise funds is not reported in the governmental funds. 158,714
Net assets of governmental activities $ 2,218,844,201
See accompanying notes to basic financial statements
M
Revenues
Taxes and assessments:
Property tax
Sales tax
Sales tax in -lieu
Transient occupancy tax
Other taxes
Intergovernmental
Licenses and permits
Charges for services
Fines and forfeitures
Investment income
Net increase in fair value of investments
Property Income
Donations
Other
Total revenues
Expenditures
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service (note 6):
Principal
Interest and fiscal charges
Issuance of debt costs
Total expenditures
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
Year Ended June 30, 2011
Tide and Other
Submerged Facilities City Hall Civic Center Governmental
General Land Replacement Improvements COP Funds Totals
$ 71,630,345
$ -
$ - $ - $ - $ -
$ 71.630,345
18,455,181
-
- - - -
18,455,181
6,284,266
-
- - - -
6,284,266
13,082,451
-
- - - -
13,082,451
8,076,293
-
- - - 455,229
8,531,522
2,306,209
-
- - 1,485,906 7,675,356
11,467,471
3,234,996
1,485,375
- - - 478,615
5;198,986
15,134,529
151,284
- - - -
15,285,813
3,542,294
2,935
- - - -
3,545,229
366,081
38,321
130,335 209,315 11,287 290,253
1,045,592
369,235
42,646
145,046 - - 325,390
882,317
6,798,036
8,740,351
- - - -
15,538,387
172,149
-
- - - 1,617;924
1,70,073
1,283,259
3,808,268
5,091,527
150,735,324
10,460,912
275,381 209,315 1,497,193 14,651,035
177,829,160
14,934,808
489,926
- - - -
15,424,734
57,177,787
17,452,950
- - - 316,436
74,947,173
24,669,717
3,544,245
- - - 3,228,114
31,442,076
7,644,104
-
- - - 786,709
8,430,813
14,215,086
1,446,925
- - - -
15,662,011
2,085,096
1,269,870
- 22,499,977 - 11,790,939
37,645,882
750,000 195,080
- -
3,990,000
1,295,000 6,230,080
211,139 41,982
- 29,356
792,790
104,345 1,179,612
over expenditures
1,219,071
(13980066)
1,219,071
121,687,737 24,440,978
23,748,404
4,782,790
17,521,543 192,181,452
Excess (deficiency) of revenues
over expenditures
29,047,587
(13980066)
275,381
(23,539,089)
(3285597)
(2,870,508)
(14352292)
Other financing sources (uses)
Transfers in (note 14)
331,088
17,435,299
31,300,000
-
4,208,612
5,488,621
58,763,620
Transfers out (note 14)
(48,767,696)
-
(5,949,737)
(3,525,858)
-
(520,329)
(58,763,620)
Issuance of debt
-
-
-
126,660,000
-
-
126,660,000
Issuance of debt premium
1,155,300
1,155,300
Total other financing sources
(uses)
(48,436,608)
17,435,299
25,350,263
124,289,442
4,208,612
4,968,292
127,815,300
Net change in fund balances
(19,389,021)
3,455,233
25,625,644
100,750,353
923,015
2,097,784
113,463,008
Fund balances, beginning
82,157,866
2,434,165
(10,527,337)
565,655
35,588,364
110,218,713
Fund balances, ending
$ 62,768,845
$ 5,889,398
$25,625,644
$90,223,016
$ 1,488,670
$37,686,148
$223,681,721
See accompanying notes to basic financial statements
57
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, 2011
Net change in fund balances - total governmental funds
$ 113,463,008
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.
24,818,449
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.
6,230,080
Issuance of debt costs
1,219,072
Some expenses reported in the Statement of Activities do not require the use of current
financial resources and therefore are not reported as expenditures in the governmental
funds:
Amortization of issuance costs
(32,024)
Issuance of debt
(126,660,000)
Issuance of debt premium
(1,155,300)
Premium on bonds are recognized as revenues in the period received, however, in the
Statement of Net Assets, it is amortized over the life of the bond.
70,323
Accrued Interest for debt service. This is the net change in accrued interest for the current period. (3,937,569)
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. 633,376
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. (828,630)
Investment in joint ventures creates an explicit, measurable equity interest reported only
in the statement of activities. (250,410)
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. 75,184
Change in net assets of governmental activities $ 13,645.559
See accompanying notes to basic financial statements
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2011
See accompanying notes to basic financial statements
59
Variance with
Final Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Taxes and assessments:
Property
$ 70,642,839
$ 70,642,839
$ 71,630,345
$ 987,506
Sales
17,374,734
17,374,734
18,455,181
1,080,447
Sales tax in -lieu
6,392,273
6,392,273
6,284,266
(108,007)
Transient occupancy
11,555,034
11,555,034
13,082,451
1,527,417
Othertaxes
8,410,800
8,410,800
8,076,293
(334,507)
Intergovernmental
1,897,825
2,199,322
2,306,209
106,887
Licenses and permits
2,663,975
2,663,975
3,234,996
571,021
Charges for services
13,949,718
14,184,905
15,134,529
949,624
Fines and forfeitures
3,651,000
3,651,000
3,542,294
(108,706)
Investment income
1,050,000
1,050,000
366,081
(683,919)
Net increase in fair value of investments
-
-
369,235
369,235
Property income
8,163,907
7,289,346
6,798,036
(491,310)
Donations
50,000
264,927
172,149
(92,778)
Other
383,050
827,420
1,283,259
455,839
Total revenues
146,185,155
146,506,575
150,735,324
4,228,749
Expenditures
General government:
City council
1,053,886
1,157,154
1,138,753
18,401
City clerk
493,978
501,377
453,521
47,856
City attorney
2,358,728
2,657,045
2,724,204
1,430,468
City manager
1,792,348
1,457,765
1,226,577
(5,768,882)
Administrative services
7,839,781
7,691,257
7,226,647
464,610
Human resources
2,326,746
2,358,431
2,165,106
193,325
Total General government
15,865,467
15,823,029
14,934,808
(3,614,222)
Public safety:
Police
42,751,592
41,000,126
38,773,831
2,226,295
Fire
34,164,977
19,780,823
18,403,956
1,376,867
Total Public safety
76,916,569
60,780,949
57,177,787
3,603,162
Public works:
General services
22,117,466
19,715,246
18,178,721
1,536,525
Public works
5,714,119
5,732,987
5,320,926
412,061
Utilities
1,336,290
1,346,771
1,170,070
176,701
Total Public works
29,167,875
26,795,004
24,669,717
2,125,287
See accompanying notes to basic financial statements
59
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
(continued)
Variance with
Final Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Community development
Planning
3,303,298
3,286,618
2,870,470
416,148
Building
4,237,602
4,356,217
4,256,871
99,346
Code and Water Quality Enforcement
667,205
669,219
516,763
152,456
Total Community development
8,208,105
8,312,054
7,644,104
667,950
Community services:
Parking Operations
Library Services
Recreation and senior services
Total Community services
Capital outlay
Debt service:
Principal
Interest and Fiscal Charges
Total Debt Service
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 balance
Fund balance, beginning
Fund balance, ending
-
2,830
410,695
(407,865)
6,630,608
6,946,994
6,568,089
378,905
7,646,569
7,823,449
7,236,302
587,147
14,277,177
14,773,273
14,215,086
558,187
3,414,035
3,675,468
2,085,096
1,590,372
750,000
750,000
750,000
-
30,000
30,000
211,139
(181,139)
780,000
780,000
961,139
(181,139)
148,629,228
130,939,777
121,687,737
9,252,040
(2,444,073)
15,566,798
29,047,587
13,480,789
331,088 331,088
(33,428,000) (54,493,299) (48,767,696) 5,725,603
(33,428,000) (54,493,299) (48,436,608) 6,056,691
(35,872,073) (38,926,501) (19,389,021) 19,537,480
82,157,866 82,157,866 82,157,866 -
$ 46,285,793 $ 43,231,365 $ 62,768,845 $ 19,537,480
See accompanying notes to basic financial statements
Mf
CITY OF NEWPORT BEACH
Tide and Submerged Land
Budgetary Comparison Statement
For the Year Ended June 30, 2011
Total revenues
Expenditures
General government
Public safety
Public works
Community services
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
10,014,252 11,108,785 10,460,912 (647,873)
489,926
- 17,452,950
838,620 3,707,463
2,235,438 1,900,842
489,926
17,452,950 -
3,544,245 163,218
1,446,925 453,917
6,162,270
6,868,084
1,269,870 5,598,214
195,080
Variance with
195,080 -
41,982
41,982
41,982 -
Final Budget
30,656,327
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues
Licenses and permits
1,370,000
1,370,000
1,485,375
115,375
Charges for services
62,000
62,000
151,284
89,284
Fines and forfeitures
500
500
2,935
2,435
Investment income
75,000
80,967
38,321
(42,646)
Net increase in fair value of investments
-
-
42,646
42,646
Property income
8,506,752
9,595,318
8,740,351
(854,967)
Total revenues
Expenditures
General government
Public safety
Public works
Community services
Community development
Capital outlay
Debt service:
Principal
Interest and fiscal charges
Total expenditures
10,014,252 11,108,785 10,460,912 (647,873)
489,926
- 17,452,950
838,620 3,707,463
2,235,438 1,900,842
489,926
17,452,950 -
3,544,245 163,218
1,446,925 453,917
6,162,270
6,868,084
1,269,870 5,598,214
195,080
195,080
195,080 -
41,982
41,982
41,982 -
9,473,390
30,656,327
24,440,978 6,215,349
Excess (deficiency) of revenues
over expenditures 540,862 (19,547,542) (13,980,066) 5,567,476
Other financing sources (uses)
Transfers in
Transfers out
Total other financing
sources (uses)
Net change in fund balance
Fund balance, beginning
17,435,299 17,435,299
(2,051,460)
(2,051,460) 17,435,299 17,435,299
(1,510,598) (2,112,243) 3,455,233 5,567,476
2,434,165 2,434,165 2,434,165
Fund balance, ending $ 923,567 $ 321,922 $ 5,889,398 $ 5,567,476
61
This page left blank intentionally.
62
FINANCIAL
Fur
FIN,
M
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.
M
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Net Assets
June 30, 2011
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 (note 13)
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 - current
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
(158,714)
$ 118,419,447
See accompanying notes to basic financial statements
M
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
$ 6,346,050
$ 1,648,258
$ 7,994,308
$ 42,431,407
4,486,753
676,205
5,162,958
1,407,654
-
-
-
304,986
-
-
-
1,257,738
10,832,803
2,324,463
13,157,266
45,401,785
2,016,450
-
2,016,450
-
688,396
-
688,396
-
187,432
-
187,432
23,482,455
115,516,129
42,625,388
158,141,517
-
441,280
2,390,678
2,831,958
-
(40,674,927)
(14,214,367)
(54,889,294)
(16,545,410)
78,174,760
30,801,699
108,976,459
6,937,045
78,174,760
30,801,699
108,976,459
6,937,045
89,007,563
33,126,162
122,133,725
52,338,830
2,670,810
640,368
3,311,178
447,818
135,296
49,934
185,230
43,604
59,132
24
59,156
-
-
-
-
1,421,498
-
-
-
3,284,036
-
-
-
1,079,277
-
-
-
1,969,425
960,396
2,865,238
690,326
3,555,564
9,206,054
-
-
-
11,335,964
-
-
-
2,878,854
-
-
-
6,936,171
-
-
-
1,920,792
8,484,000
31,555,781
2,865,238
690,326
3,555,564
40,761,835
78,174,760
30,801,699
108,976,459
6,937,045
7,967,565
1,634,137
9,601,702
4,639,950
$ 86,142,325
$32,435,836
$118,578,161
$ 11,576,995
(158,714)
$ 118,419,447
See accompanying notes to basic financial statements
M
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Revenues,
Expenses and Changes in Fund Net Assets
For the Year Ended June 30, 2011
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
Early retirement incentive program
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
(Loss) on removal of capital assets
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
$ 19,950,208 $
3,323,017
147,019 25,416
20,097,227 3,348,433
$ 19,950,208
- 16,177,529
3,323,017 -
- 1,298,064
- 272,746
172,435 285,237
23,445,660 18,033,576
8,171,227
-
8,171,227
-
3,753,693
1,418,968
5,172,661
1,366,397
1,547,342
565,602
2,113,944
1,820,267
1,820,194
333,651
2,153,845
22,749
1,864,816
714,288
2,579,104
358,010
1,077,645
791,255
1,868,900
-
-
-
-
467,924
-
-
-
5,229,876
-
-
-
1,872,592
-
-
-
2,155,738
-
-
-
392,147
-
-
-
2,128,000
-
-
-
2,502,000
1,485,609
122,485
1,608,094
1,220,261
19,720,526
3,947,249
23,667,775
19,535,961
376,701
(598,816)
(222,115)
(1,502,385)
34,488
18,508
52,996
299,166
38,380
20,597
58,977
332,935
(18,986)
-
(18,986)
41,654
53,882
39,105
92,987
673,755
430,583
(559,711)
(129,128)
(828,630)
-
-
-
1,298,405
-
-
-
(1,298,405)
430,583
(559,711)
(129,128)
(828,630)
85,711,742 32,995,547
$ 86,142,325 $ 32,435,836
(75,184)
$ (204,312)
See accompanying notes to basic financial statements
•i
12,405,625
$ 11,576,995
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Cash Flows
For the Year ended June 30, 2011
See accompanying notes to basic financial statements
67
Enterprise Funds
Governmental
Total
Activities
Enterprise
Internal Service
Water
Wastewater
Funds
Funds
Cash Flows from operating activities:
Cash received from customers or user departments
$ 19,238,164
$ 3,306,964
$ 22,545,128
$ 17,690,137
Cash payments to employees for services
(3,730,256)
(1,407,911)
(5,138,167)
(7,504,994)
Cash payments to suppliers for goods and services
(11,979,234)
(1,352,295)
(13,331,529)
(7,732,387)
Cash received (payments made) for other operating activities
(1,338,590)
(97,069)
(1,435,659)
366,907
Net cash provided by operating activities
2,190,084
449,689
2,639,773
2,819,663
Cash flows from noncapital financing activities:
Cash received from other funds
-
-
-
1,899,508
Cash paid to other funds
(1,298,405)
Net cash provided by noncapital financing activities
601,103
Cash flows from capital related financing activities:
Acquisition of capital assets
(496,855)
(2,162,687)
(2,659,542)
(2,564,020)
Net cash (used) for capital related financing activities
(496,855)
(2,162,687)
(2,659,542)
(2,365,554)
Cash flows from investing activities:
Interest on investments
72,868
39,105
111,973
632,101
Net cash provided by investing activities
72,868
39,105
111,973
632,101
Net increase (decrease) in rash and
cash equivalents
1,766,097
(1,673,893)
92,204
1,687,313
Cash and cash equivalents, beginning
4,579,953
3,322,151
7,902,104
40,744,094
Cash and cash equivalents, ending
$ 6,346,050
$ 1,648,258
$ 7,994,308
$ 42,431,407
Reconciliation of cash equivalents to the statement of net assets
Cash and investments reported on statement of net assets
$ 6,346,050
$ 1,648,258
$ 7,994,308
42,431,407
Cash and cash equivalents
$ 6,346,050
$ 1,648,258
$ 7,994,308
$ 42,431,407
Reconciliation of operating income to net cash
used for operating activities:
Operating income (loss)
$ 376,701
$ (598,816)
$ (222,115)
$ (1,502,385)
Adjustments to reconcile operating income
to net cash used for operating activities:
Depreciation
1,547,342
566,602
2,113,944
1,820,267
(Increase) in accounts receivable
(707,921)
(16,053)
(723,974)
(512,248)
(increase) in inventories
-
-
-
(49,556)
(Increase) in prepaid items
-
-
-
(886,408)
Increase in accounts payable and accrued payroll
978,085
497,956
1,476,041
160,785
(Decrease) in deposits payable
(4,123)
-
(4,123)
-
Increase in workers' compensation
-
-
-
2,298,000
Increase in general liability
-
-
-
137,740
(Decrease) in compensated absences
-
-
-
(90,283)
(Decrease) in early retirement incentive program
-
-
-
(568,249)
Increase in net OPEB obligation
2,012,000
Total adjustments
1,813,383
1,048,505
2,861,888
4,322,048
Net cash provided for operating activities
$ 2,190,084
$ 449,689
$ 2,639,773
$ 2,819,663
Non -cash investing capital and financing activities:
Net increase in fair value of investments
$ 38,380
$ 20,597
$ 58,977
$ 332,935
Gain (loss) on disposal of capital assets
(18,986)
(18,986)
41,654
Total of non -cash activities
$ 19,394
$ 20,597
$ 39,991
$ 374,589
See accompanying notes to basic financial statements
67
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M
FINANCIAL S"
FUND
FINANL''I
F[ou[
M.,
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.
70
CITY OF NEWPORT BEACH
Agency Funds
Statement of Fiduciary Assets and Liabilities
June 30, 2011
Assets Totals
Cash and investments (note 4)
$ 5,389,881
Cash with fiscal agent (note 4)
4,397,355
Prepaid items
950
Intergovernmental receivable
69,396
Total assets
$ 9,857,582
Liabilities
Due to bondholders
$ 7,406,633
Due to others
432,432
Due to ILJAOC
2,018,517
Total liabilities
$ 9,857,582
See accompanying notes to basic financial statements
71
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72
FINANCIAL S
73
NOTES
FINANE
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
(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. The City operates under a Council- Manager
form of government and provides the following services: public safety (police,
fire, and marine), highway and streets, cultural and recreation, public
improvements, planning and zoning, utilities, and general administrative services.
The financial statements present the financial activity of the City of Newport
Beach (the primary government) and its component unit. The component unit
discussed below is included in the City's reporting entity because of the
significance of its operational or financial relationship with the City. This entity is
legally separate from the City. However, the City of Newport Beach's elected
officials have continuing full or partial accountability for fiscal matters of the
component unit. The financial reporting entity consists of: (1) the City,
(2) organizations for which the City is financially accountable, and
(3) organizations for which the nature and significance of their relationship with
the City are such that exclusion would cause the City's financial statements to be
misleading or incomplete.
An organization is fiscally dependent on the primary government if it is unable to
adopt its budget, levy taxes or set rates or charges, or issue bonded debt without
approval by the primary government. In a blended presentation, a component
unit's balances and transactions are reported in a manner similar to the balances
and transactions of the City. Component units are presented on a blended basis
when the component unit's governing body is substantially the same as the City's
or the component unit provides services almost entirely to the City.
Blended Component Unit
The financial statements of the City of Newport Beach include the financial
activities of the Newport Beach Public Facilities Corporation (the "Corporation ").
The Corporation was formed on March 9, 1992, for the purpose of assisting the
City of Newport Beach in the financing of public improvements, including a public
library and most recently the new civic center project. The Corporation is
75
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
governed by a Board of Directors which is comprised of the seven City Council
Members 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
Government -wide Financial Statements
Government -wide financial statements display information about the reporting
government as a whole, except for its fiduciary activities. These statements
include separate columns for the governmental and business -type activities of
the primary government (including its blended component units). The City of
Newport Beach has no discretely presented component units. Eliminations have
been made in the Statement of Activities so that certain allocated expenses are
recorded only once (by the function to which they were allocated). However,
general government expenses have not been allocated as indirect expenses to
the various functions of the City.
Government -wide financial statements are presented using the economic
resources measurement focus and the accrual basis of accounting. Under the
economic resources measurement focus, all (both current and long -term)
economic resources and obligations of the reporting government are reported in
the government -wide financial statements. Basis of accounting refers to when
revenues and expenses are recognized in the accounts and reported in the
financial statements. Under the accrual basis of accounting, revenues, expenses,
gains, losses, assets, and liabilities resulting from exchange and exchange -like
transactions are recognized when the exchange takes place.
Program revenues include charges for services, special assessments, and
payments made by parties outside of the reporting government's citizenry if that
money is restricted to a particular program. Program revenues are netted with
program expenses in the statement of activities to present the net cost of each
program.
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
V
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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
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
77
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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.
Revenues, expenses, gains, losses, assets, and liabilities resulting from non -
exchange transaction are recognized in accordance with the requirements of
GASB Statement No. 33.
Because of their spending measurement focus, expenditure recognition for
governmental fund types excludes amounts represented by non - current liabilities.
Since they do not affect net current assets, such long -term amounts are not
recognized as governmental fund type expenditures or fund liabilities.
Amounts expended to acquire capital assets are recorded as expenditures in the
year that resources were expended, rather than as fund assets. The proceeds of
long -term debt are recorded as other financing sources rather than as a fund
liability. Amounts paid to reduce long -term indebtedness are reported as fund
expenditures.
When both restricted and unrestricted resources are combined in a fund,
expenses are considered to be paid first from restricted resources, and then from
unrestricted resources.
ELI
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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 Restricted Fund Balance in the fund level financial statements. The
endowment principal is reported as Nonspendable 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. The authority for spending investment earnings for scholarships resides
with the City Manager and for periodic maintenance dredging in the Newport Bay
resides with the City Council.
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.
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.
79
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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.
Special Revenue Fund
Tide and Submerged Land
The Tide and Submerged Lan d
expenditures related to the
beaches and marinas.
Capital Project Funds
Fund is used to account for all revenues and
operation of the City's tidelands, including
Facilities Replacement Fund
The Facilities Replacement Fund is used to account for the receipt and
expenditure of funds for the replacement of facilities.
City Hall Improvements Fund
The City Hall Improvements Fund is used to account for the design and
construction of a new Civic Center Complex.
Debt Service Fund
Civic Center COP
The Civic Center COP Fund is used to account for debt service transactions
related to the Certificates of Participation issued to finance the construction of
the 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
L-A
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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.
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 $68,098,793 at June 30, 2011. 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
81
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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.
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, 2011, the balance of this account was
$7,542,209.
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. 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:
E-M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Structures
30 -75 years
Equipment
3 -15 years
Infrastructure
20 -75 years
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.
j. Property Taxes
The assessment, levy, and collection of property taxes are the responsibility of
the County of Orange. The City records property taxes as revenue when
received from the County, except at year -end, when property taxes received
within 60 days are accrued as revenue. Property taxes are assessed and
collected each fiscal year according to the following property tax calendar:
Lien date
Jan 1
Levy date
July 1
Due dates
November 1 — 1st installment
March 1 — 2nd installment
Collection dates
December 10 — 1st installment
April 10 — 2 "d installment
k. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused
vacation and limited amounts of earned but unused sick leave benefits, which will
be paid to employees upon separation from City service. Beginning in fiscal year
1990, the City adopted a general leave plan to replace the traditional vacation
and sick leave plan. The City uses a general leave plan which permits a
maximum of three years' accrual for every employee, above which the excess is
paid out as current compensation. All employees hired prior to January 1, 1990,
were given the option of remaining in the traditional vacation and sick leave plan
or enrolling in the general leave plan. All employees hired on or after January 1,
1990, are automatically enrolled in the general leave plan. Compensated
83
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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.
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.
Fund Balance Classifications
Due to the implementation of GASB No. 54, governmental fund balance is made
up of the different classifications and the following provides explanations as to
the nature and purpose of each classification:
Nonspendable fund balance
That portion of fund balance that typically includes amounts that are either (a) not
in a spendable form such as inventories and prepaid items, or (b) legally or
contractually required to be maintained intact such as endowments.
Restricted fund balance
The portion of fund balance that reflects constraints placed on the use of
resources (other than nonspendable items) that are either (a) externally imposed
by creditors, grantors, contributors, or laws or regulations of other governments;
or (b) imposed by law through constitutional provisions or enabling legislation.
E3f
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Committed fund balance
That portion of a fund balance that includes amounts that can only be used for
specific purposes pursuant to constraints imposed by formal action by the
government's highest level of decision making authority, and remain binding
unless removed in the same manner. The City Council has authority to establish,
modify, or rescind a fund balance commitment.
Assigned fund balance
That portion of a fund balance that includes amounts that are constrained by the
City's intent to be used for specific purposes and do not meet the criteria to be
classified as restricted or committed. Constraints imposed on the use of assigned
amounts are more easily removed or modified than those imposed on amounts
classified as committed. The City Manager or designee has the authority to
establish, modify, or rescind a fund balance assignment.
Unassigned fund balance
That residual portion of a fund balance that is in spendable form and is not
otherwise restricted, committed or assigned. These amounts are available to be
used for any purpose.
In the governmental fund statements, when expenditures are incurred for
purposes for which both restricted and unrestricted (committed, assigned, or
unassigned) fund balances are available, the City uses the most restrictive funds
first. The City would use the appropriate funds in the following order: restricted,
committed, assigned, and finally unassigned amounts.
In the government -wide statements, when expenditures are incurred for
purposes for which both restricted and unrestricted net assets are available, the
City applied restricted assets first.
o. Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of certain assets and liabilities, disclosure of contingent assets and
liabilities, and the related amounts of revenues and expenditures. Actual results
could differ from those estimates. Management believes that the estimates are
reasonable.
(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 $223,681,721 differs
from "net assets" of governmental activities $2,218,844,201 reported in the
U�L
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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
$2,262,661,514
Accumulated depreciation
(143,140,670)
Total capital assets, net*
$2.119.520.844
*Amount excludes net capital assets of $6,937,045 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, 2011 were:
Certificates of participation
$126,660,000
Bond Premium
1,084,977
Note payable
737,854
Pre - annexation agreement
7,200,000
CDBG Loan
1,788,000
Purchase Agreement Payable
750.000
Total
$138.220.831
Deferred Charges
Deferred Charges represent the unamortized portion of bond issuance costs and
reported only in the statement of net assets.
Deferred charges 11,187 048
[%
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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 $4.037,373
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 $2 528 033
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 $2.449.050
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 $11.576.995
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.
87
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Explanation of Differences betweeen Government Funds
Balance Sheet and the Statement of Net Assets
Liabilities and Fund Balances / Net Assets
Liabilities:
Total
Capital
Accounts payable
Long -term
$ -
Governmental
Related
Accumulated
Debt
Assets
Funds
Items
Depreciation
Transactions
Claims payable
-
Cash and investments
$ 124,286,872
$ -
$ -
$ -
Receivables:
- - -
Early retirement incentive program
-
- -
Accounts
6,260,879
-
-
-
Notes
471,250
-
-
-
Interest
768,757
-
-
-
Intergovernmental receivables
7,542,209
-
-
-
Cash with fiscal agent
107,696,716
-
-
-
Interfund balances
14,821,919
-
-
-
Investmentinjoint venture
-
-
-
-
Prepaid items
1,597,304
-
-
-
Inventory
231,641
-
-
-
Capital assets
-
2,262,661,514
-
-
Deferred charges
-
-
-
1,187,048
Accumulated depreciation
-
-
(143,140,670)
-
Total assets
$ 263,677,547
$ 2,262,661,514
$ (143,140,670)
$ 1,187,048
Liabilities and Fund Balances / Net Assets
Liabilities:
Accounts payable
$ 11,457,479
$ -
Accrued payroll
4,395,241
- - -
Accrued interest payable
-
- - -
Deposits payable
2,110,129
- - -
Claims payable
-
- - -
Workers' compensation payable
-
- - -
Compensated absences payable
-
- - -
Early retirement incentive program
-
- -
Unearned revenue
6,183,506
- - -
Unavailable revenue
2,449,050
- - -
Due to other funds
13,400,421
- - -
Long -term liabilities
-
- - 138,220,831
Total liabilities
39,995,826
- - 138,220,831
Fund balances / net assets
223,681,721
2,262,661,514 (143,140,670) (137,033,783)
Total liabilities and
and fund balances / net assets $ 263,677,547 $ 2,262,661,514 $ (143,140,670) $ 1,187,048
M,
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Investment
Internal
Reclassifications
-
Interest in Joint
Unavailable Service
and
Statement of
Payable Venture
Revenue Funds
Eliminations
Net Assets
$ - 5 -
$ - $ 42,431,407
$ -
$ 166,718,279
- -
- 1,407,654
-
7,668,533
- -
- -
-
471,250
- -
- -
-
768,757
- -
- -
-
7,542,209
- -
- -
-
107,696,716
- -
- -
(14,663,205)
158,714
- 2,528,033
- -
-
2,528,033
- -
- 1,257,738
-
2,855,042
- -
- 304,986
-
536,627
- -
- 23,482,455
-
2,286,143,969
- -
- -
-
1,187,048
- -
- (16,545,410)
-
(159,686,080)
$ - S 2,528,033
$ - $ 52,338,830
$ (14,663,205)
$ 2,424,589,097
$ -
$ - $ -
$ 447,818 $
-
$ 11,905,297
-
- -
43,604
-
4,438,845
4,037,373
- -
-
-
4,037,373
-
- -
-
-
2,110,129
-
- -
1,079,277
-
1,079,277
-
- -
3,284,036
-
3,284,036
-
- -
1,969,425
-
1,969,425
- -
960,396
-
960,396
-
- -
-
-
6,183,506
-
- (2,449,050)
-
-
-
-
- -
1,421,498
(14,821,919)
-
-
- -
31,555,781
-
169,776,612
4,037,373
- (2,449,050)
40,761,835
(14,821,919)
205,744,896
(4,037,373)
2,528,033 2,449,050
11,576,995
158,714
2,218,844,201
$ -
$ 2,528,033 $ -
$ 52,338,830 $
(14,663,205)
$ 2,424,589,097
M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
b. Explanation of Differences between Enterprise Funds and Government -
wide Statement of Net Assets
Total net assets of the City's Enterprise Funds of $118,578,161 differs from net
assets of the business -type activities of $118,419,447 reported in the
government -wide statement of net assets. The difference, ($158,714), 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
Assets
Cash and investments
Receivables:
Accounts
Interfund balances
Capital assets, net
Total assets
Liabilities and Fund Balances / Net Assets
Liabilities:
Accounts payable
Accrued payroll
Deposits payable
Total liabilities
Total Internal Government wide
Enterprise Service Statement of
Funds Funds Net Assets
$ 7,994,308 $
5,162,958
108,976,459
a. -
5,162,958
(158,714) (158,714)
- 108,976,459
$ 122,133,725 _L( $ 121,975,011
$ 3,311,178 $ - $ 3,311,178
185,230 - 185,230
59,156 - 59,156
3,555,564
3,555,564
Net Assets
Invested in capital assets, net of related debt $ 108,976,459 - $ 108,976,459
Unrestricted 9,601,702 (158,714) 9,442,988
$ 118,578,161 $ (158,714) $ 118,419,447
bl
C.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Explanation of Differences between Governmental Fund Operating
Statements and the Statement of Activities
The "net change in fund balances" for governmental funds $113463008 differs
, ,
from the "change in net assets' for governmental activities $13,645,559 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
$ 38,112,215
Transfers out of WIP
(1,447,730)
Capital Outlays expended
36,664,485
Internal Service funds -asset additions
(2,564,020)
Governmental funds - asset additions
(3,478,329)
Net change in capital related items
$ 30,622,136
Depredation expense
($10,004,900)
Deletions in IS accumulated depreciation
1,820,267
Deletions in Governmental funds accumulated depreciation
2,380,946
Net change in accumulated depreciation
$ (5,803,687)
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.
91
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Certificates of Participation
$ 3,990,000
Note payable
195,080
Pre - annexation agreement
1,200,000
CDBG loan
95,000
Purchase Agreement Payable
750,000
Bond Issuance Costs
1,187,048
Civic Center Certificates of Participation
(126,660,000)
Bond Premium
(1,084,977)
Total proceeds
($120.327.849)
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 $3 937 569
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 250 410
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 W33,3 7
M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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 1828 6-30
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.
93
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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
Gain on sale of capital assets
Other
Total revenues
Expenditures:
Current:
General government
Public safety
Public works
Community development
Community services
Capital outlay
Debt service:
Principal retirement
Interest and fiscal charges
Issuance of debt costs
Total expenses
Other financing sources (uses):
Transfers in
Transfers out
Issuance of debt
Issuance of debt premium
Total other financing sources
(uses)
Net change in fund balances /
net assets
Total Governmental Capital Related
Funds Items
$ 117,983,765 $
11,467,471
5,198,986
15,285,813
3,545,229
1,045,592
882,317
15,538,387
1,790,073
5,091,527
177,829,160
15,424,734
74,947,173 3,549,555
31,442,076 2,492,794
8,430,813 -
15,662,011 -
37,645,882 (36,664,485)
6,230,080
1,179,612
1,219,071
Accumulated Long -term Debt
Depreciation Transactions
280,549
(1,567,106)
5,709,930
97,780
1,282,534
(6,230,080)
(38,300)
(1,219,071)
192,181,452 (30,622,136) 5,803,687 (7,487,451)
58,763,620
(58,763,620)
126,660,000
1,155,300
127,815,300
113,463,008 30,622,136
(126,660,000)
(1,155,300)
(127,815,300)
(5,803,687) (120,327,849)
Fund balances / net assets beginning of year 110,218,713 2,232,039,378 (137,336,983) (16,705,934)
Fund balances / net assets end of year $ 223,681,721 $ 2,262,661,514 $ (143,140,670) _L_(
IM"
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Accrued
Investment in
Unavailable
Internal
Reclassifications
Statement of
Interest
Joint Venture
Revenue
Service Fund
and Eliminations
Activities
$ -
$ -
$ -
$ -
$ -
$ 117,983,765
-
-
633,376
-
-
12,100,847
-
-
-
-
-
5,198,986
-
-
-
-
75,184
15,360,997
-
-
-
-
-
3,545,229
-
-
-
299,166
-
1,344,758
-
-
-
332,935
-
1,215,252
-
-
-
-
-
15,538,387
-
(250,410)
-
-
-
(250,410)
-
-
-
-
-
1,790,073
-
-
-
41,654
-
41,654
5,091,527
(250,410)
633,376
673,755
75,184
178,961,065
-
-
-
48,380
103,734
15,857,397
-
-
-
1,197,708
676
78,128,006
-
-
-
(133,623)
830,146
40,341,323
-
-
-
106,208
2,724
8,637,525
-
-
-
283,712
44,117
17,272,374
-
-
-
-
(981,397)
-
3,937,569
-
-
-
-
5,078,881
3,937,569
-
-
1,502,385
-
165,315,506
1,298,405 (60,062,025)
(1,298,405) 60,062,025
(3,937,569) (250,410) 633,376 (828,630) 75,184 13,645,559
(99,804) 2,778,443 1,815,674 12,405,625 83,530 2,205,198,642
$ (4,037,373) $ 2,528,033 $ 2,449,050 $ 11,576,995 $ 158,714 $ 2,218,844,201
95
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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 ($129,128) differs from
the change in net assets of the business -type activities ($204,312) reported in
the government -wide statement of activities. The difference, ($75,184), 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 $ 19,950,208 $ - $ 19,950,208
Sewer service and connection fees 3,323,017 - 3,323,017
Other 172,435 - 172,435
Total operating revenues 23,445,660 - 23,445,660
Operating expenses
Purchase of Water
8,171,227
-
8,171,227
Salaries and wages
5,172,661
-
5,172,661
Depreciation
2,113,944
-
2,113,944
Professional Services
2,153,845
-
2,153,845
Maintenance and supplies
2,579,104
75,184
2,654,288
System maintenance
1,868,900
-
1,868,900
Other
1,608,094
-
1,608,094
Total operating expenses
23,667,775
75,184
23,742,959
Operating income
(222,115)
(75,184)
(297,299)
Nonoperating revenues (expenses):
Investment income
52,996
-
52,996
Net decrease in fair value of investments
58,977
-
58,977
Loss on removal of capital assets
(18,986)
-
(18,986)
Other
Total nonoperating revenues (expenses)
92,987
-
92,987
Change in net assets
(129,128)
(75,184)
(204,312)
Net assets, beginning of year
118,707,289
(83,530)
118,623,759
Net assets, end of year $
118,578,161
$ (158,714) $
118,419,447
34
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
(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 committed or
restricted 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.
97
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Expenditures exceeded appropriations in the following governmental funds.
Appropriations
Building Excise Tax $ 54,600
Supplemental Law Enforcement 80,150
Prop 1 B Transportation 308,169
The following funds reported deficit fund balances:
Special Revenue Funds
OTS DUI Grant
Community Development Block Grant
Capital Proiects
Expenditures Variance
$ 58,137 $ (3,537)
100,719 (20,569)
385,515 (77,346)
$ 380
$ 41,369
Marine Science Center
$
125,421
Misc SAH Projects
$
48,383
Marina Park
$
1,525,415
Sunset Ridge Park
$
1,214,780
Police Facility
$
2,175
Lifeguard Headquarters
$
30,179
Internal Service Funds
Compensated Absences
Retiree Insurance
$ 9,503,689
$ 8,353,793
The City's intentions are to eliminate deficit fund balances through future grant funding,
other future revenue sources, or interfund transfers.
IM-1
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
(4) Cash and Investments
Cash and investments as of June 30, 2011, 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
$ 174,712,587
107,696,716
5,389,881
4,397,355
$ 292,196, 539
Cash and investments as of June 30, 2011, consist of the following:
Cash on hand $ 25,921
Deposits with financial institutions 9,687,319
1 nvestments 282,483,299
Total cash and investments $ 292,196,539
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.
M
Maximum
Maximum
Maximum
Percentage
Investment
Authorized Investment Type
Maturity
of Portfolio'
in One Issuer
Local Agency Bonds
3 years
15%
5%
U.S. Treasury Obligations
5 years
None
None
U.S. Agency Securities
5 years
None
None
Banker's Acceptances
180 days
20%
5%
Commercial Paper
270 days
25%
5%
Negotiable Certificates of Deposit
2 years
30%
5%
M
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Repurchase Agreements
Reverse Repurchase Agreements
Medium -Term Notes
Mutual Funds
Money Market Mutual Funds
Mortgage Pass - Through Securities
County Pooled Investment Funds
Local Agency Investment Fund (LAIF)
JPA Pools (other investment pools)
30 days
10%
5%
30 days
20%
5%
4 years
30%
5%
N/A
20%
None
N/A
20%
None
5 years
20%
5%
N/A
5%
None
N/A
None
None
N/A
None
None
* Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
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.
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
5 years
30%
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
100
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the
fair value of an investment. Generally, the longer the maturity of an investment, the
greater the sensitivity of its fair value to changes in market interest rates. One of the
ways that the City manages its exposure to interest rate risk is by purchasing a
combination of shorter term and longer term investments and by timing cash flows from
maturities so that a portion of the portfolio is maturing or coming close to maturity evenly
over time as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the City's investments (including
investments held by bond trustee) to market interest rate fluctuations is provided by the
following table that shows the distribution of the City's investments by maturity:
Investment Tvoe
Money Market Funds
U.S. Treasury Notes
U.S. Agencies
Corporate Notes
Certificate of Deposit
Commercial Paper
LAIF
Municipal Bond
Cash with Fiscal Agent:
Money Market Funds
U.S. Treasury Notes
U.S. Agencies
Corporate Notes
LAIF
Investment Agreements
Total
Investment Maturities (In Years)
' Fair Value Less than 1 1 1 to 3 1 3 to 5 More than 5 Total
$ 3,400,287 $
3,400,287 $
- $
- $
- $ 3,400,287
20,725,523
8,553,863
9,813,064
2,358,595
- 20,725,523
91,536,911
16,197,247
64,091,378
11,248,285
- 91,536,911
34,919,608
6,214,944
27,566,457
1,138,207
- 34,919,608
1,500,236
1,500,236
-
-
- 1,500,236
574,748
574,748
-
-
- 574,748
17,020,953
17,020,953
-
-
- 17,020,953
710,960
-
710,960
-
- 710,960
15,564,815
15,564,815
- - -
15,564,815
12,051,992
10,058,594
1,993,398 - -
12,051,992
30,687,993
10,149,150
20,538,843 - -
30,687,993
1,530,855
1,530,855
- - -
1,530,855
51,077,840
51,077,840
- - -
51,077,840
1,180,576
1,180,576
1,180,576
$ 282,483,299 $
141,843,532 $
124,714,102 $ 14,745,088 $ 1,180,576 $
282,483,299
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, 2011, the City did not have any investments (including investments held
by fiscal agent) whose fair values were highly sensitive to interest rate fluctuations.
101
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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.
Minimum Exempt
Legal Fmm Not
Fair Value Ratter, Glaclasure AAA AA, AA AA- A+ A A- AH Rated
mMantTwe
Investment Type
Reported Amount
FFCB
Federal agency securities
$
Mind, Merkel Funds
3,400287
AAA
$ - $ 3,309,703 $
- $ - $ - $ - $ - $ - $
- $ 90584
U. S. Treasury Notes'
20,725.523
N/A
- 20]25.523
- - - - -
- -
USA9enniea'
91536911
WA
- 0,053.271
- - - - 1083,641 -
- -
CorporeteNOtes
34,919,600
A
- 9,281,124
5.413,876 3,013,898 3.434,367 7,P6.053 5.134A66 865,824
- -
Ce,4ficateefDeposit
1,500,238
A-1
700,000
- - 800,236 - - -
- -
Oommerciel Paper
574,748
A-1
-
- - - - - -
574,748 -
LOralA9encYlnvk9UentFund
17,020,953
N/A
17,02,953
Municipal Banda
710,960
AA
-
- 710880
Cash with Fiscal Agent
Money Market Funs
15,584,815
AAA
- 15,564,815
- - - - - -
- -
US_TreasuryNWes
120511992
N/A
- 1$0$1992
- - - - - -
- -
U.8.A9enaers
30,667,893
WA
- 30,687,993
- - - - - -
- -
Fun, —e N.
1,530.855
A
- 1,53,855
- - - - - -
- -
LosalAgencylnvestmenlFUnd
51,0P,840
N/A
- -
- - - - - -
- 51,0P,840
Investment Agreements
1,1W,576
N/A
- -
- - - 1,100,576 - -
- -
$ 282.483.299
$ 700.000 $ 10,205,216 $
5,413,876 $ 3,724,858 $ 4.234.603 $ 8,956,629 $ 6.618107 $ 865,824 S
574,740 $ 60.189,377
U.S. Credit RaOng Downgrade'
Buhseguent to June 3, 2011, Standard & Pw(s (S&P) downgraded United States Government Sponsored Agency Sacuntes and Treasury Notes (mm AAA W AA+
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
$
17,070,093
FHLB
Federal agency securities
$
28,414,402
FHLMC
Federal agency securities
$
35,781,567
FNMA
Federal agency securities
$
39,063,087
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
102
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
for deposits or investments, other than the following provision for deposits: The
California Government Code requires that a financial institution secure deposits made by
state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental
unit). The 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, 2011, none of the
City's deposits with financial institutions in excess of federal depository amounts were
held in uncollateralized accounts.
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.
103
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
(5) Capital Assets
Capital asset activity for the year ended June 30, 2011, was as follows:
Governmental Activities:
Beginning Balance
Balance Additions Deletions June 30, 2011
Non - depreciable:
Land and rights of way
$ 1,819,673,113
Work in progress
27,224,255
Depreciable:
Structures
69,682,289
Equipment
28,373,975
Infrastructure
310,108,269
2,255,061,901
$ 1,158,526
29,142, 266
372,914
2,953,832
4,484,677
38,112,215
$ - $ 1,820,831,639
(1,447,730) 54,918,791
(3,089,623)
(2,492,794)
(7,030,147)
Less accumulated
depreciation for:
Structures
(15,019,286)
(1,381,680)
-
Equipment
(20,537,936)
(2,129,979)
2,932,807
Infrastructure
(118,452,180)
(6,493,241)
1,395,415
(154,009,402)
(10,004,900)
4,328,222
Net Capital Assets
$ 2,101,052,499
$ 28,107,315
$ (2,701,925)
Go\,ernmental Actikities capital assets net of accumulated depreciation at June 30, 2011
are comprised of the following:
General Capital Assets, net $ 2,119,520,844
Internal SeNce Fund Capital Assets, net 6,937,045
$ 2,126,457,889
104
70, 055, 203
28, 238,184
312,100,152
2,286,143,969
(16,400,966)
(19, 735,108)
(123,550,006)
(159,686,080)
$ 2,126,457,889
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Business -type Activities:
Depreciation expense was charged in the following functions in the Statement of Activities:
Beginning
Business -type
Balance
Activities
Balance
Additions
Deletions
June 30, 2011
Non - depreciable:
-
Public works
7,105,341
-
Land
$ 2,016,450
$ -
$ -
$ 2,016,450
Work in progress
682,687
2,400,967
(251,696)
2,831,958
Depreciable:
566,602
$ 10,004,900
$ 2,113,944
Structures
205,793
482,603
688,396
Equipment
291,888
7,352
(111,808)
187,432
Infrastructure
158,143,395
20,316
(22,194)
158,141,517
161,340,213
2,911,238
(385,698)
163,865,753
Less accumulated
depreciation for:
Structures
(122,465)
(5,145)
-
(127,610)
Equipment
(209,254)
(11,867)
111,808
(109,313)
Infrastructure
(52,558,647)
(2,096,932)
3,208
(54,652,371)
(52,890,366)
(2,113,944)
115,016
(54,889,294)
Net Capital Assets
$ 108,449,847
797,294
$ (270,682)
$ 108,976,459
Depreciation expense was charged in the following functions in the Statement of Activities:
"Internal Service Fund depreciation of $1,820,267 is
allocated to governmental functions above.
105
Governmental
Business -type
Activities*
Activities
General government
$ 280,549
$ -
Public safety
1,238,696
-
Public works
7,105,341
-
Community development
97,780
-
Community service
1,282,534
-
Water
-
1,547,342
Wastewater
-
566,602
$ 10,004,900
$ 2,113,944
"Internal Service Fund depreciation of $1,820,267 is
allocated to governmental functions above.
105
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
(6) Long -Term Debt
Changes in Long -Term Liabilities
Long -term liability for the year ended June 30, 2011, was as follows:
Amounts
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Governmental activities:
Certificates of participation
payable $ 3,990,000 $ 126,660,000 $ (3,990,000) $ 126,660,000 $ 1,740,000
Bond Premium - 1,155,300 (70,323) 1,084,977 70,323
Nate payable 932,934 - (195,080) 737,854 203,859
Pre - annexation agreement
8,400,000
-
(1,200,000)
7,200,000
1,200,000
CDBG Loan
1,883,000
-
(95,000)
1,788,000
102,000
Purchase Agreement
Payable
1,500,000
-
(750,000)
750,000
750,000
Workers' compensations
payable
12,322,000
5,229,876
(2,931,876)
14,620,000
3,284,036
Claims and judgements
payable
3,820,391
1,872,592
(1,734,852)
3,958,131
1,079,277
Compensated absences
8,995,879
2,155,738
(2,246,021)
8,905,596
1,969,425
Early Retirement Incentive
Program (see note 11)
3,449,437
392,147
(960,396)
2,881,188
960,396
Net OPEB obligation
6,472,000
4,630,000
(2,618,000)
8,484,000
-
Total governmental
activities
51,765,641
142,095,653
(16,791,548)
177,069,746
11,359,316
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.
M.
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Governmental Activities
Certificates of Participation
In Fiscal Year 2010 -11, the City issued $20,085,000 of Series 2010A (Tax Exempt)
and $106,575,000 of Series 2010B (Federally Taxable Direct Pay Build America
Bonds) Certificates of Participation. The 2010A Certificates were issued to prepay
the $3,990,000 principal outstanding on the 1998 Library Certificates of Participation.
The refunding was undertaken to reduce total debt service payments over the next
nine years by $1,084,556 and resulted in a net present value savings of $429,500.
Accordingly, the 1998 Library Certificates have been defeased pursuant to the
defeasance provisions of the 1998 Trust Agreement. The remaining proceeds from
the Series 2010A Certificates are to be used to finance the acquisition, improvement
and equipping of the Civic Center Project. The Series 2010B Certificates were issued
to provide additional financing for the Civic Center Project. The proceeds of the
Certificates will also be applied to pay certain costs of issuance incurred in
connection with the Certificates.
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 January 1,
2011, and are in amounts sufficient to cover the payment of principal and interest of
the Certificates. Interest on the Certificates is payable semiannually on January 1
and July 1 of each year. The 2010A Certificates carry interest rates from 2.00% to
4.00 %, while the 2010B Certificates interest rates range from 4.45% to 7.17 %. The
City has designated the Series 2010B Certificates as "Build America Bonds" (BABs)
under the provisions of the American Recovery and Reinvestment Act of 2009. Thus,
the City expects to receive refundable credits from the United States Treasury equal
to 35% of the interest payable on the 2010B Certificates totaling $53,292,850. As of
June 30, 2011 the City has received $1,485,906 of BABs Subsidy from the United
States Treasury. Principal payments are payable annually on July 1 of each year.
Future principal payments for the Series 2010A, which commence July 1, 2011 and
continue through July 1, 2019, range from $410,000 to $3,185,000. The future
principal payments for the Series 2010B Certificates, which commence July 1, 2018
and are payable through July 1, 2040, range from $2,900,000 to $7,245,000. The
total outstanding balance at June 30, 2011 amounted to $126,660,000.
The annual amortization requirements of the Certificates of Participation are as
follows:
107
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Year Ending
June 30 Principal Interest Total
2012 1,740,000 7,911,367 9,651,367
2013
2014
2015
2016
2017 -2020
2021 -2024
2025 -2028
2029 -2032
2033 -2036
2037 -2041
• Note Payable
Note payabl e
Waterways i n
thirty annual
beginning Au
$737,854.
2,690,000
2,775,000
2,860,000
2,940,000
12,960,000
12,895,000
15,060,000
18,025,000
21, 580,000
33,135,000
7,853,617
7,771,642
7,687,117
7,585,417
29,062,059
26,551,464
23,000,935
18,326,556
11,613,184
6,154,266
10,543,617
10,546,642
10, 547,117
10,525,417
42,022,059
39,446,464
38,060,935
36,351,556
33,193,184
39,289,266
$ 126,660,000 $ 153,517,623 $ 280,177,623
consists o
1987 for a
principal and
gust 1, 1987
f a note to the California Department of Boating and
I
oan in the amount of $3,300,000. The note is payable in
interest installments of $237,062 at 4.5% rate of interest
The outstanding balance at June 30, 2011, amounted to
The annual amortization requirements for the Note Payable are as follows:
Year Ending
June 30
2012
2013
2014
2015
2016
Principal
203,859
213,032
222,609
Interest Total
33,203
24,030
14,443
48,095 4,426
50,259 2,262
237,062
237,062
237,052
52,521
52,521
$ 737,854 $ 78,364 $ 816,218
• 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, 2011, amounted to $7,200,000.
M.,
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
• 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 $102,000 to
$208,000 through June 30, 2023. The outstanding balance at June 30, 2011,
amounted to $1,788,000.
The annual amortization requirements for the CDBG Loan are as follows:
Year Ending
June 30
Principal
Interest
2012
102,000
99,653
2013
108,000
94,485
2014
116,000
88,722
2015
123,000
82,315
2016
132,000
75,306
2017 -2020
622,000
217,815
2021 -2023
585,000
55,039
$ 1,788,000
$ 713,335
• Purchase Agreement Payable
Total
201,653
202,485
204,722
205,315
207,306
839,815
640,039
$ 2,501,335
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,
2011, amounted to $750,000. The annual amortization requirements for the
Purchase Agreement are as follows:
Year Ending
June 30 Principal Interest Total
2012 750,000 30,000 780,000
$ 750,000 $ 30,000 $ 780,000
• Claims and Judgments
The City retains the risk of loss for general liability and workers' compensation claims
as described in note (8). These amounts represent estimates of amounts to be paid
for reported general liability and workers' compensation claims including incurred -
but- not - reported claims based upon past experience, modified for current trends and
information. While the ultimate amount of losses incurred through
109
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
June 30, 2011, 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, 2011, for general liability
amounted to $3,958,131 and for workers' compensation was $14,620,000.
• 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,
2011, is $8,905,596.
• Early Retirement Incentive Program (ERIP)
In Fiscal year 2009 -10, the City approved and implemented an 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, 2011 is $2,881,188. See Note (11) in the notes to financial statements.
• 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
$2,128,000 of the ARC. As for the implied subsidy $6,472,000, the City has elected
to fund it on a pay -as- you -go basis, thus resulting in net OPEB obligation of
$8,484,000. See Note (12) in the notes to financial statements.
(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, 2011,
for each district under the Bond Acts of 1911 and 1915, and other special assessments,
are as follows:
110
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Bonds Outstanding
Assessment District
Original Issue
June 30, 2011
No.
68
Newport Shores
3,813,562
2,380,000
No.
69
West Newport
4,978,498
3,060,000
No.
70
Bay Shores
1,380,996
770,000
No.
74
Island Avenue
222,629
100,000
No.
75
Balboa Business
821,204
520,000
No.
78
Little Balboa Island
1,348,196
270,000
No.
79
Beacon Bay
1,215,134
90,000
No.
82
Corona del Mar
274,967
100,000
No.
86
Balboa Peninsula
300,174
145,000
No.
92
Coast Highway
1,425,000
1,305,000
No.
99 -2
Ocean Front
1,953,952
1,835,000
No.
100
13 "/Balboa /Adams
2,670,000
2,670,000
No.
101
Central Balboa
2,467,597
2,165,000
No.
103
Peninsula Point
3,295,700
3,050,000
No.
95 -1
CIOSA Refunding Series A
15,495,000
6,140,000
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. Therefore the bonded indebtedness is not shown in the financial
statements
Bonds outstanding at June 30, 2011, are as follows:
Series 2008C
Series 2008D
Series 2008E
Series 2008F
Series 2009A
Series 2009D
Series 2009E
Series 2011A
$70,095,000
$80,000,000
$80,000,000
$90,000,000
$66,835,000
$35,490,000
$35,490,000
$105,390,000
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
111
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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. For the 2011 Series bonds, varying redemption payments
begin on December 1, 2012 and are required to be made through December 1, 2040.
(8) Risk Management— General Liability and Workers' Compensation
The City is exposed to various risks of loss related to torts, theft of, damage to, and
destruction of assets, errors and omissions, injuries to employees, and natural disasters.
The City carries commercial insurance with independent third parties for loss risks
associated with real and personal property, and automotive liability. The City purchases
fidelity bonds for employees in key positions. Settled claims from these risks have not
exceeded commercial insurance coverage for the past three years. For general liability,
the City has excess insurance coverage of $50 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
$18,578,131 which represents the discounted present value at June 30, 2011; the claims
were discounted using an interest rate of five percent.
112
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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 $71,814,801 at June 30, 2011.
(10) Pension Plans
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 December 2010, non- safety employees, except
those in Police and Fire Associations, agreed to contribute 5.58% of the required 8% of
annual salary for the participant contribution and 2.42% of the City's employer
contribution which is discussed below. The 5.58% participant contribution was phased in
113
General Liability
Workers' Compensation
June 30, 2010
June 30, 2011
June 30, 2010
June 30, 2011
Unpaid claims, beginning of
fiscal year
$ 5,897,737
$ 3,820,391
$ 11,893,000
$ 12,322,000
Incurred claims (including
I13NR)
201,308
1,872,592
3,530,130
5,229,876
Claim payments
(2,278,654)
(1,734,852)
(3,101,130)
(2,931,876)
Unpaid claims, end of fiscal
year
$ 3,820,391
$ 3,958,131
$ 12,322,000
$ 14,620,000
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 $71,814,801 at June 30, 2011.
(10) Pension Plans
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 December 2010, non- safety employees, except
those in Police and Fire Associations, agreed to contribute 5.58% of the required 8% of
annual salary for the participant contribution and 2.42% of the City's employer
contribution which is discussed below. The 5.58% participant contribution was phased in
113
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
over a one -year period. Benefit provisions and all other requirements are established by
State statues and City contract with employee bargaining groups.
Under GASB 27, an employer reports an annual pension cost (APC) equal to the annual
required contribution (ARC) plus an adjustment for the cumulative difference between
the APC and the employer's actual plan contributions for the year. The cumulative
difference is called the net pension obligation (NPO). The ARC for the period July 1,
2010 to June 30, 2011, has been determined by an actuarial valuation of the plan as of
June 30, 2008. The contribution rate indicated for the period is 8.406% for non - safety
employees and 30.202% for safety employees of annual covered payroll. Without the
cost sharing agreement with non - safety employees, the contribution rate would be
10.826% for non- safety employees. In order to calculate the dollar value of the ARC for
inclusion in financial statements prepared as of June 30, 2011, the contribution rate is
multiplied by the payroll of covered employees that were paid during the period from July
1, 2010 to June 30, 2011.
Annual Pension Cost
For 2011, the City's annual pension cost of $16,829,589 for PERS was equal to the
City's required and actual contributions. A summary of principle assumptions and
methods used to determine the annual required contribution is shown below:
Valuation Date
Actuarial Cost Method
Amortization Method
Average Remaining Period
Asset Valuation Method
Actuarial Assumptions:
Investment Rate of
Return
Projected Salary
Increases
Inflation Rate
Payroll Growth
Miscellaneous Plan Safety Plan
June 30, 2008 June 30, 2008
Entry Age Actuarial Cost Method Entry Age Actuarial Cost Method
Level Percent of Payroll
25 Years as of the Valuation
Date
15 -Year Smoothed Market
7.75% (net of administrative
expenses)
3.25% to 14.45% depending on
age, service, and type of
employment
3.00%
3.25%
Level Percent of Payroll
30 Years as of the Valuation
Date
15 -Year Smoothed Market
7.75% (net of administrative
expenses)
3.25% to 13.15% depending on
age, service, and type of
employment
3.00%
3.25%
Individual Salary Growth A merit scale varying by duration A merit scale varying by duration
of employment coupled with an of employment coupled with an
assumed annual inflation growth assumed annual inflation growth
of 3.0% and an annual of 3.0% and an annual
production growth of 0.25% production growth of 0.25%
114
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Initial unfunded liabilities are amortized over a closed period that depends on the plan's
date of entry into PERS. Subsequent plan amendments are amortized as a level percent
of pay over a closed 20 -year period. Gains and losses that occur in the operation of the
plan are amortized over a 30 -year rolling period, which results in an amortization of
about 6% of unamortized gains and losses each year. If the plan's accrued liability
exceeds the actuarial value of plan assets, then the amortization payment on the total
unfunded liability may not be lower than the payment calculated over a 30 -year
amortization period.
THREE -YEAR TREND INFORMATION FOR PERS ($ Amount in Thousands)
Annual Pension Cost
Percentage of Net Pension
Fiscal Year
(APC)
APC Contributed Obligation
6/30/09
Misc.
$6,835
100%
$0
Safety
$11,570
100%
$0
Total
$18,405
100%
$0
6/30/10
Misc.
$6,334
100%
$0
Safety
$11,488
100%
$0
Total
$17,822
100%
$0
6/30/11
Misc.
$6,074
100%
$0
Safety
$10,756
100%
$0
Total
$16,830
100%
$0
The Schedule of Funding Progress, below, shows the recent history of the actuarial
value of assets, actuarial accrued liability, their relationship, and the relationship of the
unfunded actuarial accrued liability to payroll. The Schedule of Funding Progress, below,
presents multiyear trend information about whether the actuarial value of the plan assets
is increasing or decreasing overtime, relative to the actuarial accrued liability for benefits.
115
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
SCHEDULE OF FUNDING PROGRESS FOR PERS ($ 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, 2011, the City's covered payroll for employees participating
in the plan was $2,719,120. Employees made contributions of $101,967 (3.75% of
current covered payroll), which was matched by the employer in the same amount.
Assets of the plan totaled $1,856,446 at June 30, 2011.
116
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]
06/30/2008
Misc.
$
217,378
$195,954
$ 21,424
90.1%
91.9%
$ 41,148
52.066%
Safety
336,061
264,634
71,427
78.7%
81.0%
28,056
254.587%
Total
$
553,439
$460,588
$ 92,851
83.2%
85.3%
$ 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%
06/30/2010
Misc.
$
269,463
$218,258
$ 51,205
81.0%
63.8%
$ 40,588
126.158%
Safety
382,338
284,617
97,721
74.4%
58.4%
29,753
328.441%
Total
$
651,801
$502,875
$ 148,926
77.2%
60.6%
$
70,341
211.720%
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, 2011, the City's covered payroll for employees participating
in the plan was $2,719,120. Employees made contributions of $101,967 (3.75% of
current covered payroll), which was matched by the employer in the same amount.
Assets of the plan totaled $1,856,446 at June 30, 2011.
116
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
(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 PERS 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 accrued cost
for this benefit has been recognized in the Compensated Absence, Internal Service
Fund. 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. The
outstanding obligation at June 30, 2011 was $2,881,188.
(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
117
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
in a Health Reimbursement Arrangement ( "HRA ") sponsored by the City, the single
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 1,209 as of June 30, 2011, consisting of 472
miscellaneous employees, 254 safety employees, and 483 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.
118
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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 $2.50 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 presents multi -year trend information about
whether the actuarial value of plan assets is increasing or decreasing over time relative
to the actuarial accrued liabilities for the benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan
(the plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of
benefit costs between employer and plan members to that point. The actuarial methods
and assumptions used include techniques that are designed to reduce the effects of
119
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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 CalPERS)
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 CalPERS
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.
120
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Three -Year Annual Required Contribution (ARC) Trend
The 2010 -11 Annual Required Contribution (ARC) includes the Normal Cost plus a
20 -year amortization of the Unfunded AAL (in 000's):
' AOC is equal to the ARC adjusted for interest and amoritization of the NOO
121
Current Year
Annual
ARC As
Beginning
Actual
OPEB
Percentage
Covered
a %of
Ending
Fiscal Year
Balance
ARC'
ACC
Contributiion
Obligation
Contributed
Payroll
Payroll
Balance
2008/09
Cash Subsidy
$ -
$
2,720
$
2,720
$
2,720
$
-
100%
$ 56,527
4.8%
$ -
Implied Subsidy
2,221
2,734
2,703
516
2,187
18.9%
56,527
4.8%
4,408
Net OPEB Obligation
$ 2,221
$
5,454
$
5,423
$
3,236
$
2,187
593%
$ 56,527
96%
$ 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
2,064
15.9%
73,308
3.6%
6,472
Net OPEB Obligation
$ 4,408
$
4,619
$
4,493
$
2,429
$
2,064
52.6%
$ 73,308
63%
$ 6,472
2010 -11
Cash Subsidy
$ -
$
2,128
$
2,128
$
2,128
$
-
100%
$ 75,691
2.8%
$ -
Implied Subsidy
6472
2,686
2,502
490
2,012
18.2%
75,691
3.5%
8,484
Net OPEB Obligation
$
4,630
$
2,618
$
2,012
54.4%
$ 75,691
6.4%
$ 8,484
$ 6,472
$
4.814
' AOC is equal to the ARC adjusted for interest and amoritization of the NOO
121
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Three -Year Net OPEB Obligation
(NOO)
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, 2011, NOO is determined
as follows (in 000's):
Prefu nding
Contributions
& Benefit
Fiscal Year July 1, NOO
AOC
Payments
June 30, NOO
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) 2
6,472
Total $ 4,408
$ 4,493
$ (2,429)
$
6,472
2010/11
Cash Subsidy $ -
$ 2,128
$ (2,128)
$
-
Implied Subsidy 6,472
2,502
(490) a
8,484
Total
$ 6,472
$ 4,630
$ (2,618)
$
8,484
1 - 2008 -2009 estimated implied subsidy
2 - 2009 -2010 estimated implied subsidy
3 -2010 -2011 estimated implied subsidy
122
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
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 2010 -11
AOC 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
$2,128
Payroll
06/30/2006
$ 2,128
2.8%
Implied Subsidy
2,686
324
(508)
2,502
3.3%
Total
$4,814
$ 324
$ (508)
$ 4,630
6.1%
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.
123
Actuarial
Actuarial
Unfunded
Annual
UAAL as
Valuation
Accrued
Value of
AAL
Funded
Covered
a % of
Date
Liability
Assets
(UAAL)
Status
Payroll
Payroll
06/30/2006
Cash Subsidy
$29,639
$ -
$29,639
0.0%
$54,748
54.1%
Implied Subsidy
26,409
-
26,409
0.0%
$54,748
48.2%
Total
$56,048
$ -
$56,048
0.0%
$54,748
102.4%
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%
123
0
N
c
m
H
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
(13) Interfund Receivables and Payables
At June 30, 2011, interfund receivables and payable were as follows:
Due from
General Fund $ 9,340,106
Facilities Financing Plan 5,481,813
Civic Center COP -
Internal Service Funds
Nonmajor Funds
City Hall Improvements (Major fund)
Total $14,821,919
Due to
5,481,813
1,421,498
2,965,678
4,952,930
$14,821,919
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, 2011, consisted of the following:
Total $ 331,088 $ 17,435,299 $31,300,000 $ 4,208,612 $ 1,298,405 $ 5,488,621 $ 60,062,025
The City typically uses transfers to fund ongoing subsidies. The General Fund
transferred $17,435,299 to subsidize for the maintenance and operation of the Tide and
Submerged Land Fund and $31,300,000 to the Facilities Replacement Fund to cash
fund construction projects for general fund supported facilities. The facilities
124
Transfers In
Tide and
Submerged
Facilities
Civic Center Internal Service
Non -Major
General Fund
Land
Replacement
COP Fund
Funds
Total
General Fund $ -
$ 17,435,299
$31,300,000
$ - $ -
32,397
$
48,767,696
Facilities -
-
-
682,754 -
5,266,983
$
5,949,737
Replacement
City Hall -
-
_
3,525,858 -
-
$
3,525,858
Improvements
Internal Service
-
-
- 1,298,405
-
1,298,405
Fund
Non -Major Funds 331,088
-
-
- -
189,241
520,329
Total $ 331,088 $ 17,435,299 $31,300,000 $ 4,208,612 $ 1,298,405 $ 5,488,621 $ 60,062,025
The City typically uses transfers to fund ongoing subsidies. The General Fund
transferred $17,435,299 to subsidize for the maintenance and operation of the Tide and
Submerged Land Fund and $31,300,000 to the Facilities Replacement Fund to cash
fund construction projects for general fund supported facilities. The facilities
124
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
replacement fund transferred $682,754 for the debt service payment related to the Civic
Center COPs, and transferred $5,266,983 to cash fund construction of the Oasis Senior
Center. The City Hall Improvement fund transferred $3,525,858 of Civic Center COP
bond proceeds to defease the 1998 Library COPs. As required by the pre- annexation
agreement, interest accrued in the amount of $117,601 in the Newport Coast
Annexation fund, is due to and was subsequently transferred to the General Fund.
(15) Joint Venture Agreements
Bonita Canvon Public Facilities Financing 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, 2011,
the contributions from property owners are held in trust as cash with fiscal agent totaling
$67,497. 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 $240,141 for fiscal year
2010 -11. The City's 50% interest in the net equity of this joint venture at June 30, 2011,
amounts to $2,386,629. Complete separate financial statements can be obtained at the
City of Costa Mesa at 77 Fair Drive, Costa Mesa, California.
125
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Metro Cities Fire Authorit
The City of Newport Beach is a member of a joint venture agreement with the cities of
Anaheim, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, and Orange for
the operation of a communication network to provide fire suppression, emergency
medical assistance, and rescue services. The oversight board consists of one voting
member and one alternate appointed by the governing body of each member agency.
The City of Newport Beach's costs are based each fiscal year upon the number of
recorded incidents attributable to the City divided by the recorded incidents attributable
to all members during the year and, are recorded in the General Fund as an expenditure
for service. Upon termination of the agreement, the proceeds from the sale of the
property and assets of the joint venture will be paid to each member agency pursuant to
their fair share percentage. Annually, the amounts paid by the City to this joint venture
are approximately $483,203. The City's 10.57% interest in the net equity of this joint
venture at June 30, 2011, amounts to $141,404. 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, 2011, was immaterial. Complete
separate financial statements can be obtained at the City of Newport Beach, 3300
Newport Boulevard, Newport Beach, California.
(16) Commitments and Contingencies
Claims and Judgments
Numerous claims and suits have been filed against the City in the normal course of
business. The estimated liability under such claims, based upon information received
from the City Attorney, contracted attorneys and the Risk Manager, has been estimated
and recorded as accrued claims and judgments payable (See Note 6).
126
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Circulation Improvement and Coen Space Aareement
The City entered into a Circulation Improvement and Open Space Agreement (CIOSA)
with a developer whereby the City received a loan of $14,395,572 to be used only for
certain transportation and circulation improvements. The City agreed to match the
contribution (without interest) by pledging 50% of future Fair Share Fees (developer
impact fees) which are recorded in the Circulation and Transportation Special Revenue
Fund. During the year ended June 30, 2011, the City received $378,481 of Fair Share
Fees, and $189,241 was paid to the CIOSA Construction capital projects fund. Through
June 30, 2011, $4,347,649 of Fair Share Fees has been paid. No additional liability has
been recorded, because any future repayment is uncertain; any amounts not contributed
by February 20, 2016, will be forgiven.
Newport Coast Pre - Annexation Agreement
In Fiscal Year 2001 -02, the City entered into a Pre - Annexation Agreement with the
Newport Coast Committee that stipulated certain terms and conditions for the
annexation of property collectively known as Newport Coast.
In conjunction with the annexation, the City also agreed to sell the water service rights
for the annexed area to Irvine Ranch Water District for $25.0 million.
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. The outstanding
Assessment debt relief balance at June 30, 2011 was $7.2 million.
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, 2011, the City paid
VNB $2,879,421.
127
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
Contractual commitments
Construction and contractual commitments for major construction projects are as
follows:
Total
Project
Budget
Civic Center
$120,751,876
Jamboree Road Widening over SR -73
$5,667,065
OASIS Senior Center
$4,354,247
Rhine Channel Dredging
$4,512,964
Lido Isle Street Rehabilitation
$747,370
(17) Fund Balance
Project
To Date
Exoenditures
$22,499,977
$1,720,354
$3,313,467
$33,044
$183,021
Unexpended
Commitments
$98,046,123
$3,730,070
$801,718
$592,402
$470,420
In February 2009, the Governmental Accounting Standards Board (GASB) issued
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The
objective of this Statement was to enhance the usefulness of fund balance information by
providing clearer fund balance classifications that can be more consistently applied and by
clarifying the existing governmental fund type definitions. This Statement was effective,
and implemented by the City, for fiscal year ending June 30, 2011.
Governmental Fund Balance under Statement No. 54, at June 30, 2011, is classified as
follows:
Nonspendable:
Prepaid items
Inventories
Long -Term Loan Receivable
Permanent Endowment
Restricted:
Affordable housing
Hoag
Upper Newport Bay Restoration
Other
CommMed:
Cantlngency Reserve
Other
Assigned:
Unassigned:
Total fund balances
21,841,467
- - - -
21,841,467
Nan -Major
Governmental Funds
25,625,644 89,140,221 - - 797,479 -
121,701,779
Title and
5,390,264
- - - - 243,294 -
17,499,393
20,570,033
(41,749) (2,946,353)
17,581,931
Submerged
Facilities City Hall
Civic Center
Special Revenue
Capital Project
Permanent
General
Land
Replacement Improvements
COP
Funds
Funds
Funds
Totals
328,851
-
- 1,082,795
-
185,658
-
-
1,597,304
231,641
-
- -
-
-
-
-
231,641
471,250
-
- -
-
-
-
-
471,250
-
-
- -
-
-
-
4,629,781
4,629,781
1,546,573
-
- -
-
-
-
-
1,546,573
134,760
-
- -
-
-
-
-
134,760
-
139,134
- -
-
-
-
-
139,134
-
-
- -
1,488,670
27,731,091
5,683,674
1,403,273
36,306,708
21,841,467
- - - -
21,841,467
5,778,435
360,000
25,625,644 89,140,221 - - 797,479 -
121,701,779
11,865,835
5,390,264
- - - - 243,294 -
17,499,393
20,570,033
(41,749) (2,946,353)
17,581,931
62,768,845
5,889,398
25,625,694 90,223,016 1,488,670 27,875,000 3,778,094 6,033,054
223,681,721
As discussed in Note 14, Interfund Transfers, the City elected to transfer $31.3 million out
of General Fund Committed Fund Balance into a separately identifiable fund titled
"Facilities Replacement Fund" during the fiscal year. The intent of this transfer was to
better separate and identify the City Council's intent for this Committed Fund Balance for
the readers and stakeholders of these financial statements. While Council has committed
128
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2011
these monies for future replacement or financing of the City's buildings and infrastructure,
Council may elect in the future to re- allocate these funds for any other General Fund
benefit. When compared to previous fiscal years, the General Fund Balances should be
looked at in combination with the Facilities Replacement Fund Balances to ensure
consistency.
(18) Subsequent Event
Dissolution of the Airborne Law Enforcement (ABLE) Program
Effective July 1, 2011, the City of Newport Beach and the City of Costa Mesa jointly agreed
to the dissolution of ABLE, terminating the Joint Power Agreement, selling off the
helicopters, parts, vehicles and tools.
129
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130
FINANCIAL
131
5LJPPLEMEN�TARY�
IN MEIR ToION
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 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 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.
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.
133
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
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2011
136
Special Revenue
Circulation
State
Asset
OTS
and
Gas Tax
Forfeiture
DUI Grant
JAG
Transportation
Assets
Cash and investments
$
5,266,831
$ 764,538
$
-
$
-
$
3,368,809
Receivables:
Accounts
-
-
-
-
-
Intergovernmental receivables
-
111,300
100,330
13,322
-
Cash with fiscal agent
-
-
-
-
-
Due from other funds
-
-
-
-
-
Prepaid items
-
-
-
-
-
Total Assets
$
5,266,831
$ 875,838
$
100,330
$
13,322
$
3,368,809
Liabilities and Fund Balances
Liabilities:
Accounts payable
$
29,289
$ 2,759
$
431
$
-
$
41,686
Unearned revenue
-
-
-
-
-
Unavailable revenue
-
-
-
-
-
Due to other funds
-
-
100,279
13,322
-
Total Liabilities
29,289
2,759
100,710
13,322
41,686
Fund balances:
Nonspendable:
Prepaid Items
-
-
-
-
-
Inventories
-
-
-
-
-
Long -Term Loan Receivable
-
-
-
-
-
Permanent Endowment
-
-
-
-
-
Restricted:
5,237,542
873,079
-
-
3,327,123
Committed:
-
-
-
-
-
Assigned:
-
-
-
-
-
Unassigned:
-
-
(380)
-
-
Total fund balances
5,237,542
873,079
(380)
-
3,327,123
Total liabilities and
fund balances
$
5,266,831
$ 875,838
$
100,330
$
13,322
$
3,368,809
136
Special Revenue
Building
Community
Air Quality
Excise
Combined
Development
Management
Environmental
Tax
Transportation
Block Grant
District
Liability
$ 356,406
$
6,279,286
$ -
$
335,180
$
3,758,273
-
781,875
-
-
-
-
297,116
41,369
-
-
-
-
-
-
185,658
$ 356,406
$
7,358,277
$ 41,369
$
335,180
$
3,943,931
$ 21,649
$
508,142
$ 41,084
$
45
$
9,053
-
2,549,506
-
-
-
-
74,036
41,369
-
-
-
-
285
-
-
21,649
3,131,684
82,738
45
9,053
-
-
-
-
185,658
334,757
4,226,593
-
335,135
3,749,220
-
-
(41,369)
-
-
334,757
4,226,593
(41,369)
335,135
3,934,878
$ 356,406
$
7,358,277
$ 41,369
$
335,180
$
3,943,931
(continued)
137
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2011
(continued)
138
Special Revenue
Supplemental
Traffic
Newport
Law
Congestion
Coast
Prop 1B
Enforcement
Relief
Annexation
Transportation
Assets
Cash and investments
$ -
$
-
$
7,200,000
$ -
Receivables:
Accounts
-
-
-
-
Intergovernmental receivables
11,316
-
-
-
Cash with fiscal agent
-
-
-
-
Due from other funds
-
-
-
-
Prepaid items
-
-
-
-
Total Assets
$ 11,316
$
-
$
7,200,000
$ -
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ -
$
-
$
-
$ -
Unearned revenue
-
-
-
-
Unavailable revenue
-
-
-
-
Due to other funds
11,316
-
-
-
Total Liabilities
11,316
-
-
-
Fund balances:
Nonspendable:
Prepaid Items
-
-
-
-
Inventories
-
-
-
-
Long -Term Loan Receivable
-
-
-
Permanent Endowment
-
-
-
-
Restricted:
-
-
7,200,000
-
Committed:
-
-
-
-
Assigned:
-
-
-
-
Unassigned:
-
-
-
-
Total fund balances
-
-
7,200,000
-
Total liabilities and
fund balances
$ 11,316
$
-
$
7,200,000
$ -
138
(continued)
139
Capital Projects
Assessment
CIOSA
Bonita Canyon
Contributions
District
Construction
Development
$ 2,819,111
$
4,298,263
$ -
$ -
57,512
563
-
-
2,063,263
-
-
-
-
1,491,291
-
67,497
$ 4,939,886
$
5,790,117
$ -
$ 67,497
$ 58,346
$
128,643
$ -
$ 45,290
370,635
-
-
-
2,063,263
-
-
-
7
2,492,244
128,643
-
45,297
2,447,642
5,661,474
-
22,200
2,447,642
5,661,474
-
22,200
$ 4,939,886
$
5,790,117
$ -
$ 67,497
(continued)
139
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2011
(continued)
140
Capital Projects
Marine
Mariners
Oasis
Fire Station 7
Science Center
Library
Senior Center
Assets
Cash and investments
$ -
$
-
$ -
$
1,040,773
Receivables:
Accounts
-
-
-
-
Intergovernmental receivables
-
-
-
-
Cash with fiscal agent
-
-
-
-
Due from other funds
-
-
-
-
Prepaid items
-
-
-
-
Total Assets
$ -
$
-
$ -
$
1,040,773
Liabilities and Fund Balances
Liabilities:
Accounts payable
$ -
$
-
$ -
$
-
Uneamed revenue
-
-
-
-
Unavailable revenue
-
-
-
-
Due to other funds
-
125,421
-
-
Total Liabilities
-
125,421
-
-
Fund balances:
Nonspendable:
Prepaid Items
-
-
-
-
Inventories
-
-
-
-
Long -Term Loan Receivable
-
-
-
-
Permanent Endowment
-
-
-
-
Restricted:
-
-
-
-
Committed:
-
-
-
797,479
Assigned:
-
-
-
243,294
Unassigned:
-
(125,421)
-
-
Total fund balances
-
(125,421)
-
1,040,773
Total liabilities and
fund balances
$ -
$
-
$ -
$
1,040,773
140
Capital Projects
Misc Marina Sunset Police Lifeguard
SAH Projects Park Ridge Park Facility Headquarters
$ 1,236,512 $ - $ - $ - $ -
14,995 - - - -
y I,LJ I,JVI y y y y -
$ 170 $ 45,580 $ 11,921 $ - $ -
1,285,038 - - - -
14,682 - - - -
- 1,479,835 1,202,859 2,175 30,179
(48,383)
(1,525,415)
(1,214,780)
(2,175)
(30,179)
(48,383)
(1,525,415)
(1,214,780)
(2,175)
(30,179)
(continued)
141
CITY OF NEWPORT BEACH
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2011
(continued)
142
Permanent Fund
Total
Other
Ackerman
Governmental
Bay
Dredging
Donation
Funds
Assets
Cash and investments
$
4,835,467
$
1,197,587
$
42,757,036
Receivables:
Accounts
-
-
854,945
Intergovernmental receivables
-
-
2,638,016
Cash with fiscal agent
-
-
1,558,788
Due from other funds
-
-
-
Prepaid items
-
-
185,658
Total Assets
$
4,835,467
$
1,197,587
$
47,994,443
Liabilities and Fund Balances
Liabilities:
Accounts payable
$
-
$
-
$
944,088
Unearned revenue
-
-
4,205,179
Unavailable revenue
-
-
2,193,350
Due to other funds
-
-
2,965,678
Total Liabilities
-
-
10,308,295
Fund balances:
Nonspendable:
Prepaid Items
-
-
185,658
Inventories
-
-
-
Long -Term Loan Receivable
-
-
-
Permanent Endowment
3,857,000
772,781
4,629,781
Restricted:
978,467
424,806
34,818,038
Committed:
-
-
797,479
Assigned:
-
-
243,294
Unassigned:
-
-
(2,988,102)
Total fund balances
4,835,467
1,197,587
37,686,148
Total liabilities and
fund balances
$
4,835,467
$
1,197,587
$
47,994,443
142
This page left blank intentionally.
143
Revenues:
Other taxes
Intergovernmental
Licenses, permits and fees
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, 2011
Special Revenue
State Asset OTS
Gas Tax Forfeiture DUI Grant JAG
2,025,226 338,294 227,507 13,322
29,935 4,676 - -
33,313 5,204 - -
2,088,474 348,174 227,507 13,322
- 14,460 187,935 13,322
276,523 - - -
276,523 14,460 187,935 13,322
1,811,951 333,714 39,572
(160,000) -
(160,000) -
1,651,951 333,714 39,572 -
3,585,591 539,365 (39,952) -
$ 5,237,542 $ 873,079 $ (380) $ -
144
Special Revenue
Circulation Building Community Air Quality
and Excise Combined Development Management Environmental
Transportation Tax Transportation Block Grant District Liability
S - $ - $ - $ - $ - $ 455,229
-
-
1,687,374 284,615
100,655
-
378,481
100,134
- -
-
-
31,198
2,300
28,474 -
2,676
26,370
32,956
2,561
31,687 -
2,979
29,347
-
-
26,723
442,635
104,995
1,747,535 284,615
106,310
537,669
2,130,922 58,137
123,181
1,126,564 -
5,036 110,958
168,665
- - - 95,000 - -
- - - 104,345 - -
2,130,922 58,137 1,126,564 322,526 173,701 110,958
(1,688,287) 46,858 620,971 (37,911) (67,391) 426.,711
(189,241)
(189,241)
(1,877,528) 46,858
620,971 (37,911)
(67,391) 426,711
5,204,651 287,899 3,605,622 (3,458) 402,526 3,508,167
S 3,327,123 $ 334,757 $ 4,226,593 S (41,369) $ 335.135 $ 3,934,878
(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, 2011
(continued)
Revenues:
Other taxes
Intergovernmental
Licenses, permits and fees
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, ending
100,719 - - -
739,873 - 385,515
- 1,200,000 -
100,719 739,873 1,200,000 385,515
(539,149) (1,082,399) (382,276)
- (117,601)
(117,601)
(539,149) (1,200,000) (382,276)
539,149 8,400,000 382,276
$ - $ - S 7,200,000 $
146
Special Revenue
Supplemental
Traff ic
Newport
Law
Congestion
Coast
Prop 1B
Enforcement
Relief
Annexation
Transportation
100,016
197,344
-
-
377
1,600
53,931
1,533
326
1,780
63,670
1,706
100,719
200,724
117,601
3,239
100,719 - - -
739,873 - 385,515
- 1,200,000 -
100,719 739,873 1,200,000 385,515
(539,149) (1,082,399) (382,276)
- (117,601)
(117,601)
(539,149) (1,200,000) (382,276)
539,149 8,400,000 382,276
$ - $ - S 7,200,000 $
146
Capital Projects
2,977,343 - 77,805
2,949,158 - 642,114 -
2,949,158 2,977,343 642,114 77,805
(540,014) 785,696 (639,570) (77,800)
4,218 5,557 189,240
8 5,557 189,240
(53,487)
(53,487)
(535,796) 791,253 (450,330) (77,800) (53,487)
2,983,438 4,870,221 450,330 100,000 53,487
$ 2,447,642 S 5,661.474 S - $ 22,200 $ -
(continued)
147
Assessment
CIOSA
Bonita Canyon
Contributions
District
Construction
Development Fire Station 7
$
$
S
$
2,324,567
-
-
- -
32,490
30,663
1,204
5 -
36,157
34,710
1,340
- -
15,930
-
-
- -
3,697,666
-
- -
2,409,144
3,763,039
2,544
5 -
2,977,343 - 77,805
2,949,158 - 642,114 -
2,949,158 2,977,343 642,114 77,805
(540,014) 785,696 (639,570) (77,800)
4,218 5,557 189,240
8 5,557 189,240
(53,487)
(53,487)
(535,796) 791,253 (450,330) (77,800) (53,487)
2,983,438 4,870,221 450,330 100,000 53,487
$ 2,447,642 S 5,661.474 S - $ 22,200 $ -
(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, 2011
(continued)
Revenues:
Othertaxes
Intergovernmental
Licenses, permits and fees
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
Marine Mariners Oasis Misc
Science Center Library Senior Center SAH Projects
$ S S $
- - - 376,436
- - 1,601,994 -
83,879 -
- - 1,685,873 376,436
56,972
3,313,468 -
3,313,468 56,972
(1,627,595) 319,464
5,266,982
5,266,982
3,639,387 319,464
(125,421) - (2,598,614) (367,847)
$ (125,421) $ - S 1,040,773 $ (48,383)
148
Capital Projects
Marina Sunset Police Lifequard
Park Ridge Park Facility Headquarters
$ $ $ S
347,156 311,622 -
347,156 311,622 -
(347,156) (311,622) -
(347,156) (311,622) -
(1,178,259) (903,158) (2,175) (30,179)
$ (1,525,415) $ (1,214,780) $ (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, 2011
(continued)
Revenues:
Othertaxes
Intergovernmental
Licenses, permits and fees
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)
Permanent Funds
316,436
- 3,228,114
4,750 786,709
11,790,939
- - 1,295,000
104,345
4,750 17,521,543
72,740 12,985 (2,870,508)
22,624 5,488,621
- (520,329)
22,624 4,968,292
Net change in fund balances
72,740
Total
2,097,784
Fund balances, beginning
Other
1,161,978
Ackerman
Governmental
Bay Dredging
Donation
Funds
$ -
$ -
$ 455,229
-
-
7,675,356
478,615
34,427
8,394
290,253
38,313
9,341
325,390
-
-
1,617,924
-
3,808,268
72,740
17,735
14,651,035
316,436
- 3,228,114
4,750 786,709
11,790,939
- - 1,295,000
104,345
4,750 17,521,543
72,740 12,985 (2,870,508)
22,624 5,488,621
- (520,329)
22,624 4,968,292
Net change in fund balances
72,740
35,609
2,097,784
Fund balances, beginning
4,762,727
1,161,978
35,588,364
Fund balances, ending
$ 4,835,467
$ 1.197.587 $
37.686.148
150
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2011
Variance
with Final
Budget
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental $ 2,179,232 $ 2,179,232 $ 2,025,226 $ (154,006)
Investment income 31,107 31,107 29,935 (1,172)
Net increase in fair value of investments - - 33,313 33,313
Total revenues 2,210,339 2,210,339 2,088,474 (121,865)
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, ending
3,220,182 3,220,182 276,523 2,943,659
3,220,182 3,220,182 276,523 (2,943,659)
(1,009,843) (1,009,843) 1,811,951 2,821,794
(160,000) (160,000) (160,000)
(1,169,843) (1,169,843) 1,651,951 2,821,794
3,585,591 3,585,591 3,585,591 -
$ 2,415,748 $ 2,415,748 5,237,542 $ 2,821.794
151
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2011
Expenditures
Public safety
39,060
39,060
Variance
Net change in fund balance
(35,371)
(35,371)
with Final
Fund balance, beginning
539,365
539,365
Budget
Fund balance, ending
Budget Amounts
$ 503,994
Positive
Original Final
Actual
(Negative)
Revenues:
Intergovernmental
$ - $ -
$ 338,294
$ 338,294
Investment income
3,689 3,689
4,676
987
Net increase in fair value of investments
- -
5,204
5,204
Total revenues
3,689 3,689
348,174
344,485
Expenditures
Public safety
39,060
39,060
14,460 24,600
Net change in fund balance
(35,371)
(35,371)
333,714 369,085
Fund balance, beginning
539,365
539,365
539,365 -
Fund balance, ending
$ 503,994
$ 503,994
$ 873,079 $ 369,085
152
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
OTS DUI Grant Special Revenue Fund
For the Year Ended June 30, 2011
Variance
with Final
Budget
Budget Amounts Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental $ 112,604 $ 334,959 $ 227,507 $ (107,452)
Total revenues 112,604 334,959 227,507 (107,452)
Expenditures
Public safety
$ 72,325
$ 294,680
$ 187,935 106,745
Net change in fund balance
40,279
40,279
39,572 (707)
Fund balance (deficit), beginning
(39,952)
(39,952)
(39,952) -
Fund balance (deficit), ending
$ 327
$ 327
_L ___L3801 $ (707)
153
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
JAG Special Revenue Fund
For the Year Ended June 30, 2011
154
Variance
with Final
Budget
Budget Amounts
Positive
Original Final
Actual
(Negative)
Revenues:
Intergovernmental
$ - $ 13,322
$ 13,322
$ -
Total revenues
- 13,322
13,322
Expenditures
Public safety
- 13,322
13,322
-
Net change in fund balance
- -
-
Fund balance, beginning
- -
-
-
Fund balance, ending
$ - $ -
$
154
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Circulation and Transportation Special Revenue Fund
For the Year Ended June 30, 2011
155
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ 250,000
$ 250,000
$ 378,481
$ 128,481
Investment income
63,328
63,328
31,198
(32,130)
Net increase in fair value of investments
-
-
32,956
32,956
Total revenues
313,328
313,328
442,635
129,307
Expenditures:
Capital outlay
4,910,665
4,910,665
2,130,922
2,779,743
Excess (deficiency) of revenues
over expenditures
(4,597,337)
(4,597,337)
(1,688,287)
2,909,050
Other financing uses:
Transfers out
(80,000)
(80,000)
(189,241)
(109,241)
Net change in fund balance
(4,677,337)
(4,677,337)
(1,877,528)
2,799,809
Fund balance, beginning
5,204,651
5,204,651
5,204,651
-
Fund balance, ending
$ 527,314
$ 527,314
$ 3,327,123
$ 2,799,809
155
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Building Excise Tax Special Revenue Fund
For the Year Ended June 30, 2011
156
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Licenses, permits and fees
$ -
$ -
$ 100,134
$ 100,134
Investment income
4,013
4,013
2,300
(1,713)
Net increase in fair value of investments
-
-
2,561
2,561
Total revenues
4,013
4,013
104,995
100,982
Expenditures:
Capital outlay
54,600
54,600
58,137
(3,537)
Net change in fund balance
(50,587)
(50,587)
46,858
97,445
Fund balance, beginning
287,899
287,899
287,899
-
Fund balance, ending
$ 237,312
$ 237,312
$ 334,757
$ 97,445
156
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Combined Transportation Special Revenue Fund
For the Year Ended June 30, 2011
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
157
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 5,059,457
5,059,457
$ 1,687,374
$ (3,372,083)
45,942
45,942
28,474
(17,468)
-
-
31,687
31,687
5,105,399
5,105,399
1,747,535
(3,357,864)
3,253,989
3,253,989
1,126564
2,127,425
1,851,410
1,851,410
620,971
(1,230,439)
3,605,622
3,605,622
3,605,622
$ 5,457,032
$ 5,457,032
$ 4,226,593
$ (1,230,439)
157
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2011
Revenues:
Intergovernmental
Total revenues
Expenditures:
Community development
Debt service:
Principal
Interest and fiscal charges
Total expenditures
Net change in fund balance
Fund balance (deficit), beginning
Fund balance (deficit), ending
158
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 391,089
$ 391,089
$ 284,615
$ (106,474)
391,089
391,089
284,615
(106,474)
178,367
178,367
123,181
55,186
95,000
95,000
95,000
-
104,345
104,345
104,345
-
377,712
377,712
322,526
55,186
13,377
13,377
(37,911)
(51,288)
(3,458)
(3,458)
(3,458)
-
$ 9,919
$ 9,919
$ (41,369)
$ (51,288)
158
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2011
Expenditures
Public works
14,235
14,235
5,036
Variance
Capital outlay
-
203,976
168,665
with Final
Total expenditures
14,235
218,211
173,701
Budget
Net change in fund balance
Budgeted
Amounts
(67,391)
Positive
Fund balance, beginning
Original
Final
Actual
(Negative)
Revenues:
$ 440,821
$ 236,845
$335,135
$ 98,290
Intergovernmental
$ 48,830
$ 48,830
$100,655
$ 51,825
Investment income
3,700
3,700
2,676
(1,024)
Net increase in fair value of investments
-
-
2,979
2,979
Total revenues
52,530
52,530
106,310
53,780
Expenditures
Public works
14,235
14,235
5,036
9,199
Capital outlay
-
203,976
168,665
35,311
Total expenditures
14,235
218,211
173,701
44,510
Net change in fund balance
38,295
(165,681)
(67,391)
98,290
Fund balance, beginning
402,526
402,526
402,526
-
Fund balance, ending
$ 440,821
$ 236,845
$335,135
$ 98,290
159
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Environmental Liability Special Revenue Fund
For the Year Ended June 30, 2011
Expenditures
Public works
$ 169,880
$ 184,708
$ 110,958
Variance
Net change in fund balance
549,554
534,726
426,711
with Final
Fund balance, beginning
3,508,167
3,508,167
3,508,167
Budget
Fund balance, ending
Budgeted
Amounts
$ 3,934,878
Positive
Original
Final
Actual
(Negative)
Revenues:
Taxes
$ 661,127
$ 661,127
$ 455,229
$ (205,898)
Investment income
58,307
58,307
26,370
(31,937)
Net increase in fair value of investments
-
-
29,347
29,347
Other Revenue
-
-
26,723
26,723
Total revenues
719,434
719,434
537,669
(181,765)
Expenditures
Public works
$ 169,880
$ 184,708
$ 110,958
$ 73,750
Net change in fund balance
549,554
534,726
426,711
(108,015)
Fund balance, beginning
3,508,167
3,508,167
3,508,167
-
Fund balance, ending
$ 4,057,721
$ 4,042,893
$ 3,934,878
$ (108,015)
160
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Supplemental Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2011
Revenues:
Intergovernmental
Investment income
Net decrease in fair value of investments
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)
$ 80,000 $ 80,000 $ 100,016 $ 20,016
150 150 377 227
80,150 80,150 100,719 20,569
80,150 80,150 100,719 (20,569)
161
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Traffic Congestion Special Revenue Fund
For the Year Ended June 30, 2011
162
Variance
with Final
Budget
Budgeted Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 842,019
$ 842,019
$ 197,344
$ (644,675)
Investment income
2,000
2,000
1,600
(400)
Net increase in fair value of investments
-
-
1,780
1,780
Total revenues
844,019
844,019
200,724
(643,295)
Expenditures:
Capital outlay
814,613
814,613
739,873
74,740
Net change in fund balance
29,406
29,406
(539,149)
(568,555)
Fund balance, beginning
539,149
539,149
539,149
-
Fund balance, ending
$ 568,555
$ 568,555
$ -
$ (568,555)
162
Revenues
Investment income
Net increase in fair value of investments
Total revenues
Expenditures
Debt service:
Principal
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other financing uses
Transfers out
Net change in fund balance
Fund balance, beginning
Fund balance, ending
CITY OF NEWPORT BEACH
Newport Coast Annexation
Budgetary Comparison Statement
For the Year Ended June 30, 2011
163
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ -
$ -
$ 53,931
$ 53,931
-
-
63,670
63,670
-
-
117,601
117,601
1,200,000
1,200,000
1,200,000
-
1,200,000
1,200,000
1,200,000
-
(1,200,000)
(1,200,000)
(1,082,399)
117,601
(1,400,000)
(1,400,000)
(117,601)
1,282,399
(2,600,000)
(2,600,000)
(1,200,000)
1,400,000
8,400,000
8,400,000
8,400,000
-
$ 5,800,000
$ 5,800,000
$ 7,200,000
$ 1,400,000
163
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Proposition 1 B Transportation Special Revenue Fund
For the Year Ended June 30, 2011
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
$ 93,953 $ 93,953 $
164
$ (93,953)
Variance
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
$ 19,846
S 19,846
$ 1,533
$ (18,313)
-
-
1,706
1,706
19,846
19,846
3,239
(16,607)
308,169
308,169
385,515
(77,346)
(288,323)
(288,323)
(382,276)
(93,953)
382,276
382,276
382,276
-
$ 93,953 $ 93,953 $
164
$ (93,953)
CITY OF NEWPORT BEACH
Contributions Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2011
Expenditures:
Capital outlay 4,127,942 5,664,562 2,949,158 2,715,404
Excess (deficiency) of revenues
over expenditures 1,706,676 (2,332,972) (540,014) 1,792,958
Other financing sources (uses):
Transfers in
- - 4,218 4,218
Variance
1,706,676 (2,332,972) (535,796) 1,797,176
Fund balance, beginning
2,983,438 2,983,438 2,983,438 -
Fund balance, ending
with Final
Budget
Budgeted
Amounts
Positive
Original
Final
Actual
(Negative)
Revenues:
Intergovernmental
$ 4,271,290
$ 1,771,290
$2,324,567
$ 553,277
Investment income
63,328
-
32,490
32,490
Net increase in fair value of investments
-
-
36,157
36,157
Donations
1,500,000
1,560,300
15,930
(1,544,370)
Total revenues
5,834,618
3,331,590
2,409,144
(922,446)
Expenditures:
Capital outlay 4,127,942 5,664,562 2,949,158 2,715,404
Excess (deficiency) of revenues
over expenditures 1,706,676 (2,332,972) (540,014) 1,792,958
Other financing sources (uses):
Transfers in
- - 4,218 4,218
Net change in fund balance
1,706,676 (2,332,972) (535,796) 1,797,176
Fund balance, beginning
2,983,438 2,983,438 2,983,438 -
Fund balance, ending
$ 4,690,114 $ 650,466 $ 2,447,642 $ 1,797,176
165
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166
ANCI
167
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.
I[-7
Assets
Current assets:
Cash and investments
Receivables:
Accounts
Inventories
Prepaid items
Total current assets
Non - current assets:
Capital assets:
Equipment
Less accumulated depreciation
Total capital assets (net of
accumulated depreciation)
Total assets
Liabilities
Current liabilities:
Accounts payable and accrued liabilities
Accrued payroll
Due to general fund
Workers' compensation - current
General liability - current
Compensated absences - current
Early retirement incentive program - current
Total current liabilities
Non - current liabilities:
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
CITY OF NEWPORT BEACH
All Internal Service Funds
Combining Statement of Net Assets
June 30, 2011
Total
Insurance Compensated Retiree Equipment Internal
Reserve Absence Insurance Maintenance Service Funds
$ 21,562,899 $ 2,286,093 $ - $ 18,582,415 $ 42,431,407
46,568 - 1,285,532 75,554 1,407,654
- - - 304,986 304,986
991,565 266,173 1,257,738
22,601,032 2,286,093 1,551,705 18,962,955 45,401,785
23,482,455 23,482,455
(16,545,410) (16,545,410)
6,937,045 6,937,045
22,601,032 2,286,093 1,551,705 25,900,000 52,338,830
$ 248,264 $ 2,998 $ - $ 196,556
- - 43,604
1,421,498
3,284,036 - - -
1,079,277 - - -
- 1,969,425 - -
- 960,396 - -
A.1n677 Oo40 o10 1A01 ADO OAn 1cn
$ 447,818
43,604
1,421,498
3,284,036
1,079,277
1,969,425
960,396
OD. A.A
11,335,964
-
-
-
11,335,964
2,878,854
-
-
-
2,878,854
-
6,936,171
-
-
6,936,171
-
1,920,792
-
-
1,920,792
8,484,000
8,484,000
14,214,818
8,856,963
8,484,000
-
31,555,781
18,826,395
11,789,782
9,905,498
240,160
40,761,835
-
-
-
6,937,045
6,937,045
3,774,637
(9,503,689)
(8,353,793)
18,722,795
4,639,950
$ 3,774,637
$ (9,503,689)
$ (8,353,793)
$ 25,659,840
$ 11,576,995
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, 2011
Operating income (loss)
Nonoperating revenues (expenses):
Investment income
Net Increase in fair value of investments
Gain on sale of capital assets
Total nonoperating revenues
Income (loss) before transfers
Transfers in
Transfer out
Change in net assets
Net assets (accumulated
deficit), beginning
Net assets, (accumulated
deficit), ending
(1,001,606) (227,579) (2,104,544) 1,831,344 (1,502,385)
162,047
9,046 -
128,073
180,337
10,068 -
Total
-
Insurance
Compensated
Retiree
Equipment
Internal
(659,222)
Reserve
Absence
Insurance
Maintenance
Service Funds
Operating revenues:
(1,957,627)
1,089,940 (2,104,544)
2,143,601
Charges for services
$ 5,909,786
$ 2,320,306
$ 2,128,000
$ 5,819,437
$ 16,177,529
Retiree reimbursements
-
-
1,298,064
-
1,298,064
Employee contributions
-
-
272,746
-
272,746
Other
191,076
46,907
47,254
285,237
Total operating revenues
6,100,862
2,320,306
3,745,717
5,866,691
18,033,576
Operating expenses:
Salaries and wages
-
-
-
1,366,397
1,366,397
Depreciation
-
-
-
1,820,267
1,820,267
Professional services
-
-
-
22,749
22,749
Maintenance and supplies
-
-
-
358,010
358,010
Fleet parts and supplies
-
-
-
467,924
467,924
Workers' compensation
5,229,876
-
-
-
5,229,876
Claims and judgments
1,872,592
-
-
-
1,872,592
Compensated absences
-
2,155,738
-
-
2,155,738
Early Retirement Incentive Program
-
392,147
-
-
392,147
OPEB ARC -Cash subsidy
-
-
2,128,000
-
2,128,000
OPEB ARC- Implied subsidy
-
-
2,502,000
-
2,502,000
Other
-
-
1,220,261
-
1,220,261
Total operating expenses
7,102,468
2,547,885
5,850,261
4,035,347
19,535,961
Operating income (loss)
Nonoperating revenues (expenses):
Investment income
Net Increase in fair value of investments
Gain on sale of capital assets
Total nonoperating revenues
Income (loss) before transfers
Transfers in
Transfer out
Change in net assets
Net assets (accumulated
deficit), beginning
Net assets, (accumulated
deficit), ending
(1,001,606) (227,579) (2,104,544) 1,831,344 (1,502,385)
162,047
9,046 -
128,073
180,337
10,068 -
142,530
-
-
41,654
342,384
19,114 -
312,257
(659,222)
(208,465) (2,104,544)
2,143,601
-
1,298,405 -
-
(1,298,405)
(1,957,627)
1,089,940 (2,104,544)
2,143,601
5,732,264 (10,593,629) (6,249,249) 23,516,239
$ 3,774,637 $ (9,503,689) $ (8,353,793) $ 25,659,840
170
299,166
332,935
41,654
673,755
(828,630)
1,298,405
(1,298,405)
(828,630)
12,405,625
$ 11,576,995
CITY OF NEWPORT BEACH
Combining Statement of Cash Flows - Internal Service Funds
For the Year Ended June 30, 2011
Total
Insurance Compensated Retiree Equipment Internal
Reserve Absences Insurance Maintenance Service Funds
Cash flows from operating activities
Receipts from user departments
$ 6,184,353
2,332,422
$ 3,426,064
$ 5,747,298
$ 17,690,137
Payments to employees
(2,931,876)
(3,204,882)
-
(1,366,701)
(7,503,459)
Payments to suppliers
(2,568,154)
-
(4,346,820)
(818,948)
(7,733,922)
Other operating cash receipts
319,653
47,254
366,907
Net cash provided (used) for operating activities
684,323
(872,460)
(601,103)
3,608,903
2,819,663
(increase) in inventories
-
-
-
(49,556)
Cash flows from noncapital financing activities:
(Increase) decrease in prepaid items
(913,565)
-
27,157
-
Cash received from other funds
-
1,298,405
601,103
-
1,899,508
Cash paid to other funds
(1,298,405)
-
-
-
(1,298,405)
Net cash provided (used)by noncapital financing
(1.298.405)
1.298.405
601,103
-
601.103
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
342,384 19,114
342,384 19,114
(2,564,020) (2,564,020)
198,466 198,466
(2,365,554) (2,365,554)
270,603 632,101
270,603 632,101
(271,698)
445,059
- 1,513,952
1,687,313
21,834,597
1,841,034
17,068,463
40,744,094
$ 21,562,899
$ 2,286,093 $
$ 18,582,415
$ 42,431,407
Operating income (loss) $ (1,001,606) $ (227,579) $ (2,104,544) $ 1,831,344 $ (1,502,385)
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities:
Depreciation
-
-
-
1,820,267
1,820,267
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
83,491
12,116
(535,716)
(72,139)
(512,248)
(increase) in inventories
-
-
-
(49,556)
(49,556)
(Increase) decrease in prepaid items
(913,565)
-
27,157
-
(886,408)
Increase in accounts payable and
accrued payroll
80,263
1,535
-
78,987
160,785
Increase in workers' compensation
2,298,000
-
-
-
2,298,000
Increase in general liability
137,740
-
-
-
137,740
(Decrease) in compensated absences
-
(90,283)
-
-
(90,283)
(Decrease) in early retirement incentive program
-
(568,249)
-
-
(568,249)
Increase in net OPEB obligation
2,012,000
2,012,000
Total adjustments
1,685,929
(644,881)
1,503,441
1,777,559
4,322,048
Net cash provided (used) by operating activities
$ 684.323
_L _&72_460i
$ (601.1031
$ 3.608.903
$ 2.819.663
Non -cash investing, capital, and financing activities:
Net increase in fair value of investments
180,337
10,068
-
142,530
332,935
Gain on sale of capital assets
41,654
41,654
Total of non -cash activities
$ 180,337
$ 10,068
$
$ 184,184
$ 374,589
171
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172
FINANCIAL SECTION
5L LEMENTARY
INFORMATION
FIDUCIARN FU NIDS
173
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, 2011
Liabilities
Due to bondholders $ 7,406,633 $ - $ - $ 7,406,633
Due to others - 251,437 180,995 432,432
Due to ILJAOC - - 2,018,517 2,018,517
Total liabilities $ 7,406,633 $ 251,437 $ 2,199,512 $ 9,857,582
175
Special
Business
Assessment District
Improvement
ILJAOC
Assets
Fund
Fund
Fund
Totals
Cash and investments
$ 3,009,278
$ 251,437
$ 2,129,166
$ 5,389,881
Cash with fiscal agent
4,397,355
-
-
4,397,355
Prepaid items
-
950
950
Intergovernmental receivable
-
-
69,396
69,396
Total assets
$ 7,406,633
$ 251,437
$ 2,199,512
$ 9,857,582
Liabilities
Due to bondholders $ 7,406,633 $ - $ - $ 7,406,633
Due to others - 251,437 180,995 432,432
Due to ILJAOC - - 2,018,517 2,018,517
Total liabilities $ 7,406,633 $ 251,437 $ 2,199,512 $ 9,857,582
175
CITY OF NEWPORT BEACH
Statement of Changes in Fiduciary Net Assets
All Agency Funds
For the Year Ended June 30, 2011
Business Improvement District:
Assets
Cash and investments $ 198,047 $ 1,797,813 $ (1,744,423) $ 251,437
Liabilities
Due to others $ 198,047 $ 1,797,813 $ (1,744,423) $ 251,437
ILJAOC:
Balance
$ 6,188,000
$ (6,082,614)
Balance
Due to others
June 30, 2010
Additions
Deductions
June 30, 2011
Special Assessment:
1,546,707
1,011,411
(539,601)
2,018,517
Assets
Cash and investments
$
1,489,262
$
Cash and investments
$ 2,682,766
$ 4,071,591
$ (3,745,079)
$ 3,009,278
Cash with fiscal agent
4,618,481
2,116,409
(2,337,535)
4,397,355
Total Assets
$ 7,301,247
$ 6,188,000
_L ±,082,614i
$ 7,406,633
Liabilities
69,396
(88,344)
69,396
Due to bondholders
$ 7,301,247
$ 6,188,000
$ (6,082,614)
$ 7,406,633
Business Improvement District:
Assets
Cash and investments $ 198,047 $ 1,797,813 $ (1,744,423) $ 251,437
Liabilities
Due to others $ 198,047 $ 1,797,813 $ (1,744,423) $ 251,437
ILJAOC:
$ 7,301,247
$ 6,188,000
$ (6,082,614)
$ 7,406,633
Due to others
304,031
1,978,808
Assets
432,432
Due to ILJAOC
1,546,707
1,011,411
(539,601)
2,018,517
Total Liabilities
Cash and investments
$
1,489,262
$
922,763
$ (282,859)
$
2,129,166
Prepaid items
75,085
950
(75,085)
950
Intergovernmental receivable
88,344
69,396
(88,344)
69,396
Total Assets
$
1,652,691
$
993,109
$ (446,288)
$
2,199,512
Liabilities
Due to others
$
105,984
$
180,995
$ (105,984)
$
180,995
Due to ILJAOC
1,546,707
1,011,411
(539,601)
2,018,517
Total Liabilitites
$
1,652,691
$
1,192,406
$ (645,585)
$
2,199,512
Totals - All Agency Funds:
Assets
Cash and investments
$
4,370,075
$
6,792,167
$ (5,772,361)
$
5,389,881
Cash with fiscal agent
4,618,481
2,116,409
(2,337,535)
4,397,355
Prepaid items
75,085
950
(75,085)
950
Intergovernmental receivable
88,344
69,396
(88,344)
69,396
Total Assets
$
9,151,985
$
8,978,922
$ (8,273,325)
$
9,857,582
Liabilities
Due to bondholders
$ 7,301,247
$ 6,188,000
$ (6,082,614)
$ 7,406,633
Due to others
304,031
1,978,808
(1,850,407)
432,432
Due to ILJAOC
1,546,707
1,011,411
(539,601)
2,018,517
Total Liabilities
$ 9,151,985
$ 9,178,219
$ (8,472,622)
$ 9,857,582
176
�4La40�4�C�
177
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 Ass &e by Componem
Last Ten Fiscal Years
(seCNDI basis Dt accpunfin)
Fiscal Year
2002 2003 2004 2005' 2006 2007 2008 2009 2010 2011
Governmental aMvOea:
Invested in capllel a¢aem,
Investetl In capital assets,
net Of relsled debt
$1,391,677,813
$ 1,412,372,465
$1512,651,096
$ 1,915,348;803
$ 2,005543851
$ 2,027,026,053 $ 2.050,925,370
$ 2061,635,642
5 2, OW, 912,221
$ 2,087.403,003.
Rsibeed
30689,056
37,650,692
45,494,082
54,285,743
51,901,103
35,017.831 40,988,923
40.212)47
34,236,929
63,940,282
Unraetrlged
47.095.788
49.322,203.
46,772,913
61,89,9513
%562,229
75.989,189 87.602.996
98,276381
88049,492
67,500,916
TotalgwernmemalaN0tle,
$1.471.463555
$ 1.499.M.440
S 1506918091
$ 2.031.529.582
$ 2114.206.9833
$ 2.138033.053 $ 2.b9.ib.289
$ 2202124.P0
$ 2205.199.642
$ 2.218.644.201
Business -1,1 actNtlies:
Invested in capital asses,
net of related debt $ 87470,314 $ 91,912205 3 94.206,704 5 99641,411 S 10,602,266 S 107,231.308 $ 107.313.603 $ 108,510,361 5 108,449,847 $ 108,976,459
Reso-lcted - - - - - - - - - -
Unrestricted 26123,500 24,227,579 21,493,528 19,665,535 16,907,367 15,808,357 13,639,027 11435,306 10.172912 9442,988
TMal businesstpe advhles S 113,593,814 3 116139784 $ 115700232 $ 119306946 $ 121509633 3 123039685 $ 120952630 $ 119945667 $ 118623759 5 116419447
Pnmarygovemment.
Investetl In capital assets,
net of related dell
$t d79,146,127
$ 1506,284,670
$1606857,800
$ 2.014,990,294
$ 2110245,917
$ 2,134,257,361
$ 2,158,236.973
$ 2,170,146003
$ 2193,362,Ofi8
5 2,196379,462
RaNicled
39669,956
37,606,692
65,494,092
56,285,743
51,901,103
35.017.831
40,988.923
6,212)47
36.236.929
63,960,282
Unresdlcled
67$19,266
73,569,862
66,266,441
01,560,491
73,5695%
91)97.526
101,442,023
107,711,687
96,222404
76,943,906
Taal primary 9overnmart
$1,56505],369
$ 1615.465,226
$1 ]2)618323
$ 2.150,636,526
$ 2235.716616
$ 2 2 81 47 2 716
$ 2,300,669919
$ 2322,070437
$ 2323622401
6 2337,263646.
r 2005 data vadesimm trend because 0f ina as tl r pitel assets related W PCH RNlrquuhnrent
tae Cl(ya /Newport 6eacrt lmplemenled GA$B 34 /o /fAe fiazal yeas ended June 30, 2002
179
CITY OF NEWPORT BEACH
Changes in Net Means
IeR Ten Flaul .-
tactual balls or accounting)
Pmgram
banal Year
Ga,.rn. , .[boll.
4002
2003
2004
8006
2006
2007
2008
2009
2010
1011
Expenses:
Gosmmenel .divan.
2,270,082
3,000,162
2,109,141
2.412,789
2.623,272
2944100
31051
2543.880
2909,603
2,722.527
.... gsacrmenl $
12,992,860 $
10,]99630 5
11,]283]9 $
11,378.609 $
14,609.821 $
14,166,160 $
15,559.661 $
16,4305d $
7/.482705 $
15,857.307
Public salary
41,168,918
56521,811
58,118,533
63,214.291
61,189,121
89]95,386
75,821,083
79301,"
79.402500
78,1.i0W
Public woMa
30,320518
32,069038
3912]032
40359.911
331370,359
39,119844
42631,401
-038004.
55.445321
4..1,33
C rnmunlly development
4.471,397
5.182,215
6,229185
6431.086
0,151,925
9,020868
10052071
10,203528
101088.454
8631.525
Community services
11,014,006
10.404,205
14,741504
13073,215
13803 )55
233$,0.53
19/46588
20,589094
11.282.351
17272.374
Interest - longterm Eabt
511102
813944
.21.
500,009
4795.
523401
5325-
4g7 237
312502
5,010981
T.. g-- m.n.1...b.
],991,059
0750,585
10,891,329
17,489934
12,712593
18,172,823
15,779,951
13,404298
15,81],81]
10710,207
expenses
106,314.019
116.270.983
129.248259
140971.881
138.610516
155.989.720
163741.168
172.642,387
1]9.611.945
165,315.506
Bueinees ".activities:
1,582458
4.070720
674815
20,205,940
69473,891 s
6,904,716
31037.915
24,633,716
12,350,100
11,101.239
Water
14.1706.514
14.540036
11,105034
14467.233
16228213
17,399,900
20,148,517
18,210789
18.]32351
19,824.9%
Writes.
21586833
3:115,136
3,363,954
2740.988
3,143,829
3.259,637
3; tn.592
3,153,012
3.5%034
3936949
Tolsl buainesa -type nice. .
expenses
17,396347
17.656172
211,548.988
17 M141
19,371842
.,659,737
23,572.109
21,963831
22.331,306
23,761.945
Total primary govenment
16665.724
16.489,284
18,I3001U
17 fun.196
11,923523
17.918,968
17,270.511
16,966621
17Al2,SM
20,097327
.pave.
12$110,220
133,9.,155
149,]9],247
158.1.302
151982350
178,849,457
107,313.2]]
194000,210
.1 soot 0
189,071451
Pmgram
Ga,.rn. , .[boll.
Charges br ismaises'.
Gain.[ government
2,270,082
3,000,162
2,109,141
2.412,789
2.623,272
2944100
31051
2543.880
2909,603
2,722.527
Public aetety
10,549,410
11803,594
15,739912
162$,499
13,669,509
15.]56,32]
16$9.400
14,157.266
15.006,601
15,636314
Public socks
5,436.948
5.00Q$8
5,401494
6.031.248
5,133728
EAU 167
11,016,118
5,6321871
0,392,8]]
21938,315
Community 0e.chopmanl
3,236A83
4.4229$
5,196276
5129,658
S,BS],.9
Falls 38
5591.9
4,952,534
4,006]45
5599]3]
Community a--
2 ,533,099
8,039,229
31346588
3952,982
9,433218
9.054.504
9,.3,513
CC523b
8.673,K5
8,952,810
Interest on long -term Debt
Opa'a0ng Gretna anal
Con4lbWOna:
],991,059
0750,585
10,891,329
17,489934
12,712593
18,172,823
15,779,951
13,404298
15,81],81]
10710,207
Capital Grants anal
Conlubs ions:
1,582458
4.070720
674815
20,205,940
69473,891 s
6,904,716
31037.915
24,633,716
12,350,100
11,101.239
10.1 gmarnmentel atll,teea
pmgmm revenues
33,480.339
42.58Q217
43,]29.503
71,418,012
110,]]3565
61.906,473
86,939 ON
74,776083
BE 617,008
57.721116
Burin - typeaccatiss
Water
16665.724
16.489,284
18,I3001U
17 fun.196
11,923523
17.918,968
17,270.511
16,966621
17Al2,SM
20,097327
Waelenater
2,9411
2.768,941
2,802.]93
2,907.672
3,311,089
3.535050
354,780
3,479565
3.3643,327
3348.433
.1 hancie ut', e.vbeat
pmgmm revenues
19,611,528
19.24,225
21,312,70
20,4M&M
21,234.612
21 46i,018
20,823291
.,446,185
A W,961
23445,660
Tooll pmnay govenmet
pmgmm .,mule
53,991987
01839,442
ft5,.2FB
91951 B08
140,9001]9
93450,491
19],]82,3]9
95,.3,079
98,.7.969
81,188,976
Nei never- hoceneee):
GOVemmamal atlielass
(72,934,540)
(73,090]08)
(93519,756)
(89493,049)
(19,839950)
(93,99324])
(18,.20.)
(91075.584)
(113900,93])
(107,5942.)
Business -type acirvi0es
2.216.181
1,603853
763,W5
3.265727
1,072770
794,281
(2740,018)
0,517.60.5)
(1,550424)
(316,285)
Total na mvenues leapensss)
$ (70,618.34) 3
(72087,713) 5
(84)54,961) $
(66,22813F) 5
(1],974,180) 5
(93190.969) $
(79,550,098) 5
(99.307,149)
S (115.351,361)
$ 1101910,5751
1 2005 data varies from hand bxause of Incressetl metal assets neatest to PCH Relinquishment
s2.0 dale ulna. Iron trend has'.. of I ncreased capital...... too ma., to bra l 51. Heinousness ,Nauporr Coaal CummuMry Cantor, and Flre Stalon Y7
2W0 data variss from trend because of Increased capital saeala related to Santa Ana Heights Assassins
lne CRy of sass. (Beach mpbmantetl GAS934 I., ee (scely.a/ on. June 30, 2.2
180
CITY OF NEWPORT BEACH
Changes in Net Asseas
tart Ten Raul .-
laccmal Wsls of accounting)
Primary Revenue Sour
556x9,4.
s"W" qm"v
Swcco.0
$580380.
940.4..400] _
530.400,.0
W5
520A.o
oP..p
kVk .1 ID03 IOm 1005 ]0M ]M] LNS 3010
i
181
FIUAI Year
2102
MI
2004
8006
2006
2007
8008
2009
2010
1011
General revenues and other change In nel .eels:
Gmernmental actMfe:
Tams:
Ftpaty laxas
$ 33,583,659
$ 39,474664 $
43831029 $
46303388 $
57,888545 $
8300.405] $
8],388838 $
70.126..
1; 719898. $
71830,345
Sales tax
18.996.571
20.133,598
21,843884
189".828
2146555]
21.008118
2185.242
17,9259%
17.440,736
18,45.181
Bales term -1le
-
-
-
5339.027
5,720020
7.3x8253
8017539
7,503113
a,539,9411
6211.268
Tranaenl...,a -, lo.
7,898655
8,05286
8,045132
9215.882
9632729
121059608
12,]51518
11176956
1101.4,710
13082,451
Busmgs BCeee
2,470,857
2.038845
2,830127
3tgN165
3.848361
3.770,172
4,119,100
4,]]3642
4.0266H
4MAU
Fneact tams
2736641
2.486504
2,786519
3,029,476
3,16255
4,613,932
3853,119
3,9611134
3,715,946
3,]30.819
Molar vchle.11cenae lea
0"CM
3,970,103
3824917
8395860
300,]51
391559
3Mh.
358,23]
314957
4.,042
Molar vats. ca.e
711 Y.
742 957
O.laze
311,020
314,]25
266642
248534
508331
515,128
373,350
230115
201,893
226,257
Im®tmsnj Iowan.
2,171474
2Ht451
584,415
1.209,074
1,939,941
3.175,502
3655,314
1.7648"
765,055
368,081
NtlIn- -In lair value W
vestinents
1083913
310,606
(360596)
(250,125)
(715,645)
(545,533)
506.485
1,096,848
707,200
369135
Can an .1. 0 assts
160236
130.954
Other
12.570
1,294,628
214,534
761.111
]]6907
2.232,370
1,858883
1.862,9"
1.020,272
2.61
Property income
3. "1.556
-
-
-
-
-
-
-
-
-
BhamIXjointr.ntur.ael
2191.582
3MI18
140,819
100:325
(513,791)
253,207
Cap'nsl wntn.-.
036;200.102
17.038792
102,713421
213]]79.060
Sale Ma —,-111
250.,0.
-
-
-
-
-
-
Tanshrs
33,2]7
57783
40000
Total ge— nnente1 isciviti.s
94124],399
893.,148
104384439
308,52,then
104254,52
11],904553
124.688.316
120,272,985
116,874,809
121299,049
Beencent activities:
InvesOnenl Income
838,]]9
505,619
203 Cat
424.157
&9012
70,936
Call
374.80
120399
52.096
N.I roves. In lair value of
Inver .
428.199
"W'697
(07,078)
(87.921)
(1691095)
(67,185)
72913
135]89
184117
hCh,
Property income
27.100
29,800
29,20
261970
G..l wntribNlons
-
-
215,331
-
-
-
-
Inalers
-
(332]])
E7,7.)
(480.)
Total lusinesslype actil
1,344.0]0
942,919
302.791
363206
339917
735.751
061.783
610682
2201516
111,9]3
Total primary gpvernment
942, On 477
1.,246,.7
186.66].229
308.915,569
104.594,269
118.640,304
126.348..9
1M783.667
117.103326
121,351813
Changan m rid.eats
GoVPa., ectivgle
888,412,59
25 Yin Inc
108845,892
239.8514
84417,402
23,911,300
4754238
22,4074B1
3,0736]2
1384 A.
Businessrype activities
3,550159
2,545,972
1,066696
3618.933
2(102,57
1530,032
(2067.036)
(1,006963)
(1321,908)
(204.312)
Total an, 9ovanment
is 13]19]3,110
$. 28 J.5 54 $
1019122]. $
242887447 $
.5,828.9 $
25441,35 $
45,]9],201 $
21,400,518
$ 1,751.54 $
13,441247
Primary Revenue Sour
556x9,4.
s"W" qm"v
Swcco.0
$580380.
940.4..400] _
530.400,.0
W5
520A.o
oP..p
kVk .1 ID03 IOm 1005 ]0M ]M] LNS 3010
i
181
CITY OF NEITPORT BEACH
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
2002 2003 2004 2005 2006 2007 2008 2009
2010 2011
General fund:
Nonspandabse
$ 1,031,742
Reslncur]
1,681,333
Committed
27,619,802
Assigned
11,065,835
llnassignea
20,570,033
Total general fund
62 obwas °
Ad other governmental funds:
6,W7,0g4
Nanepandable
$ 5,098,234
Restnula]
36,4451842
CommXted
115,923344
Assigned
5,633,558
Unassigned
(? 980,032)
Total all other governmental bonds
S 160 °
Tote[ all governsta lfunds
$ 223.601.721
Fiscal Year
11 44.444.380
2002 2033 2004 3005 2036 2007 2008 2(109
2010
General fund.
Reserved
$ 3,165,787
4,3913,418
6,678,579
4,573,195
9,374,722
7 ,233,703
6,W7,0g4
5,907.205
5,472481
unreserved
25,171,551
31,929,366
37,765,801
49.814,197
45,212,339
62,679,499
72,252,035
73,703,759
76,685,385
Tcil aerial fund
28.337.338
$ 36.322.784
11 44.444.380
$ 54.487,395
$ 54:507.061
$ 69.913.202
$ 79,05 &139
$ 79,610.964
5 82,157,866
All Other governmental fund.
Reserved
$ 11,964,833
$ 5,174,296
$ 4,889,031
$13,000,882
$ 36,134,686
$11,168,955
$12080.3&5
$ 8,831,229
$ 9,363,673
unreserved, rePOrtad In
Financial revenue funds
19,302,039
33.042,712
34,191,332
28,391,109
7,533654
18.917,308
21670,956
23,849191
27,973,528
CapXal projects foods
7,120,032
-
6,076,969
2,077,124
(3,258,201)
3,271,954
7,671,450
(10,571,278)
Permanent funds
15
205,506
404,771
660029
934,648
1.170609
1,294,924
Total ell other govsrnmantel funds
$ 30.386,919
$ 30.217,008
$ 39.003363
$ 45.754,466
$ 46.150,235
S 27,48801
$ 3].93),923
$ 41,521,079
$ 28.06404]
Toil all governmental funds
$66724257
74539792
83527743
100241031
100737 298
97401283
116997462
121132843
110218713
The City of Neopod Beach implemented Governmental Accounting Standards Boom Statement No 54(GASB My for the Faces year ending June 30, 2011
Information poor as me Imdementaten of GA58541a not available.
2011 gereral fund date varies from trend due to $31.3 million transfer From Ganerel Fund to Facilities Replacement Fund.
° 2011 older governmental funds data vanes bond trend due to issuance of Civic Center COPS.
4laapoo,wo
Stw,mmm,mmm
$14ommm,wo
Saommm,mmm
$100oo0,Wo
$BO,mmm,mW
$60,mm0,OM
$4o,mmm,aW
$2o,mm,mW
5-
IlTstal all itnevecoonmental Funds
ffiyl
CITY OF NEWPORT BEACH
Changes In Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Rdjusled in Indude Proper, Tax -in lieu pf VLF wM1ich was previously re W. as'mlergovernno -tal revenue
183
Fall Year
2002
2003
2004
2005
20M
2007
2008
2009
2010
2011
Revenues:
Taw
$ 65,878,471
$ 72,866039
$ 79,874,751
$ 91,606,863 '
$102,737,810
$112;230,054
$118,758,201
$115,711,574
$113009443
$ 117,983]65
Infor9wemmenlal
26,227,740
10,399,792
16108023
19,513,589
14,042,994
18868929
21,005,429
11.434,885
15,379,698
11,467,471
Licensee ark parmhe
3,350,958
4,397,520
5,429,632
4.968,234
5,708,965
4.574,659
8474.789
51883,515
3.950,967
5,198,986
C6aryes for sarvlms
10,338569
11,156,294
11,518,782
13,104,478
13.135,366
14,452,723
15,073,178
14,490,120
15,293;362
152&5,813
Flnee and fooce. s
3,384,164
3,448,826
3,605,963
3,422735
3,841,843
4,126,351
4,68$442
4,572,811
4,105,632
31545229
Invlsomeni lnwme
2,758.557
1941,048
967,513
2,358,747
3847,982
5,431137
5,463 ,056
3;245,677
1289,690
1,045,592
Nelmoeasa(c.00 alln as,
value of invesbnems
1,268,972
1.468,682
(360,586)
(493,879)
(1,325,211)
(62608¶
720,488
1,472,335
1,155,363
882,317
Proper, lnwme
10,130,185
10947,021
11,957871
12,337,339
13,825,142
13,965915
15217,903
14,032,342
14,624923
15,539367
Ganetkna
746]74
1,819,159
2,7M367
1,087,825
883,405
1,379,461
2,159,63]
6,760,140
5497,640
1,790,073
CommbNlene (ram proper,
or
-
-
14,79,013
-
-
Grner1.782,696
2,590,504
478,200
980.446
1,042,882
1967465
4,205;0.95
8501914
7,648274
5 ,091527
Tobl revenues
125,867,066
121913.680
-032,102,316
163,663,391
158.341,178
176,367713
193,740,128
166,112,213
182,753.192
177,829,160
ExpeodXUres
Cumnl:
General government
12,292,008
9,689,275
11,024,258
10,926667
12,531;200
13 ,706,081
14508103
15,567,654
15,169546
15,424,734
Pumicsafety
47,041,176
53,035,377
56849,718
59.482,134
65,262.069
68843947
73,486,413
78554344
7,202445
74,94793
PuWkwmFS
19.419,067
21259.792
22,760,896
24365,996
25.430 ,751
28,352,293
30,108941
3,0,619,405
39,922406
31,442,078
Community development
4,588,192
5457,498
5,723,031
6,14499
7,900,503
7,753,035
8,703,841
9,971,536
9,558 ,066
8,430,813
Cammunfty services
9,418.041
9,382,608
10,821346
10.351,414
12.730,727
13,988,589
14,478,146
17.485,605
14.916 ,230
15,662,011
Cause l coal
38,613,906
14,684897
15,180550
33-086,048
24,811237
45,615,169
20524,638
26,072338
36,798653
37,645882
Dem samrs_
Principal euremeni
1,291.099
1,822,913
1,660,350
1,688,801
1,715,542
3,736,507
3,263,948
3,292,641
1.820,679
6,230,089
Intense and fecal v.,as
466974
529,008
520228
499,077
480909
458,035
577299
482908
383,297
1,179,612
Iuuaarenrdem cor.
1,219,071
Tons expenditures
133,927,463
115,862,158
124502375
145,939,054
151,662,938
182,453,716
165,651.329
181,976,431
195,787,322
192,101,452
Exces, ful lenq)of revenues
aver (under) a YendWres
(6060397)
5,151522
7,519,941
15,724337
8476240
(8,088 ,003)
28,088799
4,135,782
(13,014130)
(14,352292)
ONer finanung wurws (uses):
T -r.nin
10,927,460
14,378167
16,553,395
20.601,957
25,194,920
20271,396
2$5133922
23,354,368
2$390,521
58,753,620
Traosfere out
(11,669.089)
(14,342,890)
(18,495,612)
(20,612,176)
(31.177,725)
(22,521,396)
(36,076,952)
(23,354,366)
(21,780521)
(58,763,620)
Prmeede fiomissuance of debt
18,000,000
2,630,736
-
-
-
5,000,0,00
-
-
1500000
126860,000
Issuance of de a pramlum
1,155,300
Total oMrt financng sources
(uses)
17,258371
2,664,013
(11942217)
(10,219)
(5992805)
2,750070
(8,493,030)
2,100,000
127,815,300
Net change in Noel balances
$ 9.197,974
$ 7,815,535
$ 557,724
$ 18,714,118
$ 495,435
$ (3,338,003)
$ 19,595,769
$ 4,135,782
$(10914,130)
$113,483,008
Debt service as a percentage of
-pifal evgendltures
1B%
22%
18%
17%
1]%
28%
25%
23%
13%
48%
Rdjusled in Indude Proper, Tax -in lieu pf VLF wM1ich was previously re W. as'mlergovernno -tal revenue
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 Eleven Fiscal Years
Fiscal Year
Ended June
30
Public Utility
Secured
City
Unsecured
Taxable Assessed
Value
Change
Total Direct
Tax Rate
2002
2,000
16,515,797,641
913,075,074
17,428,874,715
N/A
1.000%
2003
16,531,505
21,339,270,499
1,085,951,066
22,425,221,565
28.67%
1.000%
2004
16,531,505
23,219,166,299
1,372,432,950
24,591,599,249
9.66%
1.000%
2005
53,310
25,193,662,254
1,484,019,033
26,677,681,287
8.48%
1.000%
2006
53,310
28,136,607,566
1,914,106,993
30,050,714,559
12.64%
1.000%
2007
53,310
31,423,473,042
1,569,867,249
32,993,340,291
9.79%
1.000%
2008
53,310
34,188,568,583
1,668,015,342
35,856,583,925
8.68%
1.000%
2009
699,230
36,436,106,070
1,538,539,482
37,974,645,552
5.91%
1.000%
2010
699,230
37,078,595,810
1,564,808,312
38,643,404,122
1.76%
1.000%
2011
699,230
37,080,217,275
1,626,947,910
38,707,165,185
0.16%
1.000%
2012
699,230
37,550,413,836
1,556,752,313
39,107,166,149
1.03%
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 maybe
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.
The City of Newport Beach has elected to show eleven years of data for this schedule as Fiscal year 2012 data
was readily available when compiling this schedule.
Source: County of Orange Auditor - Controller's Office
CITY OF NEWPORT BEACH
Direct and Overlapping Property Tax Rates
(Rate per $100 of assessed value)
Last Ten Fiscal Years
Fiscal Year
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
City Direct Rates:
City basic rate $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Total City Direct Rate 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000
Overlapping Rates
Water Districts
0.008
0.007
0.006
0.006
0.069
0.078
0.096
0.096
0.110
0.110
School Districts
0.0242
0.0682
0.1019
0.1439
0.1137
0.1103
0.1092
0.1009
0.1521
0.1548
Total Overlapping Rate
0.032
0.075
0.108
0.150
0.182
0.189
0.205
0.197
0.262
0.265
Total Direct & Overlapping Rate
$1.032
$1.075
$1.108
$1.150
$1.182
$1.189
$.1.205
$1.197
$1.262
$1.265
NOTE:
In 1978, Califomia 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: HdL, Coren & Cone
CITY OF NEWPORT BEACH
Principal Property Taxpayers
Current Year and Nine Years Ago
Taxpayer
Taxable Assessed
Value
2011
Rank
Percent of Total
City Taxable
Assessed Value
The Irvine Company
$ 1,943,855,195
1
5.02%
Bay Island Club
146,530,665
2
0.38%
Newport Bluffs LLC
137,816,296
3
0.36%
Balboa Bay Club Inc.
126,251,407
4
0.33%
UDR Newport Beach North LP
117,510,707
5
0.30%
Coronado South Apartments LP
114,393,193
6
0.30%
Jazz Semiconductor Inc
106,434,577
7
0.27%
EO MacArthur LLC
102,733,580
8
0.27%
Newport Healthcare Center
101,818,515
9
0.26%
100 Bayview LLC
94,303,543
10
0.24%
Source: HdL, Coren and Cone Co.
187
2002
Percent of Total
Taxable Assessed
City Taxable
Value Rank
Assessed Value
$ 926,646,311 1
4.41%
N/A
0.00%
N/A
0.00%
N/A
0.00%
127,762,327 4
0.61%
N/A
0.00%
N/A
0.00%
N/A
0.00%
N/A
0.00%
nun
n nnw.
CITY OF NEWPORT BEACH
Property Tax Levies and Collections
Last Ten Fiscal Years
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.
3 In Fiscal Year 2009 -10 the State borrowed approximately $6.2 million of property tax revenue in accordance with
Proposition 1A (2004). Collections include the full amount of the borrowing as the City recovered the $6.2 million in
Fiscal Year 2009 -10 by participating in a securitization program through the California Statewide Communities
Development Authority.
4 Negative numbers reflect property tax refunds allocated to the referenced year
Source: Orange County Auditor Controller's Office
Collected within the Fiscal
Year of Levy
Total Collections to Date
Fiscal Year
Collections in
Ended June
Taxes Levied for
Percent of
Subsequent
Percent of
30
the Fiscal Year
Amount
Levy
Years
Amount
Levy
2002
31,298,541 1
30,651,143
97.93%
102,001
30,753,144
98.26%
2003
37,092,528
36,351,026
98.00%
529,986
36,881,012
99.43%
2004
42,469,238
41,420,410
97.53%
670,685
42,091,095
99.11%
2005
45,111,328
54,063,951
119.85 %2
483,804
54,547,7552
120.92%
2006
47,286,816
45,558,039
96.34%
728,365
46,286,404
97.88%
2007
70,194,492
68,820,402
98.04%
808,765
69,629,167
99.19%
2008
69,315,117
68,242,326
98.45%
846,904
69,089,231
99.67%
2009
71,006,357
70,879,909
99.82%
(294,366)4
70,585,543
99.41%
2010
68,412,731
69,022,2703
100.89%
(1,227,109)4
67,795,161
99.10%
2011
70,476,893
70,477,221
100.00%
(796,322)4
69,680,899
98.87%
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.
3 In Fiscal Year 2009 -10 the State borrowed approximately $6.2 million of property tax revenue in accordance with
Proposition 1A (2004). Collections include the full amount of the borrowing as the City recovered the $6.2 million in
Fiscal Year 2009 -10 by participating in a securitization program through the California Statewide Communities
Development Authority.
4 Negative numbers reflect property tax refunds allocated to the referenced year
Source: Orange County Auditor Controller's Office
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
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
CITY OF NEWPORT BEACH
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Note: This schedule excludes claims and judgements, employee compensated absence, OPEB and Early
Retirement Incentive Plan Liabilities. Details regarding the City's outstanding debt can be found in the notes to
the financial statements.
1 Amount does not include bond premium.
2 These ratios are calculated using personal income and population for the prior calendar year.
190
Governmental Activities
Fiscal
Year
Pre-
Purchase
Ended
Certificates of
Annexation
Agreement
June 30
Participation 1
Note Payable
Agreement
CDBG Loan
Capital Leases
Payable
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
2011
126,660,000
737,854
7,200,000
1,788,000
-
750,000
Note: This schedule excludes claims and judgements, employee compensated absence, OPEB and Early
Retirement Incentive Plan Liabilities. Details regarding the City's outstanding debt can be found in the notes to
the financial statements.
1 Amount does not include bond premium.
2 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
191
Business -type Activities
Total
Percentage of
Governmental
Water Revenue
Total Business-
Total Primary
Personal
Debt Per
Activities
Bonds
type Activities
Government
Income 2
Capita 2
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
137,135,854
-
-
137,135,854
2.32%
1,606
191
CITY OF NEWPORT BEACH
Outstanding Debt Serviced by the General Fund
Last Ten Fiscal Years
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 I
Per Capita
2002
6,610,000
N/A
6,610,000
0.04%
94
2003
6,365,000
N/A
6,365,000
0.04%
84
2004
6,110,000
N/A
6,110,000
0.03%
77
2005
5,845,000
N/A
5,845,000
0.02%
72
2006
5,570,000
N/A
5,570,000
0.02%
67
2007
5,280,000
3,000,000
8,280,000
0.03%
99
2008
4,980,000
1,500,000
6,480,000
0.02%
77
2009
4,335,000
N/A
4,335,000
0.01%
50
2010
3,990,000
1,500,000
5,490,000
0.01%
63
2011
126,660,000
750,000
127,410,000
0.33%
1,492
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, 2011
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.D. 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 Distinct 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:
DIRECT GENERAL FUND DEBT:
City of Newport Beach Certificates of Participation
TOTAL DIRECT 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
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
TOTAL GROSS DIRECT AND 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
$ 38,707,165,185
811,396,291
$ 37,895,768,894
Percentage Outstanding Debt Estimated Share of
Applicable ' 6130111 Overlapping Debt
2.124%
227,670,000
4,835,711
35.323%
326,768,867
115,424,567
3.585%
309,908,025
11,110,203
14.711%
31,365,000
4,614;105
100.000%
9,600,000
9,600,000
72.559%
253,714,150
184,092,450
100.000%
12,540,000
12,540,000
8.567%
310,984,745
26,642,063
11.134%-
81,400,000
100.000%
79,959,310
49,534,192
100.000%
40,465,000
40,465,000
100.000%
6,140,000
6,140,000
100.000%
18,855,000
18,855,000
100.000%
33,438,296
33,438,296
100.000%
12,600,000
12,600,000
100.000%
51,560,000
51,560,000
100.000%
5,870,000
5,870,000
767,763,959
1,731,438,393
587,321,587
100.000% 126,660,000 126,660,000
126,660,000 126,660,000
10.144% $
316,898,000
$
32,146,133
10.144%
54,682,497
Combined Direct Debt ($126,660,000)
5,546,992
10.144%
19,000,000
Net Combined Tolal Debt
1,927,360
11.990%
14,120,000
1,692,988
3.084%
17,375,000
535,845
8.567%
52,212,863
4,473,076
11.269%
81,400,000
9,172,966
555,688,360
55,495,360
682, 348, 360
182,155, 360
(1,692,988)
$
180,462,372
$
769,476,947
$
767,763,959
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 announced capital lease obligations.
Ratios to 2010 -11 Assessed Valuation:
Total Overlapping Tax and Assessment Debt
1.52%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($126,660,000)
0.33%
Gross Combined Total Debt
2.03%
Net Combined Tolal Debt
2.03%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/11:
$0
Source: California Municipal Statistics, Inc.
193
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Legal debt margin $ 653,582,802 $ 840,945,809 $ 922,184,972 $ 1,000,413,048
Total debt applicable to the limit
as a percentage of debt limit 0.0% 0.0% 0.0% 0.0%
NOTE:
The State of California Government Code Section 43605 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 Stale of California for local governments located within the state.
Source: City Finance Department
194
Fiscal Year
2002
2003
2004
2005
Assessed valuation
$ 17,428,874,715
$ 22,425,221,565
$ 24,591,599,249
$ 26,677,681,287
Conversion percentage
25%
25%
25%
25%
Adjusted assessed valuation
4,357,218,679
5,606,305,391
6,147,899,812
6,669,420,322
Debt limit percentage
15%
15%
15%
15%
Debt limit
653,582,802
840,945,809
922,184,972
1,000,413,048
Total net debt applicable to limit:
General obligation bonds
-
-
-
-
Legal debt margin $ 653,582,802 $ 840,945,809 $ 922,184,972 $ 1,000,413,048
Total debt applicable to the limit
as a percentage of debt limit 0.0% 0.0% 0.0% 0.0%
NOTE:
The State of California Government Code Section 43605 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 Stale of California for local governments located within the state.
Source: City Finance Department
194
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
2006
2007
2008
2009
2010
2011
$ 30,050,714,559
$ 32,993,340,291
$ 35,856,583,925
$ 37,974,645,552
$ 38,643,404,122
$ 38,707,165,185
25%
25%
25%
25%
25%
25%
7,512,678,640
8,248,335,073
8,964,145,981
9,493,661,388
9,660,851,031
9,676,791,296
15%
15%
15%
15%
15%
15/
1,126,901,796
1,237,250,261
1,344,621,897
1,424,049,208
1,449,127,655
1,451,518,694
$ 1,126,901,796 $ 1,237,250,261 $ 1,344,621,897 $ 1,424,049,208 $ 1,449,127,655 $ 1,451,518,694
0.0% 0.0% 0.0% O.D%
195
0.0% 0.0%
This page left blank intentionally.
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
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; and, E -1 Population Estimates for Cities, Counties and State January 1, 2010 and 2011
1 �1 U.S. Census Bureau - American Community Survey 1 -Year Estimates
1'I State of California, Employment Development Department
M
Personal Income
Per Capita
Unemployment
Fiscal Year
Population
(in thousands)
Incomez
Rate'
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%
2011
85,376
5,916,215
69,296
5.8%
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; and, E -1 Population Estimates for Cities, Counties and State January 1, 2010 and 2011
1 �1 U.S. Census Bureau - American Community Survey 1 -Year Estimates
1'I State of California, Employment Development Department
M
CITY OF NEWPORT BEACH
Principal Employers'
Current Year and 6 years ago
' Figures reflect number of employees of employer at the time the information was collected.
2 Information for nine years ago is not available.
3 Company listed was unable to provide reliable employee data for 2005.
4 The Island Hotel was formerly the Four Seasons Hotel.
Source: Data obtained from companies listed and compiled by City Finance Department.
199
2011
20052
Number of
Percent of Total
Number of
Percent of Total
Employer
Employees
Rank
Employment
Employees
Rank
Employment
Hoag Memorial Hospital
5,000
1
6.22%
3,640
1
4.37%
Pacific Life Insurance
1,119
2
1.39%
2,788
2
3.35%
Glidewell Dental
1,100
3
1.37%
N/A 3
-
N/A
PIMCO Advisors
1,005
4
1.25%
530
7
0.64%
Newport-Mesa Unified School District
895
5
1.11%
N/A 3
-
N/A
City of Newport Beach
807
6
1.00%
788
4
0.95%
Resort at Pelican Hill
750
7
0.93%
-
-
N/A
Jazz Semi - Conductor
554
8
0.69 %
730
5
0.88%
Balboa Bay Club and Resort
500
9
0.62%
N/A 3
-
N/A
The Island Hotel
480
10
0.60%
525 4
8
0.63%
Fletcher Jones Motor Cars Inc.
450
11
0.56%
N/A 3
-
N/A
Marriott- Newport Beach
334
12
0.42%
475
9
0.57%
' Figures reflect number of employees of employer at the time the information was collected.
2 Information for nine years ago is not available.
3 Company listed was unable to provide reliable employee data for 2005.
4 The Island Hotel was formerly the Four Seasons Hotel.
Source: Data obtained from companies listed and compiled by City Finance Department.
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.
200
CITY OF NEWPORT BEACH
Full -time City Employees by Function
Last Ten Fiscal Years
Source: City Finance Department
201
Full -Time Employees as of June 30, 2011
Function
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
General government
77
77
84
86
90
93
93
99
100
94
Public safety
384
384
385
385
388
393
397
397
397
381
Community development
44
46
46
47
48
52
56
57
57
51
Public works
163
164
162
162
163
163
165
160
160
144
Community services
57
58
57
60
65
66
68
71
71
70
Balboa yacht basin
1
1
1
1
-
-
-
-
-
-
Water
33
33
33
34
34
34
35
35
35
37
Wastewater
12
12
13
13
13
13
13
13
13
15
Total
771
775
781
788
801
814
827
832
833
792
Source: City Finance 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
2002
2003
2004
2005
3,684
3,485
3,201
3,079
73,191
68,907
71,076
72,665
359
442
423
228
6,400
4,460
4,500
4,550
5,500
5,500
5,000
4,500
50,000
55,000
50,000
50,000
188,689
200,077
185,627
194,749
10,917
12,094
12,041
11,936
118
99
53
55
17
17
17
17
N/A
50
25
24
202
262
293
205
1,263,200 1,347,583 1,392,346 1,475,025
202
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
Fiscal Year
2006
2007
2008
2009
2010
2011
2,999
3,289
3,196
3,245
3,307
3,332
74,780
67,170
70,150
65,176
66,310
67,459
214
175
393
371
338
350
6,470
7,136
7,250
6,912
7,000
7,000
4,600
4,980
4,644
3,882
3,467
2,580
55,000
59,459
58,000
49,644
49,540
39,972
194,722
201,258
318,779
318,000
320,000
320,000
12,628
14,728
15,279
16,035
15,458
15,063
52
95
60
26
19
28
17
17
17
17
17.25
17.25
24
45
45
12
9
6
335
226
212
209
200
235
1,443,078 1,622,573 1,701,476 1,575,518 1,694,145 1,738,027
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
2002 2003 2004 2005
Police:
Stations
1
1
1
1
Fire:
Fire stations
7
7
7
8
Lifeguard Headquarters
1
1
1
1
Public works:
Streets (miles)
325
333
333
333
Streetlights
7,277
7,277
7,277
7,277
Traffic signals
130
131
131
144
Recreation & Senior Services:
Parks
47
47
47
47
Community centers
11
11
11
11
Aquatic Center
1
1
1
1
Water:
Water mains (miles)
294.81
294.81
294.81
298.42
Maximum daily capacity (thousands of gallons)
20,796
21,291
20,092
20,633
Wastewater:
Sanitary sewers (miles)
176.90
178.40
179.15
179.15
Storm sewers (miles)
51.40
53.50
57.60
57.60
Library Services:
Libraries
4
4
4
4
Source: City of Newport Beach
204
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
2006 2007 2008 2009 2010 2011
1
1
1
1
1
1
8
8
8
8
8
8
1
1
1
1
1
1
333
395
395
395
395
395
7,277
7,278
7,278
7,278
7,278
7,278
147
147
148
148
148
148
47
47
48
49
49
49
11
12
13
13
13
13
1
1
1
1
1
1
299.88
300.35
300.17
300.31
303.27
303.25
19,369
20,392
20,365
19,707
19,341
28,540
179.15
202.80
202.80
202.80
202.80
202.40
57.60
95.50
95.50
95.50
95.50
95.40
4
4
4
4
4
4
205
CITY OF NEWPORT BEACH
Water Sold by Type of Customer
Last Ten Fiscal Years
(in hundred cubic feet)
Fiscal Year
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Type of Customer:
Residential 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 3,656,705
Commercial 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 1,144,975
Government 480,809 597,395 486,051 487,189 607,650 601,659 361,457 420,697 349,334 320,821
Total 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 5,122,501
Total direct rate
per 100 cubic R. 2.00 2.00 2.00 2.00 2.08 2.08 2.08 2.08 2.20 2.46
Source: City Utilities Department
0
CITY OF NEWPORT BEACH
Water Rates
Last Ten Fiscal Years
Fiscal Year
Ended June
Monthly
Rate per
30
Base Rate
100 cubic ft
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
2011
21.03
2.81
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
Water Customer
Water Charges
2011
Rank
Percent of Total
Water Revenues
Water Charges
2002
Rank
Percent of Total
Water Revenues
The Irvine Company
$ 254,273
1
1.26%
$ 241,387
1
1.36%
Hoag Memorial Hospital
197,381
2
0.98%
60,355
15
0.34%
Big Canyon Country Club
154,772
3
0.77%
172,751
3
0.97%
Newport Beach Country Club
110,751
4
0.55%
132,881
5
0.75%
Park Newport Ltd
86,255
5
0.43%
107,807
7
0.61%
UDR Newport Beach
80,457
6
0.40%
N/A
0.00%
Bluffs Homeowners Association
75,192
7
0.37%
N/A
0.00%
Irvine Company Retail Property
67,238
8
0.33%
174,111
2
0.98%
Newport-Mesa USD
62,979
9
0.31%
73,970
11
0.42%
Newport Dunes Resort
53,302
10
0.26%
65,575
17
0.37%
Pacific View - Pierce Bros.
49,057
11
0.24%
41,224
19
0.23%
IOIC /PMS Engineerting Department
42,799
12
0.21%
N/A
0.00%
Balboa Village Community Association
33,830
13
0.17%
107,022
8
0.60%
Jasmine Creek Community Association
33,174
14
0.16%
108,956
6
0.61%
Bayside Village
32,466
15
0.16%
37,169
21
0.21%
$ 1,333,926
6.61%
$ 1,081,821
6.07%
Source: City Revenue Division
KIM
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
(949) 644 -3123
www.newportbeachca.gov /financial info