HomeMy WebLinkAboutFiscal Year 2021-22 Financial StatementC I T Y O F
N E W P O R T B E A C H
ANNUAL
COMPREHENSIVE
FINANCIAL REPORT
FISCAL YEAR ENDED JUNE 30, 2022
Annual Comprehensive Financial Report
For the Fiscal Year Ended June 30, 2022
Prepared by the Finance Department
Jason Al-Imam, Finance Director/Treasurer
The City of Newport Beach was incorporated September 1, 1906
The present City Seal was adopted July 22,1957
INTRODUCTORY SECTIONINTRODUCTORY SECTION
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CITY OF NEWPORT BEACH
Annual Comprehensive Financial Report
Year Ended June 30, 2022
TABLE OF CONTENTS
INTRODUCTORY SECTION
(Unaudited)
Table of Contents ....................................................................................................................... 1
Letter of Transmittal ................................................................................................................... 5
GFOA Certificate of Achievement for Excellence in Financial Reporting ................................ 19
List of City Officials .................................................................................................................. 20
Organization Chart ................................................................................................................... 21
FINANCIAL SECTION
Independent Auditors' Report............................................................................................ 25
Management’s Discussion and Analysis .......................................................................... 31
(Required Supplementary Information)
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position ............................................................................................... 51
Statement of Activities ..................................................................................................... 52
Fund Financial Statements:
Governmental Funds:
Balance Sheet .............................................................................................................. 58
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Position....................................................................................... 61
Statement of Revenues, Expenditures and Changes in Fund Balances ...................... 62
Reconciliation of Statement of Revenues, Expenditures and Changes
in Fund Balances of Governmental Funds to the Statement of Activities .............. 65
Budgetary Comparison Statements:
General Fund ......................................................................................................... 66
Tide and Submerged Land – Operating Fund ........................................................ 68
Tide and Submerged Land – Harbor Capital Fund ................................................ 69
American Rescue Plan Act Fund ........................................................................... 70
Proprietary Funds:
Statement of Net Position............................................................................................. 74
Statement of Revenues, Expenses and Changes in Net Position ............................... 75
Statement of Cash Flows ............................................................................................. 76
Fiduciary Funds:
Statement of Fiduciary Net Position ............................................................................. 80
Statement of Changes in Fiduciary Net Position .......................................................... 81
Notes to the Financial Statements ..................................................................................... 84
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Required Supplementary Information
Defined Benefit Plan For Miscellaneous Employees:
Schedule of Changes in the Net Pension Liability and Related Ratios ......................... 152
Schedule of Contributions ............................................................................................. 154
Defined Benefit Plan For Safety Employees:
Schedule of Changes in the Net Pension Liability and Related Ratios ......................... 156
Schedule of Contributions ............................................................................................. 158
Post-Employment Health Care Benefits (OPEB):
Schedule of Changes in the Net OPEB Liability and Related Ratios ............................ 160
Schedule of Contributions ............................................................................................. 161
Supplementary Schedules
Other Governmental Funds:
Combining Balance Sheet ............................................................................................. 168
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances .............................................................................................................. 175
Budgetary Comparison Schedules:
State Gas Tax Fund ...................................................................................................... 182
SB1 Gas Tax RMRA Fund ............................................................................................ 183
Asset Forfeiture Fund ................................................................................................... 184
OTS DUI Grant Fund .................................................................................................... 185
Circulation and Transportation Fund ............................................................................. 186
Building Excise Tax Fund .............................................................................................. 187
Community Development Block Grant Fund ................................................................. 188
Air Quality Management District Fund .......................................................................... 189
Environmental Liability Fund ......................................................................................... 190
Supplemental Law Enforcement Fund .......................................................................... 191
Contributions Fund ........................................................................................................ 192
FIIN Fund ...................................................................................................................... 193
Restricted Programs Fund ............................................................................................ 194
Measure M Fund ........................................................................................................... 195
Oceanfront Encroachment Fund ................................................................................... 196
PEG Fees Fund ............................................................................................................ 197
Internal Service Funds:
Combining Statement of Net Position ........................................................................... 202
Combining Statement of Revenues, Expenses and Changes in Net Position .............. 203
Combining Statement of Cash Flows ............................................................................ 204
Fiduciary Funds:
Combining Statement of Fiduciary Net Position ............................................................ 207
Combining Statement of Changes in Fiduciary Net Position......................................... 208
STATISTICAL SECTION
(Unaudited)
Financial Trends:
Net Position by Component ................................................................................................ 212
Changes in Net Position ...................................................................................................... 214
Fund Balances of Governmental Funds .............................................................................. 216
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Changes in Fund Balance of Governmental Funds ............................................................ 218
Revenue Capacity:
Assessed Value and Estimated Actual Value of Taxable Property ..................................... 222
Property Tax Rates, Direct and Overlapping Governments ................................................ 223
Principal Property Taxpayers .............................................................................................. 224
Property Tax Levies & Collections ...................................................................................... 225
Debt Capacity:
Ratios of Outstanding Debt by Type ................................................................................... 229
Ratios of General Bonded Debt .......................................................................................... 230
Schedule of Direct and Overlapping Debt ........................................................................... 231
Computation of Legal Debt Margin ..................................................................................... 232
Demographic and Economic Information:
Demographic and Economic Statistics ................................................................................ 236
Principal Employers ............................................................................................................ 237
Operating Information:
Full-Time City Employees by Function ................................................................................ 241
Operating Indicators by Function ........................................................................................ 242
Capital Asset Statistics by Function .................................................................................... 244
Water Sold by Customer Type ............................................................................................ 246
Utility Rates ......................................................................................................................... 247
Major Water Customers ...................................................................................................... 248
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Finance Department
CITY OF NEWPORT BEACH
100 Civic Center Drive
Newport Beach, California 92660
949 644‐3127 | 949 644‐3339 FAX
newportbeachca.gov/finance
February 6, 2023
Honorable Mayor, Members of the City Council,
and Residents of the City of Newport Beach, California
The City Charter and California state law require that the City of Newport Beach (“City”)
issue a complete set of financial statements annually and that an independent firm of
certified public accountants audit this report in conformance with generally accepted
auditing standards (“GAAS”). The Annual Comprehensive Financial Report (“ACFR”) of
the City of Newport Beach for the year ended June 30, 2022 is hereby submitted.
The ACFR was prepared in conformance with generally accepted accounting principles
(“GAAP”) as promulgated by the Governmental Accounting Standards Board (“GASB”).
This report consists of City management’s representations concerning the finances of the
City of Newport Beach. Responsibility for the accuracy and completeness of the data
presented rests with the City. Management of the City is also responsible for establishing
and maintaining an internal control structure designed to ensure that the assets of the
government are protected from loss, theft, or misuse, and to ensure that adequate
accounting data is compiled to allow for the preparation of financial statements in
conformity with generally accepted accounting principles. The internal control structure
is designed to provide reasonable, but not absolute, assurance that these objectives are
met. The concept of reasonable assurance recognizes that: (1) the cost of a control
should not exceed the benefits likely to be derived; and (2) the valuation of costs and
benefits requires estimates and judgments by management. We believe the information
presented in this report is complete and accurate in all material respects, and that it is
reported in a manner designed to fairly present the financial position and results of
operations of the various activities of the City of Newport Beach.
The City of Newport Beach’s financial statements have been audited by DavisFarr 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 (“FY”) ended June 30, 2022 are free of material misstatement. The
independent audit involved examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements; assessing the accounting principles used and
significant estimates made by management; and evaluating the overall financial
statement presentation. The independent auditor concluded, based on the audit, that
there was a reasonable basis for rendering an unmodified opinion that the City of Newport
Beach’s financial statements for the year ended June 30, 2022, are fairly presented in
5
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
Newport Beach is a community located in the coastal center of Orange County, in the
heart of Southern California, with Los Angeles County to the north and San Diego County
to the south. There are currently 34 cities within the county. In terms of population,
Orange County is the third largest county in California trailing Los Angeles and San Diego.
It is the sixth largest county in the nation.
The general vicinity of Newport Beach and Orange County relative to the counties of Los
Angeles, San Bernardino, Riverside, and San Diego is illustrated on the map below:
6
Newport Beach surrounds Newport Bay, well known for its picturesque islands and one
of the greatest recreational harbors in the world, accommodating about 9,000 recreational
and sports charter boats docked within its 21-square-mile harbor. The bay and the ten
miles of ocean beach offer outstanding fishing, swimming, surfing, and aquatic sports
activities. The City has a permanent population of 83,727, which typically grows to well
over 100,000 during the summer months, including 20,000 to 100,000 or more tourists
daily. There are fine residential areas, modern shopping facilities, and a quality school
system. The University of California, Irvine, is located immediately adjacent to the city,
and several other colleges are within a 30-mile radius.
The following map illustrates the communities within Newport Beach; the upper bay, the
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.
Newport Beach was incorporated on September 1, 1906. The City Charter was originally
adopted in 1954 but has been updated and amended over time. The City is governed by
seven Council Members, and 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 Mayor is selected by the City Council from among
its membership and serves a one-year term. The City Council is responsible for, among
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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, and street light utility services. The City provides water and wastewater
service to most areas within the city limits, but it does not provide gas, cable television,
electrical, or other utility services. Public elementary and secondary education is provided
by the Newport-Mesa Unified School District and the Laguna Beach Unified School
District.
Component Unit: The City’s financial statements present the financial activity of the City
of Newport Beach (the primary government) and the Newport Beach Public Facilities
Corporation (a component unit of the City). The Corporation is blended into the City’s
financial statements because of its operational and financial relationship with the City.
Even though it is a legally separate organization, City of Newport Beach elected officials
are 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 (1a) of the Notes to the Financial Statements.
DEMOGRAPHICS
Reflective of a mature community, vacant land has become increasingly scarce and the
city is relatively built-out. Currently at 83,727, the population has been very stable as
indicated by the following chart.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Fiscal Year
Population
8
The effective buying income and median household income are generally higher in
Newport Beach than in other areas of the State and the U.S. overall. As illustrated by the
table below, Newport Beach’s median household income is nearly twice that of the U.S.
median household income.
The leading industries here are professional, scientific, health care, finance, insurance,
legal, and travel/tourism. Unemployment in the City declined to 2.6% as of November
2022 due to the easing of restrictions associated with the COVID-19 pandemic, and is
lower compared to the state’s 4.0%, and the county’s 3.0%, as illustrated in the following
chart.
More detailed information concerning the City’s demographics and statistics are
contained within the Statistical Section of this report.
LOCAL ECONOMY
Financial results at the end of the fiscal year, along with key economic indicators such as
unemployment rates, taxable sales and assessed property values, are indicative of the
recent robust improvement to the local economy after emerging from the global
pandemic. As COVID-19 related restrictions were significantly reduced around the
beginning of the fiscal year, the City experienced a rebound in revenues much quicker
than anticipated. As consumer demand increased and services returned to normal, the
City ended the fiscal year in a positive financial position with the City’s General Fund
revenue increasing 11.5% from the prior fiscal year.
City of Newport Beach $136,588
Orange County 100,559
California 84,907
USA 69,717
2021 Median Household Income
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
Calendar Year
Historical Unemployment Rates
(Rates are not seasonally adjusted)
Newport Beach
Orange County
California
* through November 30, 2022
9
As briefly noted in the preceding demographics section, after a sharp increase in the
unemployment rate due to the pandemic, the unemployment rate has decreased a
combined 4.2% over the past two years and is back to pre-pandemic levels. This is further
evidence that the local economy is returning to normal levels as more people re-enter the
local workforce. As such, consumer spending is expected to continue to improve which,
will support additional growth in tax revenues. While recent trends in inflation provide
cause for concern in the broader economy, the City is well positioned to overcome these
pressures as any short-term increase in inflation would have a corresponding increase in
tax revenues.
TOP THREE REVENUE SOURCES
Most General Fund revenue categories performed at or higher than their budgeted levels
for the fiscal year due to more favorable economic conditions than anticipated when the
budget was developed in April 2021. Actual revenues were $22.1 million or 9.2% higher
than final anticipated estimates. As discussed in more detail below, the primary positive
variances were in sales tax and transient occupancy taxes.
The top three individual revenue sources, Property Taxes, Sales Taxes and Transient
Occupancy Taxes (TOT), represent 75.3% of all General Fund revenues. Tax revenues
in total, including business licenses, franchise fees, and other taxes represent 80.4% of
all General Fund revenues, while only 19.6% is generated from other revenue sources.
Property Taxes
Unlike many cities, property taxes, not sales taxes, are the number one source of revenue
for the City of Newport Beach, representing almost half (47.5%) of all General Fund
revenues. Due to the limited supply of scenic coastal property and the unique access to
Newport Bay, the Newport Beach community has developed into affluent residential
neighborhoods and high-end commercial districts. Consistent and vigorous demand for
47%
18%
10%
5%
20%
General Fund Revenues
Property Taxes
Sales Taxes
Transient Occupancy Taxes
Other Taxes
All Other Sources
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coastal property has allowed the City to enjoy long-term growth trends with its number
one revenue source. Property tax revenues for Fiscal Year 2021-22 came in $2.1 million
or 1.7% higher than originally budgeted, which is an indication of timely property tax
payments and higher valuations.
Detached single-family residential property values generally trended positively during the
fiscal year. The median home sales price of detached single-family residences in
Newport Beach was $3.8 million for the quarter ending June 30, 2022, up 3.9% from the
prior quarter and 18.7% higher than the quarter ending June 30, 2021. Newport Beach’s
estimated median detached single-family residence price of $3.8 million far exceeds the
countywide estimated median value of $1.2 million. With positive trends in Newport Beach
home prices, this category will likely continue to improve, which bodes well for future
secured property tax revenues. This positive trend is illustrated in the table below.
After Californians passed Proposition 13 in 1978, assessed property value is reassessed
to market value only when the property changes ownership. Otherwise, the assessed
value (“AV”) grows by no more than two percent per year. This practice creates a
constant lag and buffer between assessed and market values, effectively insulating the
tax base from more market volatility.
While property tax growth rates fell sharply during the Great Recession, the City has
experienced positive AV growth during each of the past 28 years (see chart below with
the past 15 years of AV growth demonstrated). This positive growth occurred while many
other cities experienced decreases in their AV during 2008 through 2011. Note that while
growth slowed, the assessed value never declined throughout the recession.
Calendar Home %
Year Value Change
2013 1,800,000$
2014 1,894,500$ 5.25%
2015 1,975,000$ 4.25%
2016 2,150,000$ 8.86%
2017 2,400,000$ 11.63%
2018 2,517,000$ 4.88%
2019 2,435,000$ -3.26%
2020 2,587,500$ 6.26%
2021 3,200,000$ 23.67%
2022* 3,700,000$ 15.63%
Source: HdL Coren & Cone
*Data through November 2022
CITY OF NEWPORT BEACH
Detached Single Family Home Values
Median Price
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Value changes in Newport Beach show continued appreciation in property values in
Fiscal Year 2021-22. Over the past 10 years, assessed valuation increased an average
of 5.9% per year and 6.1% over a twenty-year period. Newport Beach’s assessed
property values increased 4.5%, with a local assessed value of $66.6 billion for Fiscal
Year 2021-22.
Sales Taxes
The second largest funding source for the General Fund is sales tax revenue, making up
about 17.6% of General Fund revenues. The City’s sales tax base is largely generated
from three industry categories – autos and transportation, general consumer goods, and
restaurants/hotels. Most of these industries are also heavily impacted by tourism.
Based on the strong growth seen in the third quarter of Fiscal Year 2021-22 and the
projections from the City’s sales tax consultants, staff estimated the sales tax revenue for
Fiscal Year 2021-22 to finish the year at $45.4 million in the third quarter budget update.
Actual sales tax receipts came in at $46.2 million, or $765,000 over staff’s most recent
estimate.
This increase results from two primary drivers. First, while auto sales have slowed due
to inventory shortages, price increases have more than offset this decline and have
resulted in strong growth in this category of sales tax revenues of 10.6% over Fiscal Year
2020-21. Second, revenues from brick-and-mortar retail establishments and restaurants
& hotels have now surpassed the pre-pandemic high as consumer behavior has largely
returned to normal. These revenues grew at rates of 30.3% and 37.0%, respectively,
versus Fiscal Year 2020-21. Also factoring into the strong growth is revenue from fuel
and service stations, with 46% growth versus the prior year due to higher fuel prices and
higher demand.
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, “General Retail”, accounts
1.8%
7.1%
0.2%1.0%2.9%5.2%5.7%
5.9%6.5%6.6%
7.3%5.3%
$-
$10,000,000,000
$20,000,000,000
$30,000,000,000
$40,000,000,000
$50,000,000,000
$60,000,000,000
$70,000,000,000
2008-092009-102010-112011-122012-132013-142014-152015-162016-172017-182018-192019-202020-212021-222022-23Total Assessed Property Value Growth
4.5%4.8%
5.9%
12
for 37.0% of total sales taxes. The next largest segments, “Transportation” and “Food
Products” account for 36.2% and 19.1% of total sales taxes, respectively. The next
largest sales tax segment, “Business to Business” accounts for 6.8% of total sales.
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 21 hotels and resorts and accounts
for approximately 75 percent of TOT revenues. The residential category is made up of
approximately 1,594 vacation rentals representing 25 percent of TOT revenue.
TOT was the City’s most severely impacted revenue source as the pandemic unfolded
and most major hotels within the City were temporarily closed. The City has seen a steady
rebound and comeback for TOT revenues as the effects of the pandemic have receded.
Initially, the TOT budget for the Fiscal Year 2021-22 was developed in anticipation of full
recovery of TOT revenues not occurring until the end of Fiscal Year 2022-23. However,
staff’s revised projection in the second and third quarter budget updates estimated TOT
revenues to finish at a record high level. Actual TOT revenues came in at $26.7 million,
or $7.6 million over the Fiscal Year 2021-22 adopted budget.
Two factors caused this significant increase in TOT revenues. First, revenue from short-
term lodging businesses is at a record high level. Second, many hotel properties are
reporting record high TOT receipts and have been doing so for multiple consecutive
months. While occupancy levels have not returned to pre-pandemic levels, they are
slowly increasing. This lag in occupancy levels has been largely offset by higher daily
room rates, resulting in hotel TOT revenues that are projected to approach the pre-
pandemic high in Fiscal Year 2022-23. When taken together, the strong growth in
residential TOT makes up for the slightly lower hotel TOT revenue and the two in total
37%
19%
36%
1%
7%
General Retail
Food Products
Transportation
Construction
Business to Business
Sales Tax by Business Segment
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have resulted in a record year for TOT revenues for the City. The below data provided by
Visit Newport Beach illustrates these very positive trends.
LONG TERM FINANCIAL PLANNING
The City continues to be in excellent financial health due to its strong underlying tax base,
disciplined fiscal decisions, and stable governance. Conservative budgeting and sound
financial policies have resulted in a trend of General Fund operating surpluses and strong
reserve levels for several years. This is still no less the case even amid the significant
economic downturn the City experienced during the COVID-19 pandemic. The City
annually completes a Long-Range Financial Forecast covering the next 20 years
pursuant to City Council Policy F-3 – Budget Adoption and Administration. That forecast
shows positive General Fund results in each of the next 20 years and does not indicate
any long-term financial trends of concern. The City’s long-term financial planning has
been guided by its strong financial policies, prudent budgeting decisions, and proactive
planning in such critical areas as facilities replacement and pensions. These policies are
regularly evaluated and updated as conditions and needs change.
Financial Policies
The City Council has adopted prudent fiscal policies concerning its investments, reserves,
budget administration, revenue initiatives, competitive contracting, facility replacement
planning, and more. The budget surplus utilization policy directs the use of surplus funds
resulting from unrestricted General Fund annual revenues exceeding total actual
expenditures, encumbrances, and commitments for that year. Roughly fifty percent of the
budget surplus is used to address long-term obligations such as pension liabilities, other
post-employment benefits, bonded debt, lease obligations, and other long-term needs.
The remaining surplus is used to address one-time infrastructure or neighborhood capital
improvements, guided by a philosophy that these expenditures improve the community’s
safety, aesthetics, transportation, or quality of life. The City’s debt policy establishes
criteria for the issuance of debt and assures that the amount of any debt is affordable and
cost effective. The City’s debt policy was recognized by the California Debt and
Investment Advisory Commission as one of only 14 counties and cities in California
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whose policies have 20 or more debt management best practice elements. The City’s
debt and other financial policies can be found on the City’s website in the City Council
section under City Government at:
www.newportbeachca.gov/policies
Annual Budget
The annual budget serves as the foundation for the City of Newport Beach’s financial
planning and control and allows the City Council to prioritize City expenditures so that
they are aligned with core community values. Per current policy, appropriations for
operating expenditures are balanced in relation to current revenue sources and do not
rely on one-time revenue sources or reserves. When significant uncertainty exists
concerning revenue volatility or threatening/pending obligations, the City Council and City
Manager reserve the right to impose any special fiscal control measures, including
personnel hiring freezes, and other spending controls, as was the case in FY 2019-20
and in the development of the FY 2020-21 budget. As a result of early retirement plans,
attrition, outsourcing, and lay-offs implemented in the years following the onset of the
Great Recession, the full-time work force was reduced by approximately 4% between FY
2012-13 and FY 2016-17 as depicted in the chart below. In the years since, thoughtful
additions to the City’s workforce have been implemented with a continued focus on fiscal
discipline and maintaining balanced budgets.
The City has traditionally taken a conservative approach to forecasting revenues, often
assuming only modest growth. 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 to save, both
during prosperous and difficult economic periods. As the economy continues to improve,
these trends are likely to continue.
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The City Council may authorize the use of Contingency reserves during emergency
situations as set forth by the Council Reserve Policy. Current policy requires that the
Contingency Reserve equal 25 percent of the General Fund annual “Operating Budget.”
Credit rating agencies consider a high level of available “fund balance” to be a credit
strength. In 2021, Moody’s rating agency reaffirmed the City’s AAA credit rating noting
the City’s extensive tax base, a very strong wealth and income profile, and a robust
financial position. It also noted the City’s moderate debt burden and an elevated pension
burden in its rationale. The City’s has aggressively attacked its unfunded pension liability
and has made regular discretionary payments to reduce that liability at a more rapid pace
than is required by CalPERS, as further described in the Pension section below.
Facilities Financial Plan (FFP) Commitment & Major Construction Initiatives
The City’s FFP is a comprehensive master facilities replacement schedule that projects
the timing of construction of facility projects; projects the schedule of any planned debt
issuance; includes all relevant revenue sources and expenditures on a yearly, project-by-
project basis; and determines the long-term “level funding” annual budget commitment
that is required to support the program. The FFP was the winner of the prestigious “Helen
Putnam Award – Internal Administration” category from the League of California Cities in
2008.
The City continued its financial commitment to the Facilities Financial Planning Reserve
(FFPR) in FY 2021-22 by allocating resources to debt service, a junior lifeguards building
and parks and community centers.
Overall, the FFPR balance is increasing by $6.1million from the prior fiscal year.
Beginning Balance 7/1/21 28,092,597$
Sources
Licenses, Permits and Fees 382,118
Donations 863,279
Transfer In from General Fund 19,000,000
Investment Income 348,710
Net increase in fair value of investments (1,290,437)
Total Sources 19,303,670
Uses
Debt Service 1 (8,741,133)
Parks and Community Centers (4,013,862)
Junior Lifeguards (469,637)
Total Uses (13,224,632)
Ending Balance 6/30/22 34,171,635$
recorded in the Debt Service Fund
Facilities Financial Planning Reserve Fund
1 The transfer is net of the Build America Bonds subsidy, which is
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Pensions
As of the actuarial valuation date of June 30, 2021, the City had an Unfunded Accrued
Liability (UAL) of $223 million. The City has taken a number of actions in recent years to
mitigate the impact of rising pension costs including:
Established lower benefit formulas for new hires.
Eliminated the Employer Paid Member Contribution (EPMC).
Through negotiated cost sharing, saw employees contribute 59.2% of the Normal
Cost of the plan, or $10.7 million in Fiscal Year 2021-22.
Adopted a fixed and shorter amortization period for the unfunded liability.
Made Additional Discretionary Payments (ADPs)
Contributed no less than Actuarial Determined Contribution (ADC) each and every
year.
Analyzed the schedule of amortization bases annually in an effort to avoid negative
amortization.
Amortized all gains/losses no longer than a 20-year closed period.
Avoided asset smoothing or “rate phase-in” schedules if possible. Otherwise, the
City’s goal is to not exceed 5 years for any one smoothing cycle.
Established a General Fund Surplus Utilization Policy F-5 to set aside one-half of
any annual budget surplus to fund debts such as the pension liability.
Maintained a contingency reserve to protect against economic recessions and to
avoid negative impacts of asset smoothing and rate phased-in schedules.
Local governments with pensions have a total pension liability, which is the obligation to
pay deferred pension benefits in the future. When the total pension liability is greater than
the pension plan’s assets there is a net pension liability, also known as unfunded pension
liability. As required by GASB 68, the City reports the net pension liability in the
government wide financial statements, as well as in the proprietary fund statements, in
the ACFR – see Note (10) of Notes to the Financial Statements.
The City implemented GASB 75 in fiscal year 2017-18, which requires local governments
offering other post-employment health care benefits (“OPEB”) to report net OPEB liability
in the government wide financial statements, as well as in the proprietary fund statements,
in the ACFR – see Note (11) in the Notes to the Financial Statements. When the total
OPEB liability is greater than the OPEB plan’s assets there is a net OPEB liability, also
known as unfunded OPEB liability.
As with past practice, the City will continue to fund its pension and OPEB obligations at
an amount equal to or greater than the minimum employer contribution rate. The City has
not and will never intentionally short-fund its pension and OPEB obligations. Annually the
City evaluates the cost and benefits of paying down the unfunded pension and OPEB
liabilities on a faster schedule. Currently, the City Council has committed to a fixed $40
million per year contribution toward the unfunded pension liability, which is approximately
$10 million more than is required by CalPERS. Fiscal year 2021-22 represented three
years in a row the City Council appropriated an additional $5 million toward accelerated
17
payment of the unfunded liability from year-end budget surplus funds. Additionally, in fiscal year 2022-23 City Council proactively appropriated an additional $5 million toward accelerated payment of the unfunded liability from expected structural budget surplus.
AWARDS AND ACKNOWLEDGMENTS
The City has prepared an Annual Comprehensive Financial Report for the past 29 years.
The City has received awards for excellence in financial reporting in 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 Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021. In order to be awarded a Certificate of Achievement, a government unit
must publish an easily readable and efficiently organized Annual Comprehensive
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
Annual Comprehensive Financial Report continues to conform to the Certificate of
Achievement program requirements and we are submitting it to GFOA to determine its
eligibility for another certificate.
Acknowledgments: Preparation of this report was accomplished through the efficient and
dedicated services of everyone in the City's Accounting Division. In addition, the Finance
Department staff would like to thank the City Manager, the Mayor, and the City Council
for their interest in and support of planning and conducting the financial operations of the City in a responsible and progressive manner. We would also like to thank our auditors, DavisFarr LLP, for their time and assistance in the preparation of the report. This report
was completely prepared and published by City employees.
;!J:?;;L::=z< City Manager
Jason Al-Imam
Finance Director/Treasurer
18
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Newport Beach
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2021
Executive Director/CEO
19
Newport Beach City Officials
Robyn Grant
Council Member
District 4
Will O’Neill
Mayor Pro Tem
District 7
Lauren Kleiman
Council Member
District 6
Joe Stapleton
Council Member
District 1
Brad Avery
Council Member
District 2
Erik K. Weigand
Council Member
District 3
Noah Blom
Mayor
District 5
City Council Members
City Executive Staff
Grace K. Leung
City Manager
Aaron Harp
City Attorney
Leilani Brown
City Clerk
Tara Finnigan .......................................................................................................................... Assistant City Manager
Jason Al-Imam ..................................................................................................................Finance Director/Treasurer
Seimone Jurjis ...................................................................................................... Community Development Director
Jeff Boyles.....................................................................................................................................................Fire Chief
Paul Blank ............................................................................................................................................. Harbormaster
Barbara Salvini .................................................................................................................. Human Resources Director
Melissa Hartson.................................................................................................................... Library Services Director
Joseph L. Cartwright...................................................................................................................... Acting Police Chief
Dave Webb ............................................................................................................................... Public Works Director
Sean Levin........................................................................................................ Recreation & Senior Services Director
Mark Vukojevic ..................................................................................................................................Utilities Director
20
Board of
Library Trustees
Building & Fire
Code of Appeals
City Arts
Commission
Civil Service Board
Harbor Commission
Parks, Beaches &
Recreation Commission
Planning
Commission
ELECTORATE
CITY
MANAGER
MAYOR &
COUNCIL
CITY
CLERK
CITY
ATTORNEY
Community
Development
Finance
Fire
Human
Resources
Harbor
Library
Services
Public
Works
Utilities
Police
Recreation &
Senior Services
City
Committees
21
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22
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONINDEPENDENT AUDITORS’ REPORTINDEPENDENT AUDITORS’ REPORT
23
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24
INDEPENDENT AUDITOR’S REPORT
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
Report on the Audit of the Financial Statements
Opinion
We have audited the 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 (the “City”), as of and for the year June 30, 2022, and the related notes to
the financial statements, which collectively comprise the City of Newport Beach’s basic
financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of the City of Newport Beach,
as of June 30, 2022, and the respective changes in financial position and, where applicable,
cash flows thereof for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Emphasis of Matter
As described further in note 1 to the financial statements, during the year ended June 30,
2022, the City implemented Governmental Accounting Standards Board (GASB) Statement
No. 87. Our opinion is not modified with respect to this matter.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America (GAAS) and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States
(Government Auditing Standards). Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of
our report. We are required to be independent of the City and to meet our other ethical
responsibilities, in accordance with the relevant ethical requirements relating to our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
The City’s management is responsible for the preparation and fair presentation of the financial
statements in accordance with accounting principles generally accepted in the United States
of America, and for the design, implementation, and maintenance of internal control relevant
25
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the City’s
ability to continue as a going concern for twelve months beyond the financial statement date,
including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance
but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS and Government Auditing Standards will always detect a material
misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control. Misstatements
are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the
financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the
audit.
• Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, and design and perform audit procedures responsive to
those risks. Such procedures include examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the City’s internal control. Accordingly,
no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the City’s ability to continue as a going
concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain
internal control–related matters that we identified during the audit.
26
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis, Budgetary Comparison Schedules for the General
Fund and each major special revenue fund, Schedules of Changes in the Net Pension Liability
and Related Ratios, Schedules of Contributions, Schedule of Changes in the Net OPEB Liability
and Related Ratios and Schedule of OPEB Contributions be presented to supplement the basic
financial statements. Such information is the responsibility of management and, although
not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board who considers it to be 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 required supplementary information in
accordance with GAAS, 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 our audit of the basic financial statements. We do not express an opinion or provide
any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements. The Combining and Individual
Nonmajor Fund Financial Statements and Budgetary Comparison Schedules are presented for
purposes of additional analysis and are not a required part of the basic financial statements.
Such 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 GAAS. In our opinion, the Combining and
Individual Nonmajor Fund Financial Statements and Budgetary Comparison Schedules are
fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the Annual Comprehensive
Financial Report. The other information comprises the Introductory Section and Statistical
Section but does not include the financial statements and our auditor's report thereon. Our
opinions on the financial statements do not cover the other information, and we do not
express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the
other information and consider whether a material inconsistency exists between the other
information and the financial statements, or the other information otherwise appears to be
materially misstated. If, based on the work performed, we conclude that an uncorrected
material misstatement of the other information exists, we are required to describe it in our
report.
27
The Honorable Mayor and
Members of the City Council
City of Newport Beach
Newport Beach, California
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
February 6, 2023, on our consideration of the City’s internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, and
grant agreements and other matters. The purpose of that report is solely 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 effectiveness of internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City’s internal control over
financial reporting and compliance.
Irvine, California
February 6, 2023
28
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONMANAGEMENT’S DISCUSSION AND ANALYSIS
29
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30
MANAGEMENT’S DISCUSSION AND ANALYSIS
This section of the City of Newport Beach’s Annual Comprehensive Financial Report (ACFR)
presents management’s discussion and analysis of the City’s financial performance during the
fiscal year that ended on June 30, 2022. 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 Annual Comprehensive Financial Report contains the following
information: Independent Auditors’ Report, Management’s Discussion and Analysis (this section),
the Basic Financial Statements, the Required Supplementary Information, 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 accrual 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 accrual basis of accounting, changes in net position are recognized as
soon as the event occurs regardless of the timing of related cash flows.
The Statement of Net Position includes all of the City’s assets (including non-spendable assets
like streets, roads, and land rights), deferred outflows of resources, liabilities (including long-term
liabilities that may be paid over twenty years), and deferred inflows of resources. 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 position and how they have
changed. Net position – the difference between the City’s assets, deferred outflows of resources,
liabilities and deferred inflows of resources – is one way to measure the City’s financial health.
Over time, increases or decreases in the City’s net position 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 its facilities and other major infrastructure.
The Government-wide Financial Statements of the City are divided into two categories:
Governmental Activities – This category depicts the extent to which programs are self-
supporting and the net amount provided by property taxes and other general revenues.
Most of the City’s basic services are included in this category such as public safety, public
works, community development, community services, and general administration. Taxes
and other general revenues finance most of these activities.
31
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 – A fund is a grouping of related accounts used to maintain control
over resources that have been segregated for specific activities or objectives. The City uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements such
as State and Federal law or bond covenants. Other funds are utilized simply to control and
manage resources intended for particular 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.
Fund Financial Statements have a short-term focus measuring inflows of current, spendable
assets. The resulting net difference between current financial assets and deferred outflows of
resources, and current financial liabilities and deferred inflows of resources, 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 – Business-like services for which the City provides goods or services
to the general public 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 and other equipment, risk management, retiree insurance,
telecommunications systems, information technology services, etc.). Because the Internal
Service Funds primarily serve the government, they are reported with Governmental
Activities rather than the Business-type Activities in the Government-wide Financial
Statements.
Fiduciary Funds – The City utilizes Fiduciary Funds to account for assets held by the City
in a trustee capacity, or as an agent for other governmental entities, private organizations,
or individuals. All of the City’s fiduciary activities are reported in a separate statement of
32
fiduciary net position, and a statement of changes in fiduciary net position. 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.
Required Supplementary Information – In addition to the Basic Financial Statements, we have
included a Required Supplementary Information section, which includes the Schedule of Changes
in Net Pension Liability and Related Ratios, the Schedule of Changes in Net Post-Employment
Health Care Benefits (OPEB) Liability and Related Ratios, and the related Schedules of
Contributions for the Pension and OPEB plans.
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 Other
Governmental Funds, Internal Service Funds, and Fiduciary Funds.
ANALYSIS OF GOVERNMENT-WIDE FINANCIAL STATEMENTS
The Government-wide Financial Statements provide long-term and short-term information about
the City’s overall financial condition. This analysis addresses the financial statements of the City
as a whole.
Net Position Discussion
As shown in Figure 1, the City’s combined net position for the fiscal year ended June 30, 2022
was $2.5 billion, increasing $76.2 million or 3.2% over the prior year. Net position can serve as
an important indicator of whether the City’s overall financial condition is improving or deteriorating
over time.
Current and other assets increased $274.8 million. This increase is primarily due to lease
receivables which are required to be reported starting with the fiscal year ending June 30, 2022
by Governmental Accounting Standards Board Statement 87 (“GASB 87”). A lease receivable is
now required to be reported based on a present-value estimate of certain lease payments for
leases where the City is the lessor. The remaining $30.3 million increase is attributable to
increases in cash and investments, interest receivables, and intergovernmental receivables,
offset by decreases in accounts receivable (net of allowance), and prepaid items. Capital assets
increased $19.4 million, mostly due to GASB 87, which also requires intangible right to use assets
to be reported based on a present-value estimate of certain lease payments for leases where the
City is the lessee.
Current liabilities increased $6.6 million primarily due to increases in accounts payable and
unearned revenue. The increase in unearned revenue was due to the receipt of federal funds
through the American Rescue Plan Act that had not been spent by the end of the fiscal year.
Long-term liabilities decreased $126.2 million. The decrease is primarily due to decreases in the
City’s net pension liability and net and OPEB liability, offset by an increase in the City’s lease
liability. GASB 87 requires reporting a lease liability based on a present-value estimate of certain
33
lease payments for leases where the City is the lessee. See Note (10), Note (11), and Note (18)
of the Notes to the Financial Statements for more information.
Figure 1
Net Position
(in thousands)
The largest portion of the City’s net position, at $2.4 billion of net position, reflects the net
investment in capital assets (e.g., land, right of way, street trees, buildings, infrastructure,
equipment, and intangibles) less accumulated depreciation, accumulated amortization, and any
related outstanding debt used to acquire those assets. The City uses these capital assets to
provide services to residents. Therefore, they do not represent a financial resource to the City
and consequently are not readily available for funding current obligations.
Restricted net position totaled $78.1 million of net position, an increase of $10.9 million from the
prior fiscal year, primarily due to increased restricted net position related to public works and
community services. Public works’ increase is mainly from SB1 Gas Tax RMRA revenues not
being spent during the fiscal year, while community services’ increase is mainly from tidelands
property related revenues not being spent during the fiscal year as resources are being
accumulated for future large scale capital improvement projects related to the harbor.
As of June 30, 2022, unrestricted net position was $20.4 million, an increase of $65.6 million from
the prior fiscal year, primarily due to the receipt of unrestricted revenues such as property taxes
and sales taxes that were not spent or restricted by the end of the fiscal year.
Governmental Activities Business-Type Activities Total
2021 2022 2021 2022 2021 2022
Current and other assets 327,609$ 603,672$ 40,271$ 38,970$ 367,880$ 642,642$
Capital assets 2,324,346 2,339,355 126,028 130,464 2,450,374 2,469,819
Total assets 2,651,955 2,943,027 166,299 169,434 2,818,254 3,112,461
Deferred Outflows of Resources 70,434 63,987 2,304 2,296 72,738 66,283
Current liabilities 35,627 43,924 6,100 4,383 41,727 48,307
Long-term liabilities 463,424 340,714 10,671 7,134 474,095 347,848
Total liabilities 499,051 384,638 16,771 11,517 515,822 396,155
Deferred Inflows of Resources 878 328,685 17 3,408 895 332,093
Net Position
Net investment in capital assets 2,227,573 2,223,774 124,776 128,245 2,352,349 2,352,019
Restricted 67,189 78,100 - - 67,189 78,100
Unrestricted (72,302) (8,183) 27,039 28,560 (45,263) 20,377
Total net position 2,222,460$ 2,293,691$ 151,815$ 156,805$ 2,374,275$ 2,450,496$
34
GOVERNMENTAL ACTIVITIES
Governmental activities are generally financed through taxes, intergovernmental revenues, and
other non-exchange revenues. The Statement of Activities is intended to illustrate how the cost
of governmental activities is financed and determines the annual change in net position.
Figure 2
Changes in Net Position
(in thousands)
Revenues Associated with Governmental Activities Discussion
Figure 2 illustrates in detail how the $301.4 million in Governmental Activities revenue was
derived. Figure 3 summarizes this revenue by major source. As shown on Figures 2 and 3, $67.7
million, or 22.5%, of the revenues were recovered from those who directly benefited from the
programs as a charge for service. Another $25.5 million, or 8.4%, 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 $208.2 million, or 69.1%,
represented general revenues of the City including taxes, intergovernmental revenues, and other
miscellaneous revenues.
Governmental Activities Business-Type Activities
2021 2022 2021 2022 2021 2022
Revenues:
Program Revenues:
Charges for services 58,113$ 67,743$ 35,358$ 36,929$ 93,471$ 104,672$
Operating grants and capital contributions 20,362 16,800 - 117 20,362 16,917
Capital grants and contributions 7,658 8,693 - - 7,658 8,693
Total program revenues 86,133 93,236 35,358 37,046 121,491 130,282
General Revenues:
Taxes:
Property taxes 119,157 124,336 - - 119,157 124,336
Sales tax 38,956 46,165 - - 38,956 46,165
Transient occupancy taxes 16,886 26,677 - - 16,886 26,677
Other taxes 12,852 13,258 - - 12,852 13,258
Investment related income 518 (4,861) 55 (845) 573 (5,706)
Other 3,355 2,644 - - 3,355 2,644
Total general revenues 191,724 208,219 55 (845) 191,779 207,374
Total revenues 277,857 301,455 35,413 36,201 313,270 337,656
Expenses:
General government 20,394 19,374 - - 20,394 19,374
Public safety 119,185 104,767 - - 119,185 104,767
Public works 63,689 65,031 - - 63,689 65,031
Community development 12,157 9,665 - - 12,157 9,665
Community services 28,214 24,509 - - 28,214 24,509
Interest 7,105 6,878 - - 7,105 6,878
Water - - 28,943 27,117 28,943 27,117
Wastewater - - 5,223 4,094 5,223 4,094
Total expenses 250,744 230,224 34,166 31,211 284,910 261,435
Increases in net position 27,113 71,231 1,247 4,990 28,360 76,221
Net position at beginning of year 2,195,347 2,222,460 150,568 151,815 2,345,915 2,374,275
Net position at end of year 2,222,460$ 2,293,691$ 151,815$ 156,805$ 2,374,275$ 2,450,496$
Total
35
Figure 3
Governmental Activities Revenue Sources
Year Ended June 30, 2022
As illustrated in Figure 2, program revenues related to Governmental Activities increased $7.1
million from the prior year. This increase was primarily attributable to increases in charges for
services from recreation fee-based classes, the Junior Lifeguard program, and construction
related plan fees which is indicative of recovery from pandemic related restrictions. Additionally,
capital grants and contributions increased due to contributions from property owners related to
assessment districts. These increases were offset by a decrease in operating grants and
contributions due to a decrease in Covid-19 grant revenue.
The City’s general revenues related to Governmental Activities increased about $16.5 million from
the prior year primarily due to increases in property taxes, sales taxes, transient occupancy taxes,
and other taxes, offset by decreases in investment and other income. Increases in virtually all tax
revenue categories is indicative of a broad recovery from pandemic related restrictions. The
decrease in investment income is due to fair value decreases in the City’s investment portfolio as
the United States’ Federal Reserve raised the federal funds interest rate range in response to
inflation. These fair value decreases are unrealized as the City normally holds investments to
maturity and receives the full par value at the time of maturity.
Property tax is the largest revenue source for the City and collections finished the year $5.2 million
higher than the previous year. This increase was mostly due to an increase in secured taxes as
a robust demand for coastal property continued driving property values higher.
At $46.2 million, sales taxes represent the second largest individual revenue source for the City.
Sales taxes increased $7.2 million from the previous year. This was due to strong consumer
spending on luxury automobiles and the easing of pandemic related restrictions which allowed
retail establishments, restaurants and hotels to surpass pre-pandemic activity.
Transient occupancy taxes (TOT), the City’s third largest revenue source, finished the year at
$26.7 million, which is an increase of $9.8 million from the previous fiscal year. Both hotel TOT
23%
8%
69%
Charges for Services
Contributions and Grants
Taxes and Other
36
and residential TOT increased, which was mostly due to higher daily hotel room rates and
increased short term residential lodging revenue.
Investment income, comprised of both interest income and unrealized gains/losses, decreased
about $5.4 million from the prior fiscal year. The decrease is from a net decrease in the fair value
of investments, which is consistent with the fiscal year’s generally increasing interest rate
environment.
Expenses Associated with Governmental Activities Discussion
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) providing general governance, information
technology services, executive management, legal services, records management, risk
management, finance, and accounting.
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 Utilities) providing engineering,
construction and maintenance of public streets, highways, buildings, beaches, parks, facilities
and related infrastructure; as well as traffic engineering and street lighting.
Community Development is comprised of one department (Community Development) that
provides planning, building, and zoning services, economic development services, and building
plan check and code enforcement services.
Community Services is comprised of three departments (Library Services, Recreation & Senior
Services, and Harbor) providing library services, cultural and arts programs, recreation services,
senior social and transportation services, and harbor programs and services.
Business Enterprise Operations are overseen by the Utilities Department providing water and
wastewater services. These are considered business-type activities and are discussed further in
the Business-Type Activities section.
Figure 2 illustrates in detail how the $230.2 million of Governmental Activities expense was
derived. The decrease of $20.5 million from the prior year is mostly due to a decrease in public
safety related pension liabilities. See Note (10) of the Notes to the Financial Statements for more
information.
37
Figure 4 below summarizes the Governmental Activities expenses shared across function.
Figure 4
Governmental Activities Functional Expenses
Year Ended June 30, 2022
Figures 5 and 6 illustrate the net cost of each service. The net cost represents the amount that
governmental activities are subsidized by taxes and other general revenues of the City.
Figure 5
Governmental Activities
(in thousands)
46%
28%
11%
8%
4%3%
Public Safety
Public Works
Community Services
General Government
Community Development
Interest
Total Cost Net Cost Total Cost Net Cost
of Service of Service of Service of Service
General government 20,394$ (16,342)$ 19,374$ (14,833)$
Public safety 119,185 (93,945) 104,767 (79,083)
Public works 63,689 (38,984) 65,031 (36,627)
Community development 12,157 (1,205) 9,665 1,844
Community services 28,214 (7,029) 24,509 (1,410)
Interest 7,105 (7,105) 6,878 (6,878)
250,744$ (164,610)$ 230,224$ (136,987)$
2021 2022
38
Figure 6
Program Expenses and Revenues – Governmental Activities
Year Ended June 30, 2022
(in millions)
BUSINESS-TYPE ACTIVITIES
As noted earlier, the City combines the Water Enterprise Fund and Wastewater Enterprise Fund
into Business-type Activities for the presentation of the Government-wide Financial Statements.
Business-type activities are mainly funded by charging fees to customers to recover the cost of
providing services.
Revenues Associated with Business-Type Activities Discussion
As displayed in Figure 2, total revenues related to Business-type activities totaled $36.2 million.
Program revenues totaled $37.0 million and were offset by $845,000 of negative general
revenues related to a net decrease in the fair value of investments. As shown in Figure 7 on the
following page, Water activities represents about $32.2 million (87.0%) of program revenues,
while Wastewater activities represents $4.8 million (13.0%) of program revenues.
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
$100.0
$110.0
$120.0
General
Government
Public Safety Public Works Community
Development
Community
Services
Interest
Total Expenses Program Revenues
39
Figure 7
Program Expenses and Revenue – Business-type Activities
Year Ended June 30, 2022
(in millions)
Expenses Associated with Business-Type Activities Discussion
Current year expenses for Business-type Activities totaled $31.2 million, a decrease of about $3.0
million over prior year as shown in Figure 2. This is attributable to a decrease in salaries and
benefits, system maintenance, and miscellaneous expenses.
Major Business-type expenses in the current fiscal year included the following:
Water
Of the $27.1 million in water related expenses, $12.3 million (45.3%) is for the purchase of water,
$4.4 million (16.3%) covers employee related costs, $5.3 million (19.5%) is for maintenance,
supplies, and depreciation of the water system, $2.5 million (9.3%) is for professional services,
$1.7 million (6.4%) is for utility payments and the remaining $878,008 (3.2%) is collectively
attributable to other miscellaneous expenses.
Wastewater
Of the $4.1 million in wastewater related expenses, $2.2 million (52.7%) is for maintenance,
supplies, and depreciation of the wastewater system, $1.2 million (30.4%) is for employee related
costs, and the remaining approximately $689,247 (16.9%) is attributable to professional services,
utility payments and other miscellaneous expenses.
Figure 7 summarizes Business-type expenses separately for Water and Wastewater activities.
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
Water Wastewater
Total Expenses Program Revenues
40
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, the City uses fund accounting to highlight available financial resources and to
ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds
Utilizing the financial resources measurement focus, the City’s Governmental Funds provide
information on near-term inflows, 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 shown in Figure 8, the City’s Governmental Funds reported combined fund
balances of $248.0 million, an increase of $25.7 million from the prior year. The increase is the
net result of increases in fund balances in the Tide and Submerged Land – Operating Fund, Tide
and Submerged Land – Harbor Capital Fund, Facilities Financial Planning Reserve Fund, other
special revenue funds, and other capital projects funds in aggregate; offset by decreases in the
General Fund, Debt Service Fund, and other permanent funds in aggregate. The General Fund
represented $97.1 million or 39.2% of the combined fund balances of the Governmental Funds.
Figure 8
Governmental Funds Fund Balance
(in thousands)
The following describes the classification of fund balance as of June 30, 2022. Additional
information on the City’s fund balance can be found in Note (16) of the Notes to the Financial
Statements.
Nonspendable Fund Balance – The City has $14.1 million in fund balance classified as
nonspendable to indicate that it cannot be readily converted to cash. Of the $14.1 million
nonspendable fund balance, $1.0 million is for prepaid items, $286,074 is for inventories, $8.2
million is for long-term loan receivables, and $4.6 million is for permanent endowments.
Restricted Fund Balance – The City has $73.0 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 $73.0
million restricted fund balance, $3.7 million is restricted in the Tide and Submerged Land –
Operating Fund, of which $2.4 million is restricted for capital projects and maintenance and
repairs, and $1.3 million is restricted for the Upper Newport Bay restoration; $31.5 million is
restricted in the Tidelands and Submerged Land – Harbor Capital Fund for capital projects related
to the harbor; and $2.2 million is restricted for debt service. Of the remaining $35.6 million in
2021 2022 Change
General Fund 105,953$ 97,139$ (8,814)$
Tide and Submerged Land - Operating 4,313 4,548 235
Tide and Submerged Land - Harbor Capital 23,608 31,534 7,926
Facilities Financial Planning Reserve 28,093 34,172 6,079
Debt Service Fund 2,256 2,199 (57)
Non-major special revenue 21,798 27,844 6,046
Non-major capital projects 29,608 44,044 14,436
Non-major permanent 6,673 6,487 (186)
222,302$ 247,967$ 25,665$
41
restricted fund balance, $27.9 million is restricted for various special revenue funds, $5.1 million
is restricted for the Assessment District Fund, $721,413 is restricted for the Fire Station Fund,
and $1.9 million of fund balance is restricted for permanent funds.
Committed Fund Balance – The City has $77.7 million in fund balance classified as committed
to indicate that the City Council has committed how the money will be spent. Of the $77.7 million
committed fund balance, $4.4 million is committed in the General Fund for encumbrances;
$800,000 is committed in the Tide and Submerged Land – Operating Fund; $34.2 million is
committed in the Facilities Financial Planning Reserve Fund; $23.5 million is committed in the
Unrestricted Capital Improvements Fund; $7.7 million is committed in the Parks and Community
Center Fund; $2.7 million is committed to the Facilities Maintenance Fund; $1.9 million is
committed in the Fire Station Fund; $1.5 million is committed in the Neighborhood Enhancement
Fund; $484,163 is committed in the Civic Center and Park Fund; $429,064 is committed in Balboa
Village Parking Management District Fund; and $87,734 is committed in the Junior Lifeguards
Fund.
Assigned Fund Balance – The City does not have any fund balance classified as assigned.
Assigned fund balance is fund balance which is not restricted or committed and is classified as
assigned to indicate the City Manager’s intent to be used for specific purposes.
Unassigned Fund Balance – The remaining $83.2 million in fund balance is classified as
unassigned to indicate that it is the residual balance not otherwise restricted, committed, or
assigned.
Major Governmental Funds results for the year included the following:
General Fund revenues finished $27.1 million or 11.5% higher than prior year mostly due
to a combined $22.2 million increase in the City’s top three revenues sources – property
taxes, sales taxes and transient occupancy taxes – with a $5.2 million increase in property
taxes as the City’s assessed valuation continued to increase due primarily to the
appreciation of home values, a $7.2 million increase in sales taxes as consumer spending
increased and pandemic related restrictions eased, and a $9.8 million increase in transient
occupancy taxes due to higher daily hotel room rates and short term lodging revenues
reaching a record high level. General Fund expenditures finished $6.9 million or 3.4%
higher than the prior fiscal year mostly due to increased costs to comply with state
mandates related to recycling and providing assistance to the local homeless population,
increased costs for contract instructors for fee based recreation classes as Covid-19
restrictions receded, and one-time lump sum payments to employees as part of updating
agreements with employee bargaining units. Though revenues exceeded expenditures
by more than $51.4 million, there were substantial transfers out of the General Fund
totaling $61.5 million mostly for capital improvement projects. In total, fund balance in the
General Fund decreased $8.8 million and ended the year at $97.1 million.
Fund balance for the Tide and Submerged Land – Operating Fund increased $235,043
and ended the current year with $4.5 million in fund balance. The increase was due to the
City’s General Fund subsidizing the operations of the Tide and Submerged Land –
Operating Fund.
Fund balance for the Tide and Submerged Land – Harbor Capital Fund increased $7.9
million ending at $31.5 million. This was largely due to a transfer from the General Fund
42
for harbor related capital improvements and net results from operations as the fund
accumulates resources for future harbor related uses.
Fund balance for the Facilities Financial Planning Reserve Fund increased $6.1 million to
end the current year at $34.2 million in fund balance. This was mainly due to the revenue
from donations and transfer in from the General Fund to ultimately cash fund construction
projects related to facilities.
Fund balance for the Debt Service Fund decreased $56,432 ending at $2.2 million. The
decrease was due to administrative charges and debt service related to servicing
certificates of participation.
Proprietary Funds
The City’s Proprietary Funds (Enterprise and Internal Service Funds) presented in the Fund
Financial Statements section basically provides the same type of information in the Government-
wide Financial Statements, but also include information for individual funds.
Enterprise Fund results for the year included the following:
Net position in the Water Fund increased $4.2 million partly due to the continuing
implementation of water service rate increases and reduction in capital improvement
expenses for system maintenance. Additionally, salaries and benefits expenses
decreased mostly due to reduced pension expenses. See Note (10) of the Notes to the
Financial Statements for additional pension information.
Net position in the Wastewater Fund increased $568,619 mainly due to reduced
allocations of administrative and other expenses, and reduced system maintenance
expenses.
Major Internal Service Fund activity in the current fiscal year included the following:
Total net position in the Internal Service Funds increased $1.0 million in the current fiscal
year. This was mostly due to operating income of $3.9 million, which included increases
in revenue from charges for services for equipment maintenance. Operating income’s
contribution to net position was reduced by the net effect of non-operating revenue and
net transfers, which combined reduced net position by approximately $2.9 million.
Approximately $1.3 million was transferred to the General Fund following an analysis of
certain Internal Service Funds that had excess reserves on hand that could be returned
to the General Fund.
GENERAL FUND BUDGETARY HIGHLIGHTS
Changes to Original Budget
Final budgeted revenues for the General Fund increased $5.6 million from the original budget
during the year ended June 30, 2022. Factors contributing to this fluctuation are highlighted as
follows:
Property Tax revenue budgets were increased by $1.6 million due to higher prior year total
assessed valuation.
43
Final budgeted intergovernmental revenue increased $2.2 million primarily due to
adjustments related to Fire Department mutual aid reimbursements and SB-2 Permanent
Local Housing Allocation grant funds.
Charges for services increased from the adopted budget, in the amount of $964,120. This
adjustment is related to increased revenue received from recreation fee-based classes
and Junior Lifeguard program.
Miscellaneous revenues, donations, and property income all were adjusted upward from
the adopted budget by a total of $804,251. Increases were due to increased percentage-
based rent revenues from the Lido House Hotel lease due to the hotel’s increased
revenues and donations received for various programs.
Final budgeted expenditures for the General Fund decreased $4.7 million from the original budget
during the year ended June 30, 2022. The significant factors contributing to the decrease are as
follows:
The addition of $7.9 million to the benefits and salary budget associated with an additional
discretionary payment of $5.0 million toward the City’s unfunded pension liability and $2.9
million related to approved city contracts with City Employee associations.
Budgeted carryovers from Fiscal Year 2020-21 totaled $3.1 million were added to the
adopted budget.
An amendment in the amount of $637,000 was approved by the City Council to increase
the contract instructor budgets for fee based recreation classes. These increases were
fully offset by the additional revenue in the Service Fees & Charges category.
The above additions were offset by a $17.6 million decrease for the routine reclassification
of General Fund expenditures as Tidelands expenditures. This reclassification occurs at
year end once all such eligible expenditures can be properly attributed to Tidelands
activity.
Variance with Final Budget
Actual General Fund revenues came in at $22.1 million above final budgeted revenues for the
year ended June 30, 2022. Significant factors contributing to this favorable variance are
summarized as follows:
Sales tax revenue came in $5.9 million higher due to strong consumer spending in certain
industries such as autos and transportation, brick-and-mortar retail establishments and
restaurants & hotels, and fuel and service stations.
Transient occupancy tax was $7.6 million higher due to increased revenue from short-
term lodging businesses and many hotel properties reporting record high TOT receipts.
Other Taxes ended the year $2.4 million higher than projected due primarily to strong
growth in property transfer taxes related to a very active housing market.
44
Charges for services came in $2.9 million higher due primarily to receipts for paramedic
service fees, plan check fees, as well as revenue received from recreation fee-based
classes and the Junior Lifeguard program.
Property Income ended the year $3.2 million higher mainly due to both parking revenues
and percentage-based rent revenues from the Lido House Hotel ending the year higher
than projected.
Actual General Fund expenditures of $210.4 million were less than final budgetary estimates of
$221.3 million. The $10.9 million favorable variance was due to routine savings in salaries as well
as contract services.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
The City’s capital assets for Governmental and Business-type Activities as of June 30, 2022,
amounts to $2.5 billion, net of accumulated depreciation/amortization. This is comprised of a
broad range of tangible capital assets including land, buildings, machinery and equipment, park
facilities, road improvements, storm drains, piers, oil wells, sound walls, an 800 MHz radio
communications system, parking pay stations and meters, and bridges; and, intangible capital
assets including the rights to use land and rights of way, structures and equipment. The total
capital assets increased $19.4 million over the prior fiscal year, of which $15.6 million was due to
a prior period adjustment to record intangible right to use assets in accordance with GASB 87.
Figure 9
Capital Assets at Year End
(net of depreciation/amortization, in thousands)
Major capital asset events during the current fiscal year included the following:
Capital asset additions totaled $34.0 million in both the Governmental and Business-type
Activities in the current year. Of the $34.0 million, $11.6 million represents additions of
infrastructure assets mostly related to the road system and water system; $5.5 million is
related to equipment and intangible right to use equipment additions; $2.4 million is related
2021 2022 2021 2022 2021 2022
Land 1,897,520$ 1,899,966$ 2,219$ 2,219$ 1,899,739$ 1,902,185$
Intangible right to use
land and rights of way - - - 1,509 - 1,509
Structures 186,077 183,197 409 394 186,486 183,591
Intangible right to use structures - 13,021 - - - 13,021
Equipment 18,428 19,017 154 126 18,582 19,143
Intangible right to use equipment - 310 - - - 310
Infrastructure 210,945 211,008 122,831 122,484 333,776 333,492
Work in progress 11,375 12,836 415 3,731 11,790 16,567
Totals 2,324,345$ 2,339,355$ 126,028$ 130,463$ 2,450,373$ 2,469,818$
Activities Activities
Governmental Business-Type
Total
45
to structure additions at parks and a fire station. The remaining $14.5 million is comprised
of additions of non-depreciable/non-amortizable assets such as work in progress, $12.1
million, and land and rights of way of $2.4 million.
Of the $28.1 million of additions in governmental assets in the current year, additions in
infrastructure contributed $9.4 million, which was mostly due to upgrades in the road
system. The remaining $18.7 million added in the current year as governmental assets, is
comprised of $2.4 million of land additions and $2.4 million of structure additions both
related to Grant Howald Park upgrades, $8.4 million of work in progress, mostly related to
the ongoing construction of a new fire station and upgrades to the road system, and $5.5
million of equipment and intangible right to use equipment additions mostly related to
vehicle purchases and the use of communication equipment for lifeguard towers.
The $5.9 million of business-type asset additions in the current year is comprised of $2.2
million in water and sewer system infrastructure additions, and $3.7 million of work in
progress additions related to water system improvements.
Additional information on the City’s capital assets can be found in Note (5) of the Notes to the
Financial Statements.
Long-term Debt
Figure 10
Outstanding Debt at Year End
(in thousands)
The City’s total debt decreased $4.3 million during the current fiscal year. The decrease is the
result of expected debt service payments. Additional information on the City’s long-term debt
obligation can be found in Note (6) of the Notes to the Financial Statements.
FACTORS AFFECTING NEXT YEAR’S BUDGET
Economy
The local economy is currently supported by a strong labor market with the unemployment rate in
Orange County at 3%. However, consumer demand in certain segments of the economy is
beginning to cool as the Federal Reserve continues to aggressively raise interest rates to fight
inflation. Nonetheless, the economic outlook for the City of Newport Beach is projected to remain
positive for the foreseeable future. A slower rate of growth in the upcoming fiscal year is generally
anticipated for revenues compared to the level of growth that we have seen in the past few years
coming out of the pandemic-induced recession.
2021 2022 2021 2022 2021 2022
Certificates of participation 105,490$ 101,550$ -$ -$ 105,490$ 101,550$
Bond premium 1,291 1,149 - - 1,291 1,149
CDBG Loan 403 208 - - 403 208
Totals 107,184$ 102,907$ -$ -$ 107,184$ 102,907$
Activities Activities
Governmental Business-Type Total
46
Local Revenue Trends
Property tax revenue, the City’s largest source of revenue, is projected to increase approximately
7% next fiscal year, which is largely related to the inflation adjustment indexed at the 2% cap
allowed by Proposition 13 and due to changes in ownership.
Sales tax revenue is the second largest source of General Fund revenue. Approximately 85% of
sales tax revenue is generated from autos and transportation, restaurants and hotels, general
consumer goods, and the State and County pools. Sales tax revenue is projected to increase
approximately 6% next fiscal year due to continued growth across all industry groups, except for
fuel and service stations. The growth in sales tax revenue next fiscal year is largely due to the
following:
Autos and Transportation – After a surge of growth in the wake of the pandemic, it is
expected that the auto industry may face challenges in the years ahead due to a
combination of high prices, rapidly escalating costs to finance a vehicle purchase and a
slowing economy. Supply chain issues and the chip shortage are abating, which is
resulting in lower prices for used cars. We may also see lower prices for new cars if
demand is challenged by the factors already mentioned, which are causing growing
headwinds for the industry. Therefore, modest growth in sales tax revenue from autos and
transportation is projected.
Restaurants and Hotels – Over the past two years there has been a shift in spending from
tangible goods to spending on travel, dining and leisure, and entertainment. Therefore, in
light of continued demand and higher menu prices, robust growth in sales tax revenue
from restaurants and hotels is projected.
General Consumer Goods – Modest growth in sales tax revenue from general consumer
goods is projected as consumers are expected to continue to shift spending on tangible
goods to travel, dining and leisure, and entertainment. It is also expected that high inflation
may result in a decrease in consumer spending on discretionary purchases.
State and County Pools – Continued growth in revenue from the pools is projected next
year as we expect internet sales to continue to grow at a more rapid pace than traditional
brick-and-mortar store sales.
Discretionary Appropriations
The annual budget serves as the foundation for financial planning and control, and allows the City
Council to prioritize expenditures in alignment with core community values. The budget as
adopted is reflective of strong revenues, healthy reserves, and a sound debt position. This budget
reflects a strong local economy that continues to provide stable revenues that support a wide
variety of programs and initiatives.
The City Council adopted a Fiscal Year 2022-23 budget that maintains a deliberate resource
balance between these important municipal expenses:
Addressing long-term obligations such as pension liabilities, post-employment health care
benefits, and debt service;
47
Keeping a level of operations that reflects the community’s desire for an active, safe, and
attractive community; and
Investing in infrastructure to maintain a high-quality natural and physical environment.
An aspect of the City’s balanced approach to fiscal management is managing resources as
efficiently as possible, responsibly managing debt, and working collaboratively with employees to
recalibrate the compensation structure and share in the costs of pension obligations.
During the adoption of the budget for Fiscal Year 2022-23, the City Council approved funding for
the continuation of an aggressive pension paydown strategy, which includes $45 million being
paid to CalPERS next fiscal year towards the unfunded liability, which is approximately $15 million
more than the amount required to be paid. If the City continues to pay $45 million annually to
CalPERS towards the City’s unfunded liability, the City projects the pension liability will be
eliminated within the next decade assuming CalPERS earn 6.8% on investments on average over
the next 10 years.
Overall, the City’s total debt burden is low and remains affordable. The economy benefits from
the City's mature, robust tax base and strong employment among a diversity of business sectors,
as well as retail shopping and tourism activity. Residential and commercial property values are
among the highest in the country. Our overall assessed valuation (AV) has been stable despite
the economic downturn between 2009 and 2012, with growth in the each of the last 26 years.
A strong financial profile is a particularly important factor considered by rating agencies in their
evaluation of the creditworthiness of local government debt. The rating agencies Fitch, Moody's,
and Standard & Poor's have all assigned the City the highest quality credit rating of AAA. Moody’s
reaffirmed their AAA ratings in 2021. Expenditure controls within the past decade have included
early retirement incentive plans, increased employee contributions to pension plans, contracting
services, and freezing vacant positions when necessary, usually during recessionary periods.
Financial operations produced net surpluses (after transfers) in the last ten years due to
conservative budgeting and a stable and growing tax revenue base. The City has used surpluses
for important one-time purposes, like paying more towards retirement obligations and investing
in IT and communications infrastructure. Financial management policies are robust and have
continued to improve in recent years.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and
creditors with a general overview of the City’s finances and to demonstrate the City’s
accountability for the money it receives. If you have questions about this report or need additional
financial information, contact the City’s Finance Department, 100 Civic Center Drive, Newport
Beach, CA 92660, (949) 644-3146. The City’s Budgets, Annual Comprehensive Financial
Reports, as well as other City financial information can be found on the City’s website at:
www.newportbeachca.gov/financialinfo
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FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONGOVERNMENT-WIDE FINANCIAL STATEMENTS
49
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50
Governmental Business-type
Activities Activities Total
Assets:
Cash and investments (note 4)322,121,389$ 32,172,940$ 354,294,329$
Receivables:
Accounts (net of allowance)7,543,346 7,125,135 14,668,481
Interest 941,295 94,550 1,035,845
Intergovernmental receivables 13,555,871 - 13,555,871
Lease receivables 244,473,579 - 244,473,579
Restricted cash and investments with fiscal agent (note 4)10,134,793 - 10,134,793
Internal balances 422,817 (422,817) -
Investment in joint ventures (note 14)241,967 - 241,967
Inventory 667,459 - 667,459
Prepaid items 3,569,781 - 3,569,781
Capital assets (note 5):
Non-depreciable/non-amortizable 1,912,801,825 5,950,037 1,918,751,862
Depreciable/amortizable 712,497,374 200,696,840 913,194,214
Accumulated depreciation/amortization (285,944,253) (76,183,318) (362,127,571)
Total assets 2,943,027,243 169,433,367 3,112,460,610
Deferred Outflows of Resources:
Deferred amount from pension plans (note 10) 52,341,633 1,656,052 53,997,685
Deferred amount from OPEB (note 11) 11,645,310 640,408 12,285,718
Total deferred outflows of resources 63,986,943 2,296,460 66,283,403
Liabilities:
Accounts payable 17,064,425 4,136,502 21,200,927
Accrued payroll 5,539,582 211,734 5,751,316
Accrued interest payable 3,468,116 - 3,468,116
Deposits payable 2,893,545 35,253 2,928,798
Unearned revenue 14,958,074 - 14,958,074
Noncurrent liabilities:
Due within one year:
Lease liability (note 18)1,052,350 16,723 1,069,073
Other (note 6)14,330,533 - 14,330,533
Due in more than one year:
Net pension liability (note 10)171,482,270 4,763,767 176,246,037
Net OPEB liability (note 11)15,776,760 857,358 16,634,118
Lease liability (note 18)12,268,690 1,495,851 13,764,541
Other (note 6)125,804,238 - 125,804,238
Total liabilities 384,638,583 11,517,188 396,155,771
Deferred Inflows of Resources:
Deferred amount from pension plans (note 10)80,797,682 3,174,741 83,972,423
Deferred amount from OPEB (note 11)4,237,778 233,341 4,471,119
Deferred amount from leases 243,649,149 - 243,649,149
Total deferred inflows of resources 328,684,609 3,408,082 332,092,691
Net Position:
Net investment in capital assets 2,223,773,786 128,244,924 2,352,018,710
Restricted for:
Public safety 680,713 - 680,713
Public works 27,363,131 - 27,363,131
Community services 40,581,786 - 40,581,786
Community development 788,229 - 788,229
Debt service 2,199,363 - 2,199,363
Permanent funds:
Nonexpendable 4,629,781 - 4,629,781
Expendable 1,857,493 - 1,857,493
Unrestricted (8,183,288) 28,559,633 20,376,345
Total net position 2,293,690,994$ 156,804,557$ 2,450,495,551$
CITY OF NEWPORT BEACH
Statement of Net Position
June 30, 2022
See accompanying notes to basic financial statements
51
CITY OF NEWPORT BEACH
Statement of Activities
Year Ended June 30, 2022
Operating Capital Total
Charges for Grants and Grants and Program
Expenses Services Contributions Contributions Revenues
Functions/Programs
Primary government:
Governmental activities:
General government 19,374,179$ 3,625,809$ 915,589$ -$ 4,541,398$
Public safety 104,767,466 23,156,703 2,524,620 2,970 25,684,293
Public works 65,031,715 7,538,103 12,401,245 8,465,329 28,404,677
Community development 9,664,500 11,119,757 374,914 13,372 11,508,043
Community services 24,508,702 22,302,788 583,671 211,758 23,098,217
Interest on long-term debt 6,877,577 - - - -
Total governmental activities 230,224,139 67,743,160 16,800,039 8,693,429 93,236,628
Business-type activities:
Water 27,117,471 32,104,202 116,629 - 32,220,831
Wastewater 4,094,448 4,825,249 - - 4,825,249
Total business-type activities 31,211,919 36,929,451 116,629 - 37,046,080
Total primary government 261,436,058$ 104,672,611$ 16,916,668$ 8,693,429$ 130,282,708$
General revenues:
Taxes:
Property tax
Sales tax
Transient occupancy tax
Business license tax
Franchise tax
Other taxes
Investment income
Net decrease in fair
value of investments
Other
Total general revenues
Change in net position
Net position at beginning of year
Net position at end of year
Program Revenues
See accompanying notes to basic financial statements
52
Governmental Business-type
Activities Activities Total
(14,832,781)$ -$ (14,832,781)$
(79,083,173) - (79,083,173)
(36,627,038) - (36,627,038)
1,843,543 - 1,843,543
(1,410,485) - (1,410,485)
(6,877,577) - (6,877,577)
(136,987,511) - (136,987,511)
- 5,103,360 5,103,360
- 730,801 730,801
- 5,834,161 5,834,161
(136,987,511) 5,834,161 (131,153,350)
124,335,985 - 124,335,985
46,164,860 - 46,164,860
26,677,331 - 26,677,331
4,363,145 - 4,363,145
4,561,278 - 4,561,278
4,333,071 - 4,333,071
1,995,214 345,218 2,340,432
(6,856,640) (1,190,093) (8,046,733)
2,644,194 - 2,644,194
208,218,438 (844,875) 207,373,563
71,230,927 4,989,286 76,220,213
2,222,460,067 151,815,271 2,374,275,338
2,293,690,994$ 156,804,557$ 2,450,495,551$
Net (Expense) Revenue and Changes in Net Assets
Primary Government
See accompanying notes to basic financial statements
53
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54
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONFUND FINANCIAL STATEMENTS
GOVERNMENTAL FUNDS
55
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56
GOVERNMENTAL FUNDS
Major Funds
The General Fund is used to account for fiscal resources that are dedicated to
governmental operations of the City, and not required to be accounted for in
another fund.
The Tide and Submerged Land – Operating Fund is a Special Revenue Fund
used to account for revenues related to the operation of the City’s tidelands,
including beaches and marinas, and the related expenditures. Revenue from
tideland operations includes, but is not limited to, rents from moorings, piers, and
leases, as well as income from parking lots, meters, and the sale of oil.
The Tide and Submerged Land – Harbor Capital Fund is a Special Revenue
Fund used to account for incremental increases in revenue from certain property
lease, pier, and mooring rentals that exceed Council designated base year
revenue amounts, as well as other designated revenues and the related
expenditures for capital projects, maintenance, and servicing of loan advances
from the General Fund.
The American Rescue Plan Act Fund is used to account for federal funding
received through Coronavirus State and Local Fiscal Recovery Funds under the
American Rescue Plan Act.
The Facilities Financial Planning Reserve Fund is used to account for the
receipt and expenditure of funds for the replacement of facilities. In prior years,
this fund was called the Facilities Replacement Fund.
The Debt Service Fund is used to account for debt service transactions related
to the Certificates of Participation issued to finance the construction of the Civic
Center Complex and the construction of Fire Station No. 2.
Other Governmental Funds
Other governmental funds are those governmental funds that do not meet the
criteria of a major fund. For reporting purposes in this section, they are
combined as Other Governmental Funds.
57
Tide and Tide and
Submerged Submerged American
General Land - Operating Land - Harbor Capital Rescue Plan Act
Assets
Cash and investments (note 4)87,600,313$ 4,745,087$ 39,666,573$ 10,271,759$
Receivables:
Accounts (net of allowance)5,337,987 1,972,271 - -
Interest 325,667 50,387 107,649 -
Intergovernmental receivables 11,577,642 - - -
Lease receivables 67,674,877 176,798,702 - -
Restricted cash and investments with fiscal agent (note 4)- - - -
Advance to other funds (note 12)8,176,659 - - -
Due from other funds (note 12)460,259 - - -
Prepaid items 944,410 - - -
Inventory 286,074 - - -
Total assets 182,383,888$ 183,566,447$ 39,774,222$ 10,271,759$
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable 7,271,177$ 1,710,218$ 63,091$ 80,478$
Accrued payroll 5,200,291 38,725 - -
Deposits payable 2,700,956 192,589 - -
Unearned revenue 2,722,111 757,105 - 10,191,281
Advance from other funds (note 12)- - 8,176,659 -
Due to other funds (note 12)- - - -
Total liabilities 17,894,535 2,698,637 8,239,750 10,271,759
Deferred Inflows of Resources:
Unavailable revenue 20,833 - - -
Deferred amount from leases 67,329,139 176,320,010 - -
Total deferred inflows of resources 67,349,972 176,320,010 - -
Fund balances (deficits):
Nonspendable:
Prepaid items 944,410 - - -
Inventories 286,074 - - -
Long-term loan receivable 8,176,659 - - -
Permanent endowment - - - -
Restricted:
Upper Newport Bay restoration - 1,318,126 - -
Other - 2,429,674 31,534,472 -
Committed:
Oil and gas - 800,000 - -
Other 4,429,573 - - -
Unassigned 83,302,665 - - -
Total fund balances 97,139,381 4,547,800 31,534,472 -
Total liabilities, deferred inflows of
resources and fund balances 182,383,888$ 183,566,447$ 39,774,222$ 10,271,759$
(continued)
Special Revenue Funds
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2022
Page 1 of 2
See accompanying notes to basic financial statements
58
Capital Project Fund Debt Service Fund
Facilities Other
Financial Planning Debt Service Governmental
Reserve Fund Funds Totals
Assets
Cash and investments (note 4) 27,784,144$ -$ 82,853,560$ 252,921,436$
Receivables:
Accounts (net of allowance) - - 215,849 7,526,107
Interest 102,239 - 151,830 737,772
Intergovernmental receivables - - 1,978,229 13,555,871
Lease receivables - - - 244,473,579
Restricted cash and investments with fiscal agent (note 4) - 8,507,568 1,627,225 10,134,793
Advance to other funds (note 12) - - - 8,176,659
Due from other funds (note 12) 6,308,136 - - 6,768,395
Prepaid items - - 60,649 1,005,059
Inventory - - - 286,074
Total assets 34,194,519$ 8,507,568$ 86,887,342$ 545,585,745$
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable -$ 69$ 5,971,727$ 15,096,760$
Accrued payroll - - 1,513 5,240,529
Deposits payable - - - 2,893,545
Unearned revenue 22,884 - 1,264,693 14,958,074
Advance from other funds (note 12) - - - 8,176,659
Due to other funds (note 12) - 6,308,136 107,258 6,415,394
Total liabilities 22,884 6,308,205 7,345,191 52,780,961
Deferred Inflows of Resources:
Unavailable revenue - - 1,167,620 1,188,453
Deferred amount from leases - - - 243,649,149
Total deferred inflows of resources - - 1,167,620 244,837,602
Fund balances (deficits):
Nonspendable:
Prepaid items - - 60,649 1,005,059
Inventories - - - 286,074
Long-term loan receivable - - - 8,176,659
Permanent endowment - - 4,629,781 4,629,781
Restricted:
Upper Newport Bay restoration - - - 1,318,126
Other - 2,199,363 35,531,573 71,695,082
Committed:
Oil and gas - - - 800,000
Other 34,171,635 - 38,271,899 76,873,107
Unassigned - - (119,371) 83,183,294
Total fund balances 34,171,635 2,199,363 78,374,531 247,967,182
Total liabilities, deferred inflows of
resources and fund balances 34,194,519$ 8,507,568$ 86,887,342$ 545,585,745$
CITY OF NEWPORT BEACH
Governmental Funds
Balance Sheet
June 30, 2022
Page 2 of 2
See accompanying notes to basic financial statements
59
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60
Fund balances of governmental funds 247,967,182$
Amounts reported for governmental activities in the statement of net position 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. 2,321,566,334
Long-term liabilities applicable to the City's governmental activites 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 Position.
Amounts exclude long-term debt activity from internal service funds which have been
added below:
Certificates of participation payable - Series 2010B (94,465,000)
Certificates of participation payable - Series 2020A (7,085,000)
Bond premium - Series 2020A (1,148,895)
CDBG loan (208,000)
Lease liability (13,057,605)
Pension related debt applicable to the governmental activities are not due and payable in
the current period and accordingly are not reported as fund liabilities. Deferred outflows
of resources and deferred inflows of resources related to pension are only reported in
the Statement of Net Position as the changes in these amounts affect only the
government-wide statements for governmental activities. Amounts exclude internal
service fund activity which has been added below:
Deferred outflows of resources 51,252,394
Deferred inflows of resources (78,709,554)
Pension liability (168,348,987)
OPEB related debt applicable to the governmental activities are not due and payable in
the current period and accordingly are not reported as fund liabilities. Deferred outflows
of resources and deferred inflows of resources related to OPEB are only reported in
the Statement of Net Position as the changes in these amounts affect only the
government-wide statements for governmental activities. Amounts exclude internal
service fund activity which has been added below:
Deferred outflows of resources 11,224,090
Deferred inflows of resources (4,084,301)
OPEB liability (15,212,842)
Accrued interest payable for the current portion of interest due on long-term debt
has not been reported in the governmental funds. (3,468,116)
Some of the revenue will be collected after year-end, but is not available soon
enough to pay for the current period's expenditures, and therefore is reported as
unavailable revenue in the governmental funds. 1,188,453
Internal service funds are used by management to charge the costs of certain
activities, such as self-insurance, workers' compensation, compensated absences,
retiree insurance, fleet management and information technology, to individual funds.
The assets (including capital assets) and liabilities of the internal service funds must be
added to the statement of net position. 45,616,057
Investment in joint ventures is not a current financial resource and therefore not reported
in the governmental funds.241,967
Internal balance created by the consolidation of internal service fund activities
related to enterprise funds is not reported in the governmental funds. 422,817
Net position of governmental activities 2,293,690,994$
CITY OF NEWPORT BEACH
Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Position
June 30, 2022
See accompanying notes to basic financial statements
61
Tide and Tide and
Submerged Submerged American
General Land - Operating Land - Harbor Capital Rescue Plan Act
Revenues:
Taxes and assessments:
Property tax 124,335,985$ -$ -$ -$
Sales tax 46,164,860 - - -
Transient occupancy tax 26,677,331 - - -
Other taxes 13,257,494 - - -
Intergovernmental 4,450,372 - - 122,543
Licenses, permits and fees 6,058,428 121,046 - -
Charges for services 22,867,045 30,430 - -
Fines and forfeitures 4,154,153 37,365 - -
Investment income 1,237,762 127,362 416,225 -
Net decrease in fair value of investments (3,853,265) (515,127) (1,434,907) -
Property income 14,377,859 14,249,864 5,143,027 -
Donations 874,978 - - -
Special assessments - - - -
Other 1,169,064 - - -
Total revenues 261,772,066 14,050,940 4,124,345 122,543
Expenditures:
Current:
General government 15,693,078 1,582,165 - 122,543
Public safety 114,336,303 12,654,288 - -
Public works 41,829,359 5,190,652 - -
Community development 12,804,328 3,543 - -
Community services 24,646,728 1,774,413 - -
Capital outlay - 1,279,777 697,869 -
Debt service (note 6):
Principal 1,003,250 - - -
Interest and fiscal charges 75,177 - - -
Total expenditures 210,388,223 22,484,838 697,869 122,543
Excess (deficiency) of revenues
over expenditures 51,383,843 (8,433,898) 3,426,476 -
Other financing sources (uses):
Transfers in (note 13)1,284,630 8,668,941 4,500,000 -
Transfers out (note 13)(61,482,490) - - -
Total other financing sources
(uses)(60,197,860) 8,668,941 4,500,000 -
Net change in fund balances (8,814,017) 235,043 7,926,476 -
Fund balances, beginning 105,953,398 4,312,757 23,607,996 -
Fund balances, ending 97,139,381$ 4,547,800$ 31,534,472$ -$
(continued)
Special Revenue Funds
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2022
Page 1 of 2
See accompanying notes to basic financial statements
62
Capital Project Fund Debt Service Fund
Facilities Other
Financial Planning Debt Service Governmental
Reserve Fund Funds Totals
Revenues:
Taxes and assessments:
Property tax -$ -$ -$ 124,335,985$
Sales tax - - - 46,164,860
Transient occupancy tax - - - 26,677,331
Other taxes - - 823,732 14,081,226
Intergovernmental - 2,194,366 12,916,026 19,683,307
Licenses, permits and fees 382,118 - 434,108 6,995,700
Charges for services - - - 22,897,475
Fines and forfeitures - - - 4,191,518
Investment income 348,710 5,088 621,565 2,756,712
Net decrease in fair value of investments (1,290,437) - (1,807,026) (8,900,762)
Property income - - - 33,770,750
Donations 863,279 - 66,992 1,805,249
Special assessments - - 8,086,594 8,086,594
Other - - 272,749 1,441,813
Total revenues 303,670 2,199,454 21,414,740 303,987,758
Expenditures:
Current:
General government - - - 17,397,786
Public safety - - 599,895 127,590,486
Public works - - 7,273,523 54,293,534
Community development - - 213,691 13,021,562
Community services - - - 26,421,141
Capital outlay - - 26,625,747 28,603,393
Debt service (note 6):
Principal - 3,940,000 195,000 5,138,250
Interest and fiscal charges - 7,057,019 9,068 7,141,264
Total expenditures - 10,997,019 34,916,924 279,607,416
Excess (deficiency) of revenues
over expenditures 303,670 (8,797,565) (13,502,184) 24,380,342
Other financing sources (uses):
Transfers in (note 13)19,000,000 8,741,133 33,866,860 76,061,564
Transfers out (note 13)(13,224,632) - (69,812) (74,776,934)
Total other financing sources
(uses)5,775,368 8,741,133 33,797,048 1,284,630
Net change in fund balances 6,079,038 (56,432) 20,294,864 25,664,972
Fund balances, beginning 28,092,597 2,255,795 58,079,667 222,302,210
Fund balances, ending 34,171,635$ 2,199,363$ 78,374,531$ 247,967,182$
CITY OF NEWPORT BEACH
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2022
Page 2 of 2
See accompanying notes to basic financial statements
63
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64
25,664,972$
Amounts reported for governmental activities in the statement of activities differ
from the amounts reported in governmental funds 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 (678,348)
as depreciation expense. This is the amount by which depreciation exceeded
capital outlay in the current period.
The issuance of long-term debt provides current financial resources to governmental funds, while
repayment of the principal and issuance costs of long-term debt consumes the current financial
resources of the governmental funds. Issuance of bond principal is an other financing source and
repayment of bond principal is an expenditure in governmental funds, but the issuance increases
long-term liabilities and the repayment reduces long-term liabilities in the Statement of Net Position.
The amounts are the net effect of these differences in the treatment of long-term debt:
Repayment of principal on bonds 4,135,000
Amortization of principal on leases 1,003,250
Premium on bonds is recognized as revenues in the period received; however, in the
statement of activities, it is amortized over the life of the bond.
Amortization of bond premium - Series 2020A 142,131
Accrued interest for debt service is the net change in accrued interest for the current period. 122,176
Pension expense reported in the governmental funds includes the employer contributions made.
In the Statement of Activities, pension expense includes the change in the net pension liability
and related change in pension amounts for deferred outflows of resources and deferred inflows
of resources.37,868,065
OPEB expense reported in the governmental funds includes the employer contributions made.
In the Statement of Activities, OPEB expense includes the change in the net OPEB liability
and related change in OPEB amounts for deferred outflows of resources and deferred inflows
of resources.2,890,389
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 unavailable revenue
for the current period.(722,579)
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. 1,042,536
Investment in joint ventures creates an explicit, measurable equity interest reported only
in the statement of activities.(14,895)
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. (221,770)
Change in net position of governmental activities 71,230,927$
Net change in fund balances - total governmental funds
CITY OF NEWPORT BEACH
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
Year Ended June 30, 2022
See accompanying notes to basic financial statements
65
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Taxes and assessments:
Property 122,229,980$ 123,833,217$ 124,335,985$ 502,768$
Sales 40,275,670 40,275,670 46,164,860 5,889,190
Transient occupancy 19,027,493 19,027,493 26,677,331 7,649,838
Other taxes 10,815,117 10,815,117 13,257,494 2,442,377
Intergovernmental 1,760,934 3,946,667 4,450,372 503,705
Licenses, permits and fees 5,106,646 5,106,646 6,058,428 951,782
Charges for services 19,046,329 20,010,449 22,867,045 2,856,596
Fines and forfeitures 3,292,102 3,292,102 4,154,153 862,051
Investment income 1,112,200 1,112,200 1,237,762 125,562
Net decrease in fair value of investments - - (3,853,265) (3,853,265)
Property income 10,726,345 11,173,219 14,377,859 3,204,640
Donations 401,550 527,372 874,978 347,606
Other 332,598 564,153 1,169,064 604,911
Total revenues 234,126,964 239,684,305 261,772,066 22,087,761
Expenditures:
General government:
City council 788,911 843,187 585,602 257,585
City clerk 945,367 1,191,456 1,199,672 (8,216)
City attorney 2,425,351 2,506,635 2,368,444 138,191
City manager 4,296,947 4,358,235 2,265,294 2,092,941
Finance 6,675,039 5,998,242 6,347,684 (349,442)
Human resources 3,119,670 3,210,866 2,926,382 284,484
Total general government 18,251,285 18,108,621 15,693,078 2,415,543
Public safety:
Police 67,401,926 67,425,168 64,063,936 3,361,232
Fire 55,861,885 49,890,956 50,272,367 (381,411)
Total public safety 123,263,811 117,316,124 114,336,303 2,979,821
Public works:
Public works - general services 30,230,658 30,792,353 28,338,164 2,454,189
Public works 11,074,579 8,901,520 8,258,881 642,639
Utilities 5,144,631 5,267,693 5,232,314 35,379
Total public works 46,449,868 44,961,566 41,829,359 3,132,207
CITY OF NEWPORT BEACH
General Fund
Budgetary Comparison Statement
For the Year Ended June 30, 2022
Budgeted Amounts
See accompanying notes to basic financial statements
66
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Community development:
Community development 11,932,324 12,430,747 11,975,531 455,216
Code and water quality enforcement 840,081 865,582 828,797 36,785
Total community development 12,772,405 13,296,329 12,804,328 492,001
Community services:
Parking operations 2,210,660 2,686,829 2,025,631 661,198
Library services 9,655,108 10,453,688 9,454,173 999,515
Recreation and senior services 13,360,496 14,447,029 13,166,924 1,280,105
Total community services 25,226,264 27,587,546 24,646,728 2,940,818
Debt service:
Principal - - 1,003,250 (1,003,250)
Interest and fiscal charges - - 75,177 (75,177)
Total Debt Service - - 1,078,427 (1,078,427)
Total expenditures 225,963,633 221,270,186 210,388,223 10,881,963
Excess of revenues
over expenditures 8,163,331 18,414,119 51,383,843 32,969,724
Other financing sources (uses):
Transfers in 1,284,630 1,284,630 1,284,630 -
Transfers out (20,200,000) (61,482,490) (61,482,490) -
Total other financing
sources (uses)(18,915,370) (60,197,860) (60,197,860) -
Net change in fund balance (10,752,039) (41,783,741) (8,814,017) 32,969,724
Fund balance, beginning 105,953,398 105,953,398 105,953,398 -
Fund balance, ending 95,201,359$ 64,169,657$ 97,139,381$ 32,969,724$
CITY OF NEWPORT BEACH
Budgetary Comparison Statement
General Fund
(continued)
Budgeted Amounts
For the Year Ended June 30, 2022
See accompanying notes to basic financial statements
67
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Licenses, permits and fees 59,388$ 59,388$ 121,046$ 61,658$
Charges for services 15,940 15,940 30,430 14,490
Fines and forfeitures 24,500 24,500 37,365 12,865
Investment income 192,208 192,208 127,362 (64,846)
Net decrease in fair value of investments - - (515,127) (515,127)
Property income 12,045,872 12,045,872 14,249,864 2,203,992
Total revenues 12,337,908 12,337,908 14,050,940 1,713,032
Expenditures:
General government - 1,582,165 1,582,165 -
Public safety - 12,654,288 12,654,288 -
Public works 1,204,323 4,596,921 5,190,652 (593,731)
Community development - - 3,543 (3,543)
Community services 1,931,915 1,950,160 1,774,413 175,747
Capital outlay - 3,862,955 1,279,777 2,583,178
Total expenditures 3,136,238 24,646,489 22,484,838 2,161,651
Excess (deficiency) of revenues
over expenditures 9,201,670 (12,308,581) (8,433,898) 3,874,683
Other financing sources:
Transfers in - 8,668,941 8,668,941 -
Net change in fund balance 9,201,670 (3,639,640) 235,043 3,874,683
Fund balance, beginning 4,312,757 4,312,757 4,312,757 -
Fund balance, ending 13,514,427$ 673,117$ 4,547,800$ 3,874,683$
CITY OF NEWPORT BEACH
Tide and Submerged Land - Operating
Budgetary Comparison Statement
For the Year Ended June 30, 2022
Budgeted Amounts
See accompanying notes to basic financial statements
68
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Investment income 436,141$ 436,141$ 416,225$ (19,916)$
Net decrease in fair value of investments - - (1,434,907) (1,434,907)
Property income 3,632,368 3,632,368 5,143,027 1,510,659
Total revenues 4,068,509 4,068,509 4,124,345 55,836
Expenditures:
Capital outlay - 13,209,374 697,869 12,511,505
Excess (deficiency) of revenues
over expenditures 4,068,509 (9,140,865) 3,426,476 12,567,341
Other financing sources:
Transfers in 4,500,000 4,500,000 4,500,000 -
Net change in fund balance 8,568,509 (4,640,865) 7,926,476 12,567,341
Fund balance, beginning 23,607,996 23,607,996 23,607,996 -
Fund balance, ending 32,176,505$ 18,967,131$ 31,534,472$ 12,567,341$
CITY OF NEWPORT BEACH
Tide and Submerged Land - Harbor Capital
Budgetary Comparison Statement
For the Year Ended June 30, 2022
Budgeted Amounts
See accompanying notes to basic financial statements
69
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental -$ 122,543$ 122,543$ -$
Expenditures:
General government - 122,543 122,543 -
Net change in fund balance - - - -
Fund balance, beginning - - - -
Fund balance, ending -$ -$ -$ -$
Budgeted Amounts
CITY OF NEWPORT BEACH
American Rescue Plan Act
Budgetary Comparison Statement
For the Year Ended June 30, 2022
See accompanying notes to basic financial statements
70
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONFUND FINANCIAL STATEMENTS
PROPRIETARY FUNDS
71
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72
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.
73
Governmental
Total Activities
Enterprise Internal Service
Assets and Deferred Outflows of Resources Water Wastewater Funds Funds
Current assets:
Cash and investments 28,588,747$ 3,584,193$ 32,172,940$ 69,199,953$
Receivables:
Accounts (net of allowance) 6,175,271 949,864 7,125,135 17,239
Interest 84,033 10,517 94,550 203,523
Inventories - - - 381,385
Prepaid items - - - 2,564,722
Total current assets 34,848,051 4,544,574 39,392,625 72,366,822
Noncurrent assets:
Capital assets (note 5):
Land 2,219,450 - 2,219,450 -
Intangible right to use land 1,529,906 - 1,529,906 -
Structures 688,396 - 688,396 39,581
Equipment 301,193 35,988 337,181 45,532,018
Intangible right to use equipment - - - 348,272
Software - - - 3,603,419
Infrastructure 149,314,763 48,826,594 198,141,357 -
Work in progress 3,730,587 - 3,730,587 639,243
Less accumulated depreciation/amortization (55,556,180) (20,627,138) (76,183,318) (32,373,921)
Total capital assets (net of accumulated
depreciation/amortization) 102,228,115 28,235,444 130,463,559 17,788,612
Total assets 137,076,166 32,780,018 169,856,184 90,155,434
Deferred outflows of resources:
Deferred amount from pension plans 1,196,537 459,515 1,656,052 1,089,239
Deferred amount from OPEB 462,712 177,696 640,408 421,220
Total deferred outflows of resources 1,659,249 637,211 2,296,460 1,510,459
Liabilities and Deferred Inflows of Resources
Current liabilities:
Accounts payable 4,026,652 109,850 4,136,502 1,967,665
Accrued payroll 163,392 48,342 211,734 299,053
Deposits payable 35,253 - 35,253 -
Due to other funds (note 12)- - - 353,001
Workers' compensation - current - - - 2,930,962
General liability - current - - - 2,865,644
Compensated absences - current - - - 4,385,927
Lease liability - current 16,723 - 16,723 66,721
Total current liabilities 4,242,020 158,192 4,400,212 12,868,973
Noncurrent liabilities:
Workers' compensation (note 6)- - - 12,823,626
General liability (note 6)- - - 5,830,236
Compensated absences (note 6)- - - 8,391,481
Lease liability (note 18)1,495,851 - 1,495,851 196,714
Net pension liability (note 10)3,441,952 1,321,815 4,763,767 3,133,283
Net OPEB liability 619,464 237,894 857,358 563,918
Total noncurrent liabilities 5,557,267 1,559,709 7,116,976 30,939,258
Total liabilities 9,799,287 1,717,901 11,517,188 43,808,231
Deferred inflows of resources:
Deferred amount from pension plans 2,293,838 880,903 3,174,741 2,088,128
Deferred amount from OPEB 168,596 64,745 233,341 153,477
Total deferred inflows of resources 2,462,434 945,648 3,408,082 2,241,605
Net Position
Net investment in capital assets 100,009,480 28,235,444 128,244,924 19,430,947
Unrestricted 26,464,214 2,518,236 28,982,450 26,185,110
Total net position 126,473,694$ 30,753,680$ 157,227,374 45,616,057$
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds (422,817)
Net position of business-type activities 156,804,557$
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Net Position
June 30, 2022
Enterprise Funds
See accompanying notes to basic financial statements
74
Governmental
Total Activities
Enterprise Internal Service
Water Wastewater Funds Funds
Operating revenues:
Charges for sales and services:
Water sales 31,906,955$ -$ 31,906,955$ -$
Charges for services - - - 31,336,461
Sewer service and connection fees - 4,779,466 4,779,466 -
Employee contributions - - - 40,451
Other 313,876 45,783 359,659 710,943
Total operating revenues 32,220,831 4,825,249 37,046,080 32,087,855
Operating expenses:
Purchase of water 12,278,115 - 12,278,115 -
Salaries and benefits 4,410,909 1,245,958 5,656,867 2,657,821
Depreciation/amortization 1,782,434 643,813 2,426,247 3,694,580
Professional services 2,518,358 351,738 2,870,096 411,601
Maintenance and supplies 2,473,665 927,042 3,400,707 3,314,595
System maintenance 1,027,412 588,388 1,615,800 -
Utilities 1,740,902 70,661 1,811,563 -
Fleet parts and supplies - - - 572,898
Telecommunication - - - 216,006
Hardware - - - 336,181
Software - - - 233,186
Workers' compensation - - - 4,213,387
Claims and judgments - - - 5,957,756
Compensated absences - - - 2,058,475
OPEB ARC - cash subsidy - - - 4,499,498
Other 1,029,714 336,912 1,366,626 20,637
Total operating expenses 27,261,509 4,164,512 31,426,021 28,186,621
Operating income (loss) 4,959,322 660,737 5,620,059 3,901,234
Nonoperating revenues (expenses):
Investment income 309,968 35,250 345,218 732,235
Net decrease in fair value of investments (1,062,725) (127,368) (1,190,093) (2,596,623)
Gain on sale of capital assets - - - 290,940
Interest expense (7,668) - (7,668) (620)
Total nonoperating revenues (expenses) (760,425) (92,118) (852,543) (1,574,068)
Income (loss) before transfers 4,198,897 568,619 4,767,516 2,327,166
Transfers out (note 13) - - - (1,284,630)
Change in net position 4,198,897 568,619 4,767,516 1,042,536
Net position, beginning of year 122,274,797 30,185,061 44,573,521
Net position, end of year 126,473,694$ 30,753,680$ 45,616,057$
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds 221,770
Change in net position of business-type activities 4,989,286$
CITY OF NEWPORT BEACH
Proprietary Fund
Statement of Revenues,
Expenses and Changes in Net Position
For the Year Ended June 30, 2022
Enterprise Funds
See accompanying notes to basic financial statements
75
CITY OF NEWPORT BEACH
Statement of Cash Flows
For the Year Ended June 30, 2022
Governmental
Total Activities
Enterprise Internal Service
Water Wastewater Funds Funds
Cash flows from operating activities:
Cash received from customers or user departments 31,558,243$ 4,771,968$ 36,330,211$ 32,534,581$
Cash payments to employees for services (5,579,800) (1,700,199) (7,279,999) (9,723,148)
Cash payments to suppliers for goods and services (21,820,373) (1,906,156) (23,726,529) (13,760,353)
Cash payments for other operating activities (715,838) (291,129) (1,006,967) -
Cash received for other operating activities - - - 751,394
Net cash provided by operating activities 3,442,232 874,484 4,316,716 9,802,474
Cash flows from noncapital financing activities:
Cash received from other funds - - - 165
Cash paid to other funds - - - (1,284,630)
Net cash (used) by noncapital financing activities - - - (1,284,465)
Cash flows from capital and related financing activities:
Acquisition of capital assets (5,481,615) - (5,481,615) (5,024,863)
Lease liabilities and related (25,000) - (25,000) (33,041)
Proceeds from sale of capital assets - 150,165 150,165 290,940
Net cash provided (used) for capital and related financing activities (5,506,615) 150,165 (5,356,450) (4,766,964)
Cash flows from investing activities:
Investment (loss) (745,012) (94,861) (839,873) (1,870,669)
Net cash (used) by investing activities (745,012) (94,861) (839,873) (1,870,669)
Net increase (decrease) in cash and cash equivalents (2,809,395) 929,788 (1,879,607) 1,880,376
Cash and cash equivalents, beginning 31,398,142 2,654,405 34,052,547 67,319,577
Cash and cash equivalents, ending 28,588,747$ 3,584,193$ 32,172,940$ 69,199,953$
Reconciliation to the statement of net position:
Cash and investments reported on statement of net position 28,588,747$ 3,584,193$ 32,172,940$ 69,199,953$
Cash and cash equivalents 28,588,747$ 3,584,193$ 32,172,940$ 69,199,953$
Reconciliation of operating income to net cash
provided by operating activities:
Operating income 4,959,322$ 660,737$ 5,620,059$ 3,901,234$
Adjustments to reconcile operating income
to net cash provided by operating activities:
Depreciation 1,782,434 643,813 2,426,247 3,694,580
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (453,888) (7,498) (461,386) 1,198,120
Decrease in intergovernmental receivables 99,863 - 99,863 -
Decrease in inventories - - - 66,070
Decrease in prepaid items - - - 1,804,417
Increase (decrease) in accounts payable and accrued payroll (1,757,212) 35,811 (1,721,401) (471,619)
Increase in deposits payable 5,313 - 5,313 -
Increase in workers' compensation - - - 1,001,588
Increase in general liability - - - 430,245
(Decrease) in compensated absences - - - (735,599)
(Decrease) in net pension liability and deferred cash flows (1,070,895) (411,256) (1,482,151) (974,860)
(Decrease) in net OPEB liability and deferred cash flows (122,705) (47,123) (169,828) (111,702)
Total adjustments (1,517,090) 213,747 (1,303,343) 5,901,240
Net cash provided by operating activities 3,442,232$ 874,484$ 4,316,716$ 9,802,474$
Noncash investing, capital and financing activities:
Net (decrease) in fair value of investments (1,062,725)$ (127,368)$ (1,190,093)$ (2,596,623)$
Obtaining an intangible right to use lease asset - - - (295,856)
Total of noncash activities (1,062,725)$ (127,368)$ (1,190,093)$ (2,892,479)$
Proprietary Fund
Enterprise Funds
See accompanying notes to basic financial statements
76
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONFUND FINANCIAL STATEMENTS
FIDUCIARY FUNDS
77
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78
FIDUCIARY FUNDS
Custodial 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.
79
Custodial
Funds
Assets
Cash and investments (note 4)675,435$
Restricted cash and investments with fiscal agent (note 4)2,288,581
Receivable:
Interest 537
Intergovernmental receivable 21,046
Total assets 2,985,599
Liabilities
Due to others 383,691
Total liabilities 383,691
Net Position
Restricted for:
Individuals, organizations, and other governments 2,601,908
Total net position 2,601,908$
CITY OF NEWPORT BEACH
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2022
See accompanying notes to basic financial statements
80
Custodial
Funds
Additions
Special assessments 1,664,084$
Investment earnings 1,020
Other 214,543
Total additions 1,879,647
Deductions
Debt service 1,276,605
Administrative 66,942
Other 71,759
Total deductions 1,415,306
Net increase in fiduciary net position 464,341
Net position, beginning of year 2,137,567
Net position, end of year 2,601,908$
CITY OF NEWPORT BEACH
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
For the Year Ended June 30, 2022
See accompanying notes to basic financial statements
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82
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONNOTES TO THE FINANCIAL STATEMENTS
83
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
(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, 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 the City’s
Central Library, Civic Center, and most recently the new Fire Station No. 2. The
Corporation is 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
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
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
financial statements, rather than as an other financing source. Amounts paid to
85
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
reduce long-term indebtedness of the reporting government are reported as a
reduction of the related liability, rather than as an expenditure.
Sometimes the City will fund outlays for a particular purpose from both restricted
(e.g., restricted bond or grant proceeds) and unrestricted resources. In order to
calculate the amounts to report as restricted – net position and unrestricted – net
position in the government-wide and proprietary fund financial statements, a flow
assumption must be made about the order in which the resources are considered
to be applied. It is the City’s practice to consider restricted-net position to have
been depleted before unrestricted – net position is applied.
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, deferred inflows/outflows of
resources, 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
funds are excluded from government-wide financial statements. 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.
Property taxes, sales taxes, franchise taxes, gas taxes, motor vehicle license fees,
transient occupancy taxes, grants, and interest associated with the current fiscal
period are all considered to be subject to accrual and so have been recognized as
revenues of the current fiscal period to the extent normally collected within the
86
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
availability period. Other revenue items are considered to be measurable and
available when cash is received by the City.
Revenue recognition is subject to the measurability and availability criteria for the
governmental funds in the fund financial statements. Exchange transactions are
recognized as revenues in the period in which they are earned (i.e., the related
goods or services are provided). Locally imposed derived tax revenues are
recognized as revenues in the period in which the underlying exchange transaction
upon which they are based takes place. Imposed non-exchange transactions are
recognized as revenues in the period for which they were imposed. If the period of
use is not specified, they are recognized as revenues when an enforceable legal
claim to the revenues arises or when they are received, whichever occurs first.
Government-mandated and voluntary non-exchange transactions are recognized
as revenues when all applicable eligibility requirements have been met.
In the fund financial statements, governmental funds are presented using the
current financial resources measurement focus. This means that only current
assets and deferred outflows of resources, and current liabilities and deferred
inflows of resources are generally included on their balance sheets. The reported
fund balance 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 fund
balance. 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.
Because of their spending measurement focus, expenditure recognition for
governmental fund types excludes amounts represented by non-current liabilities.
Since they do not affect “available spendable resources”, 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.
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 net appreciation on investments that is available to support City
programs is $1,857,493. 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
87
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Endowments in the Balance Sheet. 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 the authority 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, deferred outflows of
resources, all liabilities and deferred inflows of resources (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 position.
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 expenditures. Proceeds of long-term
debt are recorded as a liability in the proprietary fund financial statements, rather
than as other financing sources. Amounts paid to reduce long-term indebtedness
of the proprietary funds are reported as reductions of the related liabilities, rather
than as expenditures.
When both restricted and unrestricted resources are combined in a proprietary
fund, expenses are considered to be paid first from restricted resources, and then
from unrestricted resources.
Fiduciary funds are also reported using the economic resources measurement
focus and the accrual basis of accounting.
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.
88
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Major Governmental Funds – Governmental funds are generally used to account
for tax supported activities. The following governmental funds meet 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 Funds
Tide and Submerged Land – Operating
The Tide and Submerged Land – Operating Fund is a special revenue fund used
to account for revenues related to the operation of the City’s tidelands, including
beaches and marinas, and the related expenditures. Revenue from tideland
operations includes, but is not limited to, rents from moorings, piers, and leases,
as well as income from parking lots, meters, and the sale of oil.
Tide and Submerged Land – Harbor Capital
The Tide and Submerged Land - Harbor Capital Fund is used to account for
incremental increases in revenue from certain property lease, pier, and mooring
rentals that exceed Council designated base year revenue amounts, as well as
other designated revenues and the related expenditures for capital projects,
maintenance, and servicing of loan advances from the General Fund.
American Rescue Plan Act Fund
The American Rescue Plan Act Fund is used to account for federal funding
received through Coronavirus State and Local Fiscal Recovery Funds under the
American Rescue Plan Act.
Capital Project Funds
Facilities Financial Planning Reserve Fund
The Facilities Financial Planning Reserve Fund is used to account for the receipt
and expenditure of funds for the replacement of facilities. In prior years, this fund
was called the Facilities Replacement Fund.
Debt Service Fund
The Debt Service Fund is used to account for debt service transactions related to
the Certificates of Participation issued to finance the construction of the City’s Civic
Center Complex and the construction of Fire Station No. 2.
89
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
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.
Other Governmental Funds – Other Governmental Funds are those funds which
do not meet the criteria of a major fund. Other Governmental Funds used by the
City fall into the following governmental fund types:
Other Special Revenue Funds – Other Special Revenue Funds are used to
account for the proceeds of specific revenue sources which are legally restricted
to expenditures for specified purposes.
Other Capital Projects Funds – Other 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.
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.
Internal Service Funds – The Internal Service Funds are used to account for the
City’s self-insured general liability and workers’ compensation, compensated
absences, and retiree insurance liabilities; the cost of maintaining and replacing
the City’s rolling stock fleet, parking equipment, coordinated communications
systems equipment, certain fire equipment, and recreation equipment; and the cost
of maintaining and replacing the City’s information technology systems. City
departments are the primary users of these services and are charged a fee on a
cost reimbursement basis.
Fiduciary Funds – The Custodial Funds, a type of Fiduciary Fund, 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 monies
held by the police department in a custodial capacity.
90
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
d. New Accounting Pronouncements
Current Year Standards
In fiscal year 2021-22, the City implemented the following Government Accounting
Standards Board (GASB) Statements:
GASB Statement No. 87 – “Leases”, effective for periods beginning after June
15, 2021. This statement changed the calculation and presentation of lease
related amounts in the City’s financial statements.
GASB Statement No. 92 – “Omnibus 2020”, primarily effective for periods
beginning after June 15, 2021. The implementation of this statement did not
have a material impact on the financial statements.
GASB Statement No. 93 – “Replacement of Interbank Offered Rates”, effective
for periods beginning after June 15, 2021 The implementation of this statement
did not have a material impact on the financial statements.
GASB Statement No. 97 – “Certain Component Unit Criteria, and Accounting
and Financial Reporting for Internal Revenue Code Section 457 Deferred
Compensation Plans – an amendment of GASB Statements No. 14 and No.
84, and a supersession of GASB Statement No. 32”, effective for fiscal years
beginning after June 15, 2021, except for the requirements of paragraphs 4
and 5. The implementation of this statement did not have a material impact on
the financial statements.
Pending Accounting Standards
GASB has issued the following statements, which may impact the City’s financial
reporting requirements in the future:
GASB Statement No. 91 – “Conduit Debt Obligations”, effective for periods
beginning after December 15, 2021. The primary objective of this statement is
to provide a single method of reporting conduit debt obligations by issues and
eliminate diversity in practice.
GASB Statement No. 94 – “Public-Private and Public-Public Partnerships and
Availability Payment Arrangements”, effective for periods beginning after June
15, 2022. The primary objective of this statement is to improve financial
reporting by addressing issues related to public-private and public-public
partnership arrangements.
GASB Statement No. 96 – “Subscription-Based Information Technology
Arrangements”, effective for fiscal years beginning after June 15, 2022. This
statement provides guidance on the accounting and financial reporting for
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June 30, 2022
subscription-based information technology arrangements (SBITAs) for
governments.
e. Accounts Receivable
Accounts receivable represent all service and capital project billings other than
intergovernmental receivables stated below. As of June 30, 2022, accounts
receivable deemed to be uncollectible with an outstanding balance over 120 days
past due were written off the City’s accounting records to ensure that the income
statement and balance sheet are fairly stated at the amount expected to be
collected in receivables. Receivables with governmental organizations are
generally excluded from the write-off as they are more likely to be received due to
the governments’ creditworthiness.
f. Cash and Investments
Cash and Cash Equivalents
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.
Investments
Investments are generally stated at fair value which is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
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 $35,655,882 at June 30, 2022. 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 her designated representative.
Two members qualified by training and experience in the field of investment or
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.
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June 30, 2022
g. 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, 2022, the balance of these accounts totaled
$13,555,871.
h. Inventories and Prepaid Items
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 and internal service fund inventories are recorded as
expenditures when consumed.
Certain payments to vendors reflect costs applicable to future accounting periods
and are recorded as prepaid items. The City follows the consumption method for
prepaid items.
i. Capital Assets
Capital assets are tangible and intangible 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.
Tangible 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 in
excess of one year. Buildings, infrastructure, and improvements are capitalized if
cost is in excess of $30,000 and the expected useful life is in excess of one year.
The cost of normal maintenance and repairs that do not add to the value of the
asset’s life are not capitalized. The City chose to value and report on infrastructure
assets in their entirety (e.g. prior to 1980).
Major capital outlays for tangible capital assets and improvements are capitalized
as projects are constructed. Tangible capital assets acquired through lease
obligations are valued at the present value of future lease payments at the date
acquired. Contributed tangible capital assets are valued at their estimated
acquisition value at the date of contribution. Intangible capitals assets are generally
an estimated present value of certain future lease payments for the leases in which
the City is the lessee.
Capital assets used in operations are depreciated/amortized using the straight-line
method in the government-wide financial statements and in the fund financial
statements of the proprietary funds. Tangible capital assets are depreciated over
their estimated useful lives. Intangible assets are amortized over the shorter of the
estimated useful life of the underlying asset or the period of time included in the
estimated present value. Depreciation/amortization is charged as an expense
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June 30, 2022
against operations and accumulated depreciation/amortization is reported on the
respective balance sheet. The ranges of useful life for depreciation purposes for
each capital asset class are as follows:
Structures 15-75 years
Equipment 3-15 years
Infrastructure 20-75 years
j. Claims and Judgments
The City accounts for material claims and judgments and associated legal and
administrative costs when it is probable that the liability claim has been incurred
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.
k. Property Taxes
The assessment, levy, and collection of property taxes are the responsibility of the
County of Orange. The City records property taxes as revenue when received from
the County, except at year-end, when property taxes received within 60 days 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 2nd installment
l. 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 that permits a maximum of
three years’ accrual for every employee, above which the excess either stops
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June 30, 2022
accruing or is paid out as current compensation. All employees hired prior to
January 1,1990, were given the option of remaining in the traditional vacation and
sick leave plan or enrolling in the general leave plan. All employees hired on or
after January 1,1990, are automatically enrolled in the general leave plan.
Compensated absences are accrued in the Compensated Absence Internal
Service Fund when employee services have been rendered and when it becomes
probable that the City will compensate the employees for benefits through paid
time off or cash payments at termination or retirement. Benefits that have been
earned but are not yet available for use because employees have not met certain
conditions are accrued to the extent it is probable that the employees will meet the
conditions for compensation in the future.
m. Deposits Payable
In the government-wide and fund-level financial statements, deposits payable
represents 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.
n. Unearned Revenue
Unearned revenues are those where asset recognition has been met, but the
revenue recognition criteria have not been met.
o. Deferred Inflows/Outflows of Resources
In addition to assets, the statement of net position and the governmental funds
balance sheet will sometimes report a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of
resources, represents a consumption of net assets that applies to future periods
and so will not be recognized as an outflow of resources (expense) until that time.
The City has three items that qualify for reporting in this category. The first item is
the deferred outflows related to employer pension and OPEB contributions made
after the measurement date. The second item is a deferred outflow related to
pensions and OPEB resulting from changes in assumptions. This amount is
amortized over a closed period equal to the average of expected remaining service
lives of all employees that are provided pensions and OPEB through the plans.
The third item is a deferred outflow related to pensions and OPEB resulting from
the difference between expected and actual experience. This amount is amortized
over a closed period equal to the average of expected remaining service lives of
all employees that are provided pensions and OPEB through the plans.
In addition to liabilities, the statement of net position and the governmental funds
balance sheet will sometimes report a separate section for deferred inflows of
resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net assets that applies to future periods
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Notes to Basic Financial Statements
June 30, 2022
and will not be recognized as an inflow of resources (revenue) until that time. The
City has six items that qualify for reporting in this category. The first item is
unavailable revenues, which is only reported in the governmental funds balance
sheet. The governmental funds report unavailable revenues from two sources:
grants receivable and rent collections. These amounts are deferred and
recognized as an inflow of resources in the period that the amounts become
available. The second item is a deferred inflow related to pensions resulting from
the difference between actual and expected experience. This amount is amortized
over a closed period equal to the average of the expected remaining service lives
of all employees that are provided pensions through the plans. The third item is a
deferred inflow related to pensions resulting from the change in assumptions. This
amount is amortized over a closed period equal to the average of expected
remaining service lives of all employees that are provided pensions through the
plans. The fourth item is a deferred inflow resulting from the net difference in
projected and actual earnings on investments of the OPEB plan fiduciary net
position. This amount is amortized over five years. The fifth item is the net
difference in projected and actual earnings on investments of the pension plan’s
fiduciary net position. This amount is amortized over five years. The sixth item is
a deferred inflow for certain leases for which the City is lessor, and relates to a
present value estimate of certain future lease payments. This amount generally is
amortized over the same time period associated with the related present value
estimate.
p. Fund Balance Classifications
The governmental fund balance is made up of 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.
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
or modify a fund balance commitment by legislation (Council action) and can only
rescind a fund balance commitment by new legislation requiring the same voting
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Notes to Basic Financial Statements
June 30, 2022
consensus. The City considers a resolution to constitute a formal action of the City
Council for the purposes of establishing committed fund balance.
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’s Reserve Policy gives the City Manager the
authority to establish, modify, or rescind a fund balance assignment.
Unassigned fund balance
The residual portion of a fund balance that is not otherwise restricted, committed,
or assigned. Positive unassigned fund balance is available to be used for any
purpose. Only the general fund may report a positive unassigned fund balance.
Funds, except the general fund, may report negative unassigned fund balance in
certain circumstances.
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
uses the appropriate funds in the following order: restricted, committed, assigned,
and finally unassigned amounts.
q. 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, deferred outflows of resources, liabilities and deferred inflows of
resources, 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.
r. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows
of resources related to pensions, and pension expense, information about the
fiduciary net position of the City of Newport Beach’s California Public Employees’
Retirement System (CalPERS) plans (Plans) and additions to/deductions from the
Plans’ fiduciary net position have been determined on the same basis as they are
reported by CalPERS. For this purpose, benefit payments (including refunds of
employee contributions) are recognized when due and payable in accordance with
the benefit terms. Investments are reported at fair value.
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June 30, 2022
GASB 68 requires that the reported results must pertain to liability and asset
information within certain defined timeframes. For this report, the following
timeframes are used.
Valuation Date (VD) June 30, 2020
Measurement Date (MD) June 30, 2021
Measurement Period (MP) July 1, 2020 to June 30, 2021
s. Post-Employment Health Care Benefits (OPEB)
For purposes of measuring the net OPEB liability and deferred outflows/inflows of
resources related to OPEB and OPEB expense, information about the fiduciary net
position of the City of Newport Beach’s California Public Employees’ Retirement
System (CalPERS) Health Plan and additions to/deductions from the Plans’
fiduciary net position have been determined on the same basis as they are
reported by CalPERS. For this purpose, benefit payments (including refunds of
employee contributions) are recognized when due and payable in accordance with
the benefit terms. Investments are reported at fair value.
GASB 75 requires that the reported results must pertain to liability and asset
information within certain defined timeframes. For this report, the following
timeframes are used.
Valuation Date (VD) June 30, 2021
Measurement Date (MD) June 30, 2021
Measurement Period (MP) July 1, 2020 to June 30, 2021
t. Lease Liabilities and Receivables
Lease liabilities and receivables are estimated present values of future lease
payments. Estimating present values involves various related estimates, including
lease terms and interest rates. The estimated lease term is the time period that
the lease is noncancelable, plus extension and termination time periods if based
on the lease agreement it is reasonable that the extensions will be exercised and
the terminations will not be exercised. When a lease’s implicit interest rate is not
known, estimates are made of either the City’s incremental borrowing rate or the
rate the City may charge a lessee. Non-lease components of lease agreements
have been treated as separate non-lease agreements when practicable, and are
excluded from the City’s estimated lease liabilities and receivables. Leases that
do not meet the Governmental Accounting Standards Board’s definition of a lease
liability or receivable (e.g. short-term leases, etc.) also are excluded from the City’s
estimated lease liabilities and receivables.
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Notes to Basic Financial Statements
June 30, 2022
(2) Reconciliation of Government-wide and Fund Financial Statements
a. Explanation of Differences Between Governmental Funds Balance Sheet
and the Statement of Net Position
The “total fund balances” of the City’s governmental funds $247,967,182 differs
from “net position” of governmental activities $2,293,690,994 reported in the
statement of net position. This difference primarily results from the long-term
economic focus of the statement of net position versus the current financial
resources focus of the governmental funds balance sheet.
Capital Related Items
When capital assets (property, plant, and equipment) that are to be used in
governmental activities are purchased, constructed or leased, the costs of those
assets or leases are reported as expenditures in governmental funds. However,
the statement of net position includes those capital assets among the assets of the
City as a whole.
Cost of capital assets $2,575,136,666
Accumulated depreciation/amortization (253,570,332)
Total capital assets, net* $2,321,566,334
*Amount excludes net capital assets of $17,788,612 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
position. Balances at June 30, 2022 were:
Certificates of participation – Series 2010B $94,465,000
Certificates of participation – Series 2020A 7,085,000
Bond premium – Series 2020A 1,148,895
CDBG loan 208,000
Lease liability 13,057,605
Total $115,964,500
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Accrued Interest
Accrued liabilities in the statement of net position differ from the amount reported
in governmental funds due to accrued interest on outstanding debt payable (see
Note 6).
Accrued interest added $3,468,116
Investment in Joint Venture
Investment in joint venture is not a current financial resource and hence reported
only in the statement of net position.
Net equity in joint venture $241,967
Unavailable Revenue
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.
Unavailable revenue $1,188,453
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
position because they primarily serve governmental activities of the City.
Internal Service Funds $45,616,057
Deferred Outflows of Resources, Deferred Inflows of Resources and Net Pension
Liability – GASB 68
Pension related debt applicable to the governmental activities are not due and
payable in the current period and accordingly are not reported as fund liabilities.
Deferred outflows of resources and deferred inflows of resources related to
pension are only reported in the Statement of Net Position as the changes in these
amounts effects only the government-wide statements for governmental activities.
Internal service funds amounts are excluded.
Deferred Outflows of Resources $51,252,394
Deferred Inflows of Resources (78,709,554)
Pension Liability (168,348,987)
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Deferred Outflows of Resources, Deferred Inflows of Resources and Net Post-
Employment Health Care Benefits Liability – GASB 75
Post-employment health care benefits (OPEB) debt applicable to the
governmental activities are not due and payable in the current period and
accordingly are not reported as fund liabilities. Deferred outflows of resources and
deferred inflows of resources related to OPEB are only reported in the Statement
of Net Position as the changes in these amounts effects only the government-wide
statements for governmental activities. Internal service funds amounts are
excluded.
Deferred Outflows of Resources $11,224,090
Deferred Inflows of Resources (4,084,301)
OPEB Liability (15,212,842)
Internal Balance
Internal balances created by the consolidation of internal service fund activities
related to enterprise funds are not reported in the governmental funds.
Internal Balance $422,817
Reclassifications and Eliminations
Interfund balances must generally be eliminated in the government-wide
statements, except for net residual amounts due between governmental activities.
Amounts involving fiduciary funds should be reported as external transactions. Any
allocations must reduce the expenses of the function from which the expenses are
being allocated, so that expenses are reported only once in the function in which
they are allocated.
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June 30, 2022
Total Capital Accumulated Long-term
Governmental Related Depreciation/ Debt
Funds Items Amortization Transactions
Assets and Deferred Outflows of Resources
Cash and investments 252,921,436$ -$ -$ -$
Receivables:
Accounts (net of allowance) 7,526,107 - - -
Advances to other funds 8,176,659 - - -
Interest 737,772 - - -
Intergovernmental receivables 13,555,871 - - -
Lease receivables 244,473,579 - - -
Restricted cash and investments with fiscal agent 10,134,793 - - -
Interfund balances 6,768,395 - - -
Investment in joint venture - - - -
Inventory 286,074 - - -
Prepaid items 1,005,059 - - -
Capital assets - 2,575,136,666 - -
Accumulated depreciation/amortization - - (253,570,332) -
Total assets 545,585,745$ 2,575,136,666$ (253,570,332)$ -$
Deferred Outflows of Resources:
Deferred amount from pension plans - - - 51,252,394
Deferred amount from OPEB - - - 11,224,090
Total deferred outflows of resources - - - 62,476,484
Total assets and deferred outflows of resources 545,585,745$ 2,575,136,666$ (253,570,332)$ 62,476,484$
Liabilities, Deferred Inflows of Resources
and Fund Balances/Net Position
Liabilities:
Accounts payable 15,096,760$ -$ -$ -$
Accrued payroll 5,240,529 - - -
Accrued interest payable - - - -
Deposits payable 2,893,545 - - -
Claims payable - - - -
Workers' compensation payable - - - -
Compensated absences payable - - - -
Lease liability - - - 985,629
Unearned revenue 14,958,074 - - -
Due to other funds 6,415,394 - - -
Advance from other funds 8,176,659 - - -
Long-term liabilities - - - 298,540,700
Total liabilities 52,780,961 - - 299,526,329
Deferred Inflows of Resources:
Unavailable revenue 1,188,453 - - -
Deferred amount from pension plans - - - 78,709,554
Deferred amount from OPEB - - - 4,084,301
Deferred amount from leases 243,649,149 - - -
Total deferred inflows of resources 244,837,602 - - 82,793,855
Fund balances / net position 247,967,182 2,575,136,666 (253,570,332) (319,843,700)
Total liabilities, deferred inflows of resources
and fund balances / net position 545,585,745$ 2,575,136,666$ (253,570,332)$ 62,476,484$
Explanation of Differences Between Government Funds
Balance Sheet and the Statement of Net Position
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Investment Internal Reclassifications
Interest in Joint Unavailable Service and Statement of
Payable Venture Revenue Funds Eliminations Net Position
-$ -$ -$ 69,199,953$ -$ 322,121,389$
- - - 17,239 - 7,543,346
- - - - (8,176,659) -
- - - 203,523 - 941,295
- - - - - 13,555,871
- - - - - 244,473,579
- - - - - 10,134,793
- - - - (6,345,578) 422,817
- 241,967 - - - 241,967
- - - 381,385 - 667,459
- - - 2,564,722 - 3,569,781
- - - 50,162,533 - 2,625,299,199
- - - (32,373,921) - (285,944,253)
-$ 241,967$ -$ 90,155,434$ (14,522,237)$ 2,943,027,243$
- - - 1,089,239 - 52,341,633
- - - 421,220 - 11,645,310
- - - 1,510,459 - 63,986,943
-$ 241,967$ -$ 91,665,893$ (14,522,237)$ 3,007,014,186$
-$ -$ -$ 1,967,665$ -$ 17,064,425$
- - - 299,053 - 5,539,582
3,468,116 - - - - 3,468,116
- - - - - 2,893,545
- - - 2,865,644 - 2,865,644
- - - 2,930,962 - 2,930,962
- - - 4,385,927 - 4,385,927
- - 66,721 - 1,052,350
- - - - - 14,958,074
- - - 353,001 (6,768,395) -
- - - - (8,176,659) -
- - - 30,939,258 - 329,479,958
3,468,116 - - 43,808,231 (14,945,054) 384,638,583
- - (1,188,453) - - -
- - - 2,088,128 - 80,797,682
- - - 153,477 - 4,237,778
- - - - - 243,649,149
- - (1,188,453) 2,241,605 - 328,684,609
(3,468,116) 241,967 1,188,453 45,616,057 422,817 2,293,690,994
-$ 241,967$ -$ 91,665,893$ (14,522,237)$ 3,007,014,186$
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
b. Explanation of Differences Between Enterprise Funds and Government-wide
Statement of Net Position
The net position of the City’s Enterprise Funds of $157,227,374 differs from the
net position of the business-type activities of $156,804,557 as reported in the
government-wide statement of net position. The difference of $422,817 results
from consolidating internal service fund activities related to the enterprise funds.
Total Internal Government-wide
Enterprise Service Statement of
Funds Funds Net Position
Assets and Deferred Outflows of Resources
Cash and investments 32,172,940$ -$ 32,172,940$
Receivables:
Accounts (net of allowance) 7,125,135 - 7,125,135
Interest 94,550 - 94,550
Interfund balances - (422,817) (422,817)
Capital assets, net 130,463,559 - 130,463,559
Total assets 169,856,184 (422,817) 169,433,367
Deferred outflows of resources:
Deferred amount from pension plans 1,656,052 - 1,656,052
Deferred amount from OPEB 640,408 - 640,408
Total deferred outflows of resources 2,296,460 - 2,296,460
Total assets and deferred outflows of resources 172,152,644$ (422,817)$ 171,729,827$
Liabilities and Deferred Inflows of Resources
Liabilities:
Accounts payable 4,136,502$ -$ 4,136,502$
Accrued payroll 211,734 - 211,734
Deposits payable 35,253 - 35,253
Lease liability 1,512,574 - 1,512,574
Net pension liability 4,763,767 - 4,763,767
Net OPEB liability 857,358 - 857,358
Total liabilities 11,517,188 - 11,517,188
Deferred inflows of resources:
Deferred amount from pension plans 3,174,741 - 3,174,741
Deferred amount from OPEB 233,341 - 233,341
Total deferred inflows of resources 3,408,082 - 3,408,082
Total liabilities and deferred inflows of resources 14,925,270$ -$ 14,925,270$
Net Position
Net investment in capital assets 128,244,924$ -$ 128,244,924$
Unrestricted 28,982,450 (422,817) 28,559,633
Total net position 157,227,374$ (422,817)$ 156,804,557$
Explanation of Differences Between Enterprise Funds
and Government-wide Statement of Net Position
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Notes to Basic Financial Statements
June 30, 2022
c. Explanation of Differences Between Governmental Fund Operating
Statements and the Statement of Activities
The “net change in fund balances” for governmental funds $25,664,972 differs
from the “change in net position” for governmental activities $71,230,927 reported
in the statement of activities. The differences arise primarily from the long-term
economic focus of the statement of activities versus the current financial resources
focus of the governmental funds. The effect of the difference is illustrated below.
Capital Related Items
When capital assets that are to be used in governmental activities (excluding those
reported in Internal Service Funds) are purchased or constructed, the resources
expended for those assets are reported as expenditures in governmental funds.
However, in the statement of activities, the cost of those assets is allocated over
their estimated useful lives and reported as depreciation expense. In governmental
funds, significant maintenance projects are reclassified as functional expenses in
the statement of net assets. Also, contributed capital is not recorded in
governmental funds; therefore, it is added to the statement of net activities.
Capital outlays 22,587,504$
Transfers out of WIP (6,934,281)
Capital outlays, net 15,653,223
Governmental funds - asset deletions (2,861,140)
Net change in capital related items 12,792,083
Depreciation/amortization expense (14,506,394)
Deletions in governmental funds accumulated
depreciation/amortization 1,035,963
Net change in accumulated depreciation/amortization (13,470,431)
Total (678,348)$
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CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Long-Term Debt Transactions
Payment of debt service is reported as an expenditure in governmental funds and
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 and increases 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 position.
Certificates of participation – Series 2010B $3,165,000
CDBG loan 195,000
Certificates of participation – Series 2020A 775,000
Amortization of bond premium – Series 2020A 142,131
Amortization of principal on leases 1,003,250
Total debt proceeds $5,280,381
Accrued Interest
Interest accrued on outstanding debt payable is not recorded as an expenditure in
governmental funds and has been added to the statement of activities.
Net change in accrued interest $122,176
Investment in Joint Venture
The City’s investment in a joint venture creates an explicit, measurable equity
interest reported only in the statement of activities.
Net change in investment in joint venture ($14,895)
Unavailable Revenue
Some of the revenue will be collected after year-end, but is not available soon
enough to pay for current-period expenditures. This amount is reported as
unavailable revenue in the governmental funds.
Net change in unavailable revenue ($722,579)
106
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Pension Expense
Pension expense reported in the governmental funds includes the annual required
contribution. In the statement of activities, pension expense includes the change
in the net pension liability and related change in the pension amounts for deferred
outflows of resources and deferred inflows of resources.
Pension expense $37,868,065
Post-Employment Health Care Benefits Expense
Post-employment health care benefits (OPEB) expense reported in the
governmental funds includes the annual required contribution. In the statement of
activities, OPEB expense includes the change in the net OPEB liability and related
change in the OPEB amounts for deferred outflows of resources and deferred
inflows of resources.
OPEB expense $2,890,389
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 “close” 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 $1,042,536
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. Reclassifications and
eliminations are used by management to consolidate internal service funds into
the statement of activities.
Net change in reclassifications and
eliminations to consolidate
internal service funds ($221,770)
107
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Total Capital Accumulated Long-term
Governmental Related Depreciation/ Debt
Funds Items Amortization Transactions
Revenues:
Taxes and assessments 211,259,402$ -$ -$ -$
Intergovernmental 19,683,307 - - -
Licenses and permits 6,995,700 - - -
Charges for services 22,897,475 - - -
Fines and forfeitures 4,191,518 - - -
Investment income 2,756,712 - - -
Net decrease in fair value of investments (8,900,762) - - -
Property income 33,770,750 - - -
Share of joint venture net gain - - - -
Donations 1,805,249 - - -
Special assessments 8,086,594 - - -
Gain on sale of capital assets - - - -
Other 1,441,813 - - -
Total revenues 303,987,758 - - -
Expenditures:
Current:
General government 17,397,786 - 3,506,270 (5,105,901)
Public safety 127,590,486 - 796,783 (23,037,453)
Public works 54,293,534 2,671,908 6,870,139 (5,686,028)
Community development 13,021,562 - 6,188 (3,187,026)
Community services 26,421,141 189,232 2,291,051 (3,742,046)
Capital outlay 28,603,393 (15,653,223) - -
Debt service:
Principal retirement 5,138,250 - - (5,138,250)
Interest and fiscal charges 7,141,264 - - -
Amortization of debt premium - - - (142,131)
Total expenses 279,607,416 (12,792,083) 13,470,431 (46,038,835)
Other financing sources (uses):
Transfers in 76,061,564 - - -
Transfers out (74,776,934) - - -
Total other financing sources
(uses)1,284,630 - - -
Net change in fund balances /
net position 25,664,972 12,792,083 (13,470,431) 46,038,835
Fund balances / net position, beginning of year 222,302,210 2,562,344,583 (240,099,901) ` (365,882,535)
Fund balances / net position, end of year 247,967,182$ 2,575,136,666$ (253,570,332)$ (319,843,700)$
Operating Statement and the Statement of Activities
Explanation of Differences Between Government Funds
108
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Investment Internal Reclassifications
Interest in Joint Unavailable Service and Statement of
Payable Venture Revenue Funds Eliminations Activities
-$ -$ -$ -$ -$ 211,259,402$
- - (722,579) - - 18,960,728
- - - - - 6,995,700
- - - - (221,770) 22,675,705
- - - - - 4,191,518
- - - 732,235 - 3,488,947
- - - (2,596,623) - (11,497,385)
- - - - - 33,770,750
- (14,895) - - - (14,895)
- - - - - 1,805,249
- - - - - 8,086,594
- - - 290,940 - 290,940
- - - - - 1,441,813
- (14,895) (722,579) (1,573,448) (221,770) 301,455,066
- - - (909,237) 4,485,261 19,374,179
- - - (1,289,492) 707,142 104,767,466
- - - (699,343) 7,581,505 65,031,715
- - - (352,486) 176,262 9,664,500
- - - (650,676) - 24,508,702
- - - - (12,950,170) -
- - - - - -
(122,176) - - 620 - 7,019,708
- - - - - (142,131)
(122,176) - - (3,900,614) - 230,224,139
- - - - (76,061,564) -
- - - (1,284,630) 76,061,564 -
- - - (1,284,630) - -
122,176 (14,895) (722,579) 1,042,536 (221,770) 71,230,927
(3,590,292) 256,862 1,911,032 44,573,521 644,587 2,222,460,067
(3,468,116)$ 241,967$ 1,188,453$ 45,616,057$ 422,817$ 2,293,690,994$
109
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
d. Explanation of Differences Between Enterprise Funds Operating Statement
and the Statement of Activities
The change in net position for the City’s enterprise funds of $4,767,516 differs from
the change in net position of the business-type activities of $4,989,286 as reported
in the government-wide statement of activities. The difference of ($221,770),
results from consolidating internal service fund activities related to the enterprise
funds.
Total Internal Business-type activities
Enterprise Service Statement of
Funds Fund Activities
Operating revenues:
Charges for sales and services:
Water sales 31,906,955$ -$ 31,906,955$
Sewer service and connection fees 4,779,466 - 4,779,466
Other 359,659 - 359,659
Total operating revenues 37,046,080 - 37,046,080
Operating expenses:
Purchase of water 12,278,115 - 12,278,115
Salaries and wages 5,656,867 - 5,656,867
Depreciation 2,426,247 - 2,426,247
Professional services 2,870,096 - 2,870,096
Maintenance and supplies 3,400,707 (221,770) 3,178,937
System maintenance 1,615,800 - 1,615,800
Utilities 1,811,563 - 1,811,563
Other 1,366,626 - 1,366,626
Total operating expenses 31,426,021 (221,770) 31,204,251
Operating income 5,620,059 221,770 5,841,829
Nonoperating revenues (expenses):
Investment income 345,218 - 345,218
Net decrease in fair value of investments (1,190,093) - (1,190,093)
Interest expense (7,668) (7,668)
Total nonoperating revenues (expenses) (852,543) - (852,543)
Change in net position 4,767,516 221,770 4,989,286
Net position, beginning of year 152,459,858 (644,587) 151,815,271
Net position, end of year 157,227,374$ (422,817)$ 156,804,557$
Explanation of Differences Between Enterprise Funds
Operating Statement and the Statement of Activities
110
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
(3) Budgetary Control and Compliance
The City adheres to the following general procedures in establishing the budgetary data
reflected in the financial statements:
During May, 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 citizen 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 approves project-length budgets. These project-
length budgets authorize total expenditures over the duration of a construction
project rather than through 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 for these funds.
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 the City Council.
At fiscal year-end, budget appropriations lapse. Budget appropriations for
incomplete capital projects are re-budgeted in the following fiscal year by City
Council action and are included in the revisions noted above. Projects that are not
started during the budget year are re-evaluated 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.
111
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Expenditures exceeded appropriations in the following governmental funds:
The following funds reported deficit fund balances:
The Community Development Block Grant is a reimbursement grant and the City will
receive reimbursement in the following fiscal year which will eliminate the deficit fund
balance.
For the Compensated Absences Fund, the City’s Reserve Policy sets the maximum cash
reserve at 50% of the long-term compensated absences liability and targets a lesser
amount that is the median between that amount and a three-year average of the actual
payments made for the cash-out of accumulated leave balances. Accordingly, this deficit
fund balance is intentional and in compliance with the City Council-approved Reserve
Policy.
(4) Cash and Investments
Cash and investments as of June 30, 2022, are classified in the accompanying financial
statements as follows:
Statement of net position: Cash and investments $ 354,294,329
Restricted cash and investments
with fiscal agent 10,134,793 Fiduciary funds: Cash and investments 675,435
Restricted cash and investments
with fiscal agent 2,288,581 Total cash and investments $ 367,393,138
Appropriations Expenditures Variance
Supplemental Law Enforcement 200,000$ 211,400$ (11,400)$
Other Governmental Funds
Community Development Block Grant 119,371$
Internal Service Funds
Compensated Absences 7,703,828$
112
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Cash and investments as of June 30, 2022, consist of the following:
Cash on hand $ 25,981
Deposits with financial institutions 20,499,123
Cash and receivables in investment accounts 5,227
Investments 346,862,807
Total cash and investments $ 367,393,138
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, whichever is more restrictive) that address interest rate risk and
concentration of credit risk. This table does not address investments of debt proceeds held
by bond trustees 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.
Authorized Investment Type
Maximum
Maturity*
Maximum
Percentage
of Portfolio*
Maximum
Investment
in One Issuer*
Local Agency Bonds 5 years 30% 5%
U.S. Treasury Obligations 5 years No Limit No Limit
U.S. Agency Securities 5 years No Limit 30%
FHLMC 5 years No Limit 30%
Banker’s Acceptances 180 days 40% 5%
Commercial Paper 270 days 40% 5%
Negotiable Certificates of Deposit 2 years 30% 5%
Repurchase Agreements 30 days No Limit 5%
Reverse Repurchase Agreements 30 days 10% 5%
Medium-Term Notes 5 years 30% 5%
Mutual Funds N/A 20% 10%
Money Market Mutual Funds N/A 20% 20%
Mortgage Pass-Through Securities 5 years 20% 5%
LA County Pooled Investment Funds N/A 5% 5%
Local Agency Investment Fund (LAIF) N/A $75 million $75 million
Supranationals 5 years 20% 10%
* Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.
113
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustees (i.e., fiscal agents) 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 trustees. The table also
identifies certain provisions of these debt agreements that address interest rate risk, credit
risk, and concentration of credit risk.
Authorized Investment Type Maximum Maturity
Maximum
Percentage
Allowed
Maximum
Investment
in One Issuer
U.S. Treasury Obligations 6 months – No Limit No Limit No Limit
U.S. Agency Securities 6 months – No Limit No Limit No Limit
Banker’s Acceptances 6 months – 1 Year 0% - No Limit No Limit
Commercial Paper 180 days – 6
months
No Limit 10%
Money Market Mutual Funds N/A No Limit No Limit
Investment Agreements 6 months – No Limit No Limit No Limit
Certificates of Deposit 6 months – No Limit No Limit No Limit
Demand Deposits 6 months – No Limit No Limit No Limit
Time Deposits 6 months – No Limit No Limit No Limit
Local Agency Bonds 6 months – No Limit No Limit No Limit
Forward Delivery Agreement 6 months – No Limit 0% - No Limit No Limit
Forward Purchase Agreement 6 months – No Limit 0% - No Limit No Limit
Repurchase Agreements 6 months – No Limit No Limit No Limit
Local Agency Investment Fund (LAIF) N/A No Limit No Limit
Municipal Obligations 6 months – No Limit No Limit No Limit
County Pooled Investment Funds N/A 0% - No Limit No Limit
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 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 trustees) to market interest rate fluctuations is provided by the
following table that shows the distribution of the City’s investments by maturity:
114
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Some of the City’s investments may have call features where the investments’ principal
may be paid down before its maturity. Such investments include asset backed securities,
FHLMC’s (a.k.a. Freddie K’s), investments with make whole call provisions, and
investments with call dates.
The City’s asset backed securities pay monthly coupons, at which time principal may be
paid down. As of June 30, 2022, the City held asset backed securities of $25,817,455.
The City’s FHLMC’s (a.k.a. Freddie K’s) may pay down principal prior to maturity. As of
June 30, 2022, the City held FHLMC’s of $9,247,227.
Investments with make whole call provisions generally may be called any time, but the
terms of the call price generally mitigate the financial impact of a call. As of June 30, 2022,
the City held corporate, municipal, and Yankee bonds with make whole call provisions as
summarized below:
Maturity Value
January 2023 $ 996,920
May 2023 995,300
January 2024 1,502,675
February 2024 1,963,320
May 2024 4,504,665
July 2024 1,882,880
February 2025 956,260
$ 12,802,020
Investment Maturities (In Years)
Fair Value Less than 1 1 to 3 3 to 5 More than 5 Total
Investment Type
Money Market Funds 126,550$ 126,550$ -$ -$ -$ 126,550$
U.S. Treasuries 97,471,436 26,613,680 53,803,382 17,054,374 - 97,471,436
Certificates of Deposit 2,194,979 2,194,979 - - - 2,194,979
Commercial Papers 8,678,259 8,678,259 - - - 8,678,259
U.S. Agency Securities 77,867,279 25,846,495 48,802,989 3,217,795 - 77,867,279
FHLMC 9,247,227 - 7,250,090 1,997,137 - 9,247,227
Asset Backed Securities 25,817,455 839,981 12,512,939 12,464,536 - 25,817,455
Corporate Bonds 61,621,183 10,444,480 45,905,731 5,270,971 - 61,621,183
Municipal Bonds 1,963,320 - 1,963,320 - - 1,963,320
LAIF 35,655,882 35,655,882 - - - 35,655,882
Yankee Bonds 1,882,880 - 1,882,880 - - 1,882,880
Supranationals 11,918,174 - 11,918,174 - - 11,918,174
Investments with Fiscal Agent:
Money Market Funds 10,662,614 10,662,614 - - - 10,662,614
U.S. Treasury Bills 64,975 64,975 - - - 64,975
U.S. Treasuries 64,594 64,594 - - - 64,594
LAIF 1,626,000 1,626,000 - - - 1,626,000
346,862,807$ 122,818,489$ 184,039,505$ 40,004,813$ -$ 346,862,807$
Assuming callable securities (if any) will not be called.
115
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Investments with call dates may be called anytime on or after the call date. As of June
30, 2022, the City held corporate bonds with call dates as summarized below:
Maturity Value Call Date
August 2023 $ 989,930 June 2023
February 2024 1,996,880 January 2024
April 2025 1,459,645 March 2025
February 2026 850,347 February 2025
May 2027 2,014,900 April 2027
$ 7,311,702
Investments may have both a make whole call provision and a regular call date. As of
June 30, 2022, the City held corporate bonds with both a make whole call provision and a
regular call date as summarized below:
Maturity Value Call Date
December 2022 $ 1,000,880 October 2022
March 2023 999,950 January 2023
June 2023 2,006,120 May 2023
February 2024 1,304,186 December 2023
March 2024 2,140,376 February 2024
March 2024 1,560,430 March 2023
May 2024 1,081,212 July 2022
June 2024 965,440 June 2023
July 2024 445,142 July 2022
September 2024 969,840 August 2024
March 2025 1,965,640 March 2024
March 2025 2,895,420 February 2025
April 2025 2,898,480 March 2025
June 2025 935,280 June 2024
August 2025 2,405,724 May 2025
$ 23,574,120
About $6.3 million of the investments with either a regular call date or both a make whole
call provision and a regular call date, also have interest rate reset dates. If these securities
are not called by their call date, then these securities will revert to floating rate securities
tied to a benchmark index. Prior to their call date, these securities pay a fixed rate of
interest.
Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations
As of June 30, 2022, the City did not have any investments (including investments held
by fiscal agent) whose fair values were highly sensitive to interest rate fluctuations.
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
116
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
nationally recognized statistical rating organization. Presented in the following schedule is
the minimum rating (where applicable) required by the California Government Code, the
City’s investment policy, or debt agreements, and the actual rating by Standard & Poor’s
as of the June 30, 2022 for each investment type.
Concentration of Credit Risk
The investment policy of the City and the California Government Code limit the amount
that can be invested in any one issuer as previously discussed. Investments in any one
issuer (excluding U.S. Treasury Bills, U.S. Treasuries, mutual funds, and pooled
investments) that represent 5% or more of total City’s investments are as follows:
Issuer Investment Type Reported Amount
FFCB U.S. agency securities $26,338,213
FHLMC U.S. agency securities $15,943,501
FHLMC FHLMC $9,247,227
FHLB U.S. agency securities $19,326,065
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository
financial institution, a government will not be able to recover its deposits or will not be able
to recover collateral securities that are in the possession of an outside party. The custodial
credit risk for investments is the risk that, in the event of the failure of the counterparty
(e.g., broker-dealer) to a transaction, a government will not be able to recover the value
of its investment or collateral securities that are in the possession of another party. The
California Government Code and the City’s investment policy do not contain legal or policy
requirements that would limit the exposure to custodial credit risk for deposits or
investments, other than the following provision for deposits: The California Government
Code requires that a financial institution secure deposits made by state or local
governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The fair
value of the pledged securities in the collateral pool must equal at least 110% of the total
Investment Type Fair Value
Minimum
Legal Rating AAA AAAm AA+ AA AA- A-1+ A+ A A-1 A- Not Rated
Money Market Funds 126,550$ AAAm -$ 126,550$ -$ -$ -$ -$ -$ -$ -$ -$ -$
U.S. Treasuries 97,471,436 None - - 97,471,436 - - - - - - - -
Certificates of Deposit 2,194,979 A-1 - - - - - 2,194,979 - - - - -
Commercial Papers 8,678,259 A-1 - - - - - 3,686,806 - - 4,991,453 - -
U.S. Agency Securities 77,867,279 None - - 77,867,279 - - - - - - - -
FHLMC 9,247,227 None 1,603,581 - 7,643,646 - - - - - - - -
Asset Backed Securities 25,817,455 AAA 16,971,766 - - - - - - - - - 8,845,689
Corporate Bonds 61,621,183 A-- - 6,995,017 4,752,201 4,954,631 - 14,926,986 21,804,087 - 8,188,261 -
Municipal Bonds 1,963,320 A-- - 1,963,320 - - - - - - - -
LAIF 35,655,882 N/A - - - - - - - - - - 35,655,882
Yankee Bonds 1,882,880 A-- - - - - - - - - 1,882,880 -
Supranationals 11,918,174 AA- 11,918,174 - - - - - - - - - -
Investments with Fiscal Agent:
Money Market Funds 10,662,614 AAm - 10,662,614 - - - - - - - - -
U.S. Treasury Bills 64,975 None - - - - - 64,975 - - - - -
U.S. Treasuries 64,594 None - - 64,594 - - - - - - - -
LAIF 1,626,000 N/A - - - - - - - - - - 1,626,000
346,862,807$ 30,493,521$ 10,789,164$ 192,005,292$ 4,752,201$ 4,954,631$ 5,946,760$ 14,926,986$ 21,804,087$ 4,991,453$ 10,071,141$ 46,127,571$
117
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
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, 2022, 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.
Limitations and restrictions apply to the City’s investment in LAIF. Up to 15 transactions
with LAIF are permitted each month. Balances in LAIF may not exceed $75 million, with
the exception of bond accounts. LAIF requests one day prior notice for withdrawals of
$10 million or more.
Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established
by generally accepted accounting principles. The hierarchy is based on the valuation
inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in
active markets for identical assets. Level 2 inputs are significant other observable inputs.
Level 3 inputs are significant unobservable inputs.
Most of the City’s investments are in Level 2 of the fair value hierarchy. Examples of Level
2 valuation inputs include:
a) Quoted prices for similar assets or liabilities in active markets
b) Quoted prices for identical or similar assets or liabilities in markets that are not active
c) Inputs other than quoted prices that are observable for the asset or liability
d) Inputs that are derived principally from or corroborated by observable market data
by correlation or other means.
118
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Following are the City’s recurring fair value measurements as of June 30, 2022:
Fair Value
Investments
That Are Not
Subject to Fair
Value Hierarchy
Quoted Prices
in Active Markets
for Identical
Assets (Level 1)
Quoted Prices
for Similar
Assets in Active
Markets
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Money Market Funds 126,550$ 126,550$ -$ -$ -$
U.S. Treasuries 97,471,436 - - 97,471,436 -
Certificates of Deposit 2,194,979 - - 2,194,979 -
Commercial Papers 8,678,259 - - 8,678,259 -
U.S. Agency Securities - - - - -
FHLMC 9,247,227 - - 9,247,227 -
Asset Backed Securities 25,817,455 - - 25,817,455 -
Corporate Bonds 61,621,183 - - 61,621,183 -
Municipal Bonds 1,963,320 - - 1,963,320 -
LAIF 35,655,882 35,655,882 - - -
Yankee Bonds 1,882,880 - - 1,882,880 -
Supranationals 11,918,174 - - 11,918,174 -
Investments with Fiscal Agent:
Money Market Funds 10,662,614 10,662,614 - - -
U.S. Treasury Bills 64,975 - - 64,975 -
U.S. Treasuries 64,594 - - 64,594 -
LAIF 1,626,000 1,626,000 - - -
268,995,528$ 48,071,046$ -$ 220,924,482$ -$
119
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
(5) Capital Assets
Capital asset activity for the year ended June 30, 2022, was as follows:
Governmental Activities:
Governmental Activities capital assets net of accumulated depreciation/amortization at
June 30, 2022 are comprised of the following:
Beginning
Balance, Balance
As Restated Additions Deletions June 30, 2022
Non-depreciable/non-amortizable:
Land and rights of way 1,897,520,485$ 2,445,807$ -$ 1,899,966,292$
Work in progress 11,375,009 8,394,805 (6,934,281) 12,835,533
1,908,895,494 10,840,612 (6,934,281) 1,912,801,825
Depreciable/amortizable:
Structures 240,472,509 2,362,140 (189,232) 242,645,417
Intangible right to use structures* 14,060,855 - - 14,060,855
Equipment 55,178,954 5,176,448 (1,365,259) 58,990,143
Intangible right to use equipment - 348,272 - 348,272
Infrastructure 389,702,092 9,422,503 (2,671,908) 396,452,687
699,414,410 17,309,363 (4,226,399) 712,497,374
Less accumulated
depreciation/amortization for:
Structures (54,395,192) (5,194,743) 141,601 (59,448,334)
Intangible right to use structures - (1,040,019) - (1,040,019)
Equipment (36,750,833) (4,345,477) 1,123,506 (39,972,804)
Intangible right to use equipment - (38,584) - (38,584)
Infrastructure (178,756,724) (7,582,151) 894,363 (185,444,512)
(269,902,749) (18,200,974) 2,159,470 (285,944,253)
Net Depreciable/amortizable 429,511,661 (891,611) (2,066,929) 426,553,121
Net Capital Assets 2,338,407,155$ 9,949,001$ (9,001,210)$ 2,339,354,946$
* The beginning balance amount for intangible right to use structures includes a prior period adjustment of $14,060,855 from implementing
GASB 87, which requires a capital asset to be reported for certain leases where the City is lessee based on a present value estimate of
certain lease payments. Please see Note (18) for additional details.
General Capital Assets, net $ 2,321,566,334
Internal Service Fund Capital Assets, net 17,788,612
$ 2,339,354,946
120
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Business-type Activities:
Depreciation/amortization expense was charged in the following functions in the
Statement of Activities:
Beginning
Balance, Balance
As Restated Additions Deletions June 30, 2022
Non-depreciable/non-amortizable:
Land and rights of way 2,219,450$ -$ -$ 2,219,450$
Work in progress 414,590 3,687,587 (371,590) 3,730,587
2,634,040 3,687,587 (371,590) 5,950,037
Depreciable/amortizable:
Intangible right to use land and
rights of way*1,529,906 - - 1,529,906
Structures 688,396 - - 688,396
Equipment 337,181 - - 337,181
Infrastructure 196,184,679 2,190,233 (233,555) 198,141,357
198,740,162 2,190,233 (233,555) 200,696,840
Less accumulated
depreciation/amortization for:
Intangible right to use land and
rights of way - (20,513) - (20,513)
Structures (279,498)(15,357) - (294,855)
Equipment (183,000)(27,838) - (210,838)
Infrastructure (73,353,348) (2,362,539) 58,775 (75,657,112)
(73,815,846) (2,426,247)58,775 (76,183,318)
Net Depreciable/amortizable 124,924,316 (236,014) (174,780) 124,513,522
Net Capital Assets 127,558,356$ 3,451,573$ (546,370)$ 130,463,559$
* The beginning balance amount for intangible right to use land and rights of way includes a prior period adjustment of $1,529,906 from
implementing GASB 87, which requires a capital asset to be reported for certain leases where the City is lessee based on a present value
estimate of certain lease payments. Please see Note (18) for additional details.
Governmental Business-type
Activities*Activities
General government 6,229,285$ -$
Public safety 1,577,037 -
Public works 171,553 -
Community development 508,964 -
Community service 9,714,135 -
Water - 1,782,434
Wastewater - 643,813
18,200,974$ 2,426,247$
*Internal Service Fund depreciation/amortization of $3,694,580 is
allocated to governmental functions above.
121
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
(6) Long-Term Liabilities
Changes in Long-Term Liabilities
The long-term liabilities for the year ended June 30, 2022, are as follows:
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.
Governmental Activities
2010 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
$3,990,000 principal outstanding on the 1998 Library Certificates of Participation.
Accordingly, the 1998 Library Certificates have been defeased and are no longer
outstanding. The remaining proceeds from the Series 2010A Certificates were used
to finance the acquisition, improvement and equipping of the Civic Center Project. The
Amounts
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Governmental activities:
Other debt:
Certificates of participation
payable - Series 2010B 97,630,000$ -$ (3,165,000)$ 94,465,000$ 3,275,000$
Certificates of participation
payable - Series 2020A 7,860,000 - (775,000) 7,085,000 665,000
Bond premium - Series 2020A 1,291,026 - (142,131) 1,148,895 -
Direct borrowing:
CDBG loan 403,000 - (195,000) 208,000 208,000
Other long-term liabilities:
Workers' compensation
payable 14,753,000 4,213,387 (3,211,799) 15,754,588 2,930,962
Claims and judgments payable 8,265,635 5,957,756 (5,527,511) 8,695,880 2,865,644
Compensated absences 13,513,007 2,058,475 (2,794,074) 12,777,408 4,385,927
Total governmental activities 143,715,668$ 12,229,618$ (15,810,515)$ 140,134,771$ 14,330,533$
122
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Series 2010B Certificates were issued to provide additional financing for the Civic
Center Project. The proceeds of the Certificates also were 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 have been defeased and are no longer
outstanding. 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 receives refundable credits from the United States Treasury on the interest
paid on the 2010B Certificates. As of June 30, 2022, the City has received
$27,321,950 of BABs Subsidy from the United States Treasury and expects to receive
subsidy equal to about 33% on future interest payable on the 2010B Certificates.
Principal payments are payable annually on July 1 of each year. The remaining
principal payments for the Series 2010B Certificates, which are payable through July
1, 2040, range from $3,275,000 to $7,245,000. The total outstanding balance at June
30, 2022 amounted to $94,465,000. The use of the following assets has been pledged
as security for the outstanding balance: the Central Library and the Civic Center.
The annual amortization requirements of the outstanding Series 2010B Certificates of
Participation are as follows:
2020 Certificates of Participation
In Fiscal Year 2020-21, the City issued $7,860,000 of Series 2020A Certificates of
Participation. The 2020A Certificates were issued to finance the acquisition,
improvement, and equipping of Fire Station No. 2. The proceeds of the Certificates
also were applied to pay certain costs of issuance incurred in connection with the
Certificates.
Year Ending
June 30 Principal Interest Total
2023 3,275,000$ 6,556,869$ 9,831,869$
2024 3,390,000 6,365,978 9,755,978
2025 3,510,000 6,142,971 9,652,971
2026 3,675,000 5,889,360 9,564,360
2027 3,850,000 5,623,515 9,473,515
2028-2032 22,050,000 23,671,645 45,721,645
2033-2037 27,615,000 14,840,806 42,455,806
2038-2041 27,100,000 3,995,444 31,095,444
94,465,000$ 73,086,588$ 167,551,588$
123
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
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 June 15,
2021, 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 1st
and July 1st of each year. The 2020A Certificates’ interest rate is 4.00%. Principal
payments are payable annually on July 1st of each year. The remaining principal
payments of the Series 2020A Certificates, which are payable through July 1, 2030,
range from $665,000 to $915,000. The total outstanding balance at June 30, 2022
amounted to $7,085,000. The use of the following assets has been pledged as
security for the outstanding balance: Fire Station 5 and Fire Station 7.
The annual amortization requirements of the outstanding Series 2020A Certificates of
Participation are as follows:
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. The original
loan was refinanced in fiscal year 2015 lowering the average interest rate from 6.5%
to 1.5%. The future final principal payment is $208,000 through June 30, 2023. The
outstanding balance at June 30, 2022, amounted to $208,000.
The annual amortization requirements for the CDBG Loan are as follows:
Claims and Judgments
The City retains the risk of loss for general liability and workers’ compensation claims
as described in Note (8). These amounts represent estimates of amounts to be paid
for reported general liability and workers' compensation claims including incurred-but-
Year Ending
June 30 Principal Interest Total
2023 665,000$ 270,100$ 935,100$
2024 695,000 242,900 937,900
2025 725,000 214,500 939,500
2026 755,000 184,900 939,900
2027 785,000 154,100 939,100
2028-2031 3,460,000 283,400 3,743,400
7,085,000$ 1,349,900$ 8,434,900$
Year Ending
June 30 Principal Interest Total
2023 208,000$ 2,548$ 210,548$
124
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
not-reported claims based upon past experience, modified for current trends and
information. While the ultimate amount of losses incurred through
June 30, 2022, is dependent on future developments based upon information from the
City’s attorney, 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, 2022, for general liability
amounted to $8,695,880 and for workers’ compensation was $15,754,588.
Compensated Absences
The City's policies relating to compensated absences are described in Note (1). This
liability at June 30, 2022, is $12,777,408. Compensated absences are liquidated from
the Compensated Absences internal service fund.
Unused Credit
The City has a letter of credit in the amount of $317,922.
(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, and the assets are recorded in the
Special Assessment District Custodialy Fund. Bonds outstanding at June 30, 2022, for
each district under the Bond Acts of 1911 and 1915 are as follows:
Assessment District Original Issue
Bonds Outstanding
June 30, 2022
Reassessment District 2012 $13,583,436 $1,902,868
Assessment District No. 117 $ 2,955,000 $2,510,000
Assessment District No. 116 $ 1,575,000 $1,445,000
Assessment District No. 116B $ 665,000 $ 610,000
Assessment District No. 111 $ 2,412,000 $2,317,000
Assessment District No. 113 $ 4,565,000 $4,565,000
(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.
125
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
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.
The City utilizes Public Risk Innovation, Solutions, and Management (PRISM), formerly
called California State Association of Counties – Excess Insurance Authority (CSAC-EIA),
a joint powers authority, to provide excess insurance for the general liability and workers’
compensation programs. PRISM provides coverage under the terms of a joint-powers
agreement with the City as follows:
Type of Coverage Self-Insured Retention (SIR) Coverage Limits
General Liability
$500,000
$25,000,000
Workers’ Compensation $500,000 Statutory
PRISM was established for the purpose of creating a risk management pool for all
California public entities. PRISM is governed by a Board of Directors consisting of
representatives of its member public entities.
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 amounts of
payouts and other economic and social factors. The total liability claims payable was
$24,450,468 at June 30, 2022, which represents the discounted present value of all
outstanding claims. The claims are discounted using an interest rate of 3%.
June 30, 2021 June 30, 2022 June 30, 2021 June 30, 2022
Unpaid claims, beginning of fiscal year 7,960,948$ 8,265,635$ 15,521,000$ 14,753,000$
Incurred claims (including IBNR)5,604,723 5,957,756 1,917,334 4,213,387
Claim payments (5,300,036) (5,527,511) (2,685,334) (3,211,799)
Unpaid claims, end of fiscal year 8,265,635$ 8,695,880$ 14,753,000$ 15,754,588$
General Liability Workers' Compensation
126
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
(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 set aside a portion of their salary and defer taxation on the contributions and any
investment earnings 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 $129,345,376 at June 30, 2022.
(10) Pension Plans
a. General Information about the Pension Plans
Plan Descriptions – All qualified permanent and probationary employees are eligible to
participate in the City of Newport Beach’s separate Safety (police and fire) and
Miscellaneous (all other) Employee Pension Plans, agent multiple-employer defined
benefit pension plans administered by the California Public Employees’ Retirement
System (CalPERS), which acts as a common investment and administrative agent for its
participating member employers. Benefit provisions under the Plans are established by
State statute and Local Government resolution. CalPERS issues publicly available reports
that include a full description of the pension plans regarding benefit provisions,
assumptions and membership information that can be found on the CalPERS website.
Benefits Provided – CalPERS provides service retirement and disability benefits, annual
cost of living adjustments and death benefits to plan members, who must be public
employees and beneficiaries. Benefits are based on years of credited service, equal to
one year of full-time employment. Members with five years of total service are eligible to
retire at age 50 to 62 with statutorily reduced benefits. PEPRA miscellaneous members
become eligible for service retirement upon attainment of age 52 with at least 5 years of
service. All members are eligible for non-duty disability benefits after 5 years of service.
The death benefit is one of the following: the Basic Death Benefit, the 1959 Survivor
Benefit, the Optional Settlement 2W Death Benefit, or the 1957 Survivor Benefit. Safety
members can receive a special death benefit if the member dies while actively employed
and the death is job-related. Fire members may receive the alternate death benefit in lieu
of the Basic Death Benefit or the 1957 Survivor Benefit if the member dies while actively
employed and has at least 20 years of total CalPERS service. The cost of living
adjustments for each plan are applied as specified by the Public Employees’ Retirement
Law.
127
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
The Plans’ provisions and benefits in effect for the measurement period ended
June 30, 2021 are summarized as follows:
Employees Covered – At the measurement date of June 30, 2021, the following
employees were covered by the benefit terms for each Plan:
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law
requires that the employer contribution rates for all public employers are determined on
an annual basis by the actuary and shall be effective on the July 1 following notice of a
change in the rate. The total plan contributions are determined through CalPERS’ annual
actuarial valuation process. The actuarially determined rate is the estimated amount
necessary to finance the costs of benefits earned by employees during the year, with an
additional amount to finance any unfunded accrued liability. The City is required to
Prior to On or after On or after
Hire date November 24,2012 November 24,2012 January 1, 2013
Benefit formula 2.5%@55 2.0%@60 2.0%@62
Benefit vesting schedule 5 years service 5 years service 5 years service
Benefit payments monthly for life monthly for life monthly for life
Retirement age 50 - 55 50 - 63 52 - 67
Monthly benefits, as a % of eligible compensation 2.0% to 2.5% 1.092% to 2.418% 1.0% to 2.5%
Required employee contribution rates 12.35% - 13.0% 12.35% - 13.0% 12.35% - 13.0%
Required employer contribution rates 31.07% - 31.72% 27.65% - 28.30% 27.15% - 27.80%
Prior to On or after On or after
Hire date November 24,2012 November 24,2012 January 1, 2013
Benefit formula 3.0%@50 2.0%@50; 3.0%@55 2.7%@57
Benefit vesting schedule 5 years service 5 years service 5 years service
Benefit payments monthly for life monthly for life monthly for life
Retirement age 50 - 55 50 - 55 50 - 57
Monthly benefits, as a % of eligible compensation 3.0% 2.0% - 2.7%; 2.4% - 3.0% 2.0% to 2.7%
Required employee contribution rates 12.0% - 14.6% 12.0% - 14.6% 12.0% - 14.6%
Required employer contribution rates 66.55% - 68.15% 66.55% - 68.15% 69.05% - 70.65%
Miscellaneous
Safety
Miscellaneous Safety
Inactive employees or beneficiaries
currently receiving benefits 719 458
Inactive employees entitled to but
not yet receiving benefits 617 90
Active employees 537 279
Total 1,873 827
128
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
contribute the difference between the actuarially determined rate and the contribution rate
of employees. City contribution rates may change if plan contracts are amended.
Payments made by the employer to satisfy contribution requirements that are identified by
the pension plan terms as plan member contributions requirements are classified as plan
member contributions.
b. Net Pension Liability
The City’s net pension liability for each Plan is measured as the total pension liability, less
the pension plan’s fiduciary net position. The net pension liability of each of the Plans is
measured as of June 30, 2021, using an annual actuarial valuation as of June 30, 2020
rolled forward to June 30, 2021 using standard update procedures. The General Fund,
Tidelands Funds, Water Fund, and Wastewater Fund have typically been used in prior
years to liquidate the net pension liability. A summary of principal assumptions and
methods used to determine the net pension liability is shown below.
Actuarial Assumptions – The total pension liabilities in the June 30, 2020 actuarial
valuations were determined using the following actuarial assumptions:
Miscellaneous Safety
Valuation Date June 30, 2020 June 30, 2020
Measurement Date June 30, 2021 June 30, 2021
Actuarial Cost Method
Actuarial Assumptions:
Discount Rate 7.15%7.15%
Inflation 2.50%2.50%
Payroll growth 2.75%2.75%
Projected salary Increase
Investment Rate of Return 7.00% (1)7.00% (1)
(1) Net of pension plan investment and administrative expenses, including inflation.
(2) The mortality table was developed based on CalPERS’ specific data. The table includes
15 years of mortality improvements using Society of Actuaries Scale 90% of scale MP
2016. For more details on this table, please refer to the December 2017 experience study
report (based on CalPERS demographic data from 1997 to 2015) that can be found on the
CalPERS website.
Mortality Rate Table (2)
Post Retirement Benefit Increase
Entry-Age Normal Cost Method
Derived using CalPERS’ Membership
Data for all Funds
The lessor of contract COLA or 2.50%
until Purchasing Power Protection
Allowance Floor on Purchasing Power
applies, 2.5% thereafter
Varies by Entry Age and Service
129
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
All other actuarial assumptions used in the June 30, 2020 valuation were based on the
results of an actuarial experience study for the period from 1997 to 2015, including
updates to salary increase, mortality and retirement rates. The Experience Study report
can be obtained at the CalPERS website under Forms and Publications.
Discount Rate – The discount rate used to measure the total pension liability was 7.15%.
The projection of cash flows used to determine the discount rate assumed that
contributions from plan members will be made at the current member contribution rates
and that contributions from employers will be made at statutorily required rates, actuarially
determined. Based on those assumptions, the Plan’s fiduciary net position was projected
to be available to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of return on plan investments was applied to all
periods of projected benefit payments to determine the total pension liability.
Long-term Expected Rate of Return – The long-term expected rate of return on pension
plan investments was determined using a building-block method in which expected future
real rates of return (expected returns, net of pension plan investment expense and
inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both
short-term and long-term market return expectations as well as the expected pension fund
cash flows. Using historical returns of all the funds’ asset classes, expected compound
(geometric) returns were calculated over the short-term (first 10 years) and the long-term
(11+ years) using a building-block approach. Using the expected nominal returns for both
short-term and long-term, the present value of benefits was calculated for each fund. The
expected rate of return was set by calculating the rounded single equivalent expected
return that arrived at the same present value for cash flows as the one calculated using
both short-term and long-term returns. The expected rate of return was then set equal to
the single equivalent rate calculated above and adjusted to account for assumed
administrative expenses.
The expected real rates of return by asset class are as follows:
Assumed
asset Real return Real Return
Asset class (1)allocation Years 1-10
(2)Years 11+(3)
Global equity 50.00% 4.80% 5.98%
Fixed income 28.00% 1.00% 2.62%
Inflation assets - 0.77% 1.81%
Private equity 8.00% 6.30% 7.23%
Real assets 13.00% 3.75% 4.93%
Liquidity 1.00% - -0.92%
(2) An expected inflation of 2.0% used for this period.
(3) An expected inflation of 2.92% used for this period.
(1) In the CalPERS' ACFR, Fixed Income is included in Global Debt Securities; Liquidity
is included in Short-term Investments; Inflation Assets are included in both Global Equity
Securities and Global Debt Securities.
130
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Subsequent Events
On July 12, 2021, CalPERS reported a preliminary 21.3% net return on investments for
fiscal year 2020-21. Based on the thresholds specified in CalPERS Funding Risk
Mitigation policy, the excess return of 14.3% prescribes a reduction in investment volatility
that corresponds to a reduction in the discount rate used for funding purposes of 0.20%,
from 7.00% to 6.80%. Since CalPERS was in the final stages of the four-year Asset
Liability Management (ALM) cycle, the board elected to defer any changes to the asset
allocation until the ALM process concluded, and the board could make its final decision
on the asset allocation in November 2021. The 21.3% investment return is reflected in the
net pension liability calculation as of the June 30, 2021 measurement date, resulting in a
significant decrease in the City’s pension liability as of June 30, 2022. In addition,
CalPERS reported a negative 7.5% net return on investments for fiscal year 2021-22,
which will be reflected in the GASB 68 accounting valuation reports for the June 30, 2022
measurement date, so it is not reflected in the net pension liability calculation as of June
30, 2022.
On November 17, 2021, the board adopted a new strategic asset allocation. The new
asset allocation along with the new capital market assumptions, economic assumptions
and administrative expense assumption support a discount rate of 6.90% (net of
investment expense but without a reduction for administrative expense) for financial
reporting purposes. This includes a reduction in the price inflation assumption from 2.50%
to 2.30% as recommended in the November 2021 CalPERS Experience Study and
Review of Actuarial Assumptions. This study also recommended modifications to
retirement rates, termination rates, mortality rates and rates of salary increases that were
adopted by the board. These new assumptions will be reflected in the GASB 68
accounting valuation reports for the June 30, 2022, measurement date.
131
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
c. Changes in the Net Pension Liability
The changes in the Net Pension Liability for each Plan for the measurement period follow:
Miscellaneous Plan:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2020 $450,976,864 $337,110,215 $ 113,866,649
Changes in the year:
Service cost 7,438,050 - 7,438,050
Interest on the total pension liability 31,805,532 - 31,805,532
Changes in benefit terms - - -
Changes of assumptions - - -
Differences between expected and
actual experience 1,624,975 - 1,624,975
Net Plan to Plan Resource Movement - - -
Contribution – employer 18,612,457 (18,612,457)
Contribution – employee - 4,057,107 (4,057,107)
Net investment income - 76,031,841 (76,031,841)
Benefit payments, including refunds of
employee contributions (22,976,493) (22,976,493) -
Administrative Expense - (336,753) 336,753
Other Miscellaneous Income/(Expense) - - -
Net changes 17,892,064 75,388,159 (57,496,095)
Balance at June 30, 2021 $468,868,928 $412,498,374 $ 56,370,554
Increase (Decrease)
132
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Sensitivity of the Net Pension Liability to Changes in the Discount Rate – The
following presents the net pension liability of the City for each Plan, calculated using the
discount rate for each Plan, as well as what the City’s net pension liability would be if it
were calculated using a discount rate that is 1-percentage point lower or 1-percentage
point higher than the current rate:
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s
fiduciary net position is available in the separately issued CalPERS financial reports.
Safety Plan:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability/(Asset)
Balance at June 30, 2020 $609,831,612 $413,616,550 $ 196,215,062
Changes in the year:
Service cost 9,817,913 - 9,817,913
Interest on the total pension liability 42,760,906 - 42,760,906
Changes in benefit terms - - -
Changes of assumptions - - -
Differences between expected and
actual experience 196,690 - 196,690
Net Plan to Plan Resource Movement - - -
Contribution – employer - 32,367,091 (32,367,091)
Contribution – employee - 3,347,740 (3,347,740)
Net investment income - 93,813,435 (93,813,435)
Benefit payments, including refunds of
employee contributions (33,765,218) (33,765,218) -
Administrative Expense - (413,178) 413,178
Other Miscellaneous Income/(Expense) - - -
Net changes 19,010,291 95,349,870 (76,339,579)
Balance at June 30, 2021 $628,841,903 $508,966,420 $ 119,875,483
Increase (Decrease)
Miscellaneous Safety
1% Decrease 6.15% 6.15%
Net Pension Liability $117,539,921 $200,369,905
Current Discount Rate 7.15% 7.15%
Net Pension Liability $56,370,554 $119,875,483
1% Increase 8.15% 8.15%
Net Pension Liability $5,763,792 $53,146,098
133
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
d. Pension Expenses and Deferred Outflows/Inflows of Resources Related to
Pensions
For the year ended June 30, 2022, the City recognized pension expense of $10,361,740
($715,516 Miscellaneous Plan and $9,646,224 Safety Plan). At June 30, 2022, the City
reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
$50,690,011 reported as deferred outflows of resources related to contributions
subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the fiscal year ending June 30, 2023. Other amounts reported as deferred
Deferred
Outflows
Deferred
Inflows
of Resources of Resources
Pension contributions subsequent to
measurement date $ 18,372,473 $ -
Differences between expected and
actual experience 1,223,907 -
Changes in assumptions - -
Net differences between projected
and actual earnings on plan
investments
- (37,567,303)
Total Miscellaneous Plan $ 19,596,380 $ (37,567,303)
Deferred
Outflows
Deferred
Inflows
of Resources of Resources
Pension contributions subsequent to
measurement date $ 32,317,538 $ -
Differences between expected and
actual experience 2,083,767 -
Changes in assumptions - (77,621)
Net differences between projected
and actual earnings on plan
investments
- (46,327,499)
Total Safety Plan $ 34,401,305 $ (46,405,120)
Grand Total $ 53,997,685 $ (83,972,423)
Miscellaneous Plan
Safety Plan
134
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
outflows of resources and deferred inflows of resources related to pensions will be
recognized as pension expense as follows:
e. Payable to the Pension Plan
At June 30, 2022, the City had no outstanding amount of contributions to the pension plan
required for the year ended June 30, 2022.
f. 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, including
establishing and amending contribution requirements. 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, 2022, the City's covered payroll for employees participating
in the plan was $3,567,206. Employees made contributions of $133,940 (3.75% of current
covered payroll), which was matched by the employer in the same amount. Assets of the
plan totaled $2,316,963 at June 30, 2022.
(11) Post-Employment Health Care Benefits (OPEB)
The following description of the City of Newport Beach Retiree Health Savings (“RHS”)
Plan provides only general information. Participants should refer to the Plan agreement
for a more complete description of the Plan’s provisions.
Fiscal
Year Ending Total
June 30 Misc. Safety Amount
2023 $ (8,820,828) $ (10,112,679) $ (18,933,507)
2024 (8,154,370) (10,305,390) (18,459,760)
2025 (8,969,294) (11,071,865) (20,041,159)
2026 (10,398,904) (12,831,419) (23,230,323)
Thereafter - - -
135
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Plan Description
In January 2006, the City and employee associations agreed to major changes in the Post-
Employment Health Care Plan. All employees hired after January 1, 2006, and certain
employees hired prior to this date, as well as employees who elected to fully convert to a
defined contribution formula (hereafter fully converted employees), 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, except for the Public Employees’ Medical
and Hospital Care Act (“PEMHCA”) minimum, which is the responsibility of the City. These
employees and eligible retirees participate in a Retiree Health Savings (“RHS”) Plan
sponsored by the City, the single employer of the plan. Plan assets are held in trust and
managed by MissionSquare Retirement (Trustee), under IRS Revenue Ruling 2002-41
(June 26, 2002) and IRS Notice 2002-45 (June 26, 2002).
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 participate in a program requiring
mandatory defined contributions by employees and the City, as well as a defined benefit
consisting of an ongoing contribution from the City to the participant’s RHS account each
month after retirement. Additionally, these employees are eligible to receive health care
benefits under the City’s group health care plans. 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 care benefits existing at the inception of
the plan.
For fully converted employees, the City made a one-time contribution into their individual
RHS account of $100 per month for every month the employee contributed to the previous
defined benefit plan up to a maximum of 15 years. For employees who elected to retain a
hybrid plan, the City made a one-time contribution into their individual RHS account of $75
per month for every month the employee contributed to the previous defined plan up to a
maximum of 15 years. In order to receive these contributions, the employee must retire
from the City. At June 30, 2022, the liability for the conversion part of the RHS Plan was
$1,138,350. This amount is not included in the Net OPEB Liability, but is included in the
compensated absences liability. See Note (6).
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 RHS account each
month. The defined benefit portion of the plan is closed to new participants.
The City has elected to participate in the California Employers’ Retiree Benefit Trust
(“CERBT”) Fund to prefund its OPEB liability. CERBT is managed by CalPERS and
invests in global equity, global debt securities, inflation assets, commodities, and REITs.
By placing funds in trust to fund future City contributions before those future contributions
are due, the City earns investment income that will help pay those future contributions and
thereby reduce the City’s long-term OPEB budgetary requirements.
136
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Employees Covered
As of the measurement date June 30, 2021, the following current and former employees
were covered by the benefit terms under the plan:
Contributions
Contribution requirements are established by City policy and may be amended by the City
Council. The annual contribution is based on the actuarially determined contribution. For
the year ended June 30, 2022, the City’s cash contributions were $4,499,498 to the trust
in premium payments and $987,469 for the estimated implicit subsidy, resulting in a total
payment of $5,486,967.
Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2021, and the total OPEB
liability used to calculate the net OPEB liability was determined by an actuarial valuation
dated June 30, 2021. The General Fund, Tidelands Funds, Water Fund, and Wastewater
Fund have typically been used in prior years to liquidate the net OPEB liability. A summary
of the principal assumptions and methods used to determine the total OPEB liability is
shown below.
Actuarial Assumptions
The total OPEB liability as of June 30, 2021 actuarial valuation was determined using the
following actuarial assumptions and applied to all periods included in the measurement,
unless otherwise specified:
Inactive employees, spouses, or beneficiaries currently receiving benefits 450
Inactive employees or beneficiaries entitled to but not receiving benefits 327
Active employees 821
Total 1,598
Valuation Date June 30, 2021
Measurement Date June 30, 2021
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 6.50%
Inflation 2.75%
Projected Salary Increase 3.00% per annum, in aggregate
Expected long term investment rate of return 6.50%
Healthcare Cost Trend Rates 6.00% HMO/6.00% PPO
Post Retirement Turnover Derived from CalPERS pension plan
Mortality From Society of Actuaries Pub-2010 Public
Retirement Plans Mortality Tables Report
137
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
The actuarial assumptions used in the June 30, 2021, valuation were based on a standard
set of assumptions the actuary has used for similar valuations, modified as appropriate for
the City.
The long-term expected rate of return on OPEB plan investment is assumed to be 6.50%.
This was determined using a building-block method in which expected future real rates of
return (expected returns, net of OPEB plan investment expense and inflation) are
developed for each major asset class. These expected future real rates of return are then
combined to produce the long-term expected rate of return by weighting them based on
the target asset allocation percentage and adding in expected inflation (2.75%).The asset
class percentages are taken from the current composition of the CERBT Fund, and the
expected yields by asset class were not available to the actuary:
Discount Rate
The discount rate used to measure the total OPEB liability is 6.50% per annum. This is
the expected long-term rate of return on City assets using investment strategy 1 within
CERBT. The projection of cash flows used to determine the discount rate assumed that
the City contribution will be made at rates equal to the actuarially determined contribution
rates. Based on those assumptions, the OPEB plan’s fiduciary net position is projected
to cover all future OPEB payments. Therefore, the discount rate was set equal to the long-
term expected rate of return.
Asset Class
Target
Allocation
Long-Term
Expected Real
Rate of Return
CERBT
Global Equities 59.00% N/A
Fixed Income 25.00% N/A
TIPS 5.00% N/A
REITs 8.00% N/A
Commodities 3.00% N/A
Total 100.00% 6.50%
138
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Changes in the Net OPEB Liability
The changes in the net OPEB liability are as follows:
Change of Assumptions
The mortality table has been updated from the 2017 CalPERS Public Agency Misc.
Mortality to the following tables from the Society of Actuaries (SOA) Pub-2010:
Employees and retirees: General Headcount Weighted Mortality Table fully
generational using Scale MP-2021.
Surviving Spouses: Continuing Survivor Headcount Weighted Mortality Table Fully
generational using Scale MP-2021.
Disabled retirees: Safety Headcount Weighted Mortality Table fully generational
using Scale MP-2021.
Future health care cost trend rates have been reset to an initial rate of 6.50% beginning
in fiscal year end 2023 and decreasing by 0.50% annually to an ultimate rate of 4.50%.
Change of Benefit Terms
There was no change of benefit terms.
Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
(a) (b) (a) - (b)
Balance at June 30, 2020 46,093,712$ 25,796,272$ 20,297,440$
Changes in the year:
Service cost 529,600 - 529,600
Interest on the total OPEB liability 2,909,400 - 2,909,400
Changes of benefit terms - - -
Changes of assumptions (302,512) - (302,512)
Differences between expected and
actual experience 6,159,865 - 6,159,865
Contributions - employer - 5,785,342 (5,785,342)
Contributions - employees - - -
Net investment income - 7,184,241 (7,184,241)
Benefit payments, including refunds of
employee contributions (3,786,232) (3,786,232) -
Administrative expenses - (9,908) 9,908
Other expense - - -
Net changes 5,510,121 9,173,443 (3,663,322)
Balance at June 30, 2021 51,603,833$ 34,969,715$ 16,634,118$
Increase (Decrease)
139
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Subsequent Events
There were no subsequent events that would materially affect the results presented in this
disclosure.
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total OPEB liability of the City, calculated using the discount
rate for the Plan, as well as what the City’s total OPEB liability would be if it were calculated
using a discount rate that is 1-percentage point lower or 1-percentage point higher than
the current rate:
Sensitivity of the Net OPEB Liability to Changes in Health-Care Cost Trend Rates
The following presents the total OPEB liability of the City, as well as what the City’s total
OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-
percentage point lower (5.0% HMO/5.0% PPO) or 1-percentage point higher (7.0%
HMO/7.0% PPO) than current healthcare cost trend rates:
OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the year ended June 30, 2022, the City recognized OPEB expense of $1,588,845. At
June 30, 2022, the City reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
1% Decrease Current Discount Rate 1% Increase
5.50% 6.50% 7.50%
Net OPEB Liability 21,822,821$ 16,634,118$ 12,247,235$
1% Decrease Current Healthcare 1% Increase
Cost Trend Rates
(5.0%HMO/5.0%PPO (6.0%HMO/6.0%PPO (7.0%HMO/7.0%PPO
decreasing to decreasing to decreasing to
3.5%HMO/3.5%PPO) 4.5%HMO/4.5%PPO) 5.5%HMO/5.5%PPO)
Net OPEB Liability 14,440,203$ 16,634,118$ 19,707,865$
Description
Deferred Outflows
of Resources
Deferred Inflows
of Resources
OPEB contributions subsequent to measurement date 5,486,967$ -$
Differences between expected and actual experience 6,741,596 (170,934)
Changes of assumptions 57,155 (268,900)
Net difference between projected and actual earnings
on OPEB plan investments - (4,031,285)
Total 12,285,718$ (4,471,119)$
140
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
The differences between expected and actual experience, and changes of assumptions
are amortized over a six-year period or a nine-year period, depending on the fiscal year
the difference occurred. The net difference between projected and actual earnings on plan
investment is amortized over a five-year period.
An amount of $5,486,967, which is reported as deferred outflows of resources related to
contributions subsequent to the measurement date, will be recognized as a reduction of
the net OPEB liability in the fiscal year ending June 30, 2023.
Amounts reported as deferred outflows of resources and deferred inflows of resources
related to OPEB will be recognized in OPEB expense as follows:
Payable to the OPEB Plan
At June 30, 2022, the City had no outstanding amount of contributions to the OPEB plan
required for the year ended June 30, 2022.
(12) Interfund Receivables and Payables
At June 30, 2022, interfund advances receivable and payable were as follows:
The General Fund advance to the Tide and Submerged Land – Harbor Capital Fund was
utilized for dredging within the City’s Tidelands. Repayment of the advance to the General
Fund is funded from incremental revenue increases generated from certain leases,
mooring rents, commercial and residential pier rents, and parking meter revenues.
Fiscal
Year Ending
June 30 Amount
2023 38,548$
2024 104,859
2025 116,588
2026 (462,374)
2027 626,398
Thereafter 1,903,612
Advance from Advance to
General Fund 8,176,659$ -$
Tide and Submerged Land - Harbor Capital Fund - 8,176,659
Total 8,176,659$ 8,176,659$
141
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
The annual amortization of the repayment of the advance is as follows:
At June 30, 2022, interfund receivables and payable were as follows:
The above balances are primarily due to reclassification of negative cash balances in the
city-wide cash pool.
Fiscal
Year
Advance #1
Dredging
Projects
Repayment
Advance #2
Marina Park
Project
Repayment
Total
Repayment
2023 750,000$ 500,000$ 1,250,000$
2024 750,000 500,000 1,250,000
2025 750,000 500,000 1,250,000
2026 750,000 500,000 1,250,000
2027 750,000 500,000 1,250,000
2028 426,659 500,000 926,659
2029 - 500,000 500,000
2030 - 500,000 500,000
Total 4,176,659$ 4,000,000$ 8,176,659$
Harbor Capital Fund Advance - Repayment Terms
(Zero Interest Advance)
Due from Due to
General Fund 460,259$ -$
Facilities Financial Planning Reserve Fund 6,308,136 -
Debt Service Fund - 6,308,136
Internal Service Funds - 353,001
Other Governmental Funds - 107,258
Total 6,768,395$ 6,768,395$
142
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
(13) Interfund Transfers
Interfund transfers at June 30, 2022, consisted of the following:
The City typically uses transfers to fund ongoing subsidies and to set aside resources for
long-term needs such as capital facilities replacement and major maintenance. The
General Fund transferred:
$8,668,941 to subsidize the maintenance and operation of the Tide and
Submerged Land – Operating Fund;
$4,500,000 to the Tide and Submerged Land – Harbor Capital Fund to cash fund
Harbor Capital projects;
$19,000,000 to the Facilities Financial Planning Reserve Fund to cash fund
construction projects for General Fund supported facilities;
and $29,313,549 to Other Governmental Funds, which includes $21,301,066 to
the Unrestricted Capital Improvements Fund to cash fund General Fund capital
improvements, $2,781,571 to establish the PEG Fees Fund, $1,162,791 to
establish Oceanfront Encroachment Fund, $1,737,821 to establish the Restricted
Programs Funds, $1,500,000 to the Facilities Maintenance Fund for maintenance
of facilities, and $830,300 to the Assessment District Fund for preliminary
engineering and design work related to assessment districts.
The Facilities Financial Planning Reserve Fund transferred $8,741,133 to the Debt
Service Fund for the debt service payments related to the Civic Center Certificates of
Participation and the Fire Station No. 2 Certificates of Participation, and $4,483,499 to
Other Governmental Funds to cash fund construction projects related to parks and
community centers and the Junior Lifeguards building.
General Fund
Tide and
Submerged
Land -
Operating
Tide and
Submerged
Land - Harbor
Capital
Facilities
Financial
Planning
Reserve
Debt Service
Fund
Other
Governmental
Funds Total
General Fund -$ 8,668,941$ 4,500,000$ 19,000,000$ -$ 29,313,549$ 61,482,490$
Facilities Financial
Planning Reserve - - - - 8,741,133 4,483,499 13,224,632
Internal Service
Funds 1,284,630 ‐ ‐ ‐ ‐ ‐ 1,284,630
Other
Governmental
Funds
- - - - - 69,812 69,812
Total 1,284,630$ 8,668,941$ 4,500,000$ 19,000,000$ 8,741,133$ 33,866,860$ 76,061,564$
Transfers In
Transfers Out143
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Internal Service Funds transferred $1,284,630 of excess reserve funds on hand to the
General Fund. The transfers include $472,403 from the Equipment Maintenance Fund
and $812,227 from the Information Technology Fund.
Other Governmental Funds, specifically the General Fund Capital Projects Fund,
transferred $69,812 to the AQMD Fund to subsidize excess expenditures on design
services related to a fueling study.
(14) Joint Venture Agreements
Bonita Canyon Public Facilities Financing Authority
The Bonita Canyon Public Facilities Financing Authority (Authority) is a joint powers
authority comprised of the City of Newport Beach and the 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 the District’s boundaries. In 1998, the
Authority issued $45,000,000 of special tax bonds to be repaid by special assessments.
$30,577,712 (81.7%) of the proceeds were used to pay for the costs of the City acquiring
and constructing public facilities including parks and road improvements. In Fiscal Year
2011-12, the Authority issued $38,330,000 of special tax refunding bonds to refinance the
1998 Series. In Fiscal Year 2017-18, the Authority issued $28,245,000 of special tax
refunding bonds to refinance the 2012 series; the City is not obligated in any manner to
repay the bonds. As of June 30, 2022, the contributions from property owners have been
fully spent and no funds are held in trust by the fiscal agent. The City does not make any
annual contributions to the Authority and 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 the Authority 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.
Metro Cities Fire Authority
The City of Newport Beach is a participant in a joint venture consisting of the cities of
Anaheim, Brea, Fountain Valley, Fullerton, Huntington Beach, and Orange for the
operation of a communication network utilized by 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 $739,713.
The City’s 11.13% interest in the net equity of this joint venture at June 30, 2022, amounts
144
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
to $241,967. 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 with several other public agencies in Orange
County for the operation of the Integrated Law and Justice Agency of Orange County
(ILJAOC). The ILJAOC was established in fiscal year 2006-07 and consists of 23 member
agencies, with an oversight board consisting of 12 members from the participating
agencies. 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 was immaterial as of June 30, 2022. The City of Newport Beach
acted as the Treasurer/Controller of the ILJAOC from inception through the end of fiscal
year 2010-11. Beginning July 1, 2011, the City of Brea, another member agency, was
appointed to serve as Treasurer/Controller, and assumed responsibility for all operating
activities of the ILJAOC. Complete separate financial statements can be obtained from the
City of Brea, 1 Civic Center Circle, Brea, California 92821.
(15) 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 Notes 6 and 8.)
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 VNB is to attract additional visitor business by promoting the City as the
premier tourist and business destination in Orange County. 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 September 27,
2011, and subsequently amended on January 28, 2014, extending the agreement through
December 31, 2024. The City pays VNB 18% of the Total Transient Occupancy Tax
collected during the fiscal year. For the Fiscal Year ending June 30, 2022, the City paid
VNB $5,830,170.
145
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
Contractual Commitments
Construction and contractual commitments for major construction projects are as follows:
At fiscal year end, the City’s encumbrances with contractors were as follows:
Annual Project YTD Unexpended
Budget Expenditures Commitments
Jamboree Rd. Pavement Rehab 5,124,131$ 1,369,953$ 3,163,432$
Utilities Back Up Generators 2,838,509 950,725 1,927,515
Lower Sunset View Park Concept 7,847,401 104,680 1,327,363
Advanced Metering Infrastructure 5,845,939 2,184,823 1,166,848
WCH Hwy Intersection Imp Ped Bridge 1,128,521 - 1,127,104
Bay Crossing Water Main Replc 1,384,466 234,123 988,410
Slurry Seal Program 1,124,050 194,246 851,940
East Coast Hwy Pavement Rehab 4,067,990 3,028,532 848,560
Lido Fire Station 2 6,764,866 5,352,887 779,716
Streetlight Rehabilitation Program 1,050,000 262,599 704,110
Traffic Signal Rehab Program 750,000 411,339 647,918
Balboa Island Drainage Master Plan 2,181,015 167,876 593,069
Alleys Reconstruction 945,103 384,461 530,116
Tide and Tide and Special Capital
Submerged Submerged Revenue Project
General Land Operating Land Harbor Capital Funds Funds Total
Drainage -$ -$ -$ -$ 617,651$ 617,651$
Streets - - - 5,752,246 2,815,210 8,567,456
Facilities - - - - 1,973,390 1,973,390
Miscellaneous and studies - - - - 133,331 133,331
Parks - - - - 2,352,276 2,352,276
Contract services 2,499,009 - - - - 2,499,009
Supplies and materials 388,800 - - - - 388,800
Maintenance and repairs 1,439,989 - - - 394,173 1,834,162
General 101,775 - - - 459,147 560,922
Beaches - 229,832 626,413 - - 856,245
Equipment - 6,604 13,312 16,319 - 36,235
Total encumbrances 4,429,573$ 236,436$ 639,725$ 5,768,565$ 8,745,178$ 19,819,477$
Major Governmental Funds Other Governmental Funds
146
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
(16) Fund Balance
Governmental Fund Balance at June 30, 2022, is classified as follows:
(17) Tax Abatements
The City may enter into sales tax abatement agreements with automobile dealerships
under City Council Resolution 99-64. Under that Resolution, the City may rebate sales
taxes “for the sole purpose of reimbursing [automobile dealerships] for costs incurred for
a project necessary to make the project financially feasible”. Automobile dealerships must
covenant “to complete the project, to remain and operate the project for a specified period
of time… [, and] to maximize the City as the point-of-sale…”. Automobile dealership sales
Governmental Fund Balance
Tide and Tide and American Facilities Special Capital
Submerged Submerged Rescue Plan Financial Planning Debt Service Revenue Project Permanent
General Land - Operating Land - Harbor Capital Act Reserve Fund Funds Funds Funds Totals
Nonspendable:
Prepaid items (legally restricted) 944,410$ -$ -$ -$ -$ -$ 49,349$ -$ -$ 993,759$
Inventories (legally restricted)286,074 - - - - - - - - 286,074
Long-term loan receivable (form restricted)8,176,659 - - - - - - - - 8,176,659
Permanent endowment (legally restricted)- - - - - - - - 4,629,780 4,629,780
Restricted:
Affordable housing - - - - - - 279,747 - - 279,747
Oceanfront encroachment - - - - - - 1,162,791 - - 1,162,791
Upper Newport bay restoration - 1,318,126 - - - - - - - 1,318,126
Cable franchise reserve - - - - - - 2,781,571 - - 2,781,571
Community development - - - - - - - 3,217 - 3,217
Streets and highways - - - - - - 619,950 - - 619,950
Public safety - - - - - - 533,795 - - 533,795
Facilities - - - - - - - 721,413 - 721,413
Transportation - - - - - - 2,820,763 - - 2,820,763
Air quality improvement - - - - - - 1,117,202 - - 1,117,202
Environmental liability mitigation - - - - - - 8,549,720 - - 8,549,720
Public arts and culture - - - - - - 885,250 - - 885,250
Parking - - - - - - 186,930 - - 186,930
Training - - - - - - 385,894 - - 385,894
Dredging - - 21,210,300 - - - - - 1,454,608 22,664,908
Libraries - - - - - - - - 195,320 195,320
Scholarships - - - - - - - - 207,566 207,566
Fiin - - - - - - 1,298,845 - - 1,298,845
Debt service - - - - - 2,199,363 - - - 2,199,363
Capital re-appropriations - 2,193,238 9,684,447 - - - 1,522,549 5,047,178 - 18,447,412
Encumbrance reserve:
Beaches - 229,832 626,413 - - - - - - 856,245
Streets - - - - - - 5,752,246 - - 5,752,246
Equipment - 6,604 13,312 - - - 16,319 - - 36,235
Committed:
Facilities replacement - - - - 34,171,635 - - - - 34,171,635
Facilities maintenance - - - - - - - 21,018,727 - 21,018,727
Civic center and park - - - - - - - 484,163 - 484,163
Oil and gas liabilities - 800,000 - - - - - - - 800,000
Parks and community centers - - - - - - - 3,044,546 - 3,044,546
Parking management - - - - - - - 5,063 - 5,063
Neighborhood enhancement - - - - - - - 512,903 - 512,903
Capital re-appropriations - - - - - - - 4,461,319 - 4,461,319
Encumbrance reserve:
Drainage - - - - - - - 617,651 - 617,651
Streets - - - - - - - 2,815,210 - 2,815,210
Facilities - - - - - - - 1,973,390 - 1,973,390
Miscellaneous and studies - - - - - - - 133,331 - 133,331
Parks - - - - - - - 2,352,276 - 2,352,276
Contract services 2,499,009 - - - - - - - - 2,499,009
Supplies and materials 388,800 - - - - - - - - 388,800
Maintenance and repairs 1,439,989 - - - - - - 394,173 - 1,834,162
General 101,775 - - - - - - 459,147 - 560,922
Unassigned 83,302,665 - - - - - (119,371) - - 83,183,294
Total fund balances 97,139,381$ 4,547,800$ 31,534,472$ -$ 34,171,635$ 2,199,363$ 27,843,550$ 44,043,707$ 6,487,274$ 247,967,182$
Other Governmental Funds
147
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
tax rebates are based on negotiations that require City Council approval. On an accrual
basis, for the fiscal year ended June 30, 2022, the City rebated sales taxes to automobile
dealerships totaling $549,265 under this program.
(18) Leases
City as Lessee
Lease agreements that meet the requirements of GASB 87 for which the City is lessee
are disclosed as lease liabilities on the City’s financial statements that are presented on
the accrual basis of accounting and with an economic resources measurement focus.
Included in the City’s lease liabilities are agreements related to an animal shelter, water
well easements, storage, lifeguard communication equipment, and part of a homeless
shelter. During the fiscal year there were no variable lease payments that were not
previously included in the City’s lease liabilities. Additional information about the related
lease assets and accumulated amortization are provided in Note 5. Estimates of the future
lease payments for the City’s lease liability are as follows:
Year Ending
June 30 Principal Interest Total
2023 1,069,073$ 79,270$ 1,148,344$
2024 1,019,436 73,566 1,093,003
2025 1,025,055 67,948 1,093,003
2026 1,025,038 62,298 1,087,336
2027 968,180 56,820 1,025,000
2028-2032 4,921,530 203,470 5,125,000
2033-2037 3,553,490 71,510 3,625,000
2038-2042 91,811 33,189 125,000
2043-2047 94,370 30,630 125,000
2048-2052 97,000 28,000 125,000
2053-2057 99,704 25,296 125,000
2058-2062 102,483 22,516 125,000
2063-2067 105,340 19,660 125,000
2068-2072 108,277 16,723 125,000
2073-2077 111,295 13,705 125,000
2078-2082 114,397 10,603 125,000
2083-2087 117,586 7,414 125,000
2088-2092 120,864 4,136 125,000
2093-2097 88,686 897 89,583
14,833,614$ 827,650$ 15,661,265$
148
CITY OF NEWPORT BEACH
Notes to Basic Financial Statements
June 30, 2022
City as Lessor
Lease agreements that meet the requirements of GASB 87 for which the City is lessor are
disclosed as lease receivables on the City’s financial statements. Included in the City’s
lease receivables are over 900 agreements related to land and structures. GASB 87
excludes certain inflows (e.g. certain variable payments, etc.) from the measurement of
lease receivables. For the fiscal year ending June 30, 2022, the City recognized
$4,211,431 of variable payments related to the lease receivables that were excluded from
the measurement of the lease receivables. Lease inflows, including inflows excluded from
GASB 87, are included on the City’s financial statements as property income. Lease
inflows for interest revenue from amortization of the GASB 87 lease receivables totaled
$2,152,689. Lease inflows for lease revenue from amortization of the related GASB 87
deferred inflows of resources from leases was $7,079,686.
(19) Subsequent Event
Dove Street Property Purchase
On November 15, 2022, the City Council authorized staff to execute an agreement with
AG Dove Owner, L.P. for the purchase of property at 1201 Dove Street for a future police
headquarters. The negotiated purchase price for the property is $30.5 million, which will
be funded from General Fund reserves, and from available funds in the Facilities Financial
Planning Fund and General Fund Capital Improvement Plan Fund. The property is
projected to produce $15 million to $25 million of lease revenue (net of operating expenses
and building management costs) over the next 10 to 15 years, respectively. The close of
escrow is anticipated to be April, 2023.
149
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150
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONREQUIRED SUPPLEMENTARY INFORMATION
151
2022 2021 2020
Measurement Period June 30, 2021 June 30, 2020 June 30, 2019
Total Pension Liability
Service cost 7,438,050$ 7,347,708$ 7,084,444$
Interest on total pension liability 31,805,532 30,565,919 29,409,624
Differences between expected and actual experience 1,624,975 369,351 403,676
Changes in assumptions - - -
Changes in benefits - - -
Benefit payments, including refunds of employee contributions (22,976,493) (21,516,515) (20,129,701)
Net Change in Total Pension Liability 17,892,064 16,766,463 16,768,043
Total Pension Liability - beginning 450,976,864 434,210,401 417,442,358
Total Pension Liability - ending (a)468,868,928$ 450,976,864$ 434,210,401$
Plan Fiduciary Net Position
Contributions - employer 18,612,457$ 16,346,284$ 15,700,833$
Contributions - employee 4,057,107 4,067,751 3,955,144
Net investment income 76,031,841 16,074,793 19,895,019
Administrative expense (336,753) (454,777) (216,502)
Other miscellaneous income/(expense)- - 700
Plan to plan resource movement - - 1,570
Benefit payments (22,976,493) (21,516,515) (20,129,701)
Net change in Plan Fiduciary Net Position 75,388,159 14,517,536 19,207,063
Plan Fiduciary Net Position - beginning 337,110,215 322,592,679 303,385,616
Plan Fiduciary Net Position - ending (b)412,498,374$ 337,110,215$ 322,592,679$
Net pension liability - ending (a)-(b)56,370,554$ 113,866,649$ 111,617,722$
Plan fiduciary net position as a percentage of the total pension liability 87.98%74.75%74.29%
Covered payroll 44,809,856$ 43,902,594$ 42,153,383$
Net pension liability as percentage of covered payroll 125.80%259.36%264.79%
Notes to Schedule:
*Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.
Benefit Changes:
Change in Assumptions:
CITY OF NEWPORT BEACH
an Agent Multiple-Employer Defined Benefit Pension Plan
As of June 30, 2022
Last 10 Years *
Defined Benefit Plan for Miscellaneous Employees
The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the
Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation
Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.
None in 2019 through 2021. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience
Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was
reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount
rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014,
amounts reported were based on the 7.5 percent discount rate.
Page 1 of 2
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years*
152
2019 2018 2017 2016 2015
June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
7,334,861$ 7,151,754$ 6,303,642$ 6,087,960$ 6,523,874$
28,226,598 27,069,673 26,375,073 25,427,094 24,624,559
2,243,854 (4,912,853) (2,686,814) (4,736,006) -
(2,522,093) 22,616,424 - (6,309,248) -
- - - - -
(18,458,539) (17,249,398) (16,714,022) (16,374,370) (15,290,340)
16,824,681 34,675,600 13,277,879 4,095,430 15,858,093
400,617,677 365,942,077 352,664,198 348,568,768 332,710,674
417,442,358$ 400,617,677$ 365,942,077$ 352,664,198$ 348,568,767$
15,797,595$ 10,509,243$ 9,904,636$ 6,615,920$ 5,793,768$
3,979,337 4,134,130 4,206,942 4,321,646 4,319,336
23,855,196 28,349,491 1,241,432 5,687,908 38,237,161
(435,499) (375,172) (155,791) (287,862) -
(827,021) - - - -
(700) - (2,387) 26,981 -
(18,458,539) (17,249,398) (16,714,022) (16,374,370) (15,290,340)
23,910,369 25,368,294 (1,519,190) (9,777) 33,059,925
279,475,247 254,106,953 255,626,143 255,635,920 222,575,995
303,385,616$ 279,475,247$ 254,106,953$ 255,626,143$ 255,635,920$
114,056,742$ 121,142,430$ 111,835,124$ 97,038,055$ 92,932,847$
72.68%69.76%69.44%72.48%73.34%
41,468,634$ 41,727,563$ 40,031,404$ 38,512,011$ 37,775,051$
275.04%290.32%279.37%251.97%246.02%
CITY OF NEWPORT BEACH
an Agent Multiple-Employer Defined Benefit Pension Plan
As of June 30, 2022
Last 10 Years *
Defined Benefit Plan for Miscellaneous Employees
Page 2 of 2
153
2022 2021 2020
Actuarially determined contribution 14,432,250$ 14,600,178$ 13,080,630$
Contributions in relation to the actuarially determined contributions (18,372,473) (18,730,840) (16,351,592)
Contribution deficiency (excess)(3,940,223)$ (4,130,662)$ (3,270,962)$
Covered payroll 45,210,057$ 44,809,856$ 43,902,594$
Contributions as a percentage of covered payroll 40.64%41.80%37.25%
Notes to Schedule:
Valuation date:06/30/2019 06/30/2018 06/30/2017
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age Entry age Entry age
Amortization method (1)(1)(1)
Asset valuation method Market Value Market Value Market Value
Inflation 2.50% 2.50% 2.625%
Salary increases (2)(2)(2)
Investment rate of return 7.00% (3)7.00% (3)7.25% (3)
Retirement age (4)(4)(4)
Mortality (5)(5)(5)
(1) Level percentage of payroll for bases established prior to June 30, 2019 and level dollar amount for bases established after June 30, 2019
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment and administrative expense; includes inflation
(4)
(5)
*Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.
Retirement assumptions are based on retirement rates resulting from the most recent CalPERS Experience Study adopted by the
CalPERS Board
Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS
Board
Defined Benefit Plan for Miscellaneous Employees
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years*
Page 1 of 2
CITY OF NEWPORT BEACH
an Agent Multiple-Employer Defined Benefit Pension Plan
As of June 30, 2022
Last 10 Years *
154
2019 2018 2017 2016 2015
12,374,026$ 11,924,053$ 10,412,963$ 9,943,342$ 7,117,065$
(15,713,898) (15,742,587) (10,412,963) (9,943,342) (7,117,065)
(3,339,872)$ (3,818,534)$ -$ -$ -$
42,153,383$ 41,468,634$ 41,727,563$ 40,031,404$ 38,512,011$
37.28%37.96%24.95%24.84%18.48%
06/30/2016 06/30/2015 06/30/2014 06/30/2013 06/30/2012
Entry age Entry age Entry age Entry age Entry age
(1)(1)(1)(1)(1)
Market Value Market Value Market Value Market Value Market Value
2.75% 2.75% 2.75% 2.75% 2.75%
(2)(2)(2)(2)(2)
7.375% (3)7.5% (3)7.5% (3)7.5% (3)7.5% (3)
(4)(4)(4)(4)(4)
(5)(5)(5)(5)(5)
CITY OF NEWPORT BEACH
an Agent Multiple-Employer Defined Benefit Pension Plan
As of June 30, 2022
Last 10 Years *
Defined Benefit Plan for Miscellaneous Employees
Page 2 of 2
155
2022 2021 2020
Measurement Period June 30, 2021 June 30, 2020 June 30, 2019
Total Pension Liability
Service cost 9,817,913$ 9,622,985$ 9,292,715$
Interest on total pension liability 42,760,906 41,449,511 40,081,524
Differences between expected and actual experience 196,690 957,686 4,798,077
Changes in assumptions - - -
Changes in benefits - - -
Benefit payments, including refunds of employee contributions (33,765,218) (32,285,653) (30,443,097)
Net Change in Total Pension Liability 19,010,291 19,744,529 23,729,219
Total Pension Liability - beginning 609,831,612 590,087,083 566,357,864
Total Pension Liability - ending (a)628,841,903$ 609,831,612$ 590,087,083$
Plan Fiduciary Net Position
Contributions - employer 32,367,091$ 28,539,301$ 28,344,445$
Contributions - employee 3,347,740 3,249,005 3,162,044
Net investment income 93,813,435 19,685,354 24,254,890
Administrative expense (413,178) (556,832) (263,991)
Plan to plan resource movement - - (1,570)
Benefit payments (33,765,218) (32,285,653) (30,443,097)
Other miscellaneous income/(expense)- - 855
Net change in Plan Fiduciary Net Position 95,349,870 18,631,175 25,053,576
Plan Fiduciary Net Position - beginning 413,616,550 394,985,375 369,931,799
Plan Fiduciary Net Position - ending (b)508,966,420$ 413,616,550$ 394,985,375$
Net pension liability - ending (a)-(b)119,875,483$ 196,215,062$ 195,101,708$
Plan fiduciary net position as a percentage of the total pension liability 80.94%67.82%66.94%
Covered payroll 34,863,204$ 34,279,062$ 33,935,043$
Net pension liability as percentage of covered payroll 343.85%572.40%574.93%
Notes to Schedule:
*Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.
Benefit Changes:
Change in Assumptions:
CITY OF NEWPORT BEACH
an Agent Multiple-Employer Defined Benefit Pension Plan
As of June 30, 2022
Last 10 Years *
Defined Benefit Plan for Safety Employees
The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the
Measurement Date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the Valuation
Date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary.
None in 2019 through 2021. In 2018, demographic assumptions and inflation rate were changed in accordance to the CalPERS Experience
Study and Review of Actuarial Assumptions December 2017. There were no changes in the discount rate. In 2017, the discount rate was
reduced from 7.65 percent to 7.15 percent. In 2016, there were no changes. In 2015, amounts reported reflect an adjustment of the discount
rate from 7.5 percent (net of administrative expense) to 7.65 percent (without a reduction for pension plan administrative expense). In 2014,
amounts reported were based on the 7.5 percent discount rate.
Page 1 of 2
SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS
Last Ten Fiscal Years*
156
2019 2018 2017 2016 2015
June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
9,223,465$ 9,015,985$ 8,075,553$ 8,077,826$ 8,091,585$
38,458,387 37,083,966 36,239,226 35,098,055 33,807,462
3,278,018 (2,192,667) (1,613,985) (316,827) -
(1,630,045) 30,110,384 - (8,359,009) -
- - - - -
(29,183,598) (28,074,414) (27,447,982) (25,838,982) (24,529,802)
20,146,227 45,943,254 15,252,812 8,661,063 17,369,245
546,211,637 500,268,383 485,015,571 476,354,508 458,985,263
566,357,864$ 546,211,637$ 500,268,383$ 485,015,571$ 476,354,508$
26,779,897$ 19,260,537$ 18,496,776$ 21,529,513$ 12,089,637$
3,104,318 2,967,318 2,826,831 2,969,503 3,122,237
29,064,749 34,814,011 1,561,480 7,049,577 47,151,493
(532,480) (462,427) (193,780) (357,866) -
(855) - 2,387 - -
(29,183,598) (28,074,414) (27,447,982) (25,838,982) (24,529,802)
(1,011,188) - - - -
28,220,843 28,505,025 (4,754,288) 5,351,745 37,833,565
341,710,956 313,205,931 317,960,219 312,608,474 274,774,909
369,931,799$ 341,710,956$ 313,205,931$ 317,960,219$ 312,608,474$
196,426,065$ 204,500,681$ 187,062,452$ 167,055,352$ 163,746,034$
65.32%62.56%62.61%65.56%65.63%
32,866,620$ 32,450,020$ 30,816,246$ 30,189,633$ 29,944,665$
597.65%630.20%607.03%553.35%546.83%
Page 2 of 2
CITY OF NEWPORT BEACH
an Agent Multiple-Employer Defined Benefit Pension Plan
As of June 30, 2022
Last 10 Years *
Defined Benefit Plan for Safety Employees
157
2022 2021 2020
Actuarially determined contribution 25,115,878$ 25,341,788$ 22,980,289$
Contributions in relation to the actuarially determined contributions (32,317,538) (32,251,903) (28,531,744)
Contribution deficiency (excess)(7,201,660)$ (6,910,115)$ (5,551,455)$
Covered payroll 35,231,003$ 34,863,204$ 34,279,062$
Contributions as a percentage of covered payroll 91.73%92.51%83.23%
Notes to Schedule:
Valuation date:06/30/2019 06/30/2018 06/30/2017
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age Entry age Entry age
Amortization method (1)(1)(1)
Asset valuation method Market Value Market Value Market Value
Inflation 2.50% 2.50% 2.625%
Salary increases (2)(2)(2)
Investment rate of return 7.00% (3)7.00% (3)7.25% (3)
Retirement age (4)(4)(4)
Mortality (5)(5)(5)
(1) Level percentage of payroll for bases established prior to June 30, 2019 and level dollar amount for bases established after June 30, 2019
(2) Depending on age, service, and type of employment
(3) Net of pension plan investment and administrative expense; includes inflation
(4)
(5)
*
CITY OF NEWPORT BEACH
an Agent Multiple-Employer Defined Benefit Pension Plan
As of June 30, 2022
Last 10 Years *
Defined Benefit Plan for Safety Employees
Fiscal year 2015 was the first year of implementation, therefore only eight years are shown.
SCHEDULE OF CONTRIBUTIONS
Last Ten Fiscal Years*
Retirement assumptions are based on retirement rates resulting from the most recent CalPERS Experience Study adopted by the
CalPERS Board
Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS
Board
Page 1 of 2
158
2019 2018 2017 2016 2015
22,227,698$ 21,524,636$ 19,338,360$ 18,466,207$ 13,393,374$
(28,346,069) (26,620,697) (19,338,360) (18,466,207) (20,993,374)
(6,118,371)$ (5,096,061)$ -$ -$ (7,600,000)$
33,935,043$ 32,866,620$ 32,450,020$ 30,816,246$ 30,189,633$
83.53%81.00%59.59%59.92%69.54%
06/30/2016 06/30/2015 06/30/2014 06/30/2013 06/30/2012
Entry age Entry age Entry age Entry age Entry age
(1)(1)(1)(1)(1)
Market Value Market Value Market Value Market Value Market Value
2.75% 2.75% 2.75% 2.75% 2.75%
(2)(2)(2)(2)(2)
7.375% (3)7.5% (3)7.5% (3)7.5% (3)7.5% (3)
(4)(4)(4)(4)(4)
(5)(5)(5)(5)(5)
CITY OF NEWPORT BEACH
an Agent Multiple-Employer Defined Benefit Pension Plan
As of June 30, 2022
Last 10 Years *
Defined Benefit Plan for Safety Employees
Page 2 of 2
159
2022 2021 2020 2019 2018
Measurement Period June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017
Total OPEB Liability
Service cost 529,600$ 521,285$ 524,717$ 509,434$ 478,341$
Interest 2,909,400 2,944,050 2,795,490 2,814,685 2,830,153
Differences between expected and actual experience 6,159,865 (219,772) 2,532,319 - -
Changes in assumptions (302,512) - 114,311 - -
Changes in benefits terms - - - - -
Benefit payments, including refunds of member contributions (3,786,232) (3,787,663) (3,627,695) (3,641,715) (3,513,406)
Net change in Total OPEB Liability 5,510,121 (542,100) 2,339,142 (317,596) (204,912)
Total OPEB Liability - beginning 46,093,712 46,635,812 44,296,670 44,614,266 44,819,178
Total OPEB Liability - ending (a)51,603,833$ 46,093,712$ 46,635,812$ 44,296,670$ 44,614,266$
Plan fiduciary net position
Contributions - employer 5,785,342$ 4,674,814$ 4,460,937$ 4,675,193$ 4,594,772$
Contributions - member - - - - -
Net investment income 7,184,241 900,087 1,495,861 1,605,114 1,875,536
Benefit payments, including refunds of member contributions (3,786,232) (3,787,663) (3,627,695) (3,641,715) (3,513,406)
Administrative expense (9,908) (12,037) (4,980) (11,076) (9,452)
Other expense - - - (25,258) -
Net change in plan fiduciary net position 9,173,443 1,775,201 2,324,123 2,602,258 2,947,450
Plan fiduciary net position - beginning 25,796,272 24,021,071 21,696,948 19,094,690 16,147,240
Plan fiduciary net position - ending (b)34,969,715$ 25,796,272$ 24,021,071$ 21,696,948$ 19,094,690$
City's Net OPEB liability - ending (a)-(b)16,634,118$ 20,297,440$ 22,614,741$ 22,599,722$ 25,519,576$
Plan fiduciary net position as a percentage of the total OPEB liability 67.77%55.96%51.51%48.98%42.80%
Covered- employee payroll (1)78,621,426$ 77,637,171$ 75,814,626$ 73,999,059$ 74,484,613$
City's Net OPEB liability as percentage of covered-employee payroll 21.16% 26.14% 29.83% 30.54% 34.26%
Notes to Schedule:
(1) Covered-employee payroll is used because contributions are not entirely based on a measure of pay.
* Fiscal year 2018 was the first year of implementation, therefore only five years are shown.
Last Ten Fiscal Years*
CITY OF NEWPORT BEACH
Post-Employment Health Care Benefits (OPEB) Retirement Plan
As of June 30, 2022
Last 10 Years *
SCHEDULE OF CHANGES IN THE CITY'S NET OPEB LIABILITY AND RELATED RATIOS
160
2022 2021 2020 2019 2018
Actuarially determined contribution 4,124,923$ 4,108,719$ 3,834,916$ 3,827,337$ 3,925,087$
Contributions in relation to the actuarially determined contributions (5,486,967) (6,511,545) (5,379,799) (5,133,062) (5,309,626)
Contribution deficiency (excess)(1,362,044)$ (2,402,826)$ (1,544,883)$ (1,305,725)$ (1,384,539)$
Covered-employee payroll (1)79,636,594$ 78,621,426$ 77,637,171$ 75,814,626$ 73,999,059$
Contributions as a percentage of covered-employee payroll -6.89%-8.28%-6.93%-6.77%-7.18%
Notes to Schedule:
Valuation date:June 30, 2019 June 30, 2019 June 30, 2017 June 30, 2017 June 30, 2015
(1) Covered-employee payroll is used because contributions are not entirely based on a measure of pay.
* Fiscal year 2018 was the first year of implementation, therefore only five years are shown.
Last Ten Fiscal Years*
SCHEDULE OF CONTRIBUTIONS
CITY OF NEWPORT BEACH
Post-Employment Health Care Benefits (OPEB) Retirement Plan
As of June 30, 2022
Last 10 Years *
161
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162
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONSUPPLEMENTARY INFORMATION
OTHER GOVERNMENTAL FUNDS
163
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164
OTHER GOVERNMENTAL FUNDS
Other 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 SB1 Gas Tax RMRA Fund accounts for all Road Maintenance and Rehabilitation Account
related revenues and expenditures. State law requires that these funds be used exclusively for
the transportation system. RMRA revenues are from fuel and vehicle registration taxes imposed
by the state’s Road Repair and Accountability Act of 2017.
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) in which judicial
proceedings have been completed. All such funds are property of the City, and it is the City's
policy that these funds shall be used for enhancement of law enforcement programs.
The Office of the Traffic Safety (OTS) DUI Grant Fund is used to account for federal funding of
the Selective Traffic Enforcement Program (STEP). These funds are used exclusively for DUI
enforcement.
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 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 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.
165
The Fostering Interest in Nature (FIIN) Fund is restricted for recreation and education
programming as a mitigation effort by the California Coastal Commission.
The Restricted Programs Fund is used to account for revenues received that are restricted for
affordable housing, public arts and culture, parking improvements, and disability access training.
The Measure M Fund is used to account for the revenues and expenditures of funds received
from the Orange County Transportation Authority. Expenditures from this fund are used
exclusively for transportation related purposes.
The Oceanfront Encroachment Fund is restricted for ocean front restoration and improvement
and maintenance to enhance public access and use of ocean beaches as restricted by the Local
Coastal Program.
The PEG Fees Fund is used to account for cable franchise fees received from cable providers for
support of Public, Education, and Government access programming only.
Other 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 Fire Station Fund is used to account for the design and construction of new fire stations.
The Civic Center and Park Fund is used to account for the design and construction of a new
Civic Center Complex. In prior years, this fund was called City Hall Improvements Fund.
The Newport Uptown Undergrounding Fund is used to account for the receipt and
expenditures related to the development within the Newport Uptown Planned Community
Development Plan.
The Parks and Community Centers Fund is used to account for expenditures for park and
community center rehabilitation, expansion and/or replacement in accordance with the Facilities
Financing Planning Program.
The Balboa Village Parking Management District Fund is used to account for revenues and
expenditures associated with parking management improvements in Balboa Village.
The Facilities Maintenance Fund is used to account for revenues and expenditures associated
with the maintenance of existing facilities.
The Neighborhood Enhancement Fund is used to account for projects that will enhance
neighborhood aesthetics and functionality.
The Junior Lifeguards Fund is used to account for capital improvement projects related to the
Junior Lifeguards program.
The Unrestricted Capital Improvements Fund is used to separately account for general fund
capital improvement projects.
166
Other 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 Funds are 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.
167
State SB1 Gas Tax Asset OTS
Gas Tax RMRA Forfeiture DUI Grant
Assets
Cash and investments $ 3,004,156 $ 1,831,295 $ 521,595 $ -
Receivables:
Accounts (net of allowance) - - - -
Interest 8,646 5,374 900 -
Intergovernmental receivables 159,406 296,343 - 50,559
Restricted cash and investments with fiscal agent - - - -
Prepaid items - - 11,300 -
Total assets $ 3,172,208 $ 2,133,012 $ 533,795 $ 50,559
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable $ 721,995 $ - $ - $ -
Accrued payroll - - - -
Unearned revenue - - - -
Due to other funds - - - 50,559
Total liabilities 721,995 - - 50,559
Deferred inflows of resources:
Unavailable revenue - - - -
Fund balances (deficits):
Nonspendable:
Prepaid items - - 11,300 -
Permanent endowment - - - - Restricted 2,450,213 2,133,012 522,495 -
Committed - - - -
Unassigned - - - -
Total fund balances (deficits) 2,450,213 2,133,012 533,795 -
Total liabilities, deferred inflows of resources
and fund balances $ 3,172,208 $ 2,133,012 $ 533,795 $ 50,559 (continued)
CITY OF NEWPORT BEACH
Combining Balance Sheet
Other Governmental Funds
June 30, 2022
Special Revenue
Page 1 of 7
168
Circulation Building Community Air Quality
and Excise Development Management
Transportation Tax Block Grant District
Assets
Cash and investments $ 3,170,828 $ 308,710 $ - $ 1,419,914
Receivables:
Accounts (net of allowance) - - - -
Interest 9,434 918 - 3,905
Intergovernmental receivables - - 119,371 28,240
Restricted cash and investments with fiscal agent - - - -
Prepaid items - - - -
Total assets $ 3,180,262 $ 309,628 $ 119,371 $ 1,452,059
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable $ - $ 15,792 $ 62,672 $ -
Accrued payroll - - - -
Unearned revenue - - - -
Due to other funds - - 56,699 -
Total liabilities - 15,792 119,371 -
Deferred inflows of resources:
Unavailable revenue - - 119,371 28,241
Fund balances (deficits):
Nonspendable:
Prepaid items - - - -
Permanent endowment - - - - Restricted 3,180,262 293,836 - 1,423,818
Committed - - - -
Unassigned - - (119,371) -
Total fund balances (deficits) 3,180,262 293,836 (119,371) 1,423,818
Total liabilities, deferred inflows of resources
and fund balances $ 3,180,262 $ 309,628 $ 119,371 $ 1,452,059 (continued)
CITY OF NEWPORT BEACH
Special Revenue
Combining Balance Sheet
Other Governmental Funds
June 30, 2022
Page 2 of 7
169
Supplemental
Environmental Law
Liability Enforcement Contributions FIIN
Assets
Cash and investments $ 8,544,527 $ - $ 1,769,603 $ 1,294,992
Receivables:
Accounts (net of allowance) 6,214 - 209,635 -
Interest 25,353 - 449 3,853
Intergovernmental receivables - - 225,296 -
Restricted cash and investments with fiscal agent - - - -
Prepaid items 49,349 - - -
Total assets $ 8,625,443 $ - $ 2,204,983 $ 1,298,845
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable $ 24,861 $ - $ 969,401 $ -
Accrued payroll 1,513 - - -
Unearned revenue - - 726,721 -
Due to other funds - - - -
Total liabilities 26,374 - 1,696,122 -
Deferred inflows of resources:
Unavailable revenue - - 336,235 -
Fund balances (deficits):
Nonspendable:
Prepaid items 49,349 - - -
Permanent endowment - - - - Restricted 8,549,720 - 172,626 1,298,845
Committed - - - -
Unassigned - - - -
Total fund balances (deficits) 8,599,069 - 172,626 1,298,845
Total liabilities, deferred inflows of resources
and fund balances $ 8,625,443 $ - $ 2,204,983 $ 1,298,845 (continued)
CITY OF NEWPORT BEACH
Combining Balance Sheet
Other Governmental Funds
June 30, 2022
Page 3 of 7
Special Revenue
170
Restricted Oceanfront PEG
Programs Measure M Encroachment Fees
Assets
Cash and investments 1,737,821$ $ 3,444,706 $ 1,162,791 $ 2,781,571
Receivables:
Accounts (net of allowance)- - - -
Interest - 10,352 - -
Intergovernmental receivables - 1,099,014 - -
Restricted cash and investments with fiscal agent - - - -
Prepaid items - - - -
Total assets $ 1,737,821 $ 4,554,072 $ 1,162,791 $ 2,781,571
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable $ - $ 1,137,065 $ - $ -
Accrued payroll - - - -
Unearned revenue - 537,972 - -
Due to other funds - - - -
Total liabilities - 1,675,037 - -
Deferred inflows of resources:
Unavailable revenue - 683,773 - -
Fund balances (deficits):
Nonspendable:
Prepaid items - - - -
Permanent endowment - - - - Restricted 1,737,821 2,195,262 1,162,791 2,781,571
Committed - - - -
Unassigned - - - -
Total fund balances (deficits) 1,737,821 2,195,262 1,162,791 2,781,571
Total liabilities, deferred inflows of resources
and fund balances $ 1,737,821 $ 4,554,072 $ 1,162,791 $ 2,781,571 (continued)
Special Revenue
June 30, 2022
CITY OF NEWPORT BEACH
Page 4 of 7
Other Governmental Funds
Combining Balance Sheet
171
Newport
Assessment Civic Center Uptown
District Fire Station and Park Undergrounding
Assets
Cash and investments $ 5,424,225 $ 1,886,064 $ 482,875 $ 3,208
Receivables:
Accounts (net of allowance) - - - -
Interest 16,362 5,611 1,288 9
Intergovernmental receivables - - - -
Restricted cash and investments with fiscal agent - 1,627,225 - -
Prepaid items - - - -
Total assets $ 5,440,587 $ 3,518,900 $ 484,163 $ 3,217
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable $ 393,409 $ 905,812 $ - $ -
Accrued payroll - - - -
Unearned revenue - - - -
Due to other funds - - - -
Total liabilities 393,409 905,812 - -
Deferred inflows of resources:
Unavailable revenue - - - -
Fund balances (deficits):
Nonspendable:
Prepaid items - - - -
Permanent endowment - - - - Restricted 5,047,178 721,413 - 3,217
Committed - 1,891,675 484,163 -
Unassigned - - - -
Total fund balances (deficits) 5,047,178 2,613,088 484,163 3,217
Total liabilities, deferred inflows of resources
and fund balances $ 5,440,587 $ 3,518,900 $ 484,163 $ 3,217 (continued)
CITY OF NEWPORT BEACH
Combining Balance Sheet
Other Governmental Funds
June 30, 2022
Page 5 of 7
Capital Projects
172
Balboa Village
Parks and Parking
Community Management Facilities Neighborhood
Centers District Maintenance Enhancement
Assets
Cash and investments $ 7,915,238 $ 469,636 $ 2,898,405 $ 2,091,264
Receivables:
Accounts (net of allowance) - - - -
Interest 23,549 1,400 8,623 6,222
Intergovernmental receivables - - - -
Restricted cash and investments with fiscal agent - - - -
Prepaid items - - - -
Total assets $ 7,938,787 $ 471,036 $ 2,907,028 $ 2,097,486
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable $ 254,154 $ 41,972 $ 189,625 $ 615,095
Accrued payroll - - - -
Unearned revenue - - - -
Due to other funds - - - -
Total liabilities 254,154 41,972 189,625 615,095
Deferred inflows of resources:
Unavailable revenue - - - -
Fund balances (deficits):
Nonspendable:
Prepaid items - - - -
Permanent endowment - - - - Restricted - - - -
Committed 7,684,633 429,064 2,717,403 1,482,391
Unassigned - - - -
Total fund balances (deficits) 7,684,633 429,064 2,717,403 1,482,391
Total liabilities, deferred inflows of resources
and fund balances $ 7,938,787 $ 471,036 $ 2,907,028 $ 2,097,486 (continued)
CITY OF NEWPORT BEACH
Combining Balance Sheet
Other Governmental Funds
June 30, 2022
Page 6 of 7
Capital Projects
173
Total
Unrestricted Other
Junior Capital Ackerman Governmental
Lifeguards Improvements Bay Dredging Donation Funds
Assets
Cash and investments $ 108,911 $ 24,108,309 $ 5,295,852 $ 1,177,064 $ 82,853,560
Receivables: -
Accounts (net of allowance) - - - - 215,849
Interest 324 - 15,756 3,502 151,830
Intergovernmental receivables - - - - 1,978,229
Restricted cash and investments with fiscal agent - - - - 1,627,225
Prepaid items - - - - 60,649
Total assets $ 109,235 $ 24,108,309 $ 5,311,608 $ 1,180,566 $ 86,887,342
Liabilities, Deferred Inflows of Resources
and Fund Balances
Liabilities:
Accounts payable $ 21,501 $ 613,473 $ - $ 4,900 $ 5,971,727
Accrued payroll - - - - 1,513
Unearned revenue - - - - 1,264,693
Due to other funds - - - - 107,258
Total liabilities 21,501 613,473 - 4,900 7,345,191
Deferred inflows of resources:
Unavailable revenue - - - - 1,167,620
Fund balances (deficits):
Nonspendable:
Prepaid items - - - - 60,649
Permanent endowment - - 3,857,000 772,781 4,629,781 Restricted - - 1,454,608 402,885 35,531,573
Committed 87,734 23,494,836 - - 38,271,899
Unassigned - - - - (119,371)
Total fund balances (deficits) 87,734 23,494,836 5,311,608 1,175,666 78,374,531
Total liabilities, deferred inflows of resources
and fund balances $ 109,235 $ 24,108,309 $ 5,311,608 $ 1,180,566 $ 86,887,342
Capital Projects Permanent Fund
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Balance Sheet
June 30, 2022
Page 7 of 7
174
State SB1 Gas Tax Asset OTS
Gas Tax RMRA Forfeiture DUI Grant
Revenues:
Other taxes -$ -$ -$ -$
Intergovernmental 2,030,920 1,725,818 187,285 205,750
Licenses, permits and fees - - - -
Investment income 38,595 11,182 5,656 -
Net decrease in fair value of investments (38,595) (11,182) (14,078) -
Donations - - - - Special assessments - - - -
Other - - - -
Total revenues 2,030,920 1,725,818 178,863 205,750
Expenditures:
Current:
Public safety - - 182,745 205,750
Public works - - - -
Community development - - - -
Capital outlay 2,496,486 9,972 - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 2,496,486 9,972 182,745 205,750
Excess (deficiency) of revenues
over expenditures (465,566) 1,715,846 (3,882) -
Other financing sources (uses):
Transfers in - - - - Transfers out - - - -
Total other financing sources (uses)- - - -
Net change in fund balances (465,566) 1,715,846 (3,882) -
Fund balances (deficits), beginning 2,915,779 417,166 537,677 -
Fund balances (deficits), ending 2,450,213$ 2,133,012$ 533,795$ -$
(continued)
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2022
Special Revenue
Page 1 of 7
175
Circulation Building Community Air Quality
and Excise Development Management
Transportation Tax Block Grant District
Revenues:
Other taxes -$ -$ -$ -$
Intergovernmental - - 291,807 109,607
Licenses, permits and fees 235,010 199,098 - -
Investment income 35,268 4,616 - 14,282
Net decrease in fair value of investments (123,676) (15,851) - (14,282)
Donations - - - -
Special assessments - - - -
Other - - - -
Total revenues 146,602 187,863 291,807 109,607
Expenditures:
Current:
Public safety - - - -
Public works - - - -
Community development - - 208,791 -
Capital outlay - 288,050 - 10,000
Debt service:
Principal - - 195,000 -
Interest and fiscal charges - - 7,387 -
Total expenditures - 288,050 411,178 10,000
Excess (deficiency) of revenues
over expenditures 146,602 (100,187) (119,371) 99,607
Other financing sources (uses):
Transfers in - - - 69,812 Transfers out - - - -
Total other financing sources (uses) - - - 69,812
Net change in fund balances 146,602 (100,187) (119,371) 169,419
Fund balances (deficits), beginning 3,033,660 394,023 - 1,254,399
Fund balances (deficits), ending 3,180,262$ 293,836$ (119,371)$ 1,423,818$
(continued)
CITY OF NEWPORT BEACH
Other Governmental Funds
Special Revenue
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2022
Page 2 of 7
176
Supplemental
Environmental Law
Liability Enforcement Contributions FIIN
Revenues:
Other taxes 823,732$ -$ -$ -$
Intergovernmental - 211,400 5,774,197 -
Licenses, permits and fees - - - -
Investment income 95,417 - 14,399 14,711
Net decrease in fair value of investments (331,447) - (47,059) (50,975)
Donations - - 66,992 - Special assessments - - - -
Other 66,593 - 156,207 -
Total revenues 654,295 211,400 5,964,736 (36,264)
Expenditures:
Current:
Public safety - 211,400 - -
Public works 636,347 - - -
Community development - - - -
Capital outlay - - 6,533,444 -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 636,347 211,400 6,533,444 -
Excess (deficiency) of revenues
over expenditures 17,948 - (568,708) (36,264)
Other financing sources (uses):
Transfers in - - - - Transfers out - - - -
Total other financing sources (uses) - - - -
Net change in fund balances 17,948 - (568,708) (36,264)
Fund balances (deficits), beginning 8,581,121 - 741,334 1,335,109
Fund balances (deficits), ending 8,599,069$ -$ 172,626$ 1,298,845$
(continued)
CITY OF NEWPORT BEACH
Other Governmental Funds
Special Revenue
Page 3 of 7
For the Year Ended June 30, 2022
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
177
Restricted Oceanfront PEG
Programs Measure M Encroachment Fees
Revenues:
Other taxes -$ -$ -$ -$
Intergovernmental - 2,378,931 - -
Licenses, permits and fees - - - -
Investment income - 43,793 - -
Net decrease in fair value of investments - (43,793) - -
Donations - - - -
Special assessments - - - -
Other - - - -
Total revenues - 2,378,931 - -
Expenditures:
Current:
Public safety - - - -
Public works - - - -
Community development - - - -
Capital outlay - 2,771,875 - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures - 2,771,875 - -
Excess (deficiency) of revenues
over expenditures - (392,944) - -
Other financing sources (uses):
Transfers in 1,737,821 - 1,162,791 2,781,571 Transfers out - - - -
Total other financing sources (uses)1,737,821 - 1,162,791 2,781,571
Net change in fund balances 1,737,821 (392,944) 1,162,791 2,781,571
Fund balances (deficits), beginning - 2,588,206 - -
Fund balances (deficits), ending 1,737,821$ 2,195,262$ 1,162,791$ 2,781,571$
(continued)
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
Other Governmental Funds
For the Year Ended June 30, 2022
CITY OF NEWPORT BEACH
Page 4 of 7
Special Revenue
178
Newport
Assessment Civic Center Uptown
District Fire Station and Park Undergrounding
Revenues:
Other taxes -$ -$ -$ -$
Intergovernmental - - - -
Licenses, permits and fees - - - -
Investment income 55,955 32,874 4,927 36
Net decrease in fair value of investments (193,132) (63,734) (17,068) (126)
Donations - - - -
Special assessments 8,086,594 - - -
Other 49,949 - - -
Total revenues 7,999,366 (30,860) (12,141) (90)
Expenditures:
Current:
Public safety - - - -
Public works 6,637,176 - - -
Community development - - - -
Capital outlay - 5,352,887 - -
Debt service:
Principal - - - -
Interest and fiscal charges - - 1,681 -
Total expenditures 6,637,176 5,352,887 1,681 -
Excess (deficiency) of revenues
over expenditures 1,362,190 (5,383,747) (13,822) (90)
Other financing sources (uses):
Transfers in 830,300 - - - Transfers out - - - -
Total other financing sources (uses) 830,300 - - -
Net change in fund balances 2,192,490 (5,383,747) (13,822) (90)
Fund balances (deficits), beginning 2,854,688 7,996,835 497,985 3,307
Fund balances (deficits), ending 5,047,178$ 2,613,088$ 484,163$ 3,217$
(continued)
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2022
CITY OF NEWPORT BEACH
Other Governmental Funds
Capital Projects
Page 5 of 7
179
Balboa Village
Parks and Parking
Community Management Facilities Neighborhood
Centers District Maintenance Enhancement
Revenues:
Other taxes -$ -$ -$ -$
Intergovernmental 311 - - -
Licenses, permits and fees - - - -
Investment income 95,418 11,717 36,633 29,789
Net decrease in fair value of investments (323,553) (36,865) (120,788) (97,866)
Donations - - - -
Special assessments - - - -
Other - - - -
Total revenues (227,824) (25,148) (84,155) (68,077)
Expenditures:
Current:
Public safety - - - -
Public works - - - -
Community development - - - -
Capital outlay 773,311 932,060 920,548 1,560,526
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 773,311 932,060 920,548 1,560,526
Excess (deficiency) of revenues
over expenditures (1,001,135) (957,208) (1,004,703) (1,628,603)
Other financing sources (uses):
Transfers in 4,013,862 - 1,500,000 - Transfers out - - - -
Total other financing sources (uses) 4,013,862 - 1,500,000 -
Net change in fund balances 3,012,727 (957,208) 495,297 (1,628,603)
Fund balances (deficits), beginning 4,671,906 1,386,272 2,222,106 3,110,994
Fund balances (deficits), ending 7,684,633$ 429,064$ 2,717,403$ 1,482,391$
(continued)
CITY OF NEWPORT BEACH
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2022
Capital Projects
Page 6 of 7
180
Total
Unrestricted Other
Junior Capital Ackerman Governmental
Lifeguards Improvements Bay Dredging Donation Funds
Revenues:
Other taxes -$ -$ -$ -$ 823,732$
Intergovernmental - - - - 12,916,026
Licenses, permits and fees - - - - 434,108
Investment income 2,765 - 60,160 13,372 621,565
Net decrease in fair value of investments (8,159) - (208,463) (46,334) (1,807,026)
Donations - - - - 66,992
Special assessments - - - - 8,086,594
Other - - - - 272,749
Total revenues (5,394) - (148,303) (32,962) 21,414,740
Expenditures:
Current:
Public safety - - - - 599,895
Public works - - - - 7,273,523
Community development - - - 4,900 213,691
Capital outlay 240,210 4,736,378 - - 26,625,747
Debt service:
Principal - - - - 195,000
Interest and fiscal charges - - - - 9,068
Total expenditures 240,210 4,736,378 - 4,900 34,916,924
Excess (deficiency) of revenues
over expenditures (245,604) (4,736,378) (148,303) (37,862) (13,502,184)
Other financing sources (uses):
Transfers in 469,637 21,301,066 - - 33,866,860 Transfers out - (69,812) - - (69,812)
Total other financing sources (uses) 469,637 21,231,254 - - 33,797,048
Net change in fund balances 224,033 16,494,876 (148,303) (37,862) 20,294,864
Fund balances (deficits), beginning (136,299) 6,999,960 5,459,911 1,213,528 58,079,667
Fund balances (deficits), ending 87,734$ 23,494,836$ 5,311,608$ 1,175,666$ 78,374,531$
CITY OF NEWPORT BEACH
Capital Projects Permanent Funds
Other Governmental Funds
Combining Statement of Revenues,
Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2022
Page 7 of 7
181
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental 2,177,096$ 2,070,412$ 2,030,920$ (39,492)$
Investment income 21,669 21,669 38,595 16,926
Net decrease in fair value of investments - - (38,595) (38,595)
Total revenues 2,198,765 2,092,081 2,030,920 (61,161)
Expenditures:
Capital outlay - 4,063,852 2,496,486 1,567,366
Net change in fund balance 2,198,765 (1,971,771) (465,566) 1,506,205
Fund balance, beginning 2,915,779 2,915,779 2,915,779 -
Fund balance, ending 5,114,544$ 944,008$ 2,450,213$ 1,506,205$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
182
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental 1,703,906$ 1,647,859$ 1,725,818$ 77,959$
Investment income 3,321 3,321 11,182 7,861
Net decrease in fair value of investments - - (11,182) (11,182)
Total revenues 1,707,227 1,651,180 1,725,818 74,638
Expenditures:
Capital outlay - 2,000,000 9,972 1,990,028
Net change in fund balance 1,707,227 (348,820) 1,715,846 2,064,666
Fund balance, beginning 417,166 417,166 417,166 -
Fund balance, ending 2,124,393$ 68,346$ 2,133,012$ 2,064,666$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
SB1 Gas Tax RMRA Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
183
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental -$ -$ 187,285$ 187,285$
Investment income - - 5,656 5,656
Net decrease in fair value of investments - - (14,078) (14,078)
Total revenues - - 178,863 178,863
Expenditures:
Public safety 65,000 233,158 182,745 50,413
Net change in fund balance (65,000) (233,158) (3,882) 229,276
Fund balance, beginning 537,677 537,677 537,677 -
Fund balance, ending 472,677$ 304,519$ 533,795$ 229,276$
Budgeted Amounts
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Asset Forfeiture Special Revenue Fund
For the Year Ended June 30, 2022
184
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental -$ 347,512$ 205,750$ (141,762)$
Expenditures:
Public safety - 347,512 205,750 141,762
Net change in fund balance - - - -
Fund balance, beginning - - - -
Fund balance, ending -$ -$ -$ -$
Budgeted Amounts
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
OTS DUI Grant Special Revenue Fund
For the Year Ended June 30, 2022
185
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Licenses, permits and fees -$ -$ 235,010$ 235,010$
Investment income - - 35,268 35,268
Net decrease in fair value of investments - - (123,676) (123,676)
Total revenues - - 146,602 146,602
Expenditures:
Capital outlay - 359,498 - 359,498
Net change in fund balance - (359,498) 146,602 506,100
Fund balance, beginning 3,033,660 3,033,660 3,033,660 -
Fund balance, ending 3,033,660$ 2,674,162$ 3,180,262$ 506,100$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Circulation and Transportation Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
186
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Licenses, permits and fees 202,950$ 202,950$ 199,098$ (3,852)$
Investment income 3,006 3,006 4,616 1,610
Net decrease in fair value of investments - - (15,851) (15,851)
Total revenues 205,956 205,956 187,863 (18,093)
Expenditures:
Capital outlay - 561,663 288,050 273,613
Net change in fund balance 205,956 (355,707) (100,187) 255,520
Fund balance, beginning 394,023 394,023 394,023 -
Fund balance, ending 599,979$ 38,316$ 293,836$ 255,520$
Budgeted Amounts
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Building Excise Tax Special Revenue Fund
For the Year Ended June 30, 2022
187
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental 359,743$ 1,451,936$ 291,807$ (1,160,129)$
Total revenues 359,743 1,451,936 291,807 (1,160,129)
Expenditures:
Community development 183,586 1,243,859 208,791 1,035,068
Capital outlay - 52,942 - 52,942
Debt service:
Principal 195,000 195,000 195,000 -
Interest and fiscal charges 7,387 7,387 7,387 -
Total expenditures 385,973 1,499,188 411,178 1,088,010
Net change in fund balance (26,230) (47,252) (119,371) (72,119)
Fund balance, beginning - - - -
Fund balance (deficit), ending (26,230)$ (47,252)$ (119,371)$ (72,119)$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
188
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental 100,000$ 100,000$ 109,607$ 9,607$
Investment income 16,734 16,734 14,282 (2,452)
Net decrease in fair value of investments - - (14,282) (14,282)
Total revenues 116,734 116,734 109,607 (7,127)
Expenditures:
Capital outlay - 261,941 10,000 251,941
Excess (deficiency) of revenues
over expenditures 116,734 (145,207) 99,607 244,814
Other financing sources
Transfers in - 69,812 69,812 -
Net change in fund balance 116,734 (75,395) 169,419 244,814
Fund balance, beginning 1,254,399 1,254,399 1,254,399 -
Fund balance, ending 1,371,133$ 1,179,004$ 1,423,818$ 244,814$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
189
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Other taxes 670,563$ 670,563$ 823,732$ 153,169$
Investment income 153,829 153,829 95,417 (58,412)
Net decrease in fair value of investments - - (331,447) (331,447)
Other revenue 40,000 40,000 66,593 26,593
Total revenues 864,392 864,392 654,295 (210,097)
Expenditures:
Public works 639,051 639,592 636,347 3,245
Net change in fund balance 225,341 224,800 17,948 (206,852)
Fund balance, beginning 8,581,121 8,581,121 8,581,121 -
Fund balance, ending 8,806,462$ 8,805,921$ 8,599,069$ (206,852)$
Budgeted Amounts
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Environmental Liability Special Revenue Fund
For the Year Ended June 30, 2022
190
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental 200,000$ 200,000$ 211,400$ 11,400$
Expenditures:
Public safety 200,000 200,000 211,400 (11,400)
Net change in fund balance - - - -
Fund balance, beginning - - - -
Fund balance, ending -$ -$ -$ -$
Budgeted Amounts
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Supplemental Law Enforcement Special Revenue Fund
For the Year Ended June 30, 2022
191
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental 8,067,689$ 10,674,974$ 5,774,197$ (4,900,777)$
Investment income 36,533 36,533 14,399 (22,134)
Net decrease in fair value of investments - - (47,059) (47,059)
Donations - 7,419 66,992 59,573
Other - 198,857 156,207 (42,650)
Total revenues 8,104,222 10,917,783 5,964,736 (4,953,047)
Expenditures:
Capital outlay - 11,687,715 6,533,444 5,154,271
Net change in fund balance 8,104,222 (769,932) (568,708) 201,224
Fund balance, beginning 741,334 741,334 741,334 -
Fund balance, ending 8,845,556$ (28,598)$ 172,626$ 201,224$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Contributions Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
192
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Investment income 23,910$ 23,910$ 14,711$ (9,199)$
Net decrease in fair value of investments - - (50,975) (50,975)
Total revenues 23,910 23,910 (36,264) (60,174)
Expenditures:
Community services 147,000 147,000 - 147,000
Net change in fund balance (123,090) (123,090) (36,264) 86,826
Fund balance, beginning 1,335,109 1,335,109 1,335,109 -
Fund balance, ending 1,212,019$ 1,212,019$ 1,298,845$ 86,826$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
FIIN Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
193
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Other financing sources (uses):
Transfers in -$ 1,737,821$ 1,737,821$ -$
Net change in fund balance - 1,737,821 1,737,821 -
Fund balance, beginning - - - -
Fund balance, ending -$ 1,737,821$ 1,737,821$ -$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Restricted Programs Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
194
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Intergovernmental 5,043,078$ 3,289,950$ 2,378,931$ (911,019)$
Investment income 7,123 7,123 43,793 36,670
Net decrease in fair value of investments - - (43,793) (43,793)
Total revenues 5,050,201 3,297,073 2,378,931 (918,142)
Expenditures:
Capital outlay 3,038,500 5,706,234 2,771,875 2,934,359
Net change in fund balance 2,011,701 (2,409,161) (392,944) 2,016,217
Fund balance, beginning 2,588,206 2,588,206 2,588,206 -
Fund balance, ending 4,599,907$ 179,045$ 2,195,262$ 2,016,217$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Measure M Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
195
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Other financing sources:
Transfers in -$ 1,162,791$ 1,162,791$ -$
Net change in fund balance - 1,162,791 1,162,791 -
Fund balance, beginning - - - -
Fund balance, ending -$ 1,162,791$ 1,162,791$ -$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
Oceanfront Encroachment Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
196
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Other financing sources:
Transfers in -$ 2,781,571$ 2,781,571$ -$
Net change in fund balance - 2,781,571 2,781,571 -
Fund balance, beginning - - - -
Fund balance, ending -$ 2,781,571$ 2,781,571$ -$
CITY OF NEWPORT BEACH
Budgetary Comparison Schedule
PEG Fees Special Revenue Fund
For the Year Ended June 30, 2022
Budgeted Amounts
197
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198
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONSUPPLEMENTARY INFORMATION
INTERNAL SERVICE FUNDS
199
This page left blank intentionally.
200
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 benefits.
The Equipment Maintenance Fund is used to account for the cost of
maintaining and replacing the City’s rolling stock fleet, parking equipment,
coordinated communications system equipment, fire equipment and recreation
equipment.
The Information Technology Fund is used to account for the cost of
maintaining and replacing the City’s computers, printers, copiers and
telecommunication services to other departments.
201
Total
Insurance Compensated Retiree Equipment Information Internal
Assets Reserve Absences Insurance Maintenance Technology Service Funds
Current assets:
Cash and investments $ 38,522,094 $ 5,564,921 $ 1,210,639 $ 14,092,188 $ 9,810,111 $ 69,199,953
Receivables:
Accounts (net of allowance)--6,225 11,014 -17,239
Interest 114,545 15,013 3,072 41,943 28,950 203,523
Inventories ---381,385 -381,385
Prepaid items 11,801 -259,182 1,964,440 329,299 2,564,722
Total current assets 38,648,440 5,579,934 1,479,118 16,490,970 10,168,360 72,366,822
Noncurrent assets:
Capital assets:
Equipment --- 42,089,030 3,442,988 45,532,018
Intangible right to use equipment ----348,272 348,272
Structures ---39,581 -39,581
Software ----3,603,419 3,603,419
Work in progress ----639,243 639,243
Less accumulated depreciation/amortization ---(26,330,020)(6,043,901)(32,373,921)
Total capital assets (net of accumulated
depreciation/amortization)--- 15,798,591 1,990,021 17,788,612
Total assets 38,648,440 5,579,934 1,479,118 32,289,561 12,158,381 90,155,434
Deferred outflows of resources:
Deferred amount from pension plans ---362,551 726,688 1,089,239
Deferred amount from OPEB ---140,200 281,020 421,220
Total deferred outflows of resources ---502,751 1,007,708 1,510,459
Liabilities
Current liabilities:
Accounts payable 558,108 506,354 - 468,398 434,805 1,967,665
Accrued payroll 9,238 -178,128 31,889 79,798 299,053
Due to other funds --353,001 --353,001
Workers' compensation - current 2,930,962 ----2,930,962
General liability - current 2,865,644 ----2,865,644
Compensated absences - current - 4,385,927 --- 4,385,927
Lease liability - current ----66,721 66,721
Total current liabilities 6,363,952 4,892,281 531,129 500,287 581,324 12,868,973
Noncurrent liabilities:
Workers' compensation 12,823,626 ----12,823,626
General liability 5,830,236 ----5,830,236
Compensated absences - 8,391,481 --- 8,391,481
Lease liability 196,714 196,714
Net pension liability --- 1,042,897 2,090,386 3,133,283
Net OPEB liability ---187,694 376,224 563,918
Total noncurrent liabilities 18,653,862 8,391,481 - 1,230,591 2,663,324 30,939,258
Total liabilities 25,017,814 13,283,762 531,129 1,730,878 3,244,648 43,808,231
Deferred inflows of resources:
Deferred amount from pension plans ---695,023 1,393,105 2,088,128
Deferred amount from OPEB ---51,084 102,393 153,477
Total deferred inflows of resources ---746,107 1,495,498 2,241,605
Net Position
Invested in capital assets --- 17,723,541 1,707,406 19,430,947
Unrestricted 13,630,626 (7,703,828)947,989 12,591,786 6,718,537 26,185,110
Total net position $ 13,630,626 $ (7,703,828) $ 947,989 $ 30,315,327 $ 8,425,943 $ 45,616,057
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Net Position
June 30, 2022
202
Total
Insurance Compensated Retiree Equipment Information Internal
Reserve Absences Insurance Maintenance Technology Service Funds
Operating revenues:
Charges for services $ 8,961,000 $ 2,713,271 $ 4,940,367 $ 7,414,613 $ 7,307,210 $ 31,336,461
Employee contributions --40,451 --40,451
Other 459,706 --251,068 169 710,943
Total operating revenues 9,420,706 2,713,271 4,980,818 7,665,681 7,307,379 32,087,855
Operating expenses:
Salaries and wages --165 750,679 1,906,977 2,657,821
Depreciation/amortization --- 3,342,645 351,935 3,694,580
Professional services ---36,240 375,361 411,601
Maintenance and supplies --- 1,495,256 1,819,339 3,314,595
Fleet parts and supplies ---572,898 -572,898
Telecommunication ----216,006 216,006
Hardware ----336,181 336,181
Software ----233,186 233,186
Workers' compensation 4,213,387 ---- 4,213,387
Claims and judgments 5,957,756 ---- 5,957,756
Compensated absences - 2,058,475 --- 2,058,475
OPEB -- 4,499,498 -- 4,499,498
Other --20,637 --20,637
Total operating expenses 10,171,143 2,058,475 4,520,300 6,197,718 5,238,985 28,186,621
Operating income (loss)(750,437)654,796 460,518 1,467,963 2,068,394 3,901,234
Nonoperating revenues: Investment income 402,869 60,058 12,391 153,487 103,430 732,235 Net decrease in fair value of investments (1,432,870)(206,360)(44,451)(544,611)(368,331)(2,596,623) Gain on sale of capital assets - - - 290,940 - 290,940 Interest expense ----(620)(620)
Total nonoperating revenues (1,030,001) (146,302)(32,060) (100,184) (265,521) (1,574,068)
Income (loss) before transfers (1,780,438)508,494 428,458 1,367,779 1,802,873 2,327,166
Transfer out - - -(472,403)(812,227)(1,284,630)
Change in net position (1,780,438)508,494 428,458 895,376 990,646 1,042,536
Net position, beginning 15,411,064 (8,212,322)519,531 29,419,951 7,435,297 44,573,521
Net position, ending $ 13,630,626 $ (7,703,828) $ 947,989 $ 30,315,327 $ 8,425,943 $ 45,616,057
CITY OF NEWPORT BEACH
Internal Service Funds
Combining Statement of Revenues, Expenses
and Changes in Net Position
For the Year Ended June 30, 2022
203
TotalInsurance Compensated Retiree Equipment Information InternalReserve Absences Insurance Maintenance Technology Service Funds
Cash flows from operating activitiesReceipts from user departments $ 9,980,942 2,713,271$ $ 4,940,518 $ 7,592,640 $ 7,307,210 $ 32,534,581 Payments to employees (3,231,520)(2,761,452)-(1,108,538)(2,621,638)(9,723,148)
Payments to suppliers (6,441,496)-(4,511,012)(323,683)(2,484,162)(13,760,353)
Other operating cash receipts 459,706 -40,451 251,068 169 751,394
Net cash provided (used) by operating activities 767,632 (48,181)469,957 6,411,487 2,201,579 9,802,474
Cash flows from noncapital financing activities:
Cash received from other funds - - 165 - - 165 Cash paid to other funds - - - (472,403) (812,227) (1,284,630)
Net cash provided (used) by noncapital financing activities --165 (472,403)(812,227)(1,284,465)
Cash flows from capital and related financing activities:Acquisition of capital assets ---(4,654,689)(370,174)(5,024,863)
Lease liabilities and related - - - -(33,041)(33,041)
Proceeds from sale of capital assets ---290,940 -290,940
Net cash (used) for capital and related financing activities ---(4,363,749)(403,215)(4,766,964)
Cash flows from investing activities:
Investment (loss)(1,030,165)(145,584)(33,307)(394,630)(266,983)(1,870,669)
Net cash (used) by investing activities (1,030,165)(145,584)(33,307)(394,630)(266,983)(1,870,669)
Net increase (decrease) in cash and cash equivalents (262,533)(193,765)436,815 1,180,705 719,154 1,880,376
Cash and cash equivalents, beginning 38,784,627 5,758,686 773,824 12,911,483 9,090,957 67,319,577
Cash and cash equivalents, ending $ 38,522,094 $ 5,564,921 1,210,639$ 14,092,188$ 9,810,111$ 69,199,953$
Reconciliation to the statement of net position: Cash and investments reported on statement of net position 38,522,094$ 5,564,921$ 1,210,639$ 14,092,188$ 9,810,111$ 69,199,953$
Cash and cash equivalents 38,522,094$ 5,564,921$ 1,210,639$ 14,092,188$ 9,810,111$ 69,199,953$
Reconciliation of operating income (loss) to net cash
provided by operating activities:
Operating income (loss) $ (750,437) $ 654,796 $ 460,518 $ 1,467,963 $ 2,068,394 $ 3,901,234
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities: Depreciation -- -3,342,645 351,935 3,694,580 Changes in operating assets and liabilities:
Decrease in accounts receivable 1,019,942 -151 178,027 - 1,198,120
Decrease in inventories - - - 66,070 -66,070
(Increase) decrease in prepaid items 52,663 -(5,987)1,629,343 128,398 1,804,417
Increase (decrease) in accounts payable and accrued payroll (986,369)32,622 15,275 89,095 377,758 (471,619) Increase in workers' compensation 1,001,588 ----1,001,588 Increase in general liability 430,245 ----430,245
(Decrease) in compensated absences -(735,599)---(735,599)
(Decrease) in net pension liability and deferred cash flows --- (324,477) (650,383) (974,860)
(Decrease) in net OPEB liability and deferred cash flows --(37,179)(74,523)(111,702)
Total adjustments 1,518,069 (702,977)9,439 4,943,524 133,185 5,901,240
Net cash provided (used) by operating activities $ 767,632 $ (48,181) $ 469,957 $ 6,411,487 $ 2,201,579 $ 9,802,474
Noncash investing, capital, and financing activities: Net (decrease) in fair value of investments $ (1,432,870) $ (206,360) $ (44,451) $ (544,611) $ (368,331) $ (2,596,623)
Obtaining an intangible right to use lease asset --- (295,856) (295,856)
Total of noncash activities $ (1,432,870) $ (206,360) $ (44,451) $ (544,611) $ (664,187) $ (2,892,479)
CITY OF NEWPORT BEACH
Combining Statement of Cash Flows
For the Year Ended June 30, 2022
Internal Service Funds
204
FINANCIAL SECTION
FINANCIAL SECTIONFINANCIAL SECTIONSUPPLEMENTARY INFORMATION
FIDUCIARY FUNDS
205
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 and 1915 Act
special assessment bonds.
The Tourism Business Improvement Fund is used to account for the Newport
Beach Tourism Business Improvement District’s special assessment on short
term room rental revenue collected by the City for Visit Newport Beach Inc.
The Other Business Improvement Fund is used to account for monies
collected from local business districts for district property improvements and
business enhancement.
The Police Custodial Fund is used to account for monies received by the City’s
police department in a custodial capacity, such as warrants and items pending
adjudication.
206
Custodial Funds
Special Tourism Other Total
Assessment Business Business Police Custodial
District Improvement Improvement Custodial Funds
Assets
Cash and investments 32,241$ 372,792$ 9,789$ 260,613$ 675,435$
Restricted cash and investments with fiscal agent 2,288,581 - - - 2,288,581
Receivable:
Interest 537 - - - 537
Intergovernmental receivable 21,046 - - - 21,046
Total assets 2,342,405 372,792 9,789 260,613 2,985,599
Liabilities
Due to others 464 372,792 9,789 646 383,691
Total liabilities 464 372,792 9,789 646 383,691
Net Position
Restricted for:
Individuals, organizations, and other governments 2,341,941 - - 259,967 2,601,908
Total net position 2,341,941$ -$ -$ 259,967$ 2,601,908$
CITY OF NEWPORT BEACH
Fiduciary Funds
Combining Statement of Fiduciary Net Position
June 30, 2022
207
Custodial Funds
Special Tourism Other Total
Assessment Business Business Police Custodial
District Improvement Improvement Custodial Funds
Additions
Special assessments 1,664,084$ -$ -$ -$ 1,664,084$
Investment earnings 991 - - 29 1,020
Other 153,604 - - 60,939 214,543
Total additions 1,818,679 - - 60,968 1,879,647
Deductions
Debt service 1,276,605 - - - 1,276,605
Administrative 66,942 - - - 66,942
Other - - - 71,759 71,759
Total deductions 1,343,547 - - 71,759 1,415,306
Net increase (decrease) in fiduciary net position 475,132 - - (10,791) 464,341
Net position, beginning of year 1,866,809 - - 270,758 2,137,567
Net position, end of year 2,341,941$ -$ -$ 259,967$ 2,601,908$
CITY OF NEWPORT BEACH
Fiduciary Funds
Combining Statement of Changes in Fiduciary Net Position
For the Year Ended June 30, 2022
208
STATISTICAL SECTIONSTATISTICAL SECTION
209
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210
FINANCIAL TRENDS
This section of the City of Newport Beach’s Annual Comprehensive Financial Report (ACFR) 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 have changed over time:
• Net Position by Component
• Changes in Net Position
• 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 Annual Comprehensive Financial Reports and underlying accounting records for the relevant years.
211
2013 20141 20152 20163
Net investment in capital assets 2,124,797,794$ 2,148,942,928$ 2,176,644,408$ 2,193,773,102$
Restricted 72,119,674 59,998,344 45,689,702 44,033,677
Unrestricted 77,966,414 (184,990,765) (150,532,773) (130,468,268)
2,274,883,882$ 2,023,950,507$ 2,071,801,337$ 2,107,338,511$
Business-type activities:
Net investment in capital assets 111,177,135$ 115,948,522$ 113,914,514$ 117,055,576$
Unrestricted 19,172,398 13,160,611 21,756,124 23,430,189
130,349,533$ 129,109,133$ 135,670,638$ 140,485,765$
Primary government:
Net investment in capital assets 2,235,974,929$ 2,264,891,450$ 2,290,558,922$ 2,310,828,678$
Restricted 72,119,674 59,998,344 45,689,702 44,033,677
Unrestricted 97,138,812 (171,830,154) (128,776,649) (107,038,079)
2,405,233,415$ 2,153,059,640$ 2,207,471,975$ 2,247,824,276$
1
2
3
4
5
6
The City of Newport Beach implemented GASB 63 and GASB 65 for the fiscal year ended June 30, 2013.
The City of Newport Beach implemented GASB 68 for the fiscal year ended June 30, 2015.
The City of Newport Beach implemented GASB 75 for the fiscal year ended June 30, 2018.
The City of Newport Beach implemented GASB 87 for the fiscal year ended June 30, 2022.
Governmental activities:
Total governmental activities
Total business-type activities
Total primary government
Reflects restatement of net position due to the implementation of GASB 68 in fiscal year ended June 30, 2015 and an
adjustment to record deferred amount from gain on refunding.
Reflects restatement of net position due to compensated absences and deferred outflow adjustments related to fiscal
year ended June 30, 2016.
Reflects restatement of net position due to deferred outflow adjustments related to fiscal year ended June 30, 2017.
Reflects restatement of net position due to implementation of GASB 75 in fiscal year ended June 30, 2018.
Reflects restatement of net position due to adjustments for capital assets and compensated absences liability in fiscal
year ended June 30, 2019.
Fiscal Year
2022 data varies from trend due to receipt of revenues such as property taxes and sales taxes that were not spent or
restricted by the end of the fiscal year.
CITY OF NEWPORT BEACH
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
212
20174 20185 2019 2020 2021 2022
2,201,552,683$ 2,208,832,391$ 2,218,040,304$ 2,217,852,660$ 2,227,572,605$ 2,223,773,786$
45,753,736 49,791,908 56,426,811 67,708,225 67,189,020 78,100,496
(133,461,197) (122,024,754) (102,035,181) (90,214,086) (72,301,558) (8,183,288)
2,113,845,222$ 2,136,599,545$ 2,172,431,934$ 2,195,346,799$ 2,222,460,067$ 2,293,690,994$
116,238,944$ 119,375,596$ 119,346,350$ 120,291,689$ 124,775,772$ 128,244,924$
28,890,311 29,183,382 30,331,669 30,276,662 27,039,499 28,559,633
145,129,255$ 148,558,978$ 149,678,019$ 150,568,351$ 151,815,271$ 156,804,557$
2,317,791,627$ 2,328,207,987$ 2,337,386,654$ 2,338,144,349$ 2,352,348,377$ 2,352,018,710$
45,753,736 49,791,908 56,426,811 67,708,225 67,189,020 78,100,496
(104,570,886) (92,841,372) (71,703,512) (59,937,424) (45,262,059) 20,376,345 6
2,258,974,477$ 2,285,158,523$ 2,322,109,953$ 2,345,915,150$ 2,374,275,338$ 2,450,495,551$
Fiscal Year
CITY OF NEWPORT BEACH
Net Position by Component
Last Ten Fiscal Years
(accrual basis of accounting)
213
2013 2014 2015 2016
15,830,575$ 18,834,165$ 24,558,041$ 19,335,275$
83,235,188 87,676,062 96,945,872 91,046,455
47,794,631 42,953,118 45,774,939 45,443,988
9,223,098 10,283,481 10,073,248 9,943,868
22,244,661 21,357,271 22,418,287 22,700,052
7,989,339 7,888,192 7,711,334 7,615,094
Total governmental activities expenses 186,317,492 188,992,289 207,481,721 196,084,732
20,208,300 22,037,284 21,175,954 21,605,197
3,462,165 3,368,656 3,452,398 3,818,165
Total business-type activities expenses 23,670,465 25,405,940 24,628,352 25,423,362
Total primary government expenses 209,987,957 214,398,229 232,110,073 221,508,094
General government 2,759,306 3,046,232 3,647,210 3,722,557
Public safety 16,008,421 19,124,113 19,386,017 19,108,222
Public works 5,019,835 5,517,103 5,276,991 5,319,510
Community development 7,057,010 8,043,390 8,608,645 8,419,588
Community services 13,176,050 13,270,316 13,667,775 13,964,018
Operating grants and contributions:11,290,989 15,196,696 10,673,286 17,826,914
Capital grants and contributions:25,613,846 1 563,786 38,157,665 2 2,717,504
80,925,457 64,761,636 99,417,589 71,078,313
Water 26,795,767 29,397,882 27,705,129 24,499,952
Wastewater 3,450,638 3,438,670 3,326,362 3,065,762
Operating grants and contributions: - - - -
30,246,405 32,836,552 31,031,491 27,565,714
111,171,862 97,598,188 130,449,080 98,644,027
(105,392,035) (124,230,653) (108,064,132) (125,006,419)
6,575,940 7,430,612 6,403,139 2,142,352
(98,816,095)$ (116,800,041)$ (101,660,993)$ (122,864,067)$
General revenues and other changes in net position:
Property tax 81,603,194$ 79,889,346$ 84,121,461$ 91,516,611$
Sales tax 20,764,204 23,142,065 24,832,412 33,937,986
Sales tax in-lieu 7,078,517 7,727,876 8,046,424 2,870,474
Transient occupancy tax 16,500,285 18,176,369 20,369,158 21,083,199
Business license tax 4,145,666 4,156,130 4,141,282 4,024,386
Franchise tax 3,820,723 3,998,943 4,189,130 4,047,584
Other taxes 286,880 216,604 354,919 327,009
Investment income 219,091 542,915 437,272 584,259
Net increase (decrease) in fair value of investments - 53,783 61,337 376,311
Other 2,748,524 3,803,728 3,161,567 4,001,486
Capital contributions 319,884 - - -
Transfers - - - -
137,486,968 141,707,759 149,714,962 162,769,305
Investment income 22,442 128,439 123,445 216,576
Net increase (decrease) in fair value of investments - 18,199 34,921 148,527
Other - - - 2,375,000
Capital contributions (319,884) - - 22,516
Transfers - - - -
(297,442) 146,638 158,366 2,762,619
137,189,526 141,854,397 149,873,328 165,531,924
32,094,933 17,477,106 41,650,830 37,762,886
6,278,498 7,577,250 6,561,505 4,904,971
38,373,431$ 25,054,356$ 48,212,335$ 42,667,857$
1 2013 data varies from trend because of increased capital assets related to contribution from State of California.
2 Data varies from trend because of one-time receipt of developer contributions.
Interest on long-term debt
Expenses:
Governmental activities:
General government
Public safety
Public works
Community development
Community services
Total governmental activities program revenues
Business-type activities:
Charges for services:
Total business-type activities program revenues
Business-type activities:
Water
Wastewater
Program revenues:
Governmental activities:
Charges for services:
Total primary government program revenues
Net revenues (expenses):
Governmental activities
Business-type activities
Total net revenues (expenses)
Changes in net position
Governmental activities
Business-type activities
Total primary government
Governmental activities:
Taxes:
Total governmental activities
Business-type activities:
Total business-type activities
Total primary government
CITY OF NEWPORT BEACH
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
214
2017 2018 2019 2020 2021 2022
20,443,569$ 19,011,099$ 20,549,224$ 20,714,050$ 20,177,482$ 19,374,179$
102,494,314 107,647,562 111,556,065 119,194,302 119,184,958 104,767,466
54,039,601 47,615,000 53,339,878 60,054,860 63,689,155 65,031,715
12,056,086 12,377,394 11,493,204 12,842,020 12,157,226 9,664,500
26,583,440 27,307,115 27,758,097 26,668,079 28,214,205 24,508,702
7,472,188 7,381,743 7,187,971 7,064,521 7,321,612 6,877,577
223,089,198 221,339,913 231,884,439 246,537,832 250,744,638 230,224,139
22,004,013 23,724,918 26,898,075 27,387,120 28,943,243 27,117,471
4,218,926 4,158,155 4,222,228 4,291,755 5,223,245 4,094,448
26,222,939 27,883,073 31,120,303 31,678,875 34,166,488 31,211,919
249,312,137 249,222,986 263,004,742 278,216,707 284,911,126 261,436,058
5,089,123 5,355,887 5,887,265 3,846,962 2,914,007 3,625,809
19,899,242 20,733,883 21,979,376 22,232,248 22,038,904 23,156,703
5,214,426 5,789,579 5,778,441 5,054,694 5,067,478 7,538,103
10,838,114 9,956,226 9,902,445 9,599,848 10,491,970 11,119,757
13,653,466 13,974,329 13,556,360 16,936,285 17,601,288 22,302,788
11,632,188 11,943,941 14,021,506 14,659,016 20,361,620 16,800,039
27,993,317 2 1,815,464 6,638,356 7,352,407 7,658,387 8,693,429
94,319,876 69,569,309 77,763,749 79,681,460 86,133,654 93,236,628
25,371,307 26,931,193 26,843,751 27,100,429 30,739,726 32,104,202
3,161,114 3,445,772 4,069,265 4,110,815 4,618,186 4,825,249
- - - - - 116,629
28,532,421 30,376,965 30,913,016 31,211,244 35,357,912 37,046,080
122,852,297 99,946,274 108,676,765 110,892,704 121,491,566 130,282,708
(128,769,322) (151,770,604) (154,120,690) (166,856,372) (164,610,984) (136,987,511)
2,309,482 2,493,892 (207,287) (467,631) 1,191,424 5,834,161
(126,459,840)$ (149,276,712)$ (154,327,977)$ (167,324,003)$ (163,419,560)$ (131,153,350)$
96,964,060$ 101,593,290$ 108,365,261$ 113,313,535$ 119,157,057$ 124,335,985$
33,702,895 36,373,253 37,168,063 36,232,969 38,956,275 46,164,860
- - - - - -
22,382,361 22,857,737 24,697,446 21,097,384 16,886,197 26,677,331
4,149,016 4,282,935 4,428,440 4,882,419 4,481,349 4,363,145
4,026,005 4,228,469 4,286,496 4,394,156 4,204,224 4,561,278
358,209 3,346,987 2,633,720 2,592,369 4,166,549 4,333,071
589,001 632,808 2,644,319 2,621,488 2,603,982 1,995,214
- - 2,234,249 2,520,033 (2,086,189) (6,856,640)
2,290,482 3,416,348 3,495,085 2,116,884 3,354,808 2,644,194
- - - - - -
(3,500,000) - - - - -
160,962,029 176,731,827 189,953,079 189,771,237 191,724,252 208,218,438
77,752 184,906 713,970 732,099 525,295 345,218
- - 612,358 625,864 (469,799) (1,190,093)
- - - - - -
- - - - - -
3,500,000 - - - - -
3,577,752 184,906 1,326,328 1,357,963 55,496 (844,875)
164,539,781 176,916,733 191,279,407 191,129,200 191,779,748 207,373,563
32,192,707 24,961,223 35,832,389 22,914,865 27,113,268 71,230,927
5,887,234 2,678,798 1,119,041 890,332 1,246,920 4,989,286
38,079,941$ 27,640,021$ 36,951,430$ 23,805,197$ 28,360,188$ 76,220,213$
CITY OF NEWPORT BEACH
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting)
Fiscal Year
215
2013 2014 2015 2016
General fund:
Nonspendable 9,919,486$ 16,316,499$ 15,784,396$ 15,210,896$
Restricted 2,410,373 3,939,751 5,389,810 3,083,133
Committed 29,371,507 12,782,235 1 11,847,852 2,726,020 2
Assigned 6,843,417 1,326,170 1,421,225 4,201,311
Unassigned 32,585,375 51,015,820 1 55,509,258 56,618,041
Total general fund 81,130,158$ 85,380,475$ 89,952,541$ 81,839,401$ 2
All other governmental funds:
Nonspendable 4,697,220$ 4,629,781$ 4,669,269$ 4,629,781$
Restricted 27,433,342 33,243,790 29,842,384 33,662,859
Committed 33,961,163 19,513,389 26,159,261 40,248,977
Unassigned (15,723,261) (14,291,969) (12,495,729) (15,422,984)
Total all other governmental funds 50,368,464$ 43,094,991$ 48,175,185$ 63,118,633$
Total all governmental funds 131,498,622$ 128,475,466$ 138,127,726$ 144,958,034$
1
2
3
4
5
6
Fiscal Year
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Data varies from trend due to the reclassification of the contingency reserve from committed fund balance to
unassigned fund balance per council approval.
Data varies from trend due to the moving of general fund capital projects to a separate capital project fund.
Data varies from trend due to additional funds set aside for seawall construction and pension related items.
Data varies from trend due to the relocation of restricted funds to special revenue funds.
Data varies from trend due to the City's absence of fund balance not restricted or committed to be used for
specific purposes in fiscal year ended June 30, 2022.
Data varies from trend due to additional funds set aside mainly in the Facilities Financial Planning Reserve
Fund and Unrestricted Capital Improvements Fund.
216
2017 2018 2019 2020 2021 2022
14,434,017$ 14,050,930$ 13,147,221$ 11,864,115$ 10,637,097$ 9,407,143$
3,797,009 4,412,302 4,757,437 5,710,434 4,876,025 - 4
10,570,638 3 13,444,487 13,335,675 2,210,811 3,235,746 4,429,573
567,132 590,368 1,199,682 2,598,828 1,489,350 - 5
60,009,244 61,415,049 64,146,123 76,699,284 85,715,180 83,302,665
89,378,040$ 3 93,913,136$ 96,586,138$ 99,083,472$ 105,953,398$ 97,139,381$
4,666,256$ 4,787,243$ 4,715,545$ 4,646,529$ 4,707,330$ 4,690,430$
31,950,139 38,629,419 45,958,167 53,310,518 63,914,627 73,013,208
49,510,047 41,731,742 40,732,124 48,032,259 47,863,154 73,243,534 6
(6,308,331) (376,162) (253) (50,137) (136,299) (119,371)
79,818,111$ 84,772,242$ 91,405,583$ 105,939,169$ 116,348,812$ 150,827,801$
169,196,151$ 178,685,378$ 187,991,721$ 205,022,641$ 222,302,210$ 247,967,182$
Fiscal Year
CITY OF NEWPORT BEACH
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
$‐
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Fund Balances
Total General Fund
Total all other Governmental Funds
217
2013 2014 2015 2016
Revenues:
Taxes 134,733,550$ 137,910,879$ 146,664,903$ 158,386,385$
Intergovernmental 11,393,589 16,825,839 11,813,208 17,262,147
Licenses, permits and fees 7,682,555 6,659,203 14,676,754 6,571,123
Charges for services 16,254,399 16,864,092 16,914,210 18,827,991
Fines and forfeitures 3,649,532 3,272,951 3,732,405 3,684,602
Investment income 372,514 1,136,062 928,729 1,157,539
Net increase (decrease) in fair value of investments - 124,439 177,485 769,460
Property income 19,847,371 22,214,256 21,406,667 22,259,425
Donations 587,445 1,170,171 22,249,427 4,190,822
Special assessments - - - -
Other 3,543,894 1,400,048 6,984,418 2,982,924
Total revenues 198,064,849 207,577,940 245,548,206 236,092,418
Expenditures:
Current:
General government 13,671,480 14,471,167 14,060,512 14,629,672
Public safety 80,546,969 82,642,988 94,568,122 96,225,784
Public works 32,451,624 32,414,457 33,694,578 36,000,905
Community development 8,994,710 9,768,928 9,876,706 10,913,205
Community services 18,872,022 19,047,813 20,235,546 21,784,680
Capital outlay 72,133,582 33,572,193 47,169,671 31,934,463
Debt service:
Principal 3,998,000 4,091,000 4,183,000 4,272,000
Interest and fiscal charges 8,152,488 8,052,927 7,957,811 7,839,341
Total expenditures 238,820,875 204,061,473 231,745,946 223,600,050
(40,756,026)3,516,467 13,802,260 12,492,368
Other financing sources (uses):
Transfers in 47,875,107 41,223,727 53,281,956 48,523,132
Transfers out (50,926,922)(47,245,283)(57,431,956)(54,185,192)
Proceeds from sale - - - -
Certificates of participation issued - - - -
Premium on certificates of participation issued - - - -
Proceeds from loan issuance - - 1,339,000 -
Payment to refunded loan escrow agent - - (1,339,000) -
(3,051,815)(6,021,556)(4,150,000)(5,662,060)
Net change in fund balances (43,807,841)$ (2,505,089)$ 9,652,260$ 6,830,308$
Debt service as a percentage of
15.8%6.9%6.6%7.2% noncapital expenditures
Excess (deficiency) of revenues over (under) expenditures
Total other financing sources (uses)
Fiscal Year
CITY OF NEWPORT BEACH
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
218
2017 2018 2019 2020 2021 2022
162,184,218$ 171,982,240$ 183,455,182$ 182,983,069$ 188,351,057$ 211,259,402$
17,073,653 16,148,754 15,818,543 12,672,931 22,233,872 19,683,307
9,844,908 6,405,668 6,302,603 5,783,862 6,566,555 6,995,700
19,197,065 19,828,786 19,472,866 21,125,622 18,434,439 22,897,475
3,590,700 3,181,823 3,347,714 3,509,883 3,923,726 4,191,518
772,546 1,143,210 3,490,992 3,765,753 3,201,376 2,756,712
- - 2,938,136 3,477,299 (2,634,682) (8,900,762)
23,553,188 25,430,217 26,674,107 25,651,360 28,842,374 33,770,750
16,827,889 414,123 402,709 795,561 5,491,871 1,805,249
- - - - - 8,086,594
2,277,322 2,893,770 5,173,716 5,950,279 3,504,103 1,441,813
255,321,489 247,428,591 267,076,568 265,715,619 277,914,691 303,987,758
15,086,397 16,099,310 16,769,920 15,968,085 17,154,507 17,397,786
98,750,981 109,760,129 116,054,531 118,290,847 126,006,313 127,590,486
35,961,024 38,012,230 44,132,877 45,730,965 46,817,293 54,293,534
11,696,779 12,979,656 12,310,621 12,612,751 12,996,840 13,021,562
23,607,284 25,538,966 26,372,495 24,474,242 26,745,189 26,421,141
30,822,972 24,054,866 26,347,312 20,376,106 33,728,085 28,603,393
4,401,000 3,335,000 3,470,000 3,576,000 3,247,000 5,138,250
7,704,957 7,617,107 7,428,469 7,265,703 7,306,143 7,141,264
228,031,394 237,397,264 252,886,225 248,294,699 274,001,370 279,607,416
27,290,095 10,031,327 14,190,343 17,420,920 3,913,321 24,380,342
45,342,446 45,308,862 54,664,532 40,373,981 70,379,824 76,061,564
(49,390,226)(45,850,962)(59,548,532)(40,763,981)(65,965,012)(74,776,934)
995,802 - - - - -
- - - - 7,860,000 -
- - - - 1,373,936 -
- - - - - -
- - - - - -
(3,051,978)(542,100)(4,884,000)(390,000)13,648,748 1,284,630
24,238,117$ 9,489,227$ 9,306,343$ 17,030,920$ 17,562,069$ 25,664,972$
6.0%5.3%4.8%4.8%4.2%4.8%
Fiscal Year
CITY OF NEWPORT BEACH
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
219
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220
REVENUE CAPACITY
This section of the City of Newport Beach’s Annual Comprehensive Financial
Report (ACFR) 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 Annual
Comprehensive Financial Reports and underlying accounting records for the relevant years.
221
Fiscal Year
Ended
June 30 Residential Commercial Other Unsecured
Total Taxable
Assessed Value Change
Total Direct
Tax Rate
2013 32,522,843,119 4,627,463,458 1,435,546,888 1,597,277,039 40,183,130,504 2.73% 1.000%
2014 34,678,952,381 4,688,189,694 1,489,111,147 1,484,909,241 42,341,162,463 5.37% 1.000%
2015 36,814,891,583 5,007,508,388 1,348,136,131 1,581,520,801 44,752,056,903 5.69% 1.000%
2016 39,263,791,190 5,264,898,550 1,394,764,145 1,465,016,213 47,388,470,098 5.89% 1.000%
2017 41,834,060,284 5,539,551,197 1,398,481,252 1,569,593,832 50,341,686,565 6.23% 1.000%
2018 44,862,969,434 5,953,148,011 1,499,414,812 1,464,683,763 53,780,216,020 6.83% 1.000%
2019 48,246,937,786 6,466,645,074 1,474,416,367 1,513,162,553 57,701,161,781 7.29% 1.000%
2020 50,791,887,238 6,807,750,346 1,552,189,492 1,592,979,478 60,744,806,554 5.27% 1.000%
2021 53,636,707,086 6,979,031,018 1,428,005,141 1,645,923,436 63,689,666,681 4.85% 1.000%
2022 56,171,689,696 7,152,717,180 1,745,857,017 1,509,466,705 66,579,730,598 4.54% 1.000%
NOTE:
Source: HdL, Coren & Cone
CITY OF NEWPORT BEACH
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
In 1978, the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the assessed value
of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2%). With
few exceptions, property is only re-assessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is
reassessed based upon the added value of the construction or at the purchase price or economic value 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.
Secured
222
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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 0.081 0.081 0.047 0.047 0.047 0.047 0.047 0.032 0.047 0.047
0.165 0.170 0.182 0.183 0.173 0.176 0.161 0.173 0.186 0.170
Total Overlapping Rate 0.246 0.251 0.229 0.230 0.220 0.223 0.208 0.205 0.233 0.218
Total Direct & Overlapping Rate 1.246$ 1.251$ 1.229$ 1.230$ 1.220$ 1.223$ 1.208$ 1.205$ 1.233$ 1.218$
NOTE:
Source: HdL, Coren & Cone
CITY OF NEWPORT BEACH
Direct and Overlapping Property Tax Rates
(Rate per $100 of assessed value)
Last Ten Fiscal Years
In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies
for which the subject property resides within. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed
property values for the payment of other debt obligations.
School districts
City Direct Rates:
City basic rate
Fiscal Year
223
Taxpayer
Taxable Assessed
Value Rank
Percent of Total
City Taxable
Assessed Value
Taxable Assessed
Value Rank
Percent of Total
City Taxable
Assessed Value
The Irvine Company 1,072,734,925$ 1 1.68% 1,737,812,513$ 1 4.32%
PH Finance LLC 307,974,740 2 0.48% N/A - 0.00%
Villas at Fashion Island LLC 274,564,806 3 0.43% N/A - 0.00%
Newport Center Hotel LLC 192,183,454 4 0.30% N/A - 0.00%
HG Newport Owner LLC 185,533,013 5 0.29% N/A - 0.00%
520 Newport Center Drive LLC 183,139,132 6 0.29% N/A - 0.00%
Newport Bluffs LLC 166,672,966 7 0.26% 141,631,126 2 0.35%
650 Newport Center Drive LLC 165,892,355 8 0.26% N/A - 0.00%
Balboa Bay Club Ventures LLC 151,560,719 9 0.24% 105,398,594 8 0.26%
UDR Newport Beach North LP 142,299,455 10 0.22% 122,475,352 3 0.30%
2,842,555,565$ 4.45% 2,107,317,585$ 5.23%
Source: HdL, Coren & Cone
CITY OF NEWPORT BEACH
Principal Property Taxpayers
Current Year and Nine Years Ago
2022 2013
224
CITY OF NEWPORT BEACH
Property Tax Levies and Collections
Last Ten Fiscal Years
Fiscal Year
Ended
June 30
Taxes Levied for
the Fiscal Year Amount
1 Percent of
Levy
Collections in
Subsequent
Years 2 Amount
Percent of
Levy
2013 74,165,333 72,532,734 97.80% 736,983 73,269,717 98.79%
2014 79,195,727 77,758,504 98.19% 650,273 78,408,777 99.01%
2015 83,843,488 82,191,604 98.03% 642,292 82,833,896 98.80%
2016 84,166,940 81,762,526 97.14% 612,863 82,375,389 97.87%
2017 86,264,321 84,019,053 97.40% 574,124 84,593,177 98.06%
2018 92,139,181 90,279,099 97.98% 581,969 90,861,068 98.61%
2019 98,471,700 96,356,203 97.85% 646,203 97,002,406 98.51%
2020 102,636,451 100,701,002 98.11% 886,688 101,587,690 98.98%
2021 107,647,017 105,781,072 98.27% 862,772 106,643,844 99.07%
2022 113,318,692 110,354,271 97.38%- 3 110,354,271 97.38%
1
2
3
Source: Orange County Auditor Controller's Office
The total amount of Fiscal Year 2022 delinquent taxes collected in subsequent years was not available as of the
date the information was collected for the City's Annual Comprehensive Financial Report.
Collected within the Fiscal
Year of Levy Total Collections to Date
Exclusive of penalty charges.
Net collections reflect deductions for refunds and impoundments.
225
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226
DEBT CAPACITY
This section of the City of Newport Beach’s Annual Comprehensive Financial
Report (ACFR) 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 Annual
Comprehensive Financial Reports and underlying accounting records for the relevant years.
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228
Business-type Activities
Fiscal
Year
Ended
June 30
Certificates of
Participation 1
Pre-
Annexation
Agreement CDBG Loan
Total
Governmental
Activities
Total Business-type
Activities
Total Primary
Government
Percentage of
Personal
Income 2
Debt Per
Capita 2
2013 123,073,871 4,800,000 1,578,000 129,451,871 - 129,451,871 1.85% 1,498
2014 120,178,318 3,600,000 1,462,000 125,240,318 - 125,240,318 1.81% 1,442
2015 117,197,765 2,400,000 1,339,000 120,936,765 - 120,936,765 1.77% 1,386
2016 114,137,212 1,200,000 1,207,000 116,544,212 - 116,544,212 1.77% 1,383
2017 110,956,659 - 1,066,000 112,022,659 - 112,022,659 1.66% 1,319
2018 107,651,106 - 916,000 108,567,106 - 108,567,106 1.48% 1,245
2019 104,220,553 - 756,000 104,976,553 - 104,976,553 1.36% 1,204
2020 100,695,000 - 585,000 101,280,000 - 101,280,000 1.24% 1,181
2021 106,781,026 - 403,000 107,184,026 - 107,184,026 1.31% 1,248
2022 102,698,895 - 208,000 102,906,895 - 102,906,895 1.17% 1,229
1
2 These ratios are calculated using personal income and population for the prior calendar year.
CITY OF NEWPORT BEACH
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Amounts include any applicable bond premium.
Governmental Activities
Note: This schedule excludes claims and judgments, employee compensated absence, pension, OPEB, GASB 87 lessee leases, and Early Retirement
Incentive Plan liabilities. Details regarding the City's outstanding debt can be found in the notes to the financial statements.
229
Fiscal Year
Ended
June 30
Certificates of
Participation1
Amounts
Restricted for
Debt Service Total
Percent of
Assessed
Value2
General
Bonded Debt
Per Capita
2013 123,073,871 (1,157,250) 121,916,621 0.30% 1,410
2014 120,178,318 (2,352,746) 117,825,572 0.28% 1,356
2015 117,197,765 (2,350,210) 114,847,555 0.26% 1,316
2016 114,137,212 (2,362,904) 111,774,308 0.24% 1,326
2017 110,956,659 (2,364,034) 108,592,625 0.22% 1,279
2018 107,651,106 (2,384,338) 105,266,768 0.20% 1,207
2019 104,220,553 (2,362,228) 101,858,325 0.18% 1,168
2020 100,695,000 (1,159,389) 99,535,611 0.16% 1,160
2021 106,781,026 (2,255,795) 104,525,231 0.16% 1,217
2022 102,698,895 (2,199,363) 100,499,532 0.15% 1,200
1
2
Assessed value was used because the actual value of taxable property is not readily available in the
State of California.
CITY OF NEWPORT BEACH
Ratios of General Bonded Debt
Last Ten Fiscal Years
Amounts include any applicable bond premium.
230
City Net Assessed Valuation:66,579,730,598$
Percentage
Applicable (1)Outstanding Debt
6/30/22
Estimated Share of
Overlapping Debt
OVERLAPPING DEBT:
Metropolitan Water District 1.962% 20,175,000$ 395,834$
Coast Community College District 34.846% 945,799,424 329,573,267
Rancho Santiago Community College District 2.749% 196,772,727 5,409,282
Rancho Santiago Community College District School Facilities Improvement District No. 1 5.163% 154,720,000 7,988,194
Laguna Beach Unified School District 15.169% 14,035,000 2,128,969
Laguna Beach Unified School District Community Facilities District No. 98-1 100.000% 7,135,000 7,135,000
Newport Mesa Unified School District 73.639% 232,782,838 171,418,954
Santa Ana Unified School District 6.372% 339,341,119 21,622,816
Irvine Ranch Water District Improvement Districts 2.800% -
100.000%424,004,508 48,145,816
100.000% 18,675,000 18,675,000
100.000% 8,270,000 8,270,000
City of Newport Beach 1915 Act Bonds 100.000% 13,349,868 13,349,868
Orange County Newport Coast Assessment District No. 01-1 100.000% 3,623,000 3,623,000
Orange County Newport Coast Reassessment District No. 17-1R 100.000% 22,170,000 22,170,000
Orange County General Fund Obligations 9.769% 376,780,000 36,807,638
Orange County Pension Obligation Bonds 9.769% 521,784,000 50,973,079
Orange County Board of Education General Fund Obligations 9.769% 11,620,000 1,135,158
Coast Community College District General Fund Obligations 34.846% 1,865,000 649,878
Coast Community College District Pension Obligation Bonds 34.846% 1,825,000 635,940
Santa Ana Unified School District General Fund Obligations 6.372% 50,389,370 3,210,811
Overlapping Tax Increment Debt (Successor Agencies):3.728% -
77.475%4,660,000 3,027,734
TOTAL OVERLAPPING DEBT 3,369,776,854$ 756,346,238$
DIRECT DEBT:
City of Newport Beach Certificates of Participation 100.000% 102,698,895$ 102,698,895$
Community Development Block Grant Loan 100.000%208,000 208,000
TOTAL DIRECT DEBT 102,906,895$ 102,906,895$
TOTAL DIRECT AND OVERLAPPING DEBT 859,253,133$
GROSS COMBINED TOTAL DEBT (2)859,253,133$
1
2
Ratios to 2021-22 Net Assessed Valuation:
Total Overlapping Debt 1.14%
Total Direct Debt ($102,906,895)0.15%
Gross Combined Total Debt 1.29%
Ratios to Redevelopment Incremental Valuation ($1,443,778,605):
Total Overlapping Tax Increment Debt 0.21%
Source: California Municipal Statistics, Inc.
The percentage of overlapping debt applicable to the city is estimated using taxable assessed property value. Applicable percentages were estimated by
determining the portion of the overlapping district's assessed value that is within the boundaries of the city divided by the district's total taxable assessed value.
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.
CITY OF NEWPORT BEACH
Direct and Overlapping Debt
June 30, 2022
Bonita Canyon Public Facilities Financing Authority Community Facilities District No. 98-1
California Statewide Community Development Authority Community Facilities District No. 2018-
3
231
2013 2014 2015 2016
40,183,130,504$ 42,341,162,463$ 44,752,056,903$ 47,388,470,098$
25%25%25%25%
10,045,782,626 10,585,290,616 11,188,014,226 11,847,117,525
15%15%15%15%
1,506,867,394 1,587,793,592 1,678,202,134 1,777,067,629
General obligation bonds - - - -
1,506,867,394$ 1,587,793,592$ 1,678,202,134$ 1,777,067,629$
as a percentage of debt limit 0.0%0.0%0.0%0.0%
NOTE:
Source: City Finance Department
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 State of California for local governments located within the state.
Fiscal Year
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Conversion percentage
Adjusted assessed valuation
Debt limit
Total net debt applicable to limit:
Legal debt margin
Total debt applicable to the limit
Debt limit percentage
Assessed valuation
232
2017 2018 2019 2020 2021 2022
50,341,686,565$ 53,780,216,020$ 57,701,161,781$ 60,744,806,554$ 63,689,666,681$ 66,579,730,598$
25%25%25%25%25%25%
12,585,421,641 13,445,054,005 14,425,290,445 15,186,201,639 15,922,416,670 16,644,932,650
15%15%15%15%15%15%
1,887,813,246 2,016,758,101 2,163,793,567 2,277,930,246 2,388,362,501 2,496,739,897
- - - - - -
1,887,813,246$ 2,016,758,101$ 2,163,793,567$ 2,277,930,246$ 2,388,362,501$ 2,496,739,897$
0.0%0.0%0.0%0.0%0.0%0.0%
CITY OF NEWPORT BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
Fiscal Year
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234
DEMOGRAPHIC AND ECONOMIC INFORMATION
This section of the City of Newport Beach’s Annual Comprehensive Financial Report (ACFR) 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 Annual Comprehensive Financial Reports and underlying accounting records for the relevant years.
235
Fiscal Year Population1 Personal Income
(in thousands)
Per Capita
Income(2)
Unemployment
Rate2(3)
2013 86,436 6,995,784 80,936 4.2%
2014 86,874 6,926,725 79,733 3.6%
2015 87,249 6,848,523 78,494 4.0%
2016 84,270 6,574,071 78,012 3.4%
2017 84,915 6,736,392 79,331 3.1%
2018 87,182 7,334,970 84,134 2.9%
2019 87,180 7,704,445 88,374 2.6%
2020 85,780 8,183,755 95,404 4.6%
2021 85,865 8,175,464 95,213 (4)6.0%
2022 83,727 8,791,502 105,002 (4)3.0%
1
2
Sources:
CITY OF NEWPORT BEACH
Demographic and Economic Statistics
Last Ten Fiscal Years
(4) HdL, Coren & Cone
(2) U.S. Census Bureau - American Community Survey 1-Year Estimates
(3) State of California, Employment Development Department
(1) California State Department of Finance, E-4 Population Estimates for Cities, Counties
and State 2008-2010; and, E-1 Population Estimates for Cities, Counties and State
January 1, 2015 - 2021.
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 Annual
Comprehensive Financial Report.
Unemployment rate represents an average of all monthly unemployment rates within a
fiscal year.
236
Employer
Number of
Employees Rank
Percent of Total
Employment
Number of
Employees Rank
Percent of Total
Employment
Hoag Memorial Hospital 5,292 1 6.43%4,944 1 5.97%
PIMCO 1,251 2 1.52%1,172 2 1.42%
Pacific Life Insurance 1,194 3 1.45%1,030 4 1.26%
Glidewell Dental 1,091 4 1.33%1,066 3 1.29%
Irvine Management Company 1,006 5 1.22%N/A 2 - N/A
Tower Semiconductor 871 6 1.06%643 8 0.79%
Newport-Mesa Unified School District 752 7 0.91%751 7 0.92%
City of Newport Beach 730 8 0.89%752 6 0.92%
Balboa Bay Club and Resort 692 9 0.84%473 10 0.58%
Resort at Pelican Hill 570 10 0.69%900 5 1.10%
CBRE Inc.387 11 0.47%N/A 2 - N/A
Fletcher Jones Motor Cars Inc. 326 12 0.40%500 9 0.61%
1
2
Source: Data obtained from companies listed and compiled by City Finance Department.
Figures reflect number of employees of employer at the time the information was collected.
Company listed was unable to provide employee data for 2013.
CITY OF NEWPORT BEACH
Principal Employers1
Current Year and 9 years ago
2022 2013
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238
OPERATING INFORMATION
This section of the City of Newport Beach’s Annual Comprehensive Financial
Report (ACFR) 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
• Utility Rates
• Major Water Customers
Sources: Unless otherwise noted, the information in these schedules is derived from the Annual
Comprehensive Financial Reports and underlying accounting records for the relevant years.
239
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240
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
General government 94 79 78 77 77 79 80 78 80 81
Public safety 357 366 370 374 371 372 375 375 376 376
Community development 56 53 52 52 52 53 53 53 52 53
Public works 128 119 109 104 99 98 96 99 98 98
Community services 70 74 75 79 81 79 78 78 78 78
Water 32 32 31 32 31 33 33 33 33 33
Wastewater 15 13 13 12 13 11 11 11 11 11
Total 752 736 728 730 724 725 726 727 728 730
Source: City Finance Department
CITY OF NEWPORT BEACH
Full-time City Employees by Function
Last Ten Fiscal Years
Fiscal Year
Function
241
2013 2014 2015 2016
Police:
3,161 2,794 3,472 3,158
58,823 51,609 59,753 64,762
Fire:
342 356 305 300
4,338 3,352 1,281 1,201
General Services:
1,708 2,408 2,711 1,890
37,607 37,607 27,175 27,000
Recreation & Senior Services:
293,938 294,000 303,152 305,000
13,112 13,956 13,740 14,000
Water:
54 72 187 194
14.02 15.96 16.39 11.66
Sewer:
14 22 20 17
215 245 260 250
Library Services:
1,582,914 1,689,870 1,610,818 1,575,000
1
2
3
Source: City of Newport Beach
Data varies with trend due to COVID-19 restrictions being lifted in 2022.
New Connections
Average Daily Consumption (hundred cubic feet)
Data varies with trend due to inclusion of responses to fires, hazardous materials, medical and other emergencies.
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
Fiscal Year
Data varies with trend due to COVID-19 restrictions in 2021.
New Connections
Miles of Pipe Cleaned
Library Circulation of Materials
Street Patching (tons of mix)
Sidewalk Repair (square feet)
Co-Sponsored Youth Organization Attendance
Senior Transportation Services
Fire Inspections
Adult Arrests
Parking Citations Issued
Fire Responses
242
2017 2018 2019 2020 2021 2022
3,178 3,266 3,520 3,093 2,872 2,650
69,246 56,685 67,048 73,372 86,439 83,307
247 248 209 11,913 1 12,204 13,251
1,216 1,307 1,033 2,842 475 2 3,015 3
1,439 1,403 1,402 913 920 901
20,490 22,925 14,840 11,729 7,805 13,590
425,000 437,751 469,959 439,954 455,442 392,605
13,500 13,071 13,386 9,300 6,287 8,805
229 210 210 256 160 252
13.80 14.07 13.75 13.44 14.87 14.28
41 137 46 10 25 3
202 211 196 221 240 209
1,464,640 1,424,594 1,376,041 1,084,206 1,043,629 1,195,151
Fiscal Year
CITY OF NEWPORT BEACH
Operating Indicators by Function
Last Ten Fiscal Years
243
2013 2014 2015 2016
Police:
Stations 1111
Fire:
Fire Stations 8888
Lifeguard Headquarters 1111
Public works:
Streets (miles) 395 395 395 399
Streetlights 5,977 5,977 5,977 5,978
Traffic Signals 808 808 808 808
Recreation & Senior Services:
Parks 64 64 64 64
Community Centers (includes leased property) 14 14 14 15
Aquatic Center 1 1 1 1
Water:
Water Mains (miles) 303.25 298.37 299.58 299.77
Maximum Daily Capacity (thousands of gallons) 26,916 27,704 27,800 27,800
Wastewater:
Sanitary Sewers (miles) 202.40 202.62 202.64 202.75
Storm Sewers (miles) 95.40 70.62 94.14 92.08
Library Services:
Libraries 4 4 4 4
Source: City of Newport Beach
Fiscal Year
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
244
2017 2018 2019 2020 2021 2022
111111
888888
111111
400 400 400 400 400 400
5,978 5,978 5,971 5,972 5,973 5,974
808 808 808 808 808 808
64 64 65 65 65 66
15 15 15 15 15 14
1 1 1 1 1 1
300.64 300.30 300.88 300.82 301.23 301.13
27,800 27,800 27,800 27,800 27,800 27,800
202.72 203.56 203.99 204.10 204.13 204.30
94.74 95.12 95.35 95.89 96.18 97.37
4 4 4 4 4 4
Fiscal Year
CITY OF NEWPORT BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
245
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Type of Customer:
Residential 3,890,973 3,902,007 3,853,566 3,072,589 3,564,203 3,603,927 3,439,655 3,747,408 3,811,231 3,714,134
Commercial 2,389,822 2,525,169 2,560,620 1,847,372 2,142,952 2,201,254 2,075,812 2,081,860 2,231,809 2,078,199
Government 394,787 455,251 396,605 263,116 305,214 289,738 256,398 270,638 299,442 314,128
Total 6,675,582 6,882,427 6,810,791 5,183,077 6,012,369 6,094,919 5,771,865 6,099,906 6,342,482 6,106,461
Total direct rate
per 100 cubic ft.2.96$ 3.08$ 3.08$ 3.08$ 3.08$ 3.08$ 3.08$ 3.11$ 1 3.35$ 2 3.60$ 3
1 Reflects increase in commodity rate effective January 1, 2020
2 Reflects increase in commodity rate effective January 1, 2021
3 Reflects increase in commodity rate effective January 1, 2022
Source: City Utilities Department
CITY OF NEWPORT BEACH
Water Sold by Type of Customer
Last Ten Fiscal Years
(in hundred cubic feet)
Fiscal Year
246
Fiscal Year
Ended June
30
Monthly
Base Rate
Rate per
100 cubic ft
2013 21.13 3.31
2014 21.77 3.43
2015 21.77 3.43
2016 21.77 3.43
2017 21.77 3.43
2018 23.73 3.46
2019 24.34 3.50
2020 28.09 3.57
2021 30.25 3.85
2022 32.03 4.14
1
Source: City Revenue Division
CITY OF NEWPORT BEACH
Utility Rates1
Last Ten Fiscal Years
Rates are based on 5/8" or 3/4" meter,
which are the standard household meter
sizes. Rates include sewer service. The
City charges an excess-use rate above
normal demand.
247
Water Customer Water Charges Rank
Percent of Total
Water Revenues Water Charges Rank
Percent of Total
Water Revenues
Irvine Company Apartment 673,101$ 1 2.14%166,764$ 2 0.62%
Irvine Company Office 550,471 2 1.75%150,363 3 0.56%
Big Canyon Country Club 357,763 3 1.14%172,200 1 0.64%
Hoag Memorial Hospital 347,678 4 1.11%126,806 5 0.47%
Newport Beach Country Club 320,844 5 1.02%131,122 4 0.49%
Bluffs Homeowners Association 303,362 6 0.96%95,584 6 0.36%
UDR Newport Beach 247,906 7 0.79%85,208 8 0.32%
Irvine Company Retail 244,315 8 0.78%53,748 11 0.20%
Park Newport Ltd 243,336 9 0.77%85,111 9 0.32%
Newport-Mesa Unified School District 243,240 10 0.77%87,615 7 0.33%
Pacific View - Pierce Bros.195,317 11 0.62%55,009 10 0.21%
Jasmine Creek Community Association 141,938 12 0.45%39,450 15 0.15%
Newport Dunes Resort 133,480 13 0.42%46,136 12 0.17%
North Bluff Bay View 128,213 14 0.41%31,550 20 0.12%
One Ford Road Community Association 125,576 15 0.40%29,363 22 0.11%
4,256,540$ 13.53%1,356,029$ 5.07%
Source: City Revenue Division
CITY OF NEWPORT BEACH
Major Water Customers
Current Year and Nine Years Ago
2022 2013
248
City of Newport Beach
100 Civic Center Drive Newport Beach, CA 92660 (949)644-3123www.newportbeachca.gov/acfr